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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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VERIO INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 7375 84-1339720
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification Number)
organization)
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VERIO INC.
8005 SOUTH CHESTER STREET, SUITE 200
ENGLEWOOD, COLORADO 80112
(303) 645-1900
(Address, including zip code, and telephone number, including area code
of Registrant's principal executive offices)
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CARLA HAMRE DONELSON, ESQ.
GENERAL COUNSEL
VERIO INC.
8005 SOUTH CHESTER STREET, SUITE 200
ENGLEWOOD, COLORADO 80112
(303) 645-1900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
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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
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
general Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933 (the "Securities Act"),
check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. [
]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED
PROPOSED MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE(1) REGISTRATION FEE
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10 5/8 Senior Notes due 2009.... $400,000,000 $100% $400,000,000 $105,600
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED FEBRUARY 25, 2000
PROSPECTUS
, 2000
VERIO INC.
EXCHANGE OFFER FOR ALL OUTSTANDING 10 5/8% SENIOR NOTES DUE 2009
Verio will receive no proceeds from the exchange offer.
TERMS OF EXCHANGE OFFER
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o EXCHANGE OFFER
We will exchange old notes for new notes.
o EXCHANGE OFFER EXPIRATION
, 2000 at 5:00 p.m., New York City time.
o OLD NOTES
Verio issued and sold $400,000,000 10 5/8% Senior Notes due 2009 on
November 19, 1999.
If you tender your old notes in the exchange offer, interest will cease
to accrue before your new notes are issued. If you do not tender in the
exchange offer, your old notes will continue to be subject to the same terms
and restrictions except that we will not be required to register your old
notes under the Securities Act.
o VERIO
8005 South Chester Street, Suite 200, Englewood, Colorado 80112. (303)
645-1900.
o NEW NOTES
Identical to the old notes except that the new notes will be registered
under the Securities Act.
- Maturity: November 15, 2009.
- Interest: Paid every six months on May 15 and November 15, starting
May 15, 2000.
- Redemption: Any time on or after November 15, 2004.
- Ranking: The new notes will be general unsecured obligations, ranking:
(1) equally with all our unsecured unsubordinated liabilities;
(2) senior to all our unsecured subordinated liabilities;
(3) junior to all our secured liabilities and liabilities of our
subsidiaries.
INVESTMENT IN THE NOTES TO BE ISSUED IN THE EXCHANGE OFFER INVOLVES RISKS.
SEE THE RISK FACTORS SECTION BEGINNING ON PAGE 13.
THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL ARE FIRST BEING
MAILED TO HOLDERS OF OUTSTANDING NOTES ON OR ABOUT , 2000.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES OR PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED.
THESE SECURITIES MAY NOT BE SOLD UNTIL THE RELATED REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR ANY APPLICABLE STATE SECURITIES
COMMISSION BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT
SEEKING TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
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TABLE OF CONTENTS
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PAGE
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Where You Can Find More Information About Us................ 3
Forward-Looking Statements.................................. 4
Prospectus Summary.......................................... 5
Ratio of Earnings to Fixed Charges.......................... 12
Risk Factors................................................ 13
The Exchange Offer.......................................... 28
Use of Proceeds............................................. 35
Dividend Policy............................................. 35
Capitalization.............................................. 36
Description of the Notes.................................... 37
Book-Entry; Delivery and Form............................... 63
Material Federal Income Tax Considerations.................. 65
Plan of Distribution........................................ 68
Legal Matters............................................... 69
Experts..................................................... 69
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
ANY OTHER INFORMATION. THE SECURITIES OFFERED IN THIS PROSPECTUS MAY ONLY BE
OFFERED IN STATES WHERE THE OFFER IS PERMITTED, AND WE AND THE SELLING
STOCKHOLDERS ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE
OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATES ON THE FRONT OF THOSE
DOCUMENTS.
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WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We have filed with the Securities and Exchange Commission, or the SEC, a
registration statement on Form S-4 under the Securities Act of 1933. This
prospectus does not contain all of the information in the registration
statement. We have omitted from this prospectus some parts of the registration
statement, as permitted by the rules and regulations of the SEC. This prospectus
provides you only with a general description of the notes.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may inspect and copy the registration statement,
including exhibits, and any reports, statements or other information that we
file at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington,
D.C. 20549. You can call the SEC at 1-800-SEC-0330 for further information about
the public reference rooms. In addition, the SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC.
Our common stock is quoted on The Nasdaq National Market. Reports, proxy and
information statements and other information concerning us may be inspected at
The Nasdaq Stock Market, Reports Section, at 1735 K Street, N.W., Washington,
D.C. 20006.
The SEC allows us to "incorporate by reference" information into this
prospectus and any subsequent prospectus supplement, which means that we can
disclose important information to you by referring you to another document filed
separately with the SEC. This prospectus incorporates by reference documents
which are not presented in this prospectus or delivered to you with it. The
information incorporated by reference is an important part of this prospectus.
Information that we file subsequently with the SEC will automatically update
this prospectus. We incorporate by reference the documents listed below and
amendments to them. These documents and their amendments were previously filed
with the SEC. These documents contain important information about us and our
finances. The information in some of these documents was provided prior to our
two-for-one stock split completed on August 20, 1999. Accordingly, all share
numbers and operative share price information in these documents, where
appropriate, should be adjusted to give effect to the stock split.
(i) Our annual report on Form 10-K for our fiscal year ended December
31, 1998. This report contains the audited and consolidated financial
statements for us and out subsidiaries as of December 31, 1997 and 1998 and
for the period from inception (March 1, 1996) to December 31, 1996 and the
years ended December 31, 1997 and 1998;
(ii) Our current report on Form 8-K dated January 11, 1999;
(iii) Our quarterly report on Form 10-Q for our fiscal quarter ended
March 31, 1999;
(iv) Our quarterly report on Form 10-Q for our fiscal quarter ended
June 30, 1999;
(v) Our quarterly report on Form 10-Q for our fiscal quarter ended
September 30, 1999;
(vi) Our current report on Form 8-K dated November 18, 1999; and
(vii) The following sections contained in our registration statement
on Form S-4 (registration number 333-70727) dated January 15, 1999, as
amended: "Management," "Certain Transactions," the pro forma condensed
combined financial statements and the financial statements of certain
acquired affiliates appearing on pages F-3 to F-8 and F-30 to F-89,
respectively, and the Independent Auditors' Report together with Schedule
II entitled "Valuation and Qualifying Accounts."
We are also incorporating by reference in this prospectus all reports and
other documents that we file pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act of 1934, as amended, after the date of this prospectus and
prior to the termination of this exchange offer. These reports and documents
will be incorporated by reference in and considered to be a part of this
prospectus as of the date of filing the reports and documents.
Upon request, we will provide without charge to each person to whom a copy
of this prospectus is delivered, including any beneficial owner, a copy of the
information that has been or may be incorporated by
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reference in this prospectus, other than exhibits to the relevant documents. We
will send exhibits to these documents to you for a reasonable fee. Direct any
request for copies to the office of the Secretary, at our corporate
headquarters, located at 8005 South Chester Street, Suite 200, Englewood,
Colorado 80112 (telephone number (303) 645-1900).
Any statement contained in a document which is incorporated by reference in
this prospectus will be modified or superseded for purposes of this prospectus
to the extent that a statement contained in this prospectus or incorporated in
this prospectus or in any document that we file after the date of this
prospectus that also is incorporated by reference in this prospectus modifies or
supersedes the prior statement. Any modified or superseded statement shall not
be deemed, except as so modified or superseded, to constitute a part of this
prospectus. Subject to the foregoing, all information appearing in this
prospectus is qualified in its entirety by the information appearing in the
documents incorporated by reference in this prospectus.
FORWARD-LOOKING STATEMENTS
Except for the historical information contained in this prospectus, the
matters discussed in this prospectus, or otherwise incorporated by reference
into this prospectus are "forward-looking statements," as such term is defined
in the Private Securities Litigation Reform Act of 1995. These statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. The safe harbor provisions of the
Exchange Act and the Securities Act, apply to forward-looking statements made by
Verio. These forward-looking statements involve risks and uncertainties,
including those identified within "Risk Factors" beginning on page 13 and
elsewhere in, or incorporated by reference into, this prospectus. The actual
results that Verio achieves may differ materially from any forward-looking
projections due to such risks and uncertainties. These forward-looking
statements are based on current expectations, and Verio assumes no obligation to
update this information. Readers are urged to carefully review and consider the
various disclosures made by Verio in this prospectus and in our other reports
filed with the Securities and Exchange Commission that attempt to advise
interested parties of the risks and factors that may affect Verio's business.
This prospectus contains trademarks of Verio and its affiliates, and may
contain trademarks, trade names and service marks of other parties. Unless we
indicate otherwise, references to "Verio" are to Verio Inc. and its
subsidiaries.
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PROSPECTUS SUMMARY
This summary highlights some information from this prospectus. It may not
contain all of the information that may be important to you. For a more complete
understanding of the exchange offer, we encourage you to read the entire
prospectus and the documents we have referred you to.
THE COMPANY
GENERAL
Verio is the world's largest operator of Web sites for businesses and a
leading provider of comprehensive Internet services with an emphasis on serving
the small and medium sized business market. As of September 30, 1999, we served
over 290,000 customer accounts, offering customers a broad range of Internet
solutions, including:
- telecommunication circuits -- permitting our customers to make
connections to and transmissions over the Internet;
- Web hosting services -- providing our customers with a presence on the
Internet in the form of a Web site;
- electronic commerce -- enabling our customers to conduct transactions
with their customers and vendors over the Internet;
- secure Internet communication links -- permitting our customers to
establish "virtual private networks" in order to engage in private and
secure Internet communication with their employees, vendors, customers
and suppliers; and
- other enhanced value Internet services.
We believe that small and medium sized businesses represent an attractive
target market for the provision of Internet services because of this market's
low current penetration levels and the expanding Internet needs of these
businesses. Because of their limited internal technical resources and operating
scale, small and medium sized businesses are increasingly looking to outsource
Internet and information technology functions at a reasonable cost. They also
typically require hands-on local support to help analyze their needs, configure
solutions and provide ongoing technical support. We believe that these
businesses currently are under-served by both the local and other national
Internet service providers. While the other national Internet service providers
typically lack the local presence to provide customized hands-on support, the
local Internet service providers often lack the requisite scale and resources to
provide a full range of services at acceptable quality and pricing levels.
However, we believe that we have a unique competitive advantage in serving small
and medium sized business customers. We combine our technical expertise and
hands-on support provided through our local sales and engineering personnel with
the quality and economic efficiency of our national network, operational
infrastructure and financial strength.
Since our incorporation in March 1996, Verio has grown rapidly,
establishing a global presence through the acquisition, integration and growth
of over 50 local, regional, national and international providers of Internet
connectivity, Web hosting and other enhanced value Internet products and
services. We integrate the operations we have acquired onto our national network
and common administrative support services in order to capture economies of
scale, derive operational efficiency and control, and improve the quality,
consistency and scalability of our services. Currently, we provide locally based
sales and engineering support for our Internet services in 41 of the top 50
metropolitan statistical areas in the U.S. We also provide Web hosting services
to customers in over 170 countries.
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We are now the largest Web hosting company in the world based on the number
of domain names -- such as yourcompany.com -- that we host. To drive continued
growth, we have created a powerful global sales and marketing engine that
includes:
- preferential marketing agreements with leading Internet on-line
companies;
- private label and co-branded distribution relationships with major
telecommunications companies;
- in-house and outsourced telemarketing operations;
- direct sales through over 220 sales professionals; and
- over 5,000 resellers and referral partners in the U.S. and over 170 other
countries.
As of September 30, 1999, Verio served over 290,000 customer accounts,
hosting over 300,000 Web sites. For the three months ended September 30, 1999,
we had revenues of approximately $68.3 million, over half of which was derived
from our Web hosting and other enhanced value Internet services.
RECENT DEVELOPMENTS
In October 1999, George J. Still, Jr. resigned from our board of directors.
On November 3, 1999, we announced the addition of two senior executives.
Barbara Goworowski has joined us as our Chief Marketing Officer and Edric
Starbird has been hired as our Vice President of Operations.
In January 2000, we announced plans to significantly expand our web hosting
and co-location physical infrastructure, systems and personnel. We established a
capital budget of $350 million in connection with these plans, which
expenditures are expected to be fully funded with cash currently on hand.
Effective February 4, 2000, Herb Hribar resigned as our President, Chief
Operating Officer and as one of our directors.
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THE EXCHANGE OFFER
Old Notes.................. 10 5/8% Senior Notes due 2009, Series A, which were
issued in November 1999.
New Notes.................. 10 5/8% Senior Notes due 2009, Series B, which we
are offering hereby. The old notes and the new
notes are referred to collectively as the notes.
The Exchange Offer......... We are offering to exchange $1,000 principal amount
of new notes in exchange for each $1,000 principal
amount of old notes. The new notes are being
offered in exchange for up to $400.0 million
principal amount of old notes. The issuance of the
new notes is intended to satisfy our obligations
contained in the registration rights agreement we
entered into with the initial purchasers of the old
notes in connection with the issuance of the old
notes. See "The Exchange Offer -- Terms of the
Exchange Offer."
Expiration Date............ The exchange offer will expire at 5:00 p.m., New
York City time, on , 2000, or such later
date and time if we extend the exchange offer, in
which case the term "expiration date" means the
latest date and time to which the exchange offer is
extended. See "The Exchange Offer -- Terms of the
Exchange Offer."
Withdrawal................. Tenders of old notes may be withdrawn at any time
prior to 5:00 p.m. New York City time, on the
expiration date. See "The Exchange Offer --
Expiration Date; Extensions; Amendments."
Conditions of the Exchange
Offer...................... The exchange offer is not conditioned upon any
minimum principal amount of old notes being
tendered for exchange. The only condition to the
exchange offer is for the Securities and Exchange
Commission to declare the registration statement,
of which this prospectus is a part, effective. See
"The Exchange Offer -- Conditions of the Exchange
Offer."
Procedures for Tendering
Old Notes.................. If you want to tender your old notes in the
exchange offer, you must complete, sign and date
the accompanying letter of transmittal according to
the instructions contained in this prospectus and
the letter of transmittal. You also must mail or
otherwise deliver the letter of transmittal,
together with your old notes and any other required
documents, to the exchange agent at the exchange
agent's address prior to 5:00 p.m., New York City
time, on the expiration date. If you own old notes
which are registered in the name of a broker,
dealer, commercial bank trust company or other
nominee and you wish to tender such old notes in
the exchange offer, you should give instructions
promptly to tender your old notes on your behalf.
Guaranteed Delivery
Procedures................. If you wish to tender your old notes and (1) your
old notes are not immediately available or (2) you
cannot deliver your old notes together with the
letter of transmittal to the exchange agent prior
to the expiration date, you may tender your old
notes according to the guaranteed delivery
procedures contained in the letter of transmittal.
See "The Exchange Offer -- Guaranteed Delivery
Procedures."
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Acceptance of Old Notes and
Delivery of New Notes.... After the registration statement becomes effective
and the exchange offer is commenced, we will accept
any and all old notes that are properly tendered in
the exchange offer prior to 5:00 p.m., New York
City time, on the expiration date. The new notes
will be delivered promptly after acceptance of the
old notes. See "The Exchange Offer -- Terms of the
Exchange Offer."
The Exchange Agent......... U.S. Bank Trust National Association has agreed to
serve as the exchange agent in the exchange offer.
See "The Exchange Offer -- The Exchange Agent;
Assistance."
Material Federal Income Tax
Considerations........... With respect to the exchange of old notes for new
notes:
- the exchange should not constitute a taxable
exchange for U.S. federal income tax purposes;
- you should not recognize gain or loss upon
receipt of the new notes; and
- you must include interest on the new notes in
gross income to the same extent as the old notes.
Use of Proceeds............ We will receive no proceeds from the exchange
offer. Net proceeds from the sale of the old notes
were approximately $388.0 million. As of November
30, 1999, we had not used any of the net proceeds
from the sale of the old notes. See "Use of
Proceeds."
Fees and Expenses.......... We will bear all expenses for the completion of the
exchange offer and compliance with the registration
rights agreement. The expenses of the exchange
offer are estimated to be approximately $450,000.
We also will pay certain transfer taxes to the
extent applicable to the exchange offer. See "The
Exchange Offer -- Fees and Expenses."
Accrued Interest........... Interest will accrue on the new notes at a rate of
10 5/8% per annum. If your old notes are accepted
for exchange you will receive interest accrued on
your old notes from the date of original issuance
or date of the last interest payment, to, but not
including, the date of issuance of your new notes.
Interest on your old notes will cease to accrue on
the day before your new notes are issued. See
"Description of the Notes -- Maturity, Interest and
Principal."
Resales of New Notes....... Based on an interpretation by the Securities and
Exchange Commission set forth in no-action letters
issued to third parties, we believe that you may
resell or otherwise transfer new notes issued
pursuant to the exchange offer in exchange for old
notes. However, there are exceptions to this
general statement. You may not freely transfer the
new notes if:
- you are an "affiliate" of Verio within the
meaning of Rule 405 under the Securities Act of
1933,
- you are a broker-dealer who acquired the old
notes directly from us without compliance with
the registration and prospectus delivery
provisions of the Securities Act,
- you did not acquire the new notes in the ordinary
course of your business, or
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- you have engaged in, intend to engage in, or have
an arrangement or understanding with any person
to participate in the distribution of the new
notes.
Any holder subject to any of the exceptions above
and each participating broker-dealer that receives
new notes for its own account in the exchange offer
in exchange for old notes that were acquired as a
result of market-making, must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with the resale
of the new notes.
Effect of Not Tendering Old
Notes for Exchange......... If you do not tender your old notes or your old
notes are not properly tendered, the existing
transfer restrictions will continue to apply. We
will have no further obligations to provide for the
registration under the Securities Act of your old
notes. Your old notes will, following the
expiration date, bear interest at the same rate as
the new notes.
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DESCRIPTION OF NEW NOTES
The form and terms of the new notes and the old notes will be identical,
except that:
(1) the new notes have been registered under the Securities Act and,
therefore, will not bear legends restricting their transfer; and
(2) the holders of the new notes will not be entitled to further
registration rights under the registration rights agreement.
The new notes will evidence the same debt as the old notes and will be
entitled to the benefits of the indenture under which the old notes were issued.
The exchange offer will be considered completed once we deliver to the
exchange agent new notes in the same aggregate principal amount as the aggregate
principal amount of old notes that are validly tendered by holders. See "The
Exchange Offer -- Procedures for Tendering Old Notes" and "Description of the
Notes."
Notes Offered.............. $400.0 million aggregate principal amount of
10 5/8% Senior Notes due 2009.
Maturity................... November 15, 2009.
Interest Payment Dates..... May 15 and November 15, commencing May 15, 2000.
Ranking.................... The old notes and the new notes will be senior
unsecured obligations ranking equally with all our
existing and future unsecured and unsubordinated
debt including:
- $100.0 million outstanding principal amount of
13 1/2% Senior Notes due 2004 (which we refer to
as our 1997 Notes),
- the $175.0 million outstanding principal amount
of 10 3/8% Senior Notes due 2005 (which we refer
to as our March 1998 Notes), and
- the $400.0 million outstanding principal amount
of 11 1/4% Senior Notes due 2008 (which we refer
to as our November 1998 Notes).
The old notes and the new notes also will be senior
to all our existing and future subordinated debt.
The old notes and the new notes will be junior to
all our secured debt to the extent of the value of
the assets securing such debt and structurally
subordinated to indebtedness of our subsidiaries.
At September 30, 1999 we had:
- approximately $27.6 million of secured
indebtedness outstanding to which holders of the
notes would be effectively subordinated in right
of payment; and
- approximately $14.9 million of subsidiary
indebtedness to which holders of notes would be
structurally subordinated; all of which is
included in the secured long-term figure above.
See "Description of the Notes -- General."
Sinking Fund............... None.
Optional Redemption........ On or after November 15, 2004, we may redeem some
or all of the notes at specific redemption prices
described in this prospectus, plus accrued
interest. See "Description of the
Notes -- Redemption -- Optional Redemption."
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Prior to November 15, 2002, we also may be able to
redeem up to 35% of the original aggregate
principal amount of the notes at a redemption price
of 110.625% of the principal amount, plus accrued
and unpaid interest. See "Description of the
Notes -- Redemption -- Optional Redemption."
Change of Control.......... In the event of a change of control, we will be
required to make an offer to purchase the notes at
a purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest.
Furthermore, we would be required to repay any
funds drawn under a bank facility in the event of a
change of control. See "Description of the
Notes -- Certain Covenants -- Change of Control."
Certain Covenants.......... The indenture governing the new notes will, among
other things, restrict our ability to:
- borrow money;
- make restricted payments;
- permit liens to exist;
- change our business;
- issue guarantees;
- sell certain assets or merge with or into other
companies;
- pay dividends;
- restrict issuances and sales of preferred stock
by restricted subsidiaries;
- engage in transactions with affiliates;
- designate or create unrestricted subsidiaries;
and
- make investments.
These covenants are subject to important exceptions
and qualifications. See "Description of the
Notes -- Certain Covenants."
Exchange Rights............ Holders of the new notes will not be entitled to
any exchange or registration rights. This exchange
offer is intended to satisfy our obligation under
the registration rights agreement. We will have no
further obligations to register any of the old
notes not tendered once the exchange offer is
completed. See "Risk Factors -- There may be
adverse consequences if you fail to exchange your
old notes."
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RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table shows the deficiency of earnings to cover combined
fixed charges and preferred stock dividends of Verio for the last three years
and the nine month periods ended September 30, 1998, and September 30, 1999.
<TABLE>
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NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
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1996 1997 1998 1998 1999
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Deficiency of earnings to cover combined fixed
charges and preferred stock dividends(*).... (5,825) (48,253) (112,423) (78,750) (137,537)
</TABLE>
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(*) Earnings consist of net loss plus fixed charges. Fixed charges consist of
interest expense, including amortization of debt issuance costs, the portion
of rent expense considered to be interest (one-third), and preferred stock
dividends.
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RISK FACTORS
Before you participate in the exchange offer, you should be aware that
there are various risks, including the ones listed below. You should carefully
consider these risk factors and the other information contained in this
prospectus in evaluating the exchange offer. This prospectus contains statements
which constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this prospectus and include statements regarding the intent, belief or
current expectations of Verio, our directors or our officers primarily with
respect to the future operating performance of Verio. You are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those in the forward-looking statements as a result of various factors. The
accompanying information contained in this Prospectus, including the information
set forth below, identifies important factors that could cause such differences.
See "Forward-Looking Statements".
WE HAVE A HISTORY OF LOSSES AND LIMITED OPERATING AND FINANCIAL DATA.
We have incurred net losses since our inception in March 1996. For the
period from inception to December 31, 1996, we had a loss of $(5.1) million, and
for the years ended December 31, 1997 and 1998, and the nine months ended
September 30, 1999, we had losses of $(46.1) million, $(122.0) million and
$(137.5) million, respectively. Because we have a relatively short operating
history, there is little operating and financial data about us, which makes an
evaluation of our business operations and prospects more difficult. We have
experienced annual growth in revenue from approximately $2.4 million in the
period of our inception to December 31, 1996 to approximately $35.7 million in
1997, approximately $120.7 million in 1998, and approximately $185.4 million for
the nine months ended September 30, 1999.
WE EXPECT CONTINUING LOSSES AND CANNOT ASSURE YOU THAT WE WILL BECOME
PROFITABLE.
We expect to continue to operate at a net loss in the near term as we
continue to use significant amounts of cash for our acquisition and integration
efforts, build out our national network operations, expand and enhance our
product and service offerings, and further establish our brand name recognition.
The extent to which we experience negative cash flow will depend upon a number
of factors, including the following:
- the number and size of any additional acquisitions and investments;
- the expense and time required to integrate prior and future acquired
operations;
- the time and effort required to capture operating efficiencies;
- our ability to generate increased revenues;
- the amount of our expenditures at the corporate and national level; and
- potential regulatory developments that may affect our operations.
In order to achieve profitability, we must develop and market products an
services that gain broad commercial acceptance. We cannot assure you that our
products and services will ever achieve broad commercial acceptance or that we
will achieve profitability. Although we have experienced significant growth in
revenues on an annual basis, this growth rate is not necessarily indicative of
future operating results. We cannot assure you that we will achieve or sustain
positive operating cash flow or generate net income in the future.
WE HAVE SUBSTANTIAL LIABILITIES WHICH MAY IMPACT OUR FUTURE OPERATIONS AND
AFFECT OUR ABILITY TO MEET OUR DEBT OBLIGATIONS.
We have substantial amounts of outstanding debt and other liabilities. At
September 30, 1999, our total long-term liabilities were approximately $694.2
million, representing approximately 59% of our total capitalization. In
addition, we completed in November 1999 the offering of the old notes, the
aggregate principal amount of which was $400.0 million, and we have a $100
million revolving credit facility from a group of financial institutions. We
have not drawn any funds under this credit facility.
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<PAGE> 15
High levels of debt have had and could have several important effects on
our future operations. Some of these consequences include the following:
- A substantial portion of our cash flow from operations must be used to
pay interest on our debt and will not be available for other business
purposes. Of the $54.4 million cash flow used by our operations for the
nine months ended September 30, 1999, $43.2 million, or approximately
79%, was used to pay interest on our debt. Of this amount, 16% was used
for interest on the $100.0 million outstanding principal amount of our
1997 Notes; 21% was used for interest on the $175.0 million outstanding
principal amount of our March 1998 Notes; 54% was used for interest on
the $400.0 million outstanding principal amount of our November 1998
Notes; and 9% was used for interest on capital leases and other
obligations. Interest on our debt continues to be a significant use of
cash.
- Covenants imposed under certain of our financing agreements limit our
ability to pursue our business strategy, borrow additional funds to grow
our business, acquire and dispose of assets, and make capital
expenditures and may otherwise restrict our operations and growth.
Our ability to meet our debt and other obligations and to reduce our total
debt depends on our future operating performance and on economic, financial,
competitive, regulatory and other factors. In addition, we may need to incur
additional indebtedness in the future. Many of these factors are beyond our
control. We believe that our existing current assets combined with working
capital from our operations, our existing credit facility, capital lease
financings and proceeds of future equity or debt financings will be adequate to
meet our existing financial obligations. We cannot assure you, however, that our
business will generate sufficient cash flow or that future financings will be
available to provide sufficient proceeds to meet these obligations or to service
our total debt. In particular, our cash flow may not be sufficient to pay:
- $13.5 million in annual interest on the 1997 Notes (interest on these
notes is paid from an escrow account until June 2000);
- $18.2 million in annual interest on the March 1998 Notes;
- $45.0 million in annual interest on the November 1998 Notes;
- up to $24.3 million in annual dividends we may pay on our convertible
preferred stock, plus any additional dividends owed thereon depending on
certain contingencies, beginning in November 2000;
- $42.5 million in annual interest on the notes comprising this exchange
offer; or
- any debt obligations we may incur under the credit facility, if drawn
upon.
THE NOTES ARE EFFECTIVELY SUBORDINATED TO ALL OF OUR SECURED INDEBTEDNESS AND
THE LIABILITIES OF OUR SUBSIDIARIES.
The notes are general senior unsecured obligations, ranking pari passu in
right of payment with all of our existing and future unsecured and
unsubordinated indebtedness, including the 1997 Notes, the March 1998 Notes and
the November 1998 Notes, and senior in right of payment to all of our existing
and future subordinated indebtedness. The notes are effectively subordinated to
all of our secured indebtedness to the extent of the value of the assets
securing such indebtedness, and structurally subordinated to all indebtedness of
our subsidiaries. At September 30, 1999, we had approximately $27.6 million of
secured indebtedness outstanding to which holders of notes would have been
effectively subordinated in right of payment and approximately $14.9 million of
subsidiary indebtedness to which holders of notes would have been structurally
subordinated. Our revolving credit facility is secured and therefore the notes
are effectively subordinated to the revolving credit facility.
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<PAGE> 16
We are a holding company that conducts substantially all of our revenue
producing operations through our operating subsidiaries. Claims of holders of
the notes will be effectively subordinated to the indebtedness and other
liabilities and commitments of our subsidiaries, and claims by Verio as an
equity holder in our non-wholly owned subsidiaries and minority interests will
be limited to the extent of our direct or indirect investment in such entities.
The ability of creditors, including the holders of the notes, to participate in
the assets of any of our subsidiaries upon any liquidation or bankruptcy of any
such entity will be subject to the prior claims of that entity's creditors,
including trade creditors, and any prior or equal claim of any other equity
holder. In addition, the ability of our creditors, including the holders of
notes, to participate in distributions of assets of our subsidiaries will be
limited to the extent that the outstanding shares of any of our subsidiaries are
either pledged to secure other creditors (which is the case under our revolving
credit facility) or are not owned by Verio.
WE WILL DEPEND UPON THE CASH FLOWS OF OUR SUBSIDIARIES TO REPAY THE NOTES.
The notes will be obligations solely of Verio. Our ability to pay interest
on the notes or to repay the notes at maturity or otherwise will be dependent
upon the cash flows of our operating subsidiaries and the payment of funds by
those subsidiaries to us in the form of repayment of loans, dividends,
management fees or otherwise. Our operating subsidiaries have no obligation,
contingent or other, to pay amounts pursuant to the notes or to make funds
available therefor, whether in the form of loans, dividends or other
distributions. In addition, to the extent we make minority investments and
investments in joint ventures as a part of our strategy, we may not have access
to the cash flows of such entities. Accordingly, our ability to repay the notes
at maturity or otherwise may be dependent upon our ability to refinance the
notes, which will in turn depend, in large part, upon factors beyond our
control. While at the present time there are no material agreements in place
which prohibit or restrict our subsidiaries' right or ability to make such
payments, future agreements may contain covenants prohibiting them from
distributing or advancing funds to Verio under certain circumstances, including
to fund interest payments in respect of the notes.
WE ARE SUBJECT TO RESTRICTIVE COVENANTS THAT LIMIT OUR FLEXIBILITY.
Our $100.0 million revolving credit facility may only be used if we meet
certain financial tests. Our credit facility and other debt instruments contain
customary covenants limiting our flexibility, including covenants limiting our
ability to incur additional debt, make liens, make investments, consolidate,
merge or acquire other businesses and sell assets, pay dividends and other
distributions, make capital expenditures and enter into transactions with
affiliates. Such covenants may make it difficult for us to pursue our business
strategies. Failure to comply with the terms of the credit facility would
entitle the secured lenders to foreclose on certain of our assets, including the
capital stock of our subsidiaries. The secured lenders would be repaid from the
proceeds of the liquidation of those assets before the assets would be available
for distribution to other creditors and, lastly, to the holders of Verio's
capital stock. Our ability to satisfy the financial and other restrictive
covenants may be affected by events beyond our control.
OUR EARNINGS HAVE BEEN INSUFFICIENT TO PAY OUR COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS.
Our earnings were insufficient to pay our combined fixed charges and
preferred stock dividends during those periods and by the amounts set forth in
the table below, although our combined fixed charges and preferred stock
dividends included substantial non-cash charges for depreciation, amortization
and non-cash interest expense on some of our debt:
<TABLE>
<CAPTION>
EARNINGS NON-CASH
DEFICIENCY CHARGES
---------- --------
(IN THOUSANDS)
<S> <C> <C>
Period from inception to December 31, 1996.................. $ (5,825) $ 784
Fiscal year ended December 31, 1997......................... $ (48,253) $11,468
Fiscal year ended December 31, 1998......................... $(112,423) $48,516
Nine months ended September 30, 1999........................ $(137,537) $94,779
</TABLE>
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We anticipate that earnings will be insufficient to cover our combined
fixed charges and preferred stock dividends for the next several years. In order
for us to meet our debt obligations, we will need to substantially improve our
operating results. We cannot assure you that our operating results will be of
sufficient magnitude to enable us to meet our debt obligations. In the absence
of such operating results, we could face substantial liquidity problems and may
be required to raise additional financing through the issuance of debt or equity
securities. We cannot assure you, however, that we would be successful in
raising such financing on acceptable terms or otherwise.
WE MAY BE UNABLE TO RAISE ADDITIONAL FUNDS THAT WE WILL NEED TO REMAIN
COMPETITIVE.
We depend on a number of different financing sources to fund our growth and
continued losses from operations. However, we cannot assure you that we will be
able to raise such funds on favorable terms or at all. In the event that we are
unable to obtain such additional funds on acceptable terms or otherwise, we may
be unable or determine not to take advantage of new opportunities or take other
actions that otherwise might be important to our operations.
We expect to make significant capital expenditures in order to maintain our
competitive position and continue to meet the increasing demands for service
quality, availability and competitive pricing. In addition to our continuing
acquisition efforts, we currently expect that our significant capital
expenditures will include the following:
- network equipment;
- network operating and data centers;
- network monitoring equipment;
- information technology systems; and
- customer support systems.
We believe that we will have a reasonable degree of flexibility to adjust
the amount and timing of these capital expenditures. However, we may need to
raise additional funds in order to take advantage of unanticipated
opportunities, such as acquisition opportunities that may arise in the U.S. and
internationally. In addition, we may need to raise additional funds to develop
new products or otherwise respond to changing business conditions or
unanticipated competitive pressures. We may be required to delay or abandon some
of our planned future expansion or expenditures if we fail to raise sufficient
funds.
OUR OPERATING RESULTS FLUCTUATE DUE TO A VARIETY OF FACTORS AND ARE NOT A
MEANINGFUL INDICATOR OF FUTURE PERFORMANCE.
Our operating results have fluctuated in the past and may fluctuate
significantly in the future, depending upon a variety of factors, including the
incurrence of capital costs and the introduction of new products and services.
Additional factors that may contribute to variability of operating results
include:
- the pricing and mix of services we offer;
- our customer retention rate;
- changes in pricing policies and product offerings by our competitors;
- growth in demand for network and Internet access services;
- one-time costs associated with acquisitions and the consolidation and
integration of our acquired operations; and
- general telecommunications services' performance and availability.
We also have experienced seasonal variation in Internet use. Accordingly,
our revenue streams may fluctuate. In response to competitive pressures, we may
take certain pricing or marketing actions that could
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<PAGE> 18
have a material adverse effect on our business, financial condition and results
of operations. Therefore, we believe that period-to-period comparisons of our
operating results are not necessarily meaningful and cannot be relied upon as
indicators of future performance. If our operating results in any future period
fall below the expectations of securities analysts and investors, the market
price of our securities would likely decline.
OUR SUCCESS IS HIGHLY DEPENDENT ON THE GROWTH OF OUR EXISTING INTERNET ACCESS
AND WEB HOSTING CORE SERVICES, AND ON OUR ABILITY TO EXPAND OUR SERVICE
OFFERINGS AND DISTRIBUTION CHANNELS.
While we continue to pursue acquisitions and investments both in the U.S.
and internationally, our success is highly dependent on the growth of our
existing Internet access and Web hosting core service platforms. We expect to
drive this internal growth by expanding and enhancing our product service base
with additional enhanced value Internet service capabilities and by establishing
further distribution capabilities. We may develop these further product and
distribution capabilities internally, but we primarily plan to form strategic
relationships with various vendors and distribution partners. Accordingly, it
will be important that we either develop these capabilities internally or
identify suitable potential product and service vendors and distributors with
whom we are able to complete agreements on acceptable terms. We expect that
competition for strategic relationships with key vendors and potential
distributors could be significant, and that we may have to compete with other
companies with greater financial and other resources to obtain these important
relationships. We cannot assure you that we will be able to identify suitable
partnering candidates or be able to complete agreements on acceptable terms with
these parties. Once implemented, we cannot assure you that any additional
service capabilities that we launch will achieve general commercial acceptance
or generate significant revenue, or that any particular distribution channels
will prove to be effective.
OUR SUCCESS DEPENDS ON OUR ABILITY TO SUCCESSFULLY INTEGRATE THE OPERATIONS WE
HAVE ACQUIRED AND MAY ACQUIRE IN THE FUTURE.
A key element of our business strategy is to grow through acquisitions, and
our success depends in large part on our ability to integrate the operations and
management of the independent Internet operations we have acquired and those we
may acquire in the future. To integrate our newly acquired Internet operations
successfully, we must:
- install and standardize adequate operational and control systems;
- deploy standard equipment and telecommunications facilities;
- employ qualified personnel to provide technical and marketing support in
new as well as existing locations;
- eliminate redundancies in overlapping network systems and personnel;
- incorporate acquired technology and products into our existing service
offerings;
- implement and maintain uniform standards, procedures and policies;
- standardize marketing and sales efforts under the common Verio brand; and
- continue the expansion of our managerial, operational, technical and
financial resources.
The process of consolidating and integrating acquired operations takes a
significant period of time, places a significant strain on our managerial,
operating and financial resources, and could prove to be even more expensive and
time-consuming than we have predicted. We may increase expenditures in order to
accelerate the integration and consolidation process with the goal of achieving
longer-term cost savings and improved profitability.
The key integration challenges we face in connection with our acquisitions
include:
- acquired operations, facilities, equipment, service offerings, networks,
technologies, brand names, and sales, marketing and service development
efforts may not be effectively integrated with our existing operations;
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- anticipated cost savings and operational benefits may not be realized;
- in the course of integrating an acquired operation, we may discover facts
or circumstances that we did not know at the time of the acquisition that
adversely impact our business or operations, or make the integration more
difficult or expensive;
- integration efforts may divert our resources from our existing business;
- standards, controls, procedures and policies may not be maintained;
- employees who are key to the acquired operations may choose to leave; and
- we may experience unforeseen delays and expenses.
WE FACE RISKS ASSOCIATED WITH ACQUISITIONS GENERALLY.
We expect to continue our acquisition and expansion strategy. Future
acquisitions could materially adversely affect our operating results as a result
of dilutive issuances of equity securities and the incurrence of additional
debt. In addition, the purchase price for many of these acquired businesses
likely will significantly exceed the current fair values of the net assets of
the acquired businesses. As a result, material goodwill and other intangible
assets would be required to be recorded which would result in significant
amortization charges in future periods. These charges, in addition to the
financial impact of such acquisitions, could have a material adverse effect on
our business, financial condition and results of operations.
We have recorded all business acquisitions under the purchase method of
accounting. With the acquisition, on January 5, 1999, of Best Internet
Communications, Inc. (d/b/a Hiway Technologies, Inc.), which we refer to as
Hiway, we recorded gross goodwill totaling approximately $240.5 million, which
is being amortized over a ten-year period from the acquisition date. On July 13,
1999, we acquired all of the outstanding stock of Computer Services Group, Inc.
(which does business as digitalNATION) for $100.0 million in cash, the goodwill
associated with which is being amortized over a 10-year period from the
acquisition date. We cannot assure you of the number, timing or size of future
acquisitions, or the effect that any such acquisitions might have on our
operating or financial results.
THE FINANCIAL INFORMATION CONCERNING BUSINESSES WE ACQUIRE MAY BE INACCURATE.
A number of the Internet businesses we have acquired did not have audited
financial statements, and this may be true for subsequent acquisitions as well.
These companies have had varying degrees of internal controls and detailed
financial information. Therefore, the financial information included in this
prospectus or incorporated by reference includes financial information
concerning certain recently completed acquisitions for which audited financial
statements may not be available. Our subsequent audits of these recently
acquired companies may reveal significant issues with respect to revenues,
expenses and liabilities, contingent or otherwise, of any of these providers.
OUR RAPID GROWTH PUTS A SIGNIFICANT STRAIN ON OUR RESOURCES.
As a result of our acquisition strategy, we have been growing rapidly and
expect to continue to grow rapidly. This rapid growth has placed, and is likely
to continue to place, a significant strain on our managerial, operating,
financial and other resources, including our ability to ensure customer
satisfaction. For example, as our customer base grows, and the need for high
capacity Internet data transmission capability expands, we will need to acquire
substantial network capacity to support their needs. Our expansion efforts also
require significant time commitments from our senior management and place a
strain on their ability to manage our existing business. We also may be required
to manage multiple relationships with third parties as we expand our enhanced
value service offerings, including Web hosting. Our future performance will
depend,
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in part, upon our ability to manage this growth effectively. To that end, we
will have to undertake the following improvements, among others:
- implement additional management information systems capabilities;
- further develop our operating, administrative and financial and
accounting systems and controls;
- improve coordination between our engineering, accounting, finance,
marketing and operations; and
- hire and train additional personnel.
WE DEPEND UPON THIRD-PARTY CHANNEL PARTNERS FOR SALES OF OUR PRODUCTS AND
SERVICES.
We depend on third-party channel partners to stimulate demand for our
products and services both where we do not have a direct sales force and as an
alternative means for generating sales to customers. These channel partners
include computer and telecommunications providers, Internet companies and
portals, value-added resellers, original equipment manufacturers, systems
integrators, Web designers and advertising agencies. Many of our channel partner
distribution relationships involve untested or novel modes of distributing our
products and services, and not all of these channel partners have been
successful in meeting our objectives for generating additional sales of our
products and services. If we fail to gain commercial acceptance in certain
markets, channel partners may discontinue their relationships with us or we may
fail to achieve a return on our investment in certain channel partner
distribution arrangements. Conflicts may develop between our direct sales force
efforts and those of our channel partners as well as among different channel
partners. The loss of channel partners, the failure of such parties to perform
under agreements with us, or the inability to attract other channel partners
with the expertise and industry experience required to market our products and
services could adversely affect us. Furthermore, sales through channel partners
are usually at discounted rates or may require us to incur additional sales and
marketing expenses. Therefore, the resulting revenues and gross margins will be
less than if we had sold the same services directly.
WE FACE RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND EXPANSION.
We provide Web hosting services to customers in over 170 countries. For the
year ended December 31, 1998, and for the nine months ended September 30, 1999,
we estimate that approximately 10% of our total revenues was from international
operations. We expect to continue to expand in these and other international
markets. However, the rate of development and adoption of the Internet has been
slower outside the U.S., and the cost of transmitting data over the Internet
outside the U.S. has been higher, which may adversely affect our ability to
expand operations, and may increase our costs of operations internationally. We
cannot assure you that acceptance of the Internet or demand for Internet access,
Web hosting and other enhanced value Internet services will increase
significantly in any international markets.
We may need to enter into joint ventures or other outsourcing agreements
with third parties, acquire complementary businesses or operations, or establish
or maintain new operations outside the U.S. in order to conduct our foreign
operations successfully. However, we cannot assure you that we will be able to
obtain the permits and operating licenses required to operate, to hire and train
employees or to market, sell and deliver high quality services in these markets.
In addition, certain risks inherent in doing business on an international level
include:
- unexpected changes in or delays resulting from regulatory requirements,
tariffs, customs, duties and other trade barriers;
- difficulties in staffing and managing foreign operations;
- longer payment cycles and problems in collecting accounts receivable;
- political instability, expropriation, nationalization, war, insurrection
and other political risks;
- fluctuations in currency exchange rates and foreign exchange controls
which restrict or prohibit repatriation of funds;
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- technology export and import restrictions or prohibitions;
- employment laws and practices in foreign countries;
- delays from customs brokers or government agencies;
- differences in technology standards;
- seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world; and
- potentially adverse tax consequences.
We cannot assure you that these factors will not have an adverse effect on
our future international operations. In addition, changes in existing foreign
laws or administrative practice relating to taxation, foreign exchange,
regulatory or other matters could adversely affect us. For example, the European
Union recently enacted its own privacy regulations. Future decisions, laws,
regulations and other activities regarding regulation and content liability may
significantly affect our business. Certain foreign governments, such as Germany,
have enforced laws and regulations related to content distributed over the
Internet that are more strict than those currently in place in the U.S. This
could adversely affect our investment in international operations such as
www.Service Online-Dienstleistungen GmbH.
Effective January 1, 1999, 11 of the 15 member countries of the European
Union established fixed conversion rates between their existing sovereign
currencies and the euro, and adopted the euro as their common legal currency. We
have not commenced any assessment of the effects or potential impact that the
euro conversion would have on us.
WE FACE A HIGH LEVEL OF COMPETITION IN THE INTERNET SERVICES INDUSTRY.
The tremendous growth and potential market size of the Internet access
market and the absence of substantial barriers to entry have attracted many new
start-ups as well as existing businesses from the telecommunications, cable and
technology industries. As a result, the market for Internet access and related
services is extremely competitive. We anticipate that competition will continue
to intensify as the use of the Internet grows. Current and prospective
competitors include:
- other independent providers of Web hosting and other enhanced value
Internet services;
- national, regional and local Internet service providers;
- global, national and regional long distance and local exchange
telecommunications companies;
- cable television companies;
- direct broadcast satellite and wireless communications providers; and
- on-line service providers.
We believe that the following are the primary competitive factors in this
market:
- a secure and reliable national network with sufficient capacity, quality
of service and scalability to support continued growth;
- a knowledgeable and effective sales force, and broad and effective
distribution channels;
- knowledgeable and capable technical support personnel, and prompt and
efficient customer care services;
- Internet system engineering and other technical expertise;
- competitive prices;
- timely introductions of new products and services;
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- sufficient financial resources; and
- a recognized and trusted brand name.
Many of our competitors have significantly greater market presence, brand
recognition, and financial, technical, network capacity and personnel resources
than we do. All of the major long distance companies, also known as
interexchange carriers, offer Internet access services and compete with us. The
recent sweeping reforms in the federal regulation of the telecommunications
industry have created greater opportunities for local exchange carriers,
including the regional bell operating companies, to enter the Internet access
market. In order to address the Internet access requirements of the current
business customers of long distance and local carriers, many carriers are
integrating horizontally through acquisitions of or joint ventures with Internet
service providers, or by wholesale purchase of Internet access from Internet
service providers. In addition, many of the major cable companies and other
alternative service providers -- such as those companies utilizing wireless
terrestrial and satellite-based service technologies -- have announced their
plans to offer Internet access and related services. Accordingly, we expect that
we will experience increased competition from traditional and emerging
telecommunications providers. Many of these companies, in addition to their
substantially greater network coverage, market presence, and financial,
technical and personnel resources, also have large existing commercial customer
bases. Furthermore, they may have the ability to bundle Internet access with
basic local and long distance telecommunications services. This bundling of
services may have an adverse effect on our ability to compete effectively with
them and may result in pricing pressure on us that would adversely affect our
business, financial condition and results of operations.
The recent deployment and further planned deployment of broadband services
or high capacity data transmission capabilities by cable and telephone companies
through new technologies such as cable modems and various digital subscriber
lines also creates further competitive pressure on our business. While these
providers initially targeted the residential consumer, more recently a number of
digital subscriber lines providers also have announced their intent to offer
services to our target business market. This may significantly affect the
pricing of our Internet access service offerings. Although we offer for sale
digital subscriber line services to business customers in a large number of
markets, there are numerous providers of digital subscriber lines competing with
these product offerings, and several providers have launched their services in
conjunction with Internet service providers, allowing those providers to offer
Internet access over digital subscriber lines circuits. These circuits, which
provide higher speed and lower latency Internet connections than a standard
dialup phone connection, compete with our dedicated connectivity offerings.
As we continue to expand internationally, we will encounter new
competitors. In some cases, we will be forced to compete with and buy services
from government-owned or subsidized telecommunications providers. Some of these
providers may enjoy a monopoly on telecommunications services essential to our
business. We cannot assure you that we will be able to purchase these services
at a reasonable price or at all. In addition to the risks associated with our
local competitors, foreign competitors may pose an even greater risk, as they
may possess a better understanding of their local markets and better working
relationships with local infrastructure providers and others. We cannot assure
you that we can obtain similar levels of local knowledge. Failure to obtain that
knowledge and those relationships could place us at a significant competitive
disadvantage.
WE DEPEND UPON OUR NETWORK INFRASTRUCTURE.
Our success depends upon our ability to implement and expand our national
network infrastructure and support services at an acceptable cost. This may
require us to enter into additional agreements with providers of infrastructure
capacity and equipment and support services. We cannot assure you that any of
these agreements can be obtained on satisfactory terms and conditions. We also
anticipate that future expansions and adaptations of our network infrastructure
may be necessary in order to respond to growth in the number of customers
served, increased demands to transmit larger amounts of data and changes to our
customers' product and service requirements. This will require substantial
financial, operational and managerial resources. We cannot assure you that we
will be able to expand or adapt our network infrastructure to meet the
industry's evolving standards or our customers' growing demands and changing
requirements on a timely or
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cost-effective basis, or at all. Also, we may not be able to deploy successfully
any expanded and adapted network infrastructure.
OUR NETWORK SYSTEM COULD FAIL, WHICH COULD NEGATIVELY IMPACT OUR REVENUES.
Our success depends upon our ability to deliver reliable, high-speed access
to the Internet and upon the ability and willingness of our telecommunications
providers to deliver reliable, high-speed telecommunications service through
their networks. Our network, and other networks providing services to us, are
vulnerable to damage or cessation of operations from fires, earthquakes, severe
storms, power losses, telecommunications failures and similar events,
particularly if the events occur within a high-traffic location of the network.
We have designed our network to minimize the risk of such system failure, for
instance, with redundant circuits among point of presence facilities to allow
traffic rerouting. In addition, we perform lab and field testing before
integrating new and emerging technology into the network, and we engage in
capacity planning. Nonetheless, we cannot assure you that we will not experience
failures or shutdowns relating to individual point of presence facilities or
even catastrophic failure of the entire network.
While historically we have not, as a general matter, offered our customers
a service-level warranty, our customers are increasingly requiring that we
provide a standard service-level warranty for our services. Many of our
competitors have begun to do so. As a result, in order to remain competitive, we
now expect to implement a standard policy under which we offer such a warranty
to our customers. To the extent that we provide such a service-level warranty in
the future, we could experience a material decline in our revenues in connection
with any significant system downtime experienced by our customers or other
material changes associated with such warranty coverage. In addition, certain of
the companies we acquired did offer various warranties under their customer
contracts. For example, Hiway historically has offered its customers a
service-level warranty, under which Hiway commits that a customer's Web site
will be available at least 99.9% of the time in each calendar month for as long
as the customer is using the services. If uptime falls below this level in any
month, the customer is entitled to certain service credits for that month. By
acquiring Hiway, we inherited these warranty obligations.
We carry business personal property insurance at both scheduled locations
and unscheduled locations, with a blanket property limit of $10.0 million per
location, and business interruption insurance with a blanket limit of $2.0
million per location. This insurance may not be adequate or available to
compensate us. In addition, we generally attempt to limit our liability to
customers by contractually disclaiming liability or limiting liability to a
usage credit based upon the amount of time that the system was down. We cannot
assure you, however, that such limitations of liability will be enforceable. In
any event, significant or prolonged system failures or shutdowns could damage
our reputation and cause us to lose our customers.
ALTHOUGH WE HAVE IMPLEMENTED NETWORK SECURITY MEASURES, OUR NETWORK MAY
EXPERIENCE SECURITY BREACHES.
We have implemented certain network security measures, such as limiting
physical and network access to our routers. Nonetheless, we cannot assure you
that our network infrastructure will not be vulnerable to computer viruses,
break-ins and similar disruptive problems caused by our customers or other
Internet users. Computer viruses, break-ins or other problems caused by third
parties could lead to interruptions, delays or cessation in service to our
customers. Furthermore, such incidents could deter potential customers and
adversely affect existing customer relationships.
Security problems represent an ongoing threat to public and private data
networks. Attacks upon the security of Internet sites and infrastructure
continue to be reported to organizations such as the CERT Coordination Center at
Carnegie Mellon University, which facilitates responses of the Internet
community to computer security events. Addressing problems caused by computer
viruses or break-ins or other problems caused by third parties could have a
material adverse effect on us, and the cost of eliminating these security
breaches could be prohibitively expensive.
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WE MAY BE LIABLE TO CUSTOMERS FOR SECURITY BREACHES.
The security services that we offer in connection with our customers'
networks cannot ensure complete protection from computer viruses, break-ins and
other disruptive problems. Inappropriate use of the Internet by third parties
could also potentially jeopardize the security of confidential information
stored in the computer systems of our customers. Although we attempt to limit
contractually our liability in such instances, the occurrence of these problems
may result in claims against us or liability on our part. Such claims,
regardless of their ultimate outcome, could result in costly litigation and
adversely affect our business or reputation or our ability to attract and retain
customers. Moreover, the security and privacy concerns of existing and potential
customers may inhibit the growth of the Internet service industry and our
customer base and revenues.
OUR COSTS WILL INCREASE IF WE FAIL TO MAINTAIN OUR PEERING RELATIONSHIPS.
The establishment and maintenance of peering relationships with other
Internet service providers are necessary in order to exchange traffic with other
Internet service providers without paying transit costs. The basis on which the
large national Internet service providers make peering available or impose
settlement charges is evolving. Recently, companies that previously offered
peering have cut back or eliminated peering relationships and are establishing
new, more restrictive criteria for peering, requiring substantial data
transmission volume and broad national scale. Global network capabilities also
may become a requirement. We may have to comply with increasing peering
requirements in order to maintain our peering relationships. Failure to maintain
peering relationships or establish new ones, if necessary, will increase our
operating expenses.
WE DEPEND ON THE INTERNET AND INTERNET INFRASTRUCTURE DEVELOPMENT.
Our products and services are targeted toward users of the Internet, which
has experienced rapid growth. Critical issues concerning the commercial use of
the Internet remain unresolved and may impact the growth of Internet use,
especially in our target business market. Despite growing interest in the many
commercial uses of the Internet, many businesses have been deterred from
purchasing Internet access services for a number of reasons, including:
- inconsistent quality of service;
- lack of availability of cost-effective, high-speed options;
- a limited number of local access points for corporate users;
- inability to integrate business applications on the Internet;
- the need to deal with multiple and frequently incompatible vendors;
- inadequate protection of the confidentiality of stored data and
information moving across the Internet; and
- a lack of tools to simplify Internet access and use.
In particular, numerous published reports have indicated that a perceived
lack of security of commercial data, such as credit card numbers, has
significantly impeded commercial use of the Internet to date. There can be no
assurance that encryption or other technologies will satisfactorily address
these security concerns. Published reports have also indicated that capacity
constraints caused by growth in the use of the Internet may, unless resolved,
impede further development of the Internet to the extent that users experience
delays, transmission errors and other difficulties. The adoption of the Internet
for commerce and communication, particularly by those individuals and
enterprises which have historically relied upon alternative means of commerce
and communication, generally requires the understanding and acceptance of a new
way of conducting business and exchanging information. In particular,
enterprises that have already invested substantial resources in other means of
conducting commerce and exchanging information may be particularly reluctant or
slow to adopt a new strategy that may make their existing personnel and
infrastructure obsolete.
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If the market for Internet access services fails to develop, develops more
slowly than expected, or becomes saturated with competitors, or if Internet
access and services are not broadly accepted, our business, financial condition
and results of operations will be materially adversely affected. In addition,
the rate of development and adoption of the Internet has been slower outside the
United States, and the cost of transmitting data over the Internet has been
higher. The recent growth in the use of the Internet has caused frequent periods
of performance degradation, requiring the upgrade of routers and switches,
telecommunications links and other components forming the infrastructure of the
Internet by providers and other organizations with links to the Internet. Any
perceived degradation in the performance of the Internet as a whole could
undermine the benefits of our services. Consequently, the emergence and growth
of the market for our services is dependent on improvements being made to the
entire Internet infrastructure to alleviate overloading and congestion.
WE MUST KEEP UP WITH TECHNOLOGY TRENDS AND EVOLVING INDUSTRY STANDARDS.
The market for Internet access and related services is characterized by
rapidly changing technology, evolving industry standards, changes in customer
needs and frequent new product and service introductions. Our future success
will depend, in part, on our ability to effectively use leading technologies, to
continue to develop our technical expertise, to enhance our current services, to
develop new products and services that meet changing customer needs, and to
influence and respond to emerging industry standards and other technological
changes on a timely and cost-effective basis. We cannot assure you that we will
be successful in accomplishing these tasks or that such new technologies or
enhancements will achieve market acceptance. We believe that our ability to
compete successfully is also dependent upon the continued compatibility and
interoperability of our services with products and architectures offered by
various vendors. We cannot assure you that we will be able to effectively
address the compatibility and interoperability issues raised by technological
changes or new industry standards. In addition, we cannot assure you that
services or technologies developed by others will not render our services or
technology uncompetitive or obsolete. For example, our services rely on the
continued widespread commercial use of transmission control protocol/ Internet
protocol. Alternative open and proprietary protocol standards that compete with
transmission control protocol/Internet protocol, including proprietary protocols
developed by IBM and Novell, Inc., have been or are being developed. The failure
of the market for business-related Internet solutions to continue to develop
would adversely impact our business, financial condition and results of
operations.
WE FACE POTENTIAL LIABILITY FOR INFORMATION DISSEMINATED THROUGH OUR NETWORK.
The law relating to liability of Internet service providers for information
carried on or disseminated through their networks is not completely settled. A
number of lawsuits have sought to impose such liability for defamatory speech
and infringement of copyrighted materials. The U.S. Supreme Court has let stand
a lower court ruling which held that an Internet service provider was protected
from liability for material posted on its system by a provision of the
Communications Decency Act. However, the findings in that case may not be
applicable in other circumstances. Other courts have held that on-line service
providers and Internet service providers may, under certain circumstances, be
subject to damages for copying or distributing copyrighted materials. Certain
provisions of the Communications Decency Act, which imposed criminal penalties
for using an interactive computer service for transmitting obscene or indecent
communications, have been found unconstitutional by the U.S. Supreme Court.
However, on October 21, 1998, federal legislation was enacted that requires
limitations on access to pornography and other material deemed "harmful to
minors" within the meaning contained in the legislation. This legislation has
been successfully attacked in the U.S. district court as a violation of the
First Amendment. This decision is on appeal and was recently argued before the
U.S. Court of Appeals for the Third Circuit. We are unable to predict the
outcome of this appeal. In addition, the Federal Trade Commission has adopted
final rules that are to become effective April 21, 2000, regarding the
Children's Online Privacy Protection Act's prohibition of unfair and deceptive
acts and practices in connection with the collection and use of personal
information from and about children on the Internet. The rules provide that Web
sites directed at children under 13 years of age must obtain verifiable parental
consent before collecting personal information from children and must take other
measures intended to safeguard children's privacy. Additional requirements may
be imposed on Web site operations relating to the use, dissemination and
collection of personal information, and proposals to enact federal and state
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legislation addressing issues relating to Internet content and liability are
submitted regularly. The imposition upon Internet service providers or Web
server hosts of potential liability for materials carried on or disseminated
through their systems could require us to implement measures to reduce our
exposure to such liability. These measures may require that we spend substantial
resources or discontinue certain product or service offerings. Any of these
actions could have a material adverse effect on our business, financial
condition and results of operations.
The law relating to the regulation and liability of Internet access
providers in relation to information carried or disseminated also is developing
in other countries. For example, the European Union has enacted its own data
privacy regulations, and Australia has imposed new obligations on Internet
service providers to block access to certain types of content. Decisions, laws,
regulations and other activities regarding regulation and content liability may
significantly affect the development and profitability of companies offering
on-line and Internet access services.
We carry an errors and omissions insurance policy. This insurance may not
be adequate or available to compensate us for all liability that may be imposed.
WE MAY BECOME SUBJECT TO GOVERNMENT REGULATION.
Although we are not currently subject to direct government regulation other
than regulations applicable to businesses generally, changes in the regulatory
environment relating to the Internet connectivity market could affect our
pricing. For example, regulations at the Federal Communications Commission
require discounted Internet connectivity rates for schools and libraries. Due to
the increasingly widespread use of the Internet, it is possible that additional
laws and regulations may be adopted. Additional laws and regulations could cover
issues such as content, user pricing, privacy, libel, intellectual property
protection and infringement, and technology export and other controls. We may be
subject to similar or other laws and regulations in non-U.S. jurisdictions.
Moreover, the Federal Communications Commission continues to review its
regulatory position on the usage of the basic network and communications
facilities by Internet service providers. Although in an April 1998 report the
Federal Communications Commission determined that Internet service providers
should not be treated as telecommunications carriers and therefore not
regulated, it is expected that future Internet service provider regulatory
status will continue to be uncertain. Indeed, in that report, the Federal
Communications Commission concluded that certain services offered over the
Internet, such as phone-to-phone Internet protocol telephony, may be
functionally indistinguishable from traditional telecommunications service
offerings and their non-regulated status may have to be re-examined.
Changes in the regulatory structure and environment affecting the Internet
access market, including regulatory changes that directly or indirectly affect
telecommunications costs or increase the likelihood of competition from regional
bell operating companies or other telecommunications companies, could adversely
affect us. Although the Federal Communications Commission has decided not to
allow local telephone companies to impose per-minute access charges on Internet
service providers, and that decision has been upheld by the reviewing court,
further regulatory and legislative consideration of this issue is likely. In
addition, some telephone companies are seeking relief through the Federal
Communications Commission and state regulatory agencies. Such rules, if adopted,
are likely to have a greater impact on consumer-oriented Internet access
providers than on business-oriented Internet service providers such as Verio.
Nonetheless, the imposition of access charges would affect our costs of serving
dialup customers and could have a material adverse effect on our business,
financial condition and results of operations.
WE DEPEND UPON SUPPLIERS, WHO ARE OFTEN OUR COMPETITORS, AND HAVE LIMITED
SOURCES OF SUPPLY FOR CERTAIN PRODUCTS AND SERVICES.
We rely on other companies to supply certain key products and services that
we resell and certain components of our network infrastructure. The products and
services that we resell, and certain components that we require for our network,
are available only from limited sources. For example, we currently rely
primarily on Cisco Systems to supply routers critical to our network. We could
be adversely affected if
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routers from Cisco were to become unavailable on commercially reasonable terms.
Qwest, Sprint, MCI WorldCom and MFS, who sell products and services that compete
with ours, also are our primary providers of data communications facilities and
network capacity. Northpoint Communications and Covad Communications provide us
with digital subscriber line services for resale to our customers. We also are
dependent upon local exchange carriers, which often are our competitors, to
provide telecommunications services and lease physical space to us for routers,
modems and other equipment. From time to time we experience delays in the
delivery and installation of telecommunications services, which can lead to the
loss of existing or potential customers or delays in generating revenues from
sales to customers. We cannot assure you that, on an ongoing basis, we will be
able to obtain third-party products and services cost-effectively and on the
scale and within the time frames we require, or at all. Failure to obtain or to
continue to make use of such third-party products and services would have a
material adverse effect on our business, financial condition and results of
operations.
WE DEPEND ON KEY PERSONNEL AND COULD BE AFFECTED BY THE LOSS OF THEIR SERVICES
BECAUSE OF THE LIMITED NUMBER OF QUALIFIED PEOPLE IN OUR INDUSTRY.
Competition for qualified employees and personnel in the Internet services
industry is intense and there are a limited number of people with knowledge of
and experience in the Internet service industry. The process of locating
personnel with the combination of skills and attributes required to carry out
our strategies is often lengthy. Our success depends to a significant degree
upon our ability to attract and retain qualified management, technical,
marketing and sales personnel and upon the continued contributions of such
people. We cannot assure you that we will be successful in attracting and
retaining qualified executives and personnel. In addition, our employees may
voluntarily terminate their employment with us at any time. The loss of the
services of key personnel or our failure to attract additional qualified
personnel could have a material adverse effect on our business, financial
condition and results of operations.
OUR BUSINESS MAY BE ADVERSELY IMPACTED BY YEAR 2000 ISSUES.
The commonly referred to Year 2000 or Y2K issue results from the fact that
many computer programs and systems were developed without considering the
possible impact of a change in the century designation that occurred on January
1, 2000. As a result, these programs and systems use only two digits instead of
four to identify the year in the date field. Systems that do not properly
recognize this date could generate wrong data, calculate erroneous results, or
fail if the issue was or remains uncorrected. The Year 2000 problem is pervasive
and complex, as virtually every company's computer operations potentially could
be affected in some way.
We have identified two main areas of potential Y2K risk in our business:
- our internal systems or embedded chips could be disrupted or fail, which
could negatively impact our services and productivity; and
- computer systems or embedded technology of third parties, such as our
suppliers, vendors, customers, landlords, telecommunication service
providers, outsource providers, and others could be disrupted or fail,
and thereby adversely affect our operations.
In order to evaluate the potential impact of the Y2K problem on our
business, and to help ensure that our network operations and services to our
customers were not and are not interrupted due to the Y2K problem, we undertook
an extensive inventory, assessment and remediation program to evaluate and
remediate the Y2K compliance status of our equipment, network and systems. We
established a Y2K assessment team that was responsible for overseeing this
effort.
Verio assessed the compliance status of all potentially affected systems
and equipment identified from the inventory phase of our Y2K compliance effort,
throughout our operations. Compliance status was checked against third party
information sources including public statements made by hardware and software
vendors, correspondence directly with such vendors, and compilations of
compliance information published by other
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parties. Verio did not independently verify compliance of such hardware and
software components utilized within our service, or independently verify the
contents of the republications.
We believe that, as a result of our detailed assessment and remediation
efforts, the Y2K issue has not posed significant operational problems for us.
However, if Y2K compliance problems have not been discovered, or if requisite
modifications or remedies have not been undertaken or made, it is possible that
the Y2K problem still could have a material impact on our operations. We cannot
currently estimate the magnitude of such a possible impact.
Through the end of 1999, we surveyed, among others, critical vendors,
suppliers, customers and financial institutions for Year 2000 compliance. We
evaluated the Year 2000 preparedness of our telecommunications providers, on
which we rely for the network services crucial to our business. In order to
reduce potential adverse impacts, we have maintained diverse providers for such
network services. However, failure of any one provider could still have a
material impact on Verio's operations. Our survey of our third party suppliers
indicates that many of them were still working on their own Year 2000 compliance
issues through the end of 1999. We are heavily dependent upon the veracity of
their testing and statements of compliance as we cannot replicate and
independently test the services supplied to us. Though most of these suppliers
indicate that their critical systems and technology were Year 2000 ready, at
this time we cannot estimate the effect, if any, that non-compliant systems
supplied by these entities could have on us. It is possible that the impact on
us could be material if one or more of these systems were not Y2K compliant by
the end of the year. We continue to work with each of these suppliers to obtain
the latest information on their compliance status to assist us in evaluating and
developing contingency plans. If any of our material third party suppliers or
vendors are not Y2K ready and their non-compliance causes a material disruption
to any of their respective businesses or services, our business, operations
and/or services could be materially and adversely affected.
The most significant risks that the Y2K issues continue to present to us
include, without limitation, disruption, delay or cessation of operations. Other
potential adverse Y2K scenarios include the failure or impairment of software
that is provided by a third party and incorporated in one of our service
platforms as a result of a Y2K problem. In that case, the particular service
that the software supports could likewise become inoperable or perform
incorrectly. Further, in the event that third-party-supplied equipment
(including customer premise equipment) contains non-Y2K-compliant technology,
the systems, operations or services supported by that equipment also could fail
or be interrupted. Other potential disruptions could include the interruption in
delivery of key supplies from vendors and other interruptions in the normal
course of our operations. Even though the date is now past January 1, 2000, we
have not experienced any immediate adverse impact from the transition to the
Year 2000, we cannot provide assurance that, in the event that a failure does
occur, our services would not suffer degradation or complete failure without
warning or remedy, resulting in substantial potential expense.
While our expenditures to date in our Year 2000 program efforts have not
been material, it is possible that the costs associated with our Y2K efforts
could increase if it is determined that additional resources are required or if
important operational or systems equipment must yet be remediated or replaced.
The total cost of our Y2K compliance program is funded through cash on hand and
we are expensing these costs, as appropriate. While the financial impact of
making all required systems changes or other remediation efforts cannot be known
precisely, it is not expected to be material to our financial position, results
of operations, or cash flows. We have not cancelled any principal information
technology projects as a result of our Y2K efforts, although we have rescheduled
and reprioritized some internal tasks in order to accommodate these efforts.
While we believe that we have adequately addressed the Y2K issue, we cannot
assure you that our Y2K compliance effort has prevented every potential
interruption or failure, or that the cost and liabilities associated with the
Y2K issue will not materially adversely impact our business, prospects,
revenues, or financial position.
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THE EXCHANGE OFFER
The following discussion summarizes the provisions of a registration rights
agreement that we entered into with the initial purchasers of the old notes. It
does not purport to be complete and reference is made to the provisions of the
registration rights agreement, which has been filed as an exhibit to the
registration statement of which this prospectus constitutes a part, and copies
of which are available upon request to Verio.
PURPOSE AND EFFECT
The old notes were sold by us to Salomon Smith Barney Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Morgan Stanley Dean Witter, as
initial purchasers, on November 16, 1999. The initial purchasers subsequently
resold the old notes in reliance on Rule 144A under the Securities Act. We
entered into a registration rights agreement with the initial purchasers that
requires, among other things, that we:
- file, on or prior to February 17, 2000, a registration statement with the
Securities and Exchange Commission under the Securities Act concerning
the exchange offer with respect to the notes;
- use our best efforts (a) to cause the registration statement to be
declared effective by the Securities and Exchange Commission on or before
May 18, 2000, and (b) to complete the exchange offer on or before June
19, 2000; and
- keep the exchange offer open for a period of not less than 30 days (or
longer if required by applicable law) after the date the notice of the
exchange offer is mailed to the holders of the old notes.
The exchange offer is intended to satisfy our obligations under the
registration rights agreement.
By tendering, each registered holder will represent to us that, among other
things:
(1) any new notes received will be acquired by the holder and the
beneficial owner of the old notes in the ordinary course of business of the
holder and each beneficial owner;
(2) the holder and the beneficial owner are not participating, do not
intend to participate, and have no arrangement or understanding with any
person to participate, in the distribution of the new notes;
(3) the holder and the beneficial owner acknowledge and agree that any
person participating in the exchange offer for the purpose of distributing
the new notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction of the new notes acquired by such person and cannot rely on the
position of the staff of the Securities and Exchange Commission in its
no-action letters that are discussed below under "-- Resales of New Notes;"
(4) that if the holder is a broker-dealer that acquired old notes as a
result of market making or other trading activities, it will deliver a
prospectus in connection with any resale of new notes acquired in such
exchange offer;
(5) the holder and the beneficial owner understand that a secondary
resale transaction described in clause (3) above should be covered by an
effective registration statement containing the selling security holder
information required by item 507 of Regulation S-K of the Securities and
Exchange Commission; and
(6) neither the holder nor the beneficial owner is an "affiliate," as
defined under Rule 405 of the Securities Act, of Verio except as otherwise
disclosed to Verio in writing.
In connection with a book-entry transfer, each participant will confirm
that it makes the representations and warranties contained in the letter of
transmittal.
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CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
After the exchange offer expires, holders of old notes not tendered, or not
properly tendered, will not have any further registration rights. These old
notes will continue to be subject to the existing transfer restrictions.
Accordingly, the liquidity of the market for a holder's old notes could be
adversely affected after the exchange offer expires if such holder elects not to
participate in the exchange offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions described below, the
registration rights agreement and the accompanying letter of transmittal, we
will accept for exchange any and all old notes that are validly tendered on or
prior to 5:00 p.m., New York City time, on the expiration date upon satisfaction
or waiver of all the conditions to the exchange offer. The new notes will be
delivered promptly after acceptance of the old notes.
We will issue $1,000 principal amount of new notes in exchange of each
$1,000 principal amount of outstanding old notes accepted in the exchange offer.
You may tender some or all of your old notes in the exchange offer. However, old
notes may be tendered only in integral multiples of $1,000. The new notes will
evidence the same debt as the old notes and will be entitled to the benefits of
the indenture. The form and terms of the new notes are substantially the same as
the form and terms of the old notes, except that:
- the new notes have been registered under the Securities Act and will not
bear legends restricting their transfer; and
- holders of the new notes generally will not be entitled to certain rights
under the registration rights agreement, which rights generally will
terminate upon completion of the exchange offer.
You may withdraw the tender of your old notes at any time prior to 5:00
p.m., New York City time, on the expiration date. The exchange offer is not
conditioned upon any minimum principal amount of old notes being tendered for
exchange. See "-- Conditions of the Exchange Offer."
As of the date of this prospectus, $400.0 million in aggregate principal
amount of the old notes is outstanding. As of January 31, 2000, there was one
registered holder of old notes with approximately 25 Depository Trust Company
participants. Only a holder of the old notes, or such holder's legal
representative or attorney-in-fact, may participate in the exchange offer. There
will be no fixed record date for determining holders of the old notes entitled
to participate in the exchange offer. We believe that, as of the date of this
prospectus, no holder of old notes is an "affiliate," as defined in Rule 405
under the Securities Act, of Verio.
We will be deemed to have accepted validly tendered notes when, as and if
we have given oral or written notice to the exchange agent. The exchange agent
will act as agent for the tendering holders of old notes and for the purposes of
receiving the new notes from us. Issuances of new notes for old notes that are
accepted in the exchange offer will be made only after timely receipt by the
exchange agent of such old notes, a properly completed and duly executed letter
of transmittal and all other required documents, or of confirmation of a
book-entry transfer of such old notes into the exchange agent's account at the
Depository Trust Company; provided, however, that we reserve the absolute right
to waive any defects or irregularities in the tender or conditions of the
exchange offer. If any tendered old notes are not accepted for exchange because
of an invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any unaccepted old notes will be returned, without
expense, to the tendering holder as promptly as practicable after the expiration
date.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date shall be , 2000 at 5:00 p.m., New York City
time, unless we decide in our sole discretion to extend the exchange offer, in
which case the expiration date shall be the latest date and time to which the
exchange offer is extended.
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In order to extend the exchange offer, we will notify the exchange agent of
any extension by oral or written notice and will make a public announcement,
each prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date.
We reserve the right, in our sole discretion, (1) to delay accepting any
old notes, (2) to extend the exchange offer, and (3) to amend the terms of the
exchange offer in any manner. Any such delay in acceptance, extension or
amendment will be followed as promptly as practicable by a public announcement.
If the exchange offer is amended in a manner determined by us to constitute a
material change, we will promptly disclose such amendments by means of a
prospectus supplement that will be distributed to the registered holders of the
old notes subject to the exchange offer. Modifications of the exchange offer,
including but not limited to extension of the period during which the exchange
offer is open, may require that at least five business days remain in the
exchange offer.
CONDITIONS OF THE EXCHANGE OFFER
The exchange offer is not conditioned upon any minimum principal amount of
the old notes being tendered for exchange. However, the exchange offer is
conditioned upon the declaration by the Securities and Exchange Commission of
the effectiveness of the registration statement of which this prospectus
constitutes a part.
ACCRUED INTEREST
The new notes will bear interest at a rate equal to 10 5/8% per annum from
and including their date of issuance. Holders whose old notes are accepted for
exchange will have the right to receive accrued interest from the last date on
which interest was paid on the old notes, or if no interest had been paid on
such old notes, from the date of their original issue, to, but not including,
the date of issuance of the new notes accepted for exchange. Interest accrued on
the old notes at the rate of 10 5/8% per annum, and will cease to accrue on the
day the issuance of the new notes. See "Description of the Notes -- Maturity,
Interest and Principal."
PROCEDURE FOR TENDERING OLD NOTES
The tender by a holder and the acceptance by Verio will constitute a
binding agreement between the tendering holder and Verio upon the terms and
subject to the conditions contained in this prospectus and in the accompanying
letter of transmittal.
Except as described below, a holder who wishes to tender old notes in the
exchange offer must transmit such old notes, together with a properly completed
and signed letter of transmittal, including all other documents required by such
letter of transmittal, to the exchange agent prior to 5:00 p.m., New York City
time, on the expiration date. The method of delivery of old notes, letters of
transmittal and all other required documents is at the election and risk of the
holder. If such delivery is by mail, it is recommended that registered mail,
properly insured, with return receipt requested, be used. Instead of delivery by
mail, it is recommended that the holder use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to ensure timely
delivery.
Any financial institution that is a participant in the Depository Trust
Company's book-entry transfer facility system may make book-entry delivery of
the old notes by causing the Depository Trust Company to transfer such old notes
into the exchange agent's account in accordance with the Depository Trust
Company's procedures for such transfer. In connection with a book-entry
transfer, a letter of transmittal need not be transmitted to the exchange agent,
provided that the book-entry transfer procedure is made in accordance with the
Depository Trust Company's Automated Tender Offer Program procedures for
transfer and such procedures are complied with prior to 5:00 p.m., New York City
time, on the expiration date.
The Depository Trust Company's Automated Tender Offer Program is the only
method of processing exchange offers through the Depository Trust Company. To
accept the exchange offer through the Automated Tender Offer Program,
participants in the Depository Trust Company must send electronic instructions
to the
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<PAGE> 32
Depository Trust Company through the Depository Trust Company's communication
system, prior to 5:00 p.m., New York City time, on the expiration date, in place
of sending a signed, hard copy letter of transmittal. The Depository Trust
Company is obligated to communicate those electronic instructions to the
exchange agent by an agent's message. The term "agent's message" means a message
transmitted by the Depository Trust Company received by the exchange agent and
forming part of the book-entry confirmation, which states:
- that the Depository Trust Company has received an express acknowledgment
from a participant in the Depository Trust Company's Automated Tender
Offer Program that is tendering old notes which are the subject of such
book entry confirmation; and
- that such participant has received and agrees to be bound by the terms of
the letter of transmittal, or, in the case of an agent's message relating
to guaranteed delivery, that such participant has received, and agrees to
be bound by the applicable notice of guaranteed delivery, and that the
agreement may be enforced against such participant.
To tender old notes through the Automated Tender Offer Program, the electronic
instructions sent to the Depository Trust Company and transmitted by the
Depository Trust Company to the exchange agent must contain the participant's
acknowledgement of its receipt of and agreement to be bound by the letter of
transmittal for such old notes.
Each signature on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the old notes surrendered for exchange
are tendered (1) by a registered holder of the old notes who has not completed
either the box entitled "Special Exchange Instructions" or the box entitled
"Special Delivery Instructions" in the letter of transmittal, or (2) for the
account of an eligible institution, which means a firm which is a member of a
registered national securities exchange or the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the U.S. or otherwise is an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act.
In the event that a signature on a letter of transmittal or a notice of
withdrawal, as the case may be, is required to be guaranteed, such guarantee
must be by an eligible institution. If the letter of transmittal is signed by a
person other than the registered holder of the old notes, the old notes
surrendered for exchange must be endorsed or accompanied by a properly completed
bond power, in form satisfactory to us in our sole discretion, signed by the
registered holder, as such registered holder's name appears on such old notes,
with the signature guaranteed by an eligible institution.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of old notes tendered for exchange will be
determined by us in our sole discretion, which determination will be final and
binding. We reserve the absolute right to reject any and all old notes not
properly tendered and to reject any old notes acceptance of which might, in our
judgment or the judgment of our counsel, be unlawful. We also reserve the
absolute right to waive any defects or irregularities or conditions of the
exchange offer as to particular old notes either before or after the expiration
date, including the right to waive the ineligibility of any holder who seeks to
tender old notes in the exchange offer. The interpretation of the terms and
conditions of the exchange offer, including the letter of transmittal and the
instructions thereto, by us will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of old notes
for exchange must be cured within such period of time as we shall determine.
Although we will use reasonable efforts to notify holders of defects or
irregularities with respect to tenders of old notes, none of Verio, the exchange
agent or any other person shall incur any liability for failure to give such
notification. Tenders of the old notes will not be deemed to have been made
until such irregularities have been cured or waived.
If any letter of transmittal, endorsement, bond power, power of attorney or
any other document required by the letter of transmittal is signed by a trustee,
executor, corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and, unless waived by us,
proper evidence satisfactory to us, in our sole discretion, of such person's
authority to so act must be submitted.
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<PAGE> 33
If you are a beneficial owner of old notes and the old notes are registered
in the name of a broker, dealer, commercial bank, trust company or other
nominee, and you wish to tender old notes in the exchange offer, you should
contact such registered holder promptly and instruct such registered holder to
tender on your behalf. If you are a beneficial owner and you wish to tender
directly, you must, prior to completing and executing the letter of transmittal
and tendering old notes, make appropriate arrangements to register ownership of
the old notes in your name. Beneficial owners should be aware that the transfer
of registered ownership may take considerable time.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their old notes and (1) whose old notes are not
immediately available, (2) who cannot deliver their old notes or any other
documents required by the letter of transmittal to the exchange agent prior to
the expiration date, or (3) who cannot complete the procedure for book-entry
transfer on a timely basis, may effect a tender if:
(a) the tender is made by or through an eligible institution and a
notice of guaranteed delivery is signed by such holder;
(b) on or prior to the expiration date, the exchange agent receives
from the holder and the eligible institution a properly completed and duly
executed notice of guaranteed delivery, by facsimile transmission, mail or
hand delivery, containing the name and address of the holder, the
certificate number or numbers of the tendered old notes, and the principal
amount of tendered old notes, stating that the tender is being made thereby
and guaranteeing that, within five New York Stock Exchange trading days
after the date of delivery of the notice of guaranteed delivery, the
tendered old notes, a duly executed letter of transmittal and any other
required documents will be deposited by the eligible institution with the
exchange agent; and
(c) such properly completed and executed documents required by the
letter of transmittal and the tendered old notes in proper form for
transfer, or confirmation of a book-entry transfer of such old notes into
the exchange agent's account at the Depository Trust Company, is received
by the exchange agent within five New York Stock Exchange trading days
after the expiration date.
Any holder who wishes to tender old notes pursuant to the guaranteed
delivery procedures described above must ensure that the exchange agent receives
the notice of guaranteed delivery and letter of transmittal relating to such old
notes prior to 5:00 p.m., New York City time, on the expiration date. The
Depository Trust Company participants may also submit the notice of guaranteed
delivery through the Automated Tender Offer Program.
WITHDRAWAL RIGHTS
Tenders of the old notes may be withdrawn, at any time prior to 5:00 p.m.,
New York City time, on the expiration date. To withdraw a tender of old notes in
the exchange offer, a written notice must be received by the exchange agent, at
its address set forth on the back cover page of this prospectus, or holders must
comply with the appropriate procedures of the Depository Trust Company's
Automated Tender Offer Program. Any such notice of withdrawal must:
- specify the name of the person having deposited the old notes to be
withdrawn;
- identify the old notes to be withdrawn, including the certificate number
or numbers and principal amount of such old notes, as applicable;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such old notes were tendered,
including any required signature guarantees, or be accompanied by a bond
power in the name of the person withdrawing the tender, in a form
satisfactory to us in our sole discretion, duly executed by the
registered holder, with the signature thereon guaranteed by an eligible
institution together with the other documents required upon transfer by
the indenture; and
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<PAGE> 34
- specify the name in which such old notes are to be re-registered, if
different from the person depositing the old notes to be withdrawn.
Any questions as to the validity, form and eligibility, including time of
receipt, of such notices will be determined by us, in our sole discretion. The
withdrawn old notes will be deemed not to have been validly tendered for
exchange for purposes of the exchange offer. Any old notes which have been
tendered for exchange but which are withdrawn will be returned to the holder
without cost to such holder as soon as practicable after withdrawal. Properly
withdrawn old notes may be retendered by following one of the procedures
described under " -- Procedure for Tendering Old Notes" at any time on or prior
to the expiration date.
THE EXCHANGE AGENT; ASSISTANCE
U.S. Bank Trust National Association is the exchange agent for the exchange
offer. Questions and requests for assistance and requests for additional copies
of this prospectus, the letter of transmittal and other related documents should
be addressed to the exchange agent as follows:
By Hand, or Overnight Courier:
U.S. BANK TRUST NATIONAL ASSOCIATION
180 East Fifth Street
St. Paul, MN 55101
Attn: Specialized Finance Department
Facsimile Transmissions (Eligible Institutions Only):
(651) 244-1537
To confirm by telephone or for information call:
(651) 244-5011
By Mail:
U.S. BANK TRUST NATIONAL ASSOCIATION
180 East Fifth Street
St. Paul, MN 55101
Attn: Specialized Finance Department
FEES AND EXPENSES
All expenses incurred in completing the exchange offer and complying with
the registration rights agreement, will be borne by Verio, including, without
limitation:
- all applicable Securities and Exchange Commission, stock exchange or
National Association of Securities Dealers, Inc. registration and filing
fees;
- all fees and expenses incurred in connection with compliance with state
securities or blue sky laws, including reasonable fees and disbursements
of one counsel for holders that are initial purchasers in connection with
blue sky qualifications of any of the new notes, and compliance with the
rules of the National Association of Securities Dealers, Inc.;
- all applicable expenses we incur in preparing or assisting in preparing,
word processing, printing and distributing any registration statement,
any prospectus and any amendments or supplements thereto, and in
preparing or assisting in preparing any other documents relating to the
performance of and compliance with the registration rights agreement;
- all rating agency fees, if any; and
- the fees and disbursements of counsel.
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<PAGE> 35
We estimate that the amount of these fees and expenses will be
approximately $450,000.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers others soliciting
acceptance of the exchange offer. We, however, will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith.
We will pay all transfer taxes, if any, applicable to the exchange of old
notes pursuant to the exchange offer. If, however, a transfer tax is imposed for
any reason other than the exchange of old notes pursuant to the exchange offer,
then the amount of any such transfer taxes, whether imposed on the registered
holder or any other persons, will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption is not submitted
with the letter of transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
ACCOUNTING TREATMENT
The new notes will be recorded at the same carrying value as the old notes,
as reflected in Verio's accounting records on the date of the exchange.
Accordingly, no gain or loss will be recognized by Verio for accounting
purposes. The expenses of the exchange offer will be amortized over the term of
the new notes.
RESALES OF THE NEW NOTES
Based on the position of the staff of the Securities and Exchange
Commission contained in no-action letters issued to third parties, we believe
that the new notes issued pursuant to the exchange offer to any holder of old
notes in exchange for old notes may be offered for resale, resold and otherwise
transferred by such holder without further compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such holder
is acquiring the new notes in the ordinary course of business and is not
participating, and has no arrangement or understanding with any person to
participate, in the distribution of the new notes. This does not apply to a
broker-dealer who purchased old notes directly from Verio for resale pursuant to
Rule 144A under the Securities Act or any other available exemption under the
Securities Act, or a person that is an "affiliate" of Verio within the meaning
of Rule 405 under the Securities Act.
We have not sought our own interpretive letter and there can be no
assurance that the Securities and Exchange Commission would make a similar
determination with respect to the exchange offer. Verio and holders of old notes
are not entitled to rely on interpretive advice provided by the staff or other
persons, which advice was based on the facts and conditions represented in such
letters. However, the exchange offer is being conducted in a manner intended to
be consistent with the facts and conditions represented in such letters. If any
holder acquires new notes in the exchange offer for the purpose of distributing
or participating in a distribution of the new notes, such holder cannot rely on
the position of the staff of the Securities and Exchange Commission enunciated
in Morgan Stanley & Co. Incorporated, available June 5, 1991, and Exxon Capital
Holdings Corporation, available May 13, 1989, or interpreted in the Securities
and Exchange Commission's letter to Shearman and Sterling, available July 2,
1993, or similar no-action or interpretive letters. The holder must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction, unless an exemption from
registration is otherwise available. Each broker-dealer that receives new notes
for its own account in exchange for old notes, where such old notes were
acquired by such broker-dealer as a result of market making or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such new notes. See "Plan of Distribution."
It is expected that the new notes will be freely transferable by the
holders thereof, subject to the limitations described in the immediately
preceding paragraph. Sales of new notes acquired in the exchange offer by
holders who are "affiliates" of Verio within the meaning of the Securities Act
will be subject to certain limitations on resale under Rule 144 of the
Securities Act, if applicable. Such persons will only be entitled to sell new
notes in compliance with the volume limitations set forth in Rule 144, and sales
of new notes by affiliates will be subject to certain Rule 144 requirements as
to the manner of sale, notice and the availability of current public information
regarding Verio. The foregoing is a summary only of Rule 144 as it
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<PAGE> 36
may apply to affiliates of Verio. Any such persons must consult their own legal
counsel for advice as to any restrictions that might apply to the resale of
their new notes.
USE OF PROCEEDS
We will receive no cash proceeds from the issuance of the new notes
pursuant to the exchange offer.
The exchange offer is intended to satisfy our obligations under the
registration rights agreement. In consideration for issuing the new notes as
contemplated in this prospectus, we will receive in exchange old notes in like
principal amount, the form and terms of which are the same in all material
respects as the form and terms of the new notes except that the new notes will
be registered under the Securities Act and hence do not include registration
rights. The old notes surrendered in exchange for new notes will be retired and
canceled and cannot be reissued. Accordingly, issuance of the new notes will not
increase our total debt.
The net proceeds from the offering of the old notes, after deducting the
initial purchasers' discounts and expenses, were approximately $388.0 million.
As of November 30, 1999, we had not used any of the net proceeds from the sale
of the old notes. The net proceeds from the sale of the old notes are expected
to be used to further our acquisition and investment strategy, to continue the
development and implementation of the national backbone, customer care center,
network operations center and billing and accounting services, and to support
our general working capital purposes. Pending application of the proceeds as
described above, we have invested the net proceeds of the issuance of the old
notes in short-term, interest-bearing, investment-grade securities.
DIVIDEND POLICY
Verio has never declared or paid any dividends on its common stock and does
not expect to pay dividends in the foreseeable future. Our current policy is to
retain all of our earnings to finance future growth and acquisitions.
Furthermore, the terms of the indentures relating to the notes, the 1997 Notes,
the March 1998 Notes and the November 1998 Notes, as well as the $100.0 million
revolving credit facility, place limitations on our ability to pay dividends.
Future dividends, if any, will be at the discretion of our board of directors
and will depend upon, among other things, our operations, capital requirements
and surplus, general financial condition, contractual restrictions and such
other factors as our board may deem relevant.
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<PAGE> 37
CAPITALIZATION
The following table sets forth the cash and cash equivalents, restricted
cash and securities, long-term debt and capital lease obligations, and the
capitalization of Verio at September 30, 1999, and as adjusted to reflect the
sale of the notes.
Long-term liabilities does not include any amounts related to our $100.0
million revolving credit facility, which matures in September 2002 and which has
never been drawn. Stockholders' equity does not include approximately 16.0
million shares of our common stock reserved for issuance pursuant to outstanding
stock options or approximately 3.3 million shares issuable upon exercise of
outstanding warrants, each as of September 30, 1999.
This table should be read in conjunction with the "Selected Consolidated
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our Consolidated Financial Statements and related
notes incorporated in this prospectus by reference.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents and securities available for
sale...................................................... $ 492,964 $ 880,964
Restricted cash and securities.............................. 33,142 33,142
========== ==========
Long-term debt and capital lease obligations, net of current
portions, and other long-term liabilities................. 694,201 1,094,201
---------- ----------
Stockholders equity:
Convertible preferred stock; 12,500,000 shares authorized;
7,200,000 shares of 6.75% Series A issued and
outstanding -- liquidation preference of
$360,000,000........................................... 347,601 347,601
Common stock, par value $0.001 per share; 250,000,000
shares authorized; 76,894,006 shares outstanding
historical; pro forma as adjusted; and additional paid
in capital............................................. 455,715 455,715
Accumulated deficit....................................... (311,053) (311,053)
---------- ----------
Total stockholders' equity........................ 492,263 492,263
---------- ----------
Total capitalization.............................. $1,186,464 $1,586,464
========== ==========
</TABLE>
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<PAGE> 38
DESCRIPTION OF THE NOTES
The old notes were issued and the new notes will be issued under the
indenture between Verio and U.S. Bank Trust National Association, as trustee.
The indenture is subject to and governed by the Trust Indenture Act of 1939, as
amended. Except as otherwise indicated, the following summary applies to both
the old notes and the new notes. In this summary, the word "Verio" refers to
Verio and not to any of its subsidiaries, and the term "notes" means the old
notes and the new notes. A copy of the indenture is available upon request to
Verio, 8005 South Chester Street, Suite 200, Englewood, Colorado 80112;
attention: General Counsel; telephone: (303) 645-1900.
The form and terms of the new notes will be identical in all material
respects to the form and terms of the old notes, except that the new notes will
be registered under the Securities Act. As a result, the new notes will not be
subject to some of the transfer restrictions and registration rights applicable
to the old notes. See "The Exchange Offer."
The following is a summary of material provisions of the new notes. It does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the Trust Indenture Act, and to all of the provisions of the
indenture, including the definitions of certain terms and those terms made a
part of the indenture by reference to the Trust Indenture Act, as in effect on
the date of the indenture. We urge you to read the indenture because it, and not
this summary, defines your rights as holders of the notes. For definitions of
certain capitalized terms used in the following summary, see "Certain
Definitions."
GENERAL
The notes:
- are general unsecured obligations of Verio;
- rank equally with all Verio's unsecured unsubordinated indebtedness;
- are senior to all Verio's unsecured subordinated indebtedness;
- are subordinated to all Verio's secured indebtedness and indebtedness of
Verio's subsidiaries;
- have been issued only in fully registered form without coupons, in
denominations of $1,000 principal amount and integral multiples of such
amount; and
- will not be subject to any service charge for any registration of
transfer, exchange or redemption, except in certain circumstances, a tax
or other governmental charge may be imposed.
Principal of, premium, if any, and interest on the notes are payable, and
the notes are exchangeable and transferable, at the office or agency of Verio in
New York City maintained for such purposes, which initially will be the
corporate trust office of the trustee. See " -- Book-Entry; Delivery and Form."
MATURITY, INTEREST AND PRINCIPAL
The notes are limited to $400,000,000 aggregate principal amount and will
mature on November 15, 2009. Verio will not be required to make any mandatory
sinking fund payments in respect of the notes. Interest on the notes will accrue
at a rate of 10 5/8% per annum and be payable in cash semi-annually in arrears
on May 15 and November 15, commencing May 15, 2000. Verio will make each
interest payment to the registered holders on the immediately preceding May 1 or
November 1, as the case may be. Interest on the notes will accrue from the most
recent interest payment date to which interest has been paid or duly provided
for or, if no interest has been paid or duly provided for, from the Issue Date.
Cash interest will be computed on the basis of a 360-day year of twelve 30-day
months. If Verio defaults on any payment of principal and/or premium, whether
upon redemption or otherwise, cash interest will accrue on the amount in default
at the rate of interest borne by the notes. Interest on overdue principal and
premium and, to the extent permitted by law, on overdue installments of interest
will accrue at the rate of interest borne by the notes.
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<PAGE> 39
REDEMPTION
Optional Redemption. The notes are redeemable, at Verio's option, in whole
or in part, on or after November 15, 2004 upon not less than 30 nor more than 60
days' written notice. The notes may be redeemed at the following redemption
prices, expressed as a percentage of principal amount, plus accrued and unpaid
interest, if any, to the applicable redemption date, if redeemed during the
twelve-month period beginning on November 15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2004........................................................ 105.313%
2005........................................................ 103.542%
2006........................................................ 101.771%
2007........................................................ 100.000%
</TABLE>
In addition, prior to November 15, 2002, Verio may redeem, at its option,
up to a maximum of 35% of the initially outstanding aggregate principal amount
of notes from the net proceeds of an Equity Sale -- which is the issuance in one
or more transactions of Capital Stock, other than Disqualified Stock, of Verio
to one or more Strategic Equity Investors or in any Equity Offering -- at a
redemption price equal to 110.625% of the principal amount of the notes,
together with accrued and unpaid interest to the date of redemption. However, at
least $260.0 million aggregate principal amount of notes must be outstanding
following such redemption. Any such redemption may only be effected once and
must be effected upon not less than 30 nor more than 60 days' notice given
within 180 days after such Equity Sale.
Selection; Effect of Redemption Notice. If less than all the notes are to
be redeemed, selection of the notes for redemption will be made pro rata, by lot
or such other method as the trustee in its sole discretion deems appropriate and
just. However, any redemption pursuant to the provisions relating to an Equity
Sale will be made on a pro rata basis or on as nearly a pro rata basis as
practicable, subject to the Depository Trust Company's procedures. No notes of a
principal amount of $1,000 or less may be redeemed in part. Notice of redemption
will be mailed by first-class mail at least 30 but not more than 60 days before
the redemption date to each holder of notes to be redeemed at its registered
address. If any note is to be redeemed in part only, the notice of redemption
that relates to such note must state the portion of the principal amount to be
redeemed. A new note in a principal amount equal to the unredeemed portion will
be issued in the name of the holder upon surrender for cancellation of the
original note. Upon giving of a redemption notice, interest on the notes called
for redemption will cease to accrue from and after the date fixed for redemption
and such notes will cease to be outstanding. Interest on the notes will continue
to accrue if Verio defaults in providing the funds for such redemption.
RANKING
The indebtedness evidenced by the notes ranks:
- senior in right of payment to all subordinated indebtedness of Verio;
- equally in right of payment with all other existing and future
unsubordinated indebtedness of Verio including the 1997 Notes, the March
1998 Notes and the November 1998 Notes; and
- junior to all Verio's secured indebtedness and indebtedness of its
subsidiaries.
Verio has no existing unsecured and unsubordinated indebtedness or any
existing subordinated indebtedness. Accordingly, there is no existing debt that
is subordinated to the notes.
Verio is a holding company with limited assets and no significant business
operations of its own. Verio operates its business through its subsidiaries. Any
right of Verio and its creditors, including holders of the notes, to participate
in the assets of any of Verio's subsidiaries upon any liquidation or
administration of any such subsidiary will be subject to the prior claims of the
subsidiary's creditors, including trade creditors. As of September 30, 1999,
Verio had approximately $27.1 million of secured indebtedness outstanding to
which
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<PAGE> 40
holders of notes would have been effectively subordinated in right of payment
and approximately $14.9 million of subsidiary indebtedness to which holders of
notes would have been structurally subordinated, all of which is included in the
secured long-term figure above. In addition, the $100.0 million revolving credit
facility is secured by certain assets, including the equity of the subsidiaries
that Verio owns currently or may own in the future, and thus the notes are
effectively subordinated to the credit facility to the extent of the value of
such assets. For a discussion of certain adverse consequences of Verio being a
holding company and of the terms of potential future indebtedness of Verio and
its subsidiaries, see "Risk Factors -- The notes are effectively subordinated to
all of our secured indebtedness and the liabilities of our subsidiaries."
CERTAIN COVENANTS
The indenture contains, among others, the following covenants:
Limitation on Additional Indebtedness. Verio will not, and will not permit
any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness
(including any Acquired Indebtedness), except for Permitted Indebtedness
(including Acquired Indebtedness to the extent it would constitute Permitted
Indebtedness); provided, however, that:
(1) Verio will be permitted to incur Indebtedness (including Acquired
Indebtedness); and
(2) a Restricted Subsidiary will be permitted to incur Acquired
Indebtedness,
if, in either case, after giving pro forma effect to such incurrence, including
the application of the net proceeds therefrom, the ratio of Total Consolidated
Indebtedness to Consolidated Annualized Pro Forma Operating Cash Flow would be
less than 6.0 to 1.0.
Limitation on Restricted Payments. Verio will not, and will not permit any
of the Restricted Subsidiaries to, make, directly or indirectly, any Restricted
Payment unless:
(1) no Default shall have occurred and be continuing at the time of or
upon giving effect to such Restricted Payment;
(2) immediately after giving effect to such Restricted Payment, Verio
would be able to incur $1.00 of Indebtedness under the proviso of the
covenant "Limitation on Additional Indebtedness;" and
(3) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after
the Issue Date and all Designation Amounts made on or after the Issue Date
does not exceed an amount equal to the sum of, without duplication:
(a) 50% of the Consolidated Net Income of Verio accrued on a
cumulative basis during the period beginning on October 1, 1999 and
ending on the last day of the fiscal quarter of Verio immediately
preceding the date of such proposed Restricted Payment (or, if such
cumulative Consolidated Net Income of Verio for such period is a
deficit, minus 100% of such deficit); plus
(b) the aggregate net cash proceeds received by Verio either (x) as
capital contributions to Verio after the Issue Date or (y) from the
issue and sale (other than to a Restricted Subsidiary of Verio) of its
Capital Stock (other than Disqualified Stock) on or after the Issue Date
(including upon exercise of warrants, options or rights); plus
(c) the aggregate net proceeds received by Verio from the issuance
(other than to a Restricted Subsidiary of Verio) on or after the Issue
Date of its Capital Stock (other than Disqualified Stock) upon the
conversion of, or in exchange for, Indebtedness of Verio; plus
(d) in the case of the disposition or repayment (in whole or in
part) of any Investment constituting a Restricted Payment made after the
Issue Date (except for Investments made (x) pursuant to clause (6) of
the second following paragraph that are not subject to clause (e) of
this paragraph below, and (y) pursuant to clause (7) of the second
following paragraph), an amount equal to the lesser of the return of
capital with respect to the applicable portion of such Investment
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<PAGE> 41
and the cost of the applicable portion of such Investment, in either
case, less the cost of the disposition of such Investment; plus
(e) in the case of any Revocation with respect to a Subsidiary of
Verio that was made subject to a Designation after the Issue Date, an
amount equal to the lesser of the Designation Amount with respect to
such Subsidiary or the Fair Market Value of the Investment of Verio and
the Restricted Subsidiaries in such Subsidiary at the time of
Revocation; plus
(f) the amount of capacity available for "Restricted Payments"
under clause (iii) of the first paragraph under the covenant "Limitation
on Restricted Payments" under the November 1998 Note Indenture (which is
similar to this paragraph) determined as of the Issue Date (without
regard to clause (i) or (ii) of such covenant but taking account of the
effect of the balance of such covenant, in each case as of the Issue
Date).
For purposes of the preceding clauses (b)(y) and (c), as applicable, the
value of the aggregate net proceeds received by Verio upon the issuance of
Capital Stock either upon the conversion of convertible Indebtedness or in
exchange for outstanding Indebtedness or upon the exercise of options, warrants
or rights will be the net cash proceeds received upon the issuance of such
Indebtedness, options, warrants or rights plus the incremental amount received,
if any, by Verio upon the conversion, exchange or exercise thereof.
For purposes of determining the amount expended for Restricted Payments,
cash distributed shall be valued at the face amount thereof and property other
than cash shall be valued at its Fair Market Value.
The provisions of this covenant shall not prohibit the following (each of
which shall be given independent effect):
(1) the payment of any dividend or other distribution within 60 days
after the date of declaration thereof if at such date of declaration such
payment would be permitted by the provisions of the indenture;
(2) the purchase, redemption, retirement or other acquisition of any
shares of Capital Stock of Verio in exchange for, or out of the net cash
proceeds of the substantially concurrent issue and sale (other than to a
Restricted Subsidiary of Verio) of, shares of Capital Stock of Verio (other
than Disqualified Stock); provided that any such net cash proceeds are
excluded from clause (3)(b) of the second preceding paragraph;
(3) so long as no Default shall have occurred and be continuing, the
purchase, redemption, retirement, defeasance or other acquisition of
Subordinated Indebtedness made by exchange for, or out of the net cash
proceeds of, a substantially concurrent issue and sale (other than to a
Restricted Subsidiary of Verio) of (x) Capital Stock (other than
Disqualified Stock) of Verio or (y) other Subordinated Indebtedness to the
extent that its stated maturity for the payment of principal thereof is not
prior to the 180th day after the final stated maturity of the notes;
provided that any such net cash proceeds are excluded from clause (3)(b) of
the second preceding paragraph;
(4) bonds, notes, debentures or other securities received as a result
of Asset Sales pursuant to and in compliance with the covenant "Disposition
of Proceeds of Asset Sales;"
(5) so long as no Default shall have occurred and be continuing,
purchases or redemptions of Capital Stock (including cash settlements of
stock options) held by employees, officers or directors upon or following
termination of their employment with Verio or one of its Subsidiaries;
provided that payments shall not exceed $2.0 million in any fiscal year in
the aggregate or $4.0 million in the aggregate during the term of the
notes;
(6) so long as no Default shall have occurred and be continuing,
Investments in Unrestricted Subsidiaries to the extent reasonably promptly
made with the proceeds of a substantially concurrent (1) capital
contribution to Verio or (2) issue or sale of Capital Stock (other than
Disqualified Stock) of Verio (other than to a Restricted Subsidiary of
Verio); provided that any such proceeds are excluded from clause (3)(b) of
the second preceding paragraph;
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(7) loans or advances to employees of Verio or any Restricted
Subsidiary made in the ordinary course of business, including to fund the
purchase of Capital Stock of Verio (provided that any proceeds from such
purchase are excluded from clause (3)(b) of the second preceding paragraph
to the extent such loan or advance is not reimbursed) in an amount not to
exceed $2.0 million at any time outstanding; and
(8) cash payments in lieu of fractional shares pursuant to any
warrant, option or other similar agreement.
In no event shall a Restricted Payment made on the basis of consolidated
financial statements prepared in good faith in accordance with GAAP be subject
to rescission or constitute a Default by reason of any requisite subsequent
restatement of such financial statements which would have made such Restricted
Payment prohibited at the time that it was made.
In determining the amount of Restricted Payments permissible under clause
(3) of the first paragraph of this covenant, amounts expended since the Issue
Date pursuant to clauses (1), (4) and (5) of the second preceding paragraph
above shall be included, without duplication, as Restricted Payments.
Limitation on Liens Securing Certain Indebtedness. Verio will not, and will
not permit any Restricted Subsidiary to, create, incur, assume or suffer to
exist any Liens of any kind against or upon any property or assets of Verio or
any Restricted Subsidiary, whether now owned or hereafter acquired, or any
proceeds therefrom, which secure either (x) Subordinated Indebtedness unless the
notes are secured by a Lien on such property, assets or proceeds that is senior
in priority to the Liens securing such Subordinated Indebtedness or (y)
Indebtedness of Verio that is not Subordinated Indebtedness, unless the notes
are equally and ratably secured with the Liens securing such other Indebtedness,
except, in the case of this clause (y), Permitted Liens.
Limitation on Business. Verio will not, and will not permit any of the
Restricted Subsidiaries to, engage in a business which is not substantially an
Internet Service Business.
Limitation on Certain Guarantees and Indebtedness of Restricted
Subsidiaries. Verio will not permit any Restricted Subsidiary, directly or
indirectly, to assume, guarantee or in any other manner become liable with
respect to:
(1) any Subordinated Indebtedness; or
(2) any Indebtedness of Verio that is not Subordinated Indebtedness
(other than, in the case of this clause (2), Indebtedness under any
Permitted Credit Facility to the extent constituting Permitted
Indebtedness),
unless, in each case, such Restricted Subsidiary simultaneously executes and
delivers a supplemental indenture providing for the guarantee of payment of the
notes by such Restricted Subsidiary on a basis senior to any such Subordinated
Indebtedness or pari passu with any such other Indebtedness referred to in
clause (2), as the case may be. Each guarantee created pursuant to such
provisions is referred to as a "Guarantee" and the issuer of each such
Guarantee, so long as the Guarantee remains outstanding, is referred to as a
"Guarantor."
Notwithstanding the foregoing, in the event of the unconditional release of
any Guarantor from its obligations in respect of the Indebtedness which gave
rise to the requirement that a Guarantee be given, such Guarantor shall be
released from all obligations under its Guarantee. In addition, upon any sale or
disposition (by merger or otherwise) of any Guarantor by Verio or a Restricted
Subsidiary of Verio to any person that is not an Affiliate of Verio or any of
its Restricted Subsidiaries which is otherwise in compliance with the terms of
the Indenture and as a result of which such Guarantor ceases to be a Restricted
Subsidiary of Verio, such Guarantor will be deemed to be automatically and
unconditionally released from all obligations under its Guarantee; provided that
each such Guarantor is sold or disposed of in accordance with the "Disposition
of Proceeds of Asset Sales" covenant.
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Change of Control. If a Change of Control occurs (the date being the
"Change of Control Date"), Verio shall make an offer to purchase (the "Change of
Control Offer"), on a business day (the "Change of Control Payment Date") not
later than 60 days following the Change of Control Date, all notes then
outstanding at a purchase price equal to 101% of the principal amount thereof on
any Change of Control Payment Date, plus accrued and unpaid interest, if any, to
such Change of Control Payment Date. Notice of a Change of Control Offer shall
be given to holders of notes, not less than 25 days nor more than 45 days before
the Change of Control Payment Date. The Change of Control Offer is required to
remain open for at least 20 business days and until the close of business on the
Change of Control Payment Date.
Except as described above with respect to a Change of Control, the
indenture will not contain provisions that permit the holders of the notes to
require that Verio repurchase or redeem the notes in the event of a takeover,
recapitalization or similar transaction which may be highly leveraged.
If a Change of Control Offer is made, there can be no assurance that Verio
will have available funds sufficient to pay for all of the notes that might be
delivered by holders of notes seeking to accept the Change of Control Offer.
Verio shall not be required to make a Change of Control Offer following a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements applicable to a
Change of Control Offer made by Verio and purchases all notes validly tendered
and not withdrawn under such Change of Control Offer.
If Verio is required to make a Change of Control Offer, Verio will comply
with all applicable tender offer laws and regulations, including, to the extent
applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any other
applicable securities laws and regulations.
Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries. Verio will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise enter into or cause to become
effective any consensual encumbrance or consensual restriction of any kind on
the ability of any Restricted Subsidiary to:
(a) pay dividends, in cash or otherwise, or make any other
distributions on its Capital Stock or any other interest or participation
in, or measured by, its profits to the extent owned by Verio or any
Restricted Subsidiary;
(b) pay any Indebtedness owed to Verio or any Restricted Subsidiary;
(c) make any Investment in Verio or any Restricted Subsidiary; or
(d) transfer any of its properties or assets to Verio or to any
Restricted Subsidiary, except for (in each case except as otherwise noted
in the following clause (2)):
(1) any encumbrance or restriction in existence on the Issue Date;
(2) any encumbrance or restriction existing under agreements
relating to an Investment in an ISP (which in the case of clause (a) and
(b) shall not be permitted in the case of ISPs that are Restricted
Subsidiaries) to the extent consistent with past practice;
(3) customary non-assignment provisions;
(4) any encumbrances or restrictions pertaining to an asset subject
to a Lien to the extent set forth in the security documentation
governing such Lien;
(5) any encumbrance or restriction applicable to a Restricted
Subsidiary at the time that it becomes a Restricted Subsidiary that is
not created in contemplation thereof;
(6) any encumbrance or restriction existing under any agreement
that refinances or replaces an agreement containing a restriction
permitted by clause (v) above; provided that the terms and conditions of
any such encumbrance or restriction are not materially less favorable to
the holders of notes than those under or pursuant to the agreement being
replaced or the agreement evidencing the Indebtedness refinanced;
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(7) any encumbrance or restriction imposed upon a Restricted
Subsidiary pursuant to an agreement which has been entered into for the
sale or disposition of all or substantially all of the Capital Stock or
assets of such Restricted Subsidiary or any Asset Sale to the extent
limited to the Capital Stock or assets in question; and
(8) any customary encumbrance or restriction applicable to a
Restricted Subsidiary that is contained in an agreement or instrument
governing or relating to Indebtedness contained in any Permitted Credit
Facility; provided that the provisions of such agreement permit the
payment of interest and principal and mandatory repurchases pursuant to
the terms of the indenture and the notes and other Indebtedness that is
solely an obligation of Verio, but, provided, further, that such
agreement may nevertheless contain customary net worth, leverage,
invested capital and other financial covenants, customary covenants
regarding the merger of or sale of all or any substantial part of the
assets of Verio or any Restricted Subsidiary, customary restrictions on
transactions with affiliates, and customary subordination provisions
governing Indebtedness owed to Verio or any Restricted Subsidiary.
Disposition of Proceeds of Asset Sales. Verio will not, and will not permit
any Restricted Subsidiary to, make any Asset Sale unless:
(a) Verio or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair
Market Value of the shares or assets sold or otherwise disposed of; and
(b) at least 75% of such consideration consists of cash, Cash
Equivalents or Qualified Consideration, provided that the following shall
be treated as cash for purposes of this covenant:
(x) the amount of any liabilities (other than Subordinated
Indebtedness or Indebtedness of a Restricted Subsidiary that would not
constitute Restricted Subsidiary Indebtedness) that are assumed by the
transferee of any such assets pursuant to an agreement that
unconditionally releases Verio or such Restricted Subsidiary from
further liability ("assumed liabilities"); and
(y) the amount of any notes or other obligations that within 30
days of receipt, are converted into cash (to the extent of the cash
received).
Verio or the applicable Restricted Subsidiary, as the case may be, may:
(1) apply the Net Cash Proceeds from such Asset Sale within 365 days
of the receipt thereof to repay an amount of Indebtedness (other than
Subordinated Indebtedness) of Verio in an amount not exceeding the Other
Senior Debt Pro Rata Share and elect to permanently reduce the amount of
the commitments thereunder by the amount of the Indebtedness so repaid;
(2) apply the Net Cash Proceeds from such Asset Sale to repay any
Restricted Subsidiary Indebtedness and elect to permanently reduce the
commitments thereunder by the amount of the Indebtedness so repaid; or
(3) apply such Net Cash Proceeds within 365 days thereof, to an
investment in properties and assets that will be used in an Internet
Service Business (or in Capital Stock and other securities of any person
that will become a Restricted Subsidiary as a result of such investment to
the extent such person owns properties and assets that will be used in an
Internet Service Business) of Verio or any Restricted Subsidiary
("Replacement Assets").
Any Net Cash Proceeds from any Asset Sale that are neither used to repay,
and permanently reduce the commitments under, any Restricted Subsidiary
Indebtedness as set forth in clause (2) of the preceding sentence or invested in
Replacement Assets within the 365-day period as set forth in clause (3) shall
constitute "Excess Proceeds." Any Excess Proceeds not used as set forth in
clause (1) of the second preceding sentence shall constitute "Offer Excess
Proceeds" subject to disposition as provided below.
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When the aggregate amount of Offer Excess Proceeds equals or exceeds $10.0
million, Verio shall make an offer to purchase (an "Asset Sale Offer"), from all
holders of the notes, that aggregate principal amount of notes as can be
purchased by application of such Offer Excess Proceeds at a price in cash equal
to 100% of the principal amount thereof on any purchase date, plus accrued and
unpaid interest, if any, to any purchase date. Each Asset Sale Offer shall
remain open for a period of 20 business days or such longer period as may be
required by law. To the extent that the principal amount of notes tendered
pursuant to an Asset Sale Offer is less than the Offer Excess Proceeds, Verio or
any Restricted Subsidiary may use such deficiency for general corporate
purposes. If the principal amount of notes validly tendered and not withdrawn by
holders thereof exceeds the amount of notes which can be purchased with the
Offer Excess Proceeds, notes to be purchased will be selected on a pro rata
basis. Upon completion of such Asset Sale Offer, the amount of Offer Excess
Proceeds shall be reset to zero.
If Verio is required to make an Asset Sale Offer, Verio will comply with
all applicable tender offer rules, including, to the extent applicable, Section
14(e) and Rule 14e-1 under the Exchange Act, and any other applicable securities
laws and regulations.
Limitation on Issuances and Sales of Preferred Stock by Restricted
Subsidiaries. Verio will not permit any Restricted Subsidiary to issue any
Preferred Stock (other than to Verio or a Restricted Subsidiary).
Limitation on Transactions with Affiliates. Verio will not, and will not
permit, cause or suffer any Restricted Subsidiary to, conduct any business or
enter into any transaction (or series of related transactions which are similar
or part of a common plan) with or for the benefit of any of their respective
Affiliates (other than Affiliates of a Restricted Subsidiary that are not also
Affiliates of Verio or any Wholly Owned Restricted Subsidiary) or any beneficial
holder of 10% or more of the Common Stock of Verio or any officer or director of
Verio (each, an "Affiliate Transaction"), unless the terms of the Affiliate
Transaction are set forth in writing, and are fair and reasonable to Verio or
such Restricted Subsidiary, as the case may be. Each Affiliate Transaction
involving aggregate payments or other Fair Market Value in excess of $1.0
million shall be approved by a majority of the Board, such approval to be
evidenced by a Board Resolution stating that the Board has determined that such
transaction or transactions comply with the foregoing provisions. In addition to
the foregoing, each Affiliate Transaction involving aggregate consideration of
$5.0 million or more shall be approved by a majority of the Disinterested
Directors; provided that, in lieu of such approval by the Disinterested
Directors, Verio may obtain a written opinion from an Independent Financial
Advisor stating that the terms of such Affiliate Transaction to Verio or the
Restricted Subsidiary, as the case may be, are fair from a financial point of
view. For purposes of this covenant, any Affiliate Transaction approved by a
majority of the Disinterested Directors or as to which a written opinion has
been obtained from an Independent Financial Advisor, on the basis set forth in
the preceding sentence, shall be deemed to be on terms that are fair and
reasonable to Verio and the Restricted Subsidiaries, as the case may be, and,
therefore, shall be permitted under this covenant.
However, the restrictions in this covenant shall not apply to:
(1) transactions with or among, or solely for the benefit of, Verio
and/or any of the Restricted Subsidiaries;
(2) transactions pursuant to agreements and arrangements existing on
the Issue Date;
(3) transactions related to the provision of internet services in the
ordinary course of business; provided that (x) such transactions are
entered into on an arm's length basis and are fair and reasonable to Verio
or such Restricted Subsidiary, as the case may be, and (y) in the good
faith judgment of Verio or the applicable Restricted Subsidiary, the Fair
Market Value of the consideration received by Verio or such Restricted
Subsidiary, as the case may be, reasonably approximates the Fair Market
Value of the services provided;
(4) dividends paid by Verio pursuant to and in compliance with the
covenant "Limitation on Restricted Payments;"
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(5) customary directors' fees, indemnification and similar
arrangements, consulting fees, employee salaries bonuses, employment
agreements and arrangements, compensation or employee benefit arrangements
or legal fees;
(6) transactions contemplated by any of the Permitted Affiliate
Agreements as in effect on the Issue Date; and
(7) grants of customary registration rights with respect to securities
of Verio.
Reports. Whether or not Verio has a class of securities registered under
the Exchange Act, Verio shall furnish without cost to each holder of notes and
file with the trustee and file with the Securities and Exchange Commission:
(1) within the applicable time period required under the Exchange Act,
after the end of each fiscal year of Verio, the information required by
Form 10-K, or any successor form, under the Exchange Act with respect to
such period;
(2) within the applicable time period required under the Exchange Act
after the end of each of the first three fiscal quarters of each fiscal
year of Verio, the information required by Form 10-Q, or any successor
form, under the Exchange Act with respect to such period; and
(3) any current reports on Form 8-K, or any successor forms, required
to be filed under the Exchange Act.
Limitation on Designations of Unrestricted Subsidiaries. Verio will not
designate any Subsidiary of Verio (other than a newly created Subsidiary in
which no Investment has previously been made) as an "Unrestricted Subsidiary"
under the indenture (a "Designation") unless:
(a) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation;
(b) except in the case of a Permitted Investment or an Investment made
pursuant to clause (6) of the third paragraph of the covenant "Limitation
on Restricted Payments," immediately after giving effect to such
Designation, Verio would be able to incur $1.00 of Indebtedness under the
proviso of the covenant "Limitation on Additional Indebtedness;" and
(c) Verio would not be prohibited under the indenture from making an
Investment at the time of Designation (assuming the effectiveness of such
Designation) in an amount (the "Designation Amount") equal to the Fair
Market Value of the net Investment of Verio or any other Restricted
Subsidiary in such Restricted Subsidiary on such date.
In the event of any such Designation made on or after the Issue Date, Verio
shall be deemed to have made an Investment constituting a Restricted Payment
pursuant to the covenant "Limitation on Restricted Payments" for all purposes of
the indenture in the Designation Amount. Neither Verio nor any Restricted
Subsidiary shall at any time:
(x) provide a guarantee of, or similar credit support to, any
Indebtedness of any Unrestricted Subsidiary (including of any undertaking,
agreement or instrument evidencing such Indebtedness); provided that Verio
may pledge Capital Stock or Indebtedness of any Unrestricted Subsidiary on
a nonrecourse basis such that the pledgee has no claim whatsoever against
Verio other than to obtain such pledged property;
(y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary; or
(z) be directly or indirectly liable for any other Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon (or cause the payment thereof to be accelerated
or payable prior to its final scheduled maturity) upon the occurrence of a
default with respect to any other Indebtedness that is Indebtedness of an
Unrestricted Subsidiary (including any corresponding right to take
enforcement action against such Unrestricted Subsidiary),
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except in the case of clause (x) or (y) to the extent permitted under the
covenants "Limitation on Restricted Payments" and "Limitation on Transactions
with Affiliates."
In addition, Verio will not revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") unless:
(a) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of the
indenture.
All Designations and Revocations must be evidenced by Board Resolutions
delivered to the trustee certifying compliance with the foregoing provisions.
Limitation on Status as Investment Company. Verio will not, and will not
permit any of its Subsidiaries or controlled Affiliates to, conduct its business
in a fashion that would cause Verio to be required to register as an "investment
company" (as that term is defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act")), or otherwise become subject to
regulation under the Investment Company Act. For purposes of establishing
Verio's compliance with this provision, any exemption which is or would become
available under Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act
will be disregarded.
CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
Verio will not:
(1) consolidate or combine with or merge with or into or, directly or
indirectly, sell, assign, convey, lease, transfer or otherwise dispose of
all or substantially all of its properties and assets to any person or
persons in a single transaction or through a series of transactions; or
(2) permit any of the Restricted Subsidiaries to enter into any such
transaction or series of transactions if it would result in the disposition
of all or substantially all of the properties or assets of Verio and the
Restricted Subsidiaries on a consolidated basis, unless, in the case of
either (1) or (2):
(a) Verio shall be the continuing person or, if Verio is not the
continuing person, the resulting, surviving or transferee person (the
"surviving entity") shall be a company organized and existing under the
laws of the United States or any State or territory thereof;
(b) the surviving entity shall expressly assume all of the
obligations of Verio under the notes and the indenture, and shall, if
required by law to effectuate such assumption, execute a supplemental
indenture to effect such assumption which supplemental indenture shall
be delivered to the trustee and shall be in form and substance
reasonably satisfactory to the trustee;
(c) immediately after giving effect to such transaction or series
of transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with
or in respect of such transaction or series of transactions), Verio or
the surviving entity (assuming such surviving entity's assumption of
Verio's obligations under the notes and the indenture), as the case may
be, would be able to incur $1.00 of Indebtedness under the proviso of
the covenant "Limitation on Additional Indebtedness"; provided that, in
the case of any transaction or series of transactions comprised solely
of one or more Rollups, this clause (c) shall be deemed satisfied if
Verio or the surviving entity and the Restricted Subsidiaries would have
been able to incur all of their outstanding Indebtedness as Permitted
Indebtedness;
(d) immediately after giving effect to such transaction or series
of transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in
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connection with or in respect of such transaction or series of
transactions), no Default shall have occurred and be continuing; and
(e) Verio or the surviving entity, as the case may be, shall have
delivered to the trustee an officers' certificate stating that such
transaction or series of transactions, and, if a supplemental indenture
is required in connection with such transaction or series of
transactions to effectuate such assumption, such supplemental indenture
complies with this covenant and that all conditions precedent in the
indenture relating to the transaction or series of transactions have
been satisfied.
Upon any consolidation or merger or any sale, assignment, conveyance,
lease, transfer or other disposition of all or substantially all of the assets
of Verio in accordance with the foregoing in which Verio or the Restricted
Subsidiary, as the case may be, is not the continuing corporation, the successor
corporation formed by such a consolidation or into which Verio or such
Restricted Subsidiary is merged or to which such transfer is made, will succeed
to, and be substituted for, and may exercise every right and power of, Verio or
such Restricted Subsidiary, as the case may be, under the indenture with the
same effect as if such successor corporation had been named as Verio or such
Restricted Subsidiary therein; and thereafter, except in the case of (1) any
lease or (2) any sale, assignment, conveyance, transfer, lease or other
disposition to a Restricted Subsidiary of Verio, Verio shall be discharged from
all obligations and covenants under the indenture and the notes.
For all purposes of the indenture and the notes (including the provision of
this covenant and the covenants "Limitation on Additional Indebtedness,"
"Limitation on Restricted Payments" and "Limitation on Liens Securing Certain
Indebtedness"), Subsidiaries of any surviving entity will, upon such transaction
or series of related transactions, become Restricted Subsidiaries or
Unrestricted Subsidiaries as provided pursuant to the covenant "Limitation on
Designations of Unrestricted Subsidiaries" and all Indebtedness, and all Liens
on property or assets, of Verio and the Restricted Subsidiaries in existence
immediately prior to such transaction or series of related transactions will be
deemed to have been incurred upon such transaction or series of related
transactions.
EVENTS OF DEFAULT
The following are "Events of Default" under the indenture:
(1) default in the payment of interest on the notes when it becomes
due and payable and continuance of such default for a period of 30 days or
more; or
(2) default in the payment of the principal of, or premium, if any, on
the notes when due; or
(3) default in the performance, or breach, of any covenant described
under "-- Certain Covenants -- Change of Control," "-- Disposition of
Proceeds of Asset Sales" or "-- Consolidation, Merger, Sale of Assets,
Etc."; or
(4) default in the performance, or breach, of any covenant in the
indenture (other than defaults specified in clause (1), (2) or (3) above),
and continuance of such default or breach for a period of 30 days or more
after written notice to Verio by the trustee or to Verio and the trustee by
the holders of at least 25% in aggregate principal amount of the
outstanding notes (in each case, when such notice is deemed received in
accordance with the indenture); or
(5) failure to perform any term, covenant, condition or provision of
one or more classes or issues of Indebtedness in an aggregate principal
amount of $15.0 million or more under which Verio or a Material Restricted
Subsidiary is obligated, and either (a) such Indebtedness is already due
and payable in full or (b) such failure results in the acceleration of the
maturity of such Indebtedness; or
(6) any holder of at least $15.0 million in aggregate principal amount
of Indebtedness of Verio or any Material Restricted Subsidiary shall
commence judicial proceedings or take any other action to foreclose upon,
or dispose of assets of Verio or any Material Restricted Subsidiary having
an aggregate Fair Market Value, individually or in the aggregate, of $15.0
million or more or shall have exercised any
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right under applicable law or applicable security documents to take
ownership of any such assets in lieu of foreclosure; provided that, in any
such case, Verio or any Material Restricted Subsidiary shall not have
obtained, prior to any such foreclosure or disposition of assets, a stay of
all such actions that remains in effect; or
(7) one or more judgments, orders or decrees for the payment of money
of $15.0 million or more, either individually or in the aggregate, shall be
entered into against Verio or any Material Restricted Subsidiary or any of
their respective properties and shall not be discharged and there shall
have been a period of 60 days or more during which a stay of enforcement of
such judgment or order, by reason of pending appeal or otherwise, shall not
be in effect; or
(8) certain events of bankruptcy, insolvency, reorganization,
administration or similar proceedings with respect to Verio or any Material
Restricted Subsidiary shall have occurred.
If an Event of Default (other than an Event of Default specified in clause
(8) above with respect to Verio) occurs and is continuing, then the trustee or
the holders of at least 25% in principal amount of the outstanding notes may, by
written notice, and the trustee upon the request of the holders of not less than
25% in principal amount of the outstanding notes shall, declare the principal
amount of, premium (if any) on, and any accrued and unpaid interest on, all
outstanding notes to be immediately due and payable and upon any such
declaration such amounts shall become immediately due and payable. If an Event
of Default specified in clause (8) above with respect to Verio occurs and is
continuing, then the principal amount of, premium (if any) on, and any accrued
and unpaid interest on, all outstanding notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the trustee or any holder.
After a declaration of acceleration, the holders of a majority in aggregate
principal amount of outstanding notes may, by notice to the trustee, rescind
such declaration of acceleration if all existing Events of Default, other than
nonpayment of the principal of, premium (if any) on, and any accrued and unpaid
interest on, the notes that has become due solely as a result of such
acceleration, have been cured or waived and if the rescission of acceleration
would not conflict with any judgment or decree. The holders of a majority in
principal amount of the outstanding notes also have the right to waive past
defaults under the indenture, except a default in the payment of principal of,
premium (if any) on, or any interest on, any outstanding note, or in respect of
certain covenants or a provisions that cannot be modified or amended without the
consent of all holders of notes.
No holder of any of the notes has any right to institute any proceeding
with respect to the indenture or any remedy thereunder, unless the holders of at
least 25% in principal amount of the outstanding notes have made written
request, and offered reasonable security or indemnity, to the trustee to
institute such proceeding as trustee, the trustee has failed to institute such
proceeding within 60 days after receipt of such notice and the trustee has not
within such 60-day period received directions inconsistent with such written
request by holders of a majority in principal amount of the outstanding notes.
Such limitations do not apply, however, to a suit instituted by a holder of a
note for the enforcement of the payment of the principal of, premium (if any)
on, or any accrued and unpaid interest on, such note on or after the respective
due dates expressed in such note.
During the existence of an Event of Default, the trustee is required to
exercise such rights and powers vested in it under the indenture and use the
same degree of care and skill in its exercise thereof as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
Subject to the provisions of the indenture relating to the duties of the
trustee, if an Event of Default shall occur and be continuing, the trustee is
not under any obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders unless such holders
shall have offered to such trustee reasonable security or indemnity. Subject to
certain provisions concerning the rights of the trustee, the holders of a
majority in principal amount of the outstanding notes have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the trustee or exercising any trust or power conferred on the trustee.
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The trustee will, within 45 days after the occurrence of any Default, give
to the holders of the notes notice of such Default known to it, unless such
Default shall have been cured or waived; provided that the trustee shall be
protected in withholding such notice if it determines in good faith that the
withholding of such notice is in the interest of such holders.
Verio is required to furnish to the trustee annually a statement as to its
compliance with all conditions and covenants under the indenture.
DEFEASANCE
Verio may at any time terminate all of its obligations with respect to the
notes ("defeasance"), except for certain obligations, including those regarding
any trust established for a defeasance and obligations to register the transfer
or exchange of the notes, to replace mutilated, destroyed, lost or stolen notes
as required by the indenture and to maintain agencies in respect of notes. Verio
may at any time terminate its obligations under certain covenants set forth in
the indenture, some of which are described under "-- Certain Covenants" above,
and any omission to comply with such obligations shall not constitute a Default
with respect to the notes ("covenant defeasance"). To exercise either defeasance
or covenant defeasance, Verio must irrevocably deposit in trust, for the benefit
of the holders of the notes, with the trustee money (in United States dollars)
or U.S. government obligations (denominated in United States dollars), or a
combination thereof, in such amounts as will be sufficient to pay the principal
of, and premium, if any, and interest on the notes to redemption or maturity and
comply with certain other conditions, including the delivery of a legal opinion
as to certain tax matters.
SATISFACTION AND DISCHARGE
The indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of notes)
as to all outstanding notes when either:
(a) all such notes theretofore authenticated and delivered (except
lost, stolen or destroyed notes that have been replaced or paid and notes
whose payment has been deposited in trust or segregated and held in trust
by Verio and thereafter repaid to Verio or discharged from such trust) have
been delivered to the trustee for cancellation; or
(b) (1) all such notes not delivered to the trustee for cancellation
have become due and payable and Verio has irrevocably deposited or caused
to be deposited with the trustee as trust funds in trust for the purpose an
amount of money sufficient to pay and discharge the entire indebtedness on
the notes not delivered to the trustee for cancellation, for principal
amount, premium, if any, and accrued interest to the date of such deposit;
(2) Verio has paid all sums payable by it under the indenture; and
(3) Verio has delivered irrevocable instructions to the trustee to
apply the deposited money toward the payment of the notes at maturity or
on the redemption date, as the case may be.
In addition, Verio must deliver an officers' certificate and an opinion of
counsel stating that all conditions precedent to satisfaction and discharge have
been complied with.
AMENDMENT AND WAIVERS
Verio may at any time, when authorized by resolutions of the Board, and the
trustee, without the consent of the holders of the notes, amend, waive or
supplement the indenture or the notes for certain specified purposes, including,
among other things, curing ambiguities, defects or inconsistencies, maintaining
the qualification of the indenture under the Trust Indenture Act or making any
change that does not adversely affect the rights of any holder. Other amendments
and modifications of the indenture and the notes may be made by Verio and the
trustee by supplemental indenture with the consent of the holders of not less
than a
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majority of the aggregate principal amount of the outstanding notes. However, no
modification or amendment may, without the consent of the holder of each
outstanding note affected thereby:
(1) reduce the principal amount of, change the fixed maturity of, or
alter the redemption provisions of, the notes;
(2) change the currency in which any notes or amounts owing thereon is
payable;
(3) reduce the percentage of the aggregate principal amount
outstanding of notes which must consent to an amendment, supplement or
waiver or consent to take any action under the indenture or the notes;
(4) impair the right to institute suit for the enforcement of any
payment on or with respect to the notes;
(5) waive a default in payment with respect to the notes;
(6) reduce the rate or change the time for payment of interest on the
notes;
(7) following the occurrence of a Change of Control or an Asset Sale,
alter Verio's obligation to purchase the notes in accordance with the
indenture or waive any default in the performance thereof;
(8) affect the ranking of the notes in a manner adverse to the holder
of the notes; or
(9) release any Guarantee except in compliance with the terms of the
indenture.
GOVERNING LAW
The indenture and the notes are to be governed by and construed in
accordance with laws of the State of New York without giving effect to
principles of conflicts of law.
CERTAIN DEFINITIONS
"1997 Notes" means Verio's 13 1/2% Senior Notes due 2004.
"Acquired Indebtedness" means Indebtedness of a person existing at the time
such person becomes a Restricted Subsidiary or assumed in connection with an
Asset Acquisition by such person and not incurred in connection with, or in
anticipation of, such person becoming a Restricted Subsidiary or such Asset
Acquisition; provided that Indebtedness of such person which is redeemed,
defeased, retired or otherwise repaid at the time of or immediately upon
consummation of the transactions by which such person becomes a Restricted
Subsidiary or such Asset Acquisition shall not constitute Acquired Indebtedness.
"Affiliate" of any specified person means any other person which, directly
or indirectly, controls, is controlled by or is under direct or indirect common
control with, such specified person. For the purposes of this definition,
"control" when used with respect to any person means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"affiliated," "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Acquisition" means:
(1) any capital contribution (by means of transfers of cash or other
property to others or payments for property or services for the account or
use of others, or otherwise) by Verio or any Restricted Subsidiary in any
other person, or any acquisition or purchase of Capital Stock of any other
person by Verio or any Restricted Subsidiary, in either case pursuant to
which such person shall (a) become a Restricted Subsidiary or (b) shall be
merged with or into Verio or any Restricted Subsidiary; or
(2) any acquisition by Verio or any Restricted Subsidiary of the
assets of any person which constitute substantially all of an operating
unit or line of business of such person or which is otherwise outside of
the ordinary course of business.
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"Asset Sale" means any direct or indirect sale, conveyance, transfer or
lease (that has the effect of a disposition and is not for security purposes) or
other disposition (that is not for security purposes) to any person other than
Verio or a Restricted Subsidiary, in one transaction or a series of related
transactions, of:
(1) any Capital Stock of any Restricted Subsidiary (other than
customary stock option programs);
(2) any assets of Verio or any Restricted Subsidiary which constitute
substantially all of an operating unit or line of business of Verio and the
Restricted Subsidiaries; or
(3) any other property or asset of Verio or any Restricted Subsidiary
outside of the ordinary course of business.
For the purposes of this definition, the term "Asset Sale" shall not
include (1) any disposition of properties and assets of Verio that is governed
under "-- Consolidation, Merger, Sale of Assets, Etc." above, (2) sales of
property or equipment that have become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of Verio or any
Restricted Subsidiary, as the case may be, and (3) for purposes of the covenant
"Disposition of Proceeds of Asset Sales," any sale, conveyance, transfer, lease
or other disposition of any property or asset, whether in one transaction or a
series of related transactions occurring within one year, either (x) involving
assets with a Fair Market Value not in excess of $500,000 or (y) which
constitutes the incurrence of a Capitalized Lease Obligation.
"Average Life to Stated Maturity" means, with respect to any Indebtedness,
as at any date of determination, the quotient obtained by dividing:
(1) the sum of the products of (a) the number of years from such date
to the date or dates of each successive scheduled principal payment
(including, without limitation, any sinking fund requirements) of such
Indebtedness multiplied by (b) the amount of each such principal payment;
by
(2) the sum of all such principal payments; provided that, in the case
of any Capitalized Lease Obligation, all calculations hereunder shall give
effect to any applicable options to renew in favor of Verio or any
Restricted Subsidiary.
"Bank Facility" means the $100.0 million revolving credit facility among
Verio, as borrower, Citicorp USA, Inc., as administrative agent, First Union
National Bank, as documentation agent, and Salomon Smith Barney Inc., as lead
arranger and book manager, and the financial institutions party thereto from
time to time as lenders, as such credit facility may be amended or supplemented
from time to time.
"Board" means the Board of Directors of Verio.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of Verio to have been duly adopted by the Board and to
be in full force and effect on the date of such certification, and delivered to
the trustee.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting and/or non-voting) of, such person's capital stock, whether
outstanding on the Issue Date or issued after the Issue Date, and any and all
rights (other than any evidence of Indebtedness), warrants or options
exchangeable for or convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed, immovable or movable) that is
required to be classified and accounted for as a capitalized lease obligation
under GAAP, and, for the purpose of the indenture, the amount of such obligation
at any date shall be the capitalized amount thereof at such date, determined in
accordance with GAAP.
"Cash Equivalents" means:
(1) any evidence of Indebtedness (with, for purposes of the covenant
"Disposition of Proceeds of Asset Sales" only, a maturity of 365 days or
less) issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof (provided that the full
faith and credit of the
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United States is pledged in support thereof or such Indebtedness
constitutes a general obligation of such country);
(2) deposits, certificates of deposit or acceptances (with, for
purposes of the covenant "Disposition of Proceeds of Asset Sales" only, a
maturity of 365 days or less) of any financial institution that is a member
of the Federal Reserve System, in each case having combined capital and
surplus and undivided profits (or any similar capital concept) of not less
than $500.0 million and whose senior unsecured debt is rated at least "A-1"
by S&P or "P-1" by Moody's;
(3) commercial paper with a maturity of 365 days or less issued by a
corporation (other than an Affiliate of Verio) organized under the laws of
the United States or any State thereof and rated at least "A-1" by S&P or
"P-1" by Moody's;
(4) repurchase agreements and reverse repurchase agreements relating
to marketable direct obligations issued or unconditionally guaranteed by
the United States Government or issued by any agency thereof and backed by
the full faith and credit of the United States Government maturing within
365 days from the date of acquisition;
(5) other debt obligations maturing in 365 days or less issued by a
corporation (other than an Affiliate of Verio) organized under the laws of
the United States or any state thereof and rated at least "A-" by S&P or
"A3" by Moody's; and
(6) money market funds which invest substantially all of their assets
in securities of the type described in the preceding clauses (1) through
(5).
"Change of Control" is defined to mean the occurrence of any of the
following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), excluding WorldCom, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a person shall be deemed to have "beneficial ownership" of
all securities that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total Voting Stock of
Verio; or
(b) Verio consolidates with, or merges with or into, another person or
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any person consolidates
with, or merges with or into, Verio, in any such event pursuant to a
transaction in which the outstanding Voting Stock of Verio is converted
into or exchanged for cash, securities or other property, other than any
such transaction where:
(1) the outstanding Voting Stock of Verio is converted into or
exchanged for (x) Voting Stock (other than Disqualified Stock) of the
surviving or transferee corporation or its parent corporation and/or (y)
cash, securities and other property in an amount which could be paid by
Verio as a Restricted Payment under the indenture; and
(2) immediately after such transaction no "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act),
excluding WorldCom, is the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act, except that a person shall be deemed
to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more than
50% of the total Voting Stock of the surviving or transferee corporation
or its parent corporation, as applicable; or
(c) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board (together with any new
directors whose election by the Board or whose nomination for election by
the stockholders of Verio was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously
so approved) cease for any reason (other than by action of WorldCom) to
constitute a majority of the Board then in office.
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The good faith determination by the Board, based upon advice of outside
counsel, of the beneficial ownership of securities of Verio within the meaning
of Rules 13d-3 and 13d-5 under the Exchange Act shall be conclusive, absent
contrary controlling judicial precedent or contrary written interpretation
published by the Securities and Exchange Commission.
"Common Stock" means, with respect to any person, any and all shares,
interest or other participations in, and other equivalents (however designated
and whether voting or nonvoting) of such person's common stock whether
outstanding at the Issue Date, and includes, without limitation, all series and
classes of such common stock.
"Consolidated Annualized Pro Forma Operating Cash Flow" means, at any date
of determination, Consolidated Operating Cash Flow for the latest fiscal quarter
for which consolidated financial statements of Verio are available multiplied by
four. For purposes of calculating "Consolidated Operating Cash Flow" for any
fiscal quarter for purposes of this definition, (1) any Subsidiary of Verio that
is a Restricted Subsidiary on the date of the transaction (the "Transaction
Date") giving rise to the need to calculate "Consolidated Annualized Pro Forma
Operating Cash Flow" shall be deemed to have been a Restricted Subsidiary at all
times during such fiscal quarter and (2) any Subsidiary of Verio that is not a
Restricted Subsidiary on the Transaction Date shall be deemed not to have been a
Restricted Subsidiary at any time during such fiscal quarter. In addition to and
without limitation of the foregoing, for purposes of this definition,
"Consolidated Operating Cash Flow" shall be calculated after giving effect on a
pro forma basis for the applicable fiscal quarter to, without duplication, any
Asset Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of
Verio or one of the Restricted Subsidiaries (including any person who becomes a
Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming
or otherwise being liable for Acquired Indebtedness) occurring during the period
commencing on the first day of such fiscal quarter to and including the
Transaction Date, as if such Asset Sale or Asset Acquisition occurred on the
first day of such fiscal quarter.
"Consolidated Income Tax Expense" means, with respect to any period, the
provision for United States corporation, local, foreign and other income taxes
of Verio and the Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any period, without
duplication, the sum of:
(1) the interest expense of Verio and the Restricted Subsidiaries for
such period as determined on a consolidated basis in accordance with GAAP,
including, without limitation:
(a) any amortization of debt discount;
(b) the net cost under Interest Rate Obligations (including any
amortization of discounts);
(c) the interest portion of any deferred payment obligation;
(d) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and
similar transactions; and
(e) all accrued interest;
(2) the interest component of Capitalized Lease Obligations paid,
accrued and/or scheduled to be paid or accrued by Verio and the Restricted
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP; and
(3) the amount of dividends in respect of Disqualified Stock paid by
Verio and the Restricted Subsidiaries during such period;
provided that Consolidated Interest Expense shall exclude the amortization of
fees related to the issuance of the notes, the 1997 Notes, the March 1998 Notes
and the November 1998 Notes, and fees related to any Indebtedness under a
Permitted Credit Facility.
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"Consolidated Net Income" means, with respect to any period, the
consolidated net income of Verio and the Restricted Subsidiaries for such
period, adjusted, to the extent included in calculating such consolidated net
income, by excluding, without duplication:
(1) all extraordinary, unusual or nonrecurring gains or losses of such
person (net of fees and expenses relating to the transaction giving rise
thereto) for such period;
(2) income of Verio and the Restricted Subsidiaries derived from or in
respect of all Investments in persons other than Restricted Subsidiaries,
except to the extent of any dividends or distributions actually received by
Verio or any Restricted Subsidiary;
(3) the portion of net income (or loss) of such person allocable to
minority interests in Restricted Subsidiaries for such period;
(4) net income (or loss) of any other person combined with such person
on a "pooling of interests" basis attributable to any period prior to the
date of combination;
(5) any gain or loss, net of taxes, realized by such person upon the
termination of any employee pension benefit plan during such period;
(6) gains or losses in respect of any Asset Sales (net of fees and
expenses relating to the transaction giving rise thereto) during such
period;
(7) except in the case of any restriction or encumbrance permitted
under clause (8) of the covenant "Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries," the net income of any
Restricted Subsidiary for such period to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of that
income is not at the time permitted, directly or indirectly, by operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulations applicable to that
Restricted Subsidiary or its stockholders; and
(8) dividends or other distributions paid in respect of Capital Stock
(other than Disqualified Stock) to the extent that such dividend or
distribution would constitute a Restricted payment or be paid out of the
deposit account in respect of Verio's 6.75% Series A Convertible Preferred
Stock.
"Consolidated Net Worth" means, with respect to any person, the
consolidated stockholders' or partners' equity of such person reflected on the
most recent financial statements of such person, determined in accordance with
GAAP, less any amounts attributable to redeemable capital stock (as determined
under applicable accounting standards by the Commission) of such person.
"Consolidated Operating Cash Flow" means, with respect to any period, the
Consolidated Net Income of Verio and the Restricted Subsidiaries for such period
increased, to the extent deducted in arriving at Consolidated Net Income for
such period, by the sum of:
(1) the Consolidated Income Tax Expense of Verio and the Restricted
Subsidiaries accrued according to GAAP for such period (other than taxes
attributable to extraordinary gains or losses and gains and losses from
Asset Sales);
(2) Consolidated Interest Expense for such period;
(3) depreciation of Verio and the Restricted Subsidiaries for such
period;
(4) amortization of Verio and the Restricted Subsidiaries for such
period, including, without limitation, amortization of capitalized debt
issuance costs for such period, all determined on a consolidated basis in
accordance with GAAP; and
(5) other non-cash charges decreasing Consolidated Net Income.
"consolidation" means, with respect to Verio, the consolidation of the
accounts of the Restricted Subsidiaries with those of Verio, all in accordance
with GAAP; provided that "consolidation" will not
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include consolidation of the accounts of any Unrestricted Subsidiary with the
accounts of Verio. The term "consolidated" has a correlative meaning to the
foregoing.
"Debt Securities" means any debt securities issued by Verio in a public
offering or a private placement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Designation" has the meaning set forth under " -- Certain
Covenants -- Limitation on Designations of Unrestricted Subsidiaries."
"Disinterested Director" means, with respect to any transaction or series
of related transactions, a member of the Board other than a director who (1) has
any material direct or indirect financial interest in or with respect to such
transaction or series of related transactions or (2) is an employee or officer
of Verio or an Affiliate that is itself a party to such transaction or series of
transactions or an Affiliate of a party to such transaction or series of related
transactions.
"Disqualified Stock" means, with respect to any person, any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or becomes mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or becomes exchangeable for Indebtedness at the option
of the holder thereof, or becomes redeemable at the option of the holder
thereof, in whole or in part, on or prior to the final maturity date of the
notes; provided such Capital Stock shall only constitute Disqualified Stock to
the extent it so matures or becomes so redeemable or exchangeable on or prior to
the final maturity date of the notes; provided, further, that any Capital Stock
of Verio or any Restricted Subsidiary that would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to require
such person to repurchase or redeem such Capital Stock upon the occurrence of an
"asset sale" or "change of control" occurring prior to the final maturity date
of the notes shall not constitute Disqualified Stock if the "asset sale" or
"change of control" provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions contained in
"Disposition of Proceeds of Asset Sales" and "Change of Control" covenants
described above and such Capital Stock specifically provides that such person
will not repurchase or redeem any such stock pursuant to such provision prior to
Verio's repurchase of such notes as are required to be repurchased pursuant to
the "Disposition of Proceeds of Asset Sales" and "Change of Control" covenants
described above.
"Equity Offering" means an underwritten offering of Capital Stock (other
than Disqualified Stock) made pursuant to a registration statement filed with
the Commission under the Securities Act or pursuant to Rule 144A under the
Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Existing ISP" means any ISP in which Verio or a Subsidiary of Verio has an
Investment on the Issue Date.
"Fair Market Value" means, with respect to any asset or property, the price
that could be negotiated in an arms-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under pressure
or compulsion to complete the transaction. Unless otherwise specified in the
indenture, Fair Market Value shall be determined by the Board acting in good
faith and shall be evidenced by a Board Resolution.
"GAAP" means, at any date of determination, generally accepted accounting
principles in effect in the United States and which are applicable as of the
date of determination and which are consistently applied for all applicable
periods.
"guarantee" means, as applied to any obligation, (1) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (2) an agreement, direct or indirect, contingent or
otherwise, the
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practical effect of which is to assure in any way the payment or performance (or
payment of damages in the event of non-performance) of all or any part of such
obligation, including, without limiting the foregoing, the payment of amounts
drawn down by letters of credit.
"incur" means, with respect to any Indebtedness or other obligation of any
person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation including by acquisition of Subsidiaries or the recording, as
required pursuant to GAAP or otherwise, of any such Indebtedness or other
obligation on the balance sheet of such person (and "incurrence," "incurred,"
"incurrable" and "incurring" shall have meanings correlative to the foregoing);
provided that a change in GAAP that results in an obligation of such person that
exists at such time becoming Indebtedness shall not be deemed an incurrence of
such Indebtedness and that neither the accrual of interest nor the accretion of
original issue discount shall be deemed an Incurrence of Indebtedness.
Indebtedness otherwise incurred by a person before it becomes a Subsidiary of
Verio (whether by merger, consolidation, acquisition or otherwise) shall be
deemed to have been incurred at the time at which such person becomes a
Subsidiary of Verio.
"Indebtedness" means, with respect to any person, without duplication:
(1) any liability, contingent or otherwise, of such person (A) for
borrowed money (whether or not the recourse of the lender is to the whole
of the assets of such person or only to a portion thereof) or (B) evidenced
by a note, debenture or similar instrument or letter of credit (including a
purchase money obligation) or (C) for the payment of money relating to a
Capitalized Lease Obligation or other obligation relating to the deferred
purchase price of property (except to the extent representing funds
deposited in escrow to secure the deferred purchase price of an Asset
Acquisition or Permitted Investment) or (D) in respect of an Interest Rate
Obligation or currency agreement; or
(2) any liability of others of the kind described in the preceding
clause (1) which the person has guaranteed or which is otherwise its legal
liability; or
(3) any obligation secured by a Lien (other than (x) Permitted Liens
of the types described in clauses (b), (d) or (e) of the definition of
Permitted Liens; provided that the obligations secured would not constitute
Indebtedness under clauses (1) or (2) or (3) of this definition, and (y)
Liens on Capital Stock or Indebtedness of any Unrestricted Subsidiary) to
which the property or assets of such person are subject, whether or not the
obligations secured thereby shall have been assumed by or shall otherwise
be such person's legal liability (the amount of such obligation being
deemed to be the lesser of the value of such property or asset or the
amount of the obligation so secured);
(4) all Disqualified Stock valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid
dividends; and
(5) any and all deferrals, renewals, extensions and refundings of, or
amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses (1), (2), (3) or (4).
In no event shall "Indebtedness" include trade payables and accrued
liabilities that are current liabilities incurred in the ordinary course of
business, excluding the current maturity of any obligation which would otherwise
constitute Indebtedness. For purposes of the covenants "Limitation on Additional
Indebtedness" and "Limitation on Restricted Payments" and the definition of
"Events of Default," in determining the principal amount of any Indebtedness to
be incurred by Verio or a Restricted Subsidiary or which is outstanding at any
date, (x) the principal amount of any Indebtedness issued with original issue
discount shall be the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
date as determined in conformity with GAAP and (y) the principal amount of any
Indebtedness shall be reduced by any amount of cash or Cash Equivalent
collateral securing on a perfected basis, and dedicated for disbursement
exclusively to the payment of principal of and interest on, such Indebtedness.
"Independent Financial Advisor" means a United States investment banking
firm of national or regional standing in the United States (1) which does not,
and whose directors, officers and employees or Affiliates do
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not have, a direct or indirect financial interest in Verio and (2) which, in the
judgment of the Board, is otherwise independent and qualified to perform the
task for which it is to be engaged.
"Interest Rate Obligations" means the obligations of any person pursuant to
any arrangement with any other person whereby, directly or indirectly, such
person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount and shall include without limitation, interest rate swaps, caps, floors,
collars, forward interest rate agreements and similar agreements.
"Internet Service Business" means any business operating an internet
connectivity or internet enhancement service as it exists from time to time,
including, without limitation, dial up or dedicated internet service, web
hosting or collocation services, security solutions, the provision, development
and hosting of software and software applications in connection with the
services described herein, configuration services, electronic commerce, intranet
solutions, data backup and restoral, business content and collaboration,
communications tools or network equipment products or services (including,
without limitation, any business conducted by Verio or any Restricted Subsidiary
on the Issue Date), and any business reasonably related or ancillary to the
foregoing. A good faith determination by a majority of the Board as to whether a
business meets the requirements of this definition shall be conclusive, absent
manifest error.
"Investment" means, with respect to any person, any advance, loan, account
receivable (other than an account receivable arising in the ordinary course of
business), or other extension of credit (including, without limitation, by means
of any guarantee) or any capital contribution to (by means of transfers of
property to others, payments for property or services for the account or use of
others, or otherwise), or any purchase or ownership of any stocks, bonds, notes,
debentures or other securities of, any other person. Notwithstanding the
foregoing, in no event shall any issuance of Capital Stock (other than
Disqualified Stock) of Verio in exchange for Capital Stock, property or assets
of another person constitute an Investment by Verio in such other person.
"ISP" means any person engaged principally in an Internet Service Business.
"Issue Date" means the original date of issuance of the notes.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, or preference
or priority or other encumbrance upon or with respect to any property of any
kind. A person shall be deemed to own subject to a Lien any property which such
person has acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title retention
agreement.
"March 1998 Notes" means Verio's 10 3/8% Senior Notes due 2005.
"Market Capitalization" of any person means, as of any day of
determination, the average Closing Price of such person's Common Stock over the
20 consecutive trading days immediately preceding such day. "Closing Price" on
any trading day with respect to the per share price of any shares of Common
Stock means the last reported sale price regular way or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the New York Stock Exchange or,
if such shares of Common Stock are not listed or admitted to trading on such
exchange, on the principal national securities exchange on which such shares are
listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, on the National Association of Securities Dealers
Automated Quotations National Market System or, if such shares are not listed or
admitted to trading on any national securities exchange or quoted on such
automated quotation system but the issuer is a Foreign Issuer (as defined in
Rule 3b-4(b) under the Exchange Act) and the principal securities exchange on
which such shares are listed or admitted to trading is a Designated Offshore
Securities Market (as defined in Rule 902(a) under the Securities Act), the
average of the reported closing bid and asked prices regular way on such
principal exchange, or, if such shares are not listed or admitted to trading on
any national securities exchange or quoted on such automated quotation system
and the issuer and principal securities exchange do not meet such requirements,
the average of the closing bid and asked prices in the over-the-counter marked
as
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furnished by any New York Stock Exchange member firm that is selected from time
to time by Verio for that purpose and is reasonably acceptable to the trustee.
"Material Restricted Subsidiary" means any Restricted Subsidiary of Verio,
which, at any date of determination, is a "Significant Subsidiary" (as that term
is defined in Regulation S-X issued under the Securities Act), but shall, in any
event, include (x) any Guarantor or (y) any Restricted Subsidiary of Verio
which, at any date of determination, is an obligor under any Indebtedness in an
aggregate principal amount equal to or exceeding $15.0 million.
"Maturity Date" means, with respect to any note, the date specified in such
note as the fixed date on which the principal of such note is due and payable.
"Moody's" means Moody's Investors Service.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash (including assumed liabilities and other items
deemed to be cash under the proviso to the first sentence of the covenant
"Disposition of Proceeds of Asset Sales") or Cash Equivalents including payments
in respect of deferred payment obligations when received in the form of cash or
Cash Equivalents (except to the extent that such obligations are financed or
sold with recourse to Verio or any Restricted Subsidiary) net of:
(1) brokerage commissions and other fees and expenses (including fees
and expenses of legal counsel and investment bankers) related to such Asset
Sale;
(2) provisions for all taxes payable as a result of such Asset Sale;
(3) amounts required to be paid to any person (other than Verio or any
Restricted Subsidiary) owning a beneficial interest in or having a
Permitted Lien on the assets subject to the Asset Sale; and
(4) appropriate amounts to be provided by Verio or any Restricted
Subsidiary, as the case may be, as a reserve required in accordance with
GAAP against any liabilities associated with such Asset Sale and retained
by Verio or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such
Asset Sale, all as reflected in an officers' certificate delivered to the
trustee.
"New ISP" means any ISP in which Verio or a Subsidiary of Verio makes its
first Investment after the Issue Date.
"November 1998 Notes" means Verio's 11 1/4% Senior Notes due 2008.
"Other Senior Debt Pro Rata Share" means the amount of the applicable
Excess Proceeds obtained by multiplying the amount of such Excess Proceeds by a
fraction:
(1) the numerator of which is the aggregate accreted value and/or
principal amount, as the case may be, of all Indebtedness (other than (x)
the notes and (y) Subordinated Indebtedness) of Verio outstanding at the
time of the applicable Asset Sale with respect to which Verio is required
to use Excess Proceeds to repay or make an offer to purchase or repay; and
(2) the denominator of which is the sum of (a) the aggregate principal
amount of all notes outstanding at the time of the applicable Asset Sale
and (b) the aggregate principal amount or the aggregate accreted value, as
the case may be, of all other Indebtedness (other than Subordinated
Indebtedness) of Verio outstanding at the time of the applicable Asset Sale
Offer with respect to which Verio is required to use the applicable Excess
Proceeds to offer to repay or make an offer to purchase or repay.
"Permitted Affiliate Agreement" means each of the Series A Purchase
Agreement, the Series B Purchase Agreement, the Series C Purchase Agreement and
the Stockholders Agreement, each as in effect on the Issue Date.
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"Permitted Credit Facility" means any senior commercial term loan and/or
revolving credit facility (including any letter of credit subfacility) entered
into principally with commercial banks and/or other financial institutions
typically party to commercial loan agreements including, without limitation, the
Bank Facility.
"Permitted Equipment Financing" means any credit facility or other
financing arrangement (including in the form of Capitalized Lease Obligations
and guarantees of Indebtedness of Restricted Subsidiaries) entered into with any
vendor or supplier (or any financial institution acting on behalf of or for the
purpose of directly financing purchases from such vendor or supplier) to the
extent the Indebtedness thereunder is incurred for the purpose of financing the
cost (including the cost of design, development, site acquisition, construction,
integration, manufacture or acquisition) of real or personal property (tangible
or intangible) used, or to be used, in an Internet Service Business.
"Permitted Indebtedness" means the following Indebtedness (each of which
shall be given independent effect):
(a) Indebtedness under the notes and the indenture;
(b) Indebtedness of Verio and/or any Restricted Subsidiary outstanding
on the Issue Date, including, without limitation, the 1997 Notes, the March
1998 Notes and the November 1998 Notes;
(c) (1) Indebtedness of any Restricted Subsidiary owed to and held by
Verio or a Restricted Subsidiary and (2) Indebtedness of Verio, not secured
by any Lien, owed to and held by any Restricted Subsidiary; provided that
an incurrence of Indebtedness shall be deemed to have occurred upon (x) any
sale or other disposition (excluding assignments as security to financial
institutions) of any Indebtedness of Verio or a Restricted Subsidiary
referred to in this clause (c) to a person (other than Verio or a
Restricted Subsidiary) or (y) any sale or other disposition of Capital
Stock of a Restricted Subsidiary, or Designation of a Restricted
Subsidiary, which holds Indebtedness of Verio or another Restricted
Subsidiary such that such Restricted Subsidiary, in any such case, ceases
to be a Restricted Subsidiary;
(d) Interest Rate Obligations of Verio and/or any Restricted
Subsidiary relating to Indebtedness of Verio and/or such Restricted
Subsidiary, as the case may be (which Indebtedness (x) bears interest at
fluctuating interest rates and (y) is otherwise permitted to be incurred
under the "Limitation on Additional Indebtedness" covenant), but only to
the extent that the notional principal amount of such Interest Rate
Obligations does not exceed the principal amount of the Indebtedness
(and/or Indebtedness subject to commitments) to which such Interest Rate
Obligations relate;
(e) Indebtedness of Verio and/or any Restricted Subsidiary in respect
of performance bonds of Verio or any Restricted Subsidiary or surety bonds
provided by Verio or any Restricted Subsidiary incurred in the ordinary
course of business;
(f) Indebtedness of Verio and/or any Restricted Subsidiary to the
extent it represents a replacement, renewal, refinancing or extension (a
"Refinancing") of outstanding Indebtedness of Verio and/or of any
Restricted Subsidiary incurred or outstanding pursuant to clause (a), (b),
(g), (h) or (i) of this definition or the proviso of the covenant
"Limitation on Additional Indebtedness"; provided that (1) Indebtedness of
Verio may not be Refinanced to such extent under this clause (f) with
Indebtedness of any Restricted Subsidiary and (2) any such Refinancing
shall only be permitted under this clause (f) to the extent that (x) it
does not result in a lower Average Life to Stated Maturity of such
Indebtedness as compared with the Indebtedness being Refinanced and (y) it
does not exceed the sum of the principal amount (or, if such Indebtedness
provides for a lesser amount to be due and payable upon a declaration of
acceleration thereof, an amount no greater than such lesser amount) of the
Indebtedness being Refinanced plus the amount of accrued interest thereon
and the amount of any reasonably determined prepayment premium necessary to
accomplish such Refinancing and such reasonable fees and expenses incurred
in connection therewith;
(g) Indebtedness of Verio such that, after giving effect to the
incurrence thereof, the total aggregate principal amount of Indebtedness
incurred under this clause (g) plus the aggregate principal amount of
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the November 1998 Notes and the notes outstanding, and any Refinancings
thereof otherwise incurred in compliance with the Indenture, would not
exceed 200% of Total Incremental Equity;
(h) Indebtedness of Verio and/or any Restricted Subsidiary incurred
under any Permitted Credit Facility and/or Indebtedness of Verio
represented by Debt Securities of Verio, and any Refinancings of the
foregoing otherwise incurred in compliance with the indenture, in an
aggregate principal amount not to exceed $250.0 million at any time
outstanding;
(i) Indebtedness of Verio and/or any Restricted Subsidiary incurred
under any Permitted Equipment Financing in an aggregate principal amount
not to exceed the Fair Market Value of the assets acquired with the
proceeds thereof;
(j) Acquired Indebtedness and other Indebtedness of Verio and/or any
Restricted Subsidiary incurred in connection with the acquisition of, or an
Investment in, a New ISP, including any obligations in respect of the
deferred purchase price (whether or not subject to a contingency) of any
such acquisition or Investment, in an aggregate principal amount not to
exceed $100.0 million at any time outstanding; and
(k) in addition to the items referred to in clauses (a) through (j)
above, Indebtedness of Verio and/or the Restricted Subsidiaries having an
aggregate principal amount not to exceed $50.0 million at any time
outstanding.
"Permitted Investments" means:
(a) Cash Equivalents;
(b) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility and workers' compensation, performance and
other similar deposits;
(c) Interest Rate Obligations incurred in compliance with the covenant
"Limitation on Additional Indebtedness;"
(d) the extension by Verio and the Restricted Subsidiaries of (1)
trade credit to Subsidiaries of Verio and the ISPs, represented by accounts
receivable, extended on usual and customary terms in the ordinary course of
business or (2) guarantees of commitments for the purchase of goods or
services by any ISP incurred in the ordinary course of business so long as
such guarantees to the extent constituting Indebtedness are permitted to be
incurred under the covenant "Limitation on Additional Indebtedness;"
(e) Strategic Investments; and
(f) Investments in Unrestricted Subsidiaries in an amount not to
exceed $50.00 million at any time outstanding.
"Permitted Liens" means:
(a) Liens on property of a person existing at the time such person is
merged into or consolidated with Verio or any Restricted Subsidiary or
becomes a Restricted Subsidiary; provided that such Liens were in existence
prior to the contemplation of such merger, consolidation or acquisition and
do not secure any property or assets of Verio or any Restricted Subsidiary
other than the property or assets subject to the Liens prior to such merger
or consolidation or acquisition;
(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens arising in the ordinary course of
business that secure payment of obligations not more than 60 days past due
or that are being contested in good faith and by appropriate proceedings;
(c) Liens existing on the Issue Date;
(d) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently
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conducted; provided that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made therefor;
(e) easements, rights of way, restrictions and other similar
easements, licenses, restrictions on the use of properties, or minor
imperfections of title that, in the aggregate, are not material in amount
and do not in any case materially detract from the properties subject
thereto or interfere with the ordinary conduct of the business of Verio or
the Restricted Subsidiaries;
(f) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(g) Liens securing any Permitted Credit Facility or Permitted
Equipment Financing;
(h) Liens to secure Indebtedness incurred in compliance with clause
(k) of "Permitted Indebtedness" to the extent relating to the asset subject
of the particular Asset Acquisition or Investment;
(i) Liens to secure any Refinancing of any Indebtedness secured by
Liens referred to in the foregoing clauses (a) or (c), but only to the
extent that such Liens do not extend to any other property or assets and
the principal amount of the Indebtedness secured by such Liens is not
increased;
(j) Liens to secure the notes; and
(k) Liens on real property incurred in connection with the financing
of the purchase of such real property (or incurred within 60 days of
purchase) by Verio or any Restricted Subsidiary.
"Preferred Stock" means, with respect to any person, any and all shares,
interests, participations or other equivalents (however designated) of such
person's preferred or preference stock whether now outstanding, or issued after
the Issue Date, and including, without limitation, all classes and series of
preferred or preference stock of such person.
"Public Capital Stock" means any class of Capital Stock which is traded on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market.
"Refinancing" has the meaning set forth in clause (f) of the definition of
"Permitted Indebtedness."
"Restricted Payment" means any of the following:
(1) the declaration or payment of any dividend or any other
distribution on Capital Stock of Verio or any payment made to the direct or
indirect holders (in their capacities as such) of Capital Stock of Verio
(other than dividends or distributions payable solely in Capital Stock
(other than Disqualified Stock) of Verio or in options, warrants or other
rights to purchase Capital Stock (other than Disqualified Stock) of Verio);
(2) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of Verio (other than any such Capital Stock
owned by Verio or a Wholly Owned Restricted Subsidiary);
(3) the purchase, redemption, defeasance or other acquisition or
retirement for value prior to any scheduled repayment, sinking fund or
maturity of any Subordinated Indebtedness (other than any Subordinated
Indebtedness held by a Wholly Owned Restricted Subsidiary); or
(4) the making by Verio or any Restricted Subsidiary of any Investment
(other than a Permitted Investment) in any person (other than an Investment
by a Restricted Subsidiary in Verio or an Investment by Verio or a
Restricted Subsidiary in a Restricted Subsidiary or a person that becomes a
Restricted Subsidiary as a result of such Investment). It is not intended
that payments made out of the deposit account in respect of Verio's 6.75%
Series A Convertible Preferred Stock be considered Restricted Payments.
"Restricted Subsidiary" means any Subsidiary of Verio that has not been
designated by the Board, by a Board Resolution delivered to the trustee, as an
Unrestricted Subsidiary pursuant to and in compliance with
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the covenant "Limitation on Designations of Unrestricted Subsidiaries." Any such
designation may be revoked by a Board Resolution delivered to the trustee,
subject to the provisions of such covenant.
"Restricted Subsidiary Indebtedness" means Indebtedness of any Restricted
Subsidiary:
(1) which is not subordinated to any other Indebtedness of such
Restricted Subsidiary; and
(2) in respect of which Verio is not also obligated (by means of a
guarantee or otherwise) other than, in the case of this clause (2),
Indebtedness under any Permitted Credit Facilities.
"Revocation" has the meaning set forth under "-- Certain
Covenants -- Limitation on Designations of Unrestricted Subsidiaries."
"Rollup" means:
(1) an Investment in an Existing ISP or transaction or series of
related transactions as a result of which such Existing ISP becomes a
Wholly Owned Restricted Subsidiary; or
(2) an Investment in a New ISP or transaction or series of related
transactions as a result of which such New ISP becomes a Restricted
Subsidiary; or
(3) a merger or consolidation of any ISP with Verio.
"S&P" means Standard & Poor's Corporation.
"Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
"Strategic Equity Investor" means any person engaged principally in one or
more communications businesses with a Market Capitalization or Consolidated Net
Worth of at least $1.0 billion.
"Strategic Investment" means an Investment in any person (other than an
Unrestricted Subsidiary) whose primary business is an Internet Service Business
provided that the Investment is determined by the Board of Directors of Verio to
promote or significantly benefit the business of Verio and the Restricted
Subsidiaries on the date of the Investment.
"Subordinated Indebtedness" means any Indebtedness of Verio or any
Guarantor which is expressly subordinated in right of payment to any other
Indebtedness of Verio or such Guarantor.
"Subsidiary" means, with respect to any person:
(1) any corporation of which the outstanding Capital Stock having at
least a majority of the votes entitled to be cast in the election of
directors shall at the time be owned, directly or indirectly, by such
person; or
(2) any other person of which at least a majority of voting interest
is at the time, directly or indirectly, owned by such person.
"Total Consolidated Indebtedness" means, at any date of determination, an
amount equal to the aggregate amount of all Indebtedness of Verio and the
Restricted Subsidiaries outstanding as of the date of determination.
"Total Incremental Equity" means, at any time of determination, the sum of,
without duplication:
(1) the aggregate cash proceeds received by Verio from capital
contributions in respect of existing Capital Stock (other than Disqualified
Stock) or the issuance or sale of Capital Stock (other than Disqualified
Stock but including Capital Stock issued upon the conversion of convertible
Indebtedness or from the exercise of options, warrants or rights to
purchase Capital Stock (other than Disqualified Stock)) subsequent to the
Issue Date, other than to a Subsidiary of Verio; plus
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(2) the Fair Market Value (determined at the time of issuance) of any
Capital Stock (other than Disqualified Stock) of Verio issued as
consideration for the acquisition of Capital Stock of an ISP (other than
the acquisition of Capital Stock of an Existing ISP); plus
(3) the Fair Market Value (determined at the time of issuance) of any
Capital Stock (other than Disqualified Stock) of Verio issued as
consideration for the acquisition of Capital Stock of an Existing ISP in a
transaction as a result of which the Existing ISP becomes a Wholly Owned
Restricted Subsidiary; plus
(4) the aggregate cash proceeds received by Verio or any Restricted
Subsidiary from the sale, disposition or repayment (in whole or in part) of
any Investment that is or was made after the Issue Date and that
constitutes a Restricted Payment that has been deducted from Total
Incremental Equity pursuant to clause (5) below in an amount equal to the
lesser of (a) the return of capital with respect to the applicable portion
of such Investment and (b) the cost of the applicable portion of such
Investment, in either case, less the cost of the disposition of such
Investment; minus
(5) the aggregate amount of all Restricted Payments declared or made
on and after the Issue Date (other than a Restricted Payment made pursuant
to clauses (3) or (7) of the third paragraph of the covenant "Limitation on
Restricted Payments"), plus
(6) the amount, as of the Issue Date, of the "Total Incremental
Equity" as defined and determined under the November 1998 Notes Indenture.
"Unrestricted Subsidiary" means any Subsidiary of Verio designated as such
pursuant to and in compliance with the covenant "Limitation on Designations of
Unrestricted Subsidiaries." Any such designation may be revoked by a Board
Resolution delivered to the trustee, subject to the provisions of such covenant.
"Voting Stock" means, with respect to any person, the Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors
or other members of the governing body of such person.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of
which 99% or more of the outstanding Capital Stock is owned by Verio or another
Wholly Owned Restricted Subsidiary; provided NorthWestNet shall be deemed a
Wholly Owned Restricted Subsidiary notwithstanding its existing stock option
plan and any stock options issued thereunder. For the purposes of this
definition, any directors' qualifying shares or investments by foreign nationals
mandated by applicable law shall be disregarded in determining the ownership of
a Restricted Subsidiary.
"WorldCom" means WorldCom, Inc. (and its successors by merger or
consolidation) and its controlled Affiliates.
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth under "-- Certificated Securities," the new notes will
be issued in the form of one global new note. Such global new note will be
deposited with, or on behalf of, the Depository Trust Company and registered in
the name of the Depository Trust Company or its nominee. Except as set forth
below, such global new note may be transferred, in whole and not in part, only
to the Depository Trust Company or another nominee of the Depository Trust
Company.
Investors may hold their beneficial interests in such global new note
directly through the Depository Trust Company if they have an account with the
Depository Trust Company or indirectly through organizations which have accounts
with the Depository Trust Company.
The Depository Trust Company has advised Verio as follows: The Depository
Trust Company is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code, and "a
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clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. The Depository Trust Company was created to hold securities of
institutions that have accounts with the Depository Trust Company
("participants") and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depository Trust Company's
participants include securities brokers and dealers, which may include the
initial purchasers, banks, trust companies, clearing corporations and certain
other organizations. Access to the Depository Trust Company's book-entry system
is also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
whether directly or indirectly.
Upon the issuance of the global new note, the Depository Trust Company will
credit, on its book-entry registration and transfer system, the principal amount
of the new notes represented by such global new note to the accounts of
participants. Ownership of beneficial interests in such global new note will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in such global new note will be shown on, and
the transfer of those ownership interests will be effected only through records
maintained by the Depository Trust Company, with respect to participants'
interest, and such participants, with respect to the owners of beneficial
interests in such global new note other than participants. The laws of some
jurisdictions may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and laws may impair
the ability to transfer or pledge beneficial interests in such global new note.
So long as the Depository Trust Company, or its nominee, is the registered
holder and owner of a global new note, the Depository Trust Company or such
nominee, as the case may be, will be considered the sole legal owner and holder
of the related new notes for all purposes of such new notes and the indenture.
Except as set forth below, owners of beneficial interests in the global new note
will not be entitled to have the new notes represented by the global new note
registered in their names, will not receive or be entitled to receive physical
delivery of certificated new notes in definitive form and will not be considered
to be the owners or holders of any new notes under the global new note. Verio
understands that under existing industry practice, in the event an owner of a
beneficial interest in the global new note desires to take any action that the
Depository Trust Company, as the holder of the global new note is entitled to
take, the Depository Trust Company would authorize the participants to take such
action, and that the participants would authorize beneficial owners owning
through such participants to take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Payment of principal of and interest on new notes represented by a global
new note registered in the name of and held by the Depository Trust Company or
its nominee will be made to the Depository Trust Company or its nominee, as the
case may be, as the registered owner and holder of the global new note.
Verio expects that the Depository Trust Company or its nominee, upon
receipt of any payment of principal of or interest on a global new note, will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global new note
as shown on the records of the Depository Trust Company or its nominee. Verio
also expects that payments by participants to owners of beneficial interests in
a global new note held through such participants will be governed by standing
instructions and customary practices and will be the responsibility of such
participants. Verio will not have any responsibility or liability for any aspect
of the records relating to, or payments made on account of, beneficial ownership
interests in a global new note for any new note or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests or for
any other aspect of the relationship between the Depository Trust Company and
its participants or the relationship between such participants and the owners of
beneficial interests in the global new notes owning through such participants.
Unless and until it is exchanged in whole or in part for certificated new
notes in definitive form, the global new note may not be transferred except as a
whole by the Depository Trust Company to a nominee of the Depository Trust
Company or by a nominee of the Depository Trust Company to the Depository Trust
Company or another nominee of the Depository Trust Company.
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Although the Depository Trust Company has agreed to the foregoing
procedures in order to facilitate transfers of interests in the global new note
among participants of the Depository Trust Company, it is under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. None of the trustee, Verio nor the paying agent will
have any responsibility for the performance by the Depository Trust Company or
its participants or indirect participants of their respective obligations under
the rules and procedures governing their operations.
Certificated Securities. Interests in the global new note will be exchanged
for certificated securities if (1) the Depository Trust Company notifies Verio
that it is unwilling or unable to continue as Depository Trust Company for the
global new note, or the Depository Trust Company ceases to be a "clearing
agency" registered under the Exchange Act, and a successor Depository Trust
Company is not appointed by Verio within 90 days, or (2) an Event of Default has
occurred and is continuing with respect to the new notes. Upon the occurrence of
any of the events described in the preceding sentence, Verio will cause the
appropriate certificated securities to be delivered.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material federal income tax
consequences that apply to the exchange of old notes for new notes and the
ownership and disposition of the new notes. It is based on the Internal Revenue
Code of 1986, as amended, applicable U.S. Treasury Regulations, judicial
authority, and administrative rulings and practice, as of the date of this
exchange offer. The discussion below does not address any state, local or
foreign tax consequences of an exchange of old notes for new notes, or of
ownership and disposition of the new notes. Your tax treatment may vary
depending upon your particular situation. You may also be subject to special
rules not discussed below if you are a certain kind of note owner, including:
- an owner which did not purchase the old notes for cash at original issue;
- a financial institution or broker-dealer;
- an insurance company;
- a tax-exempt organization; or
- a holder of a note as part of a hedge, straddle or conversion
transaction.
The following discussion assumes that you hold your old notes as capital
assets at the time of the exchange and will hold your new notes as capital
assets.
The tax law upon which this discussion is based is subject to change at any
time, and any change may be applied retroactively in a manner that could
adversely affect you. In addition, Verio has not requested an advance ruling
from the Internal Revenue Service as to the tax consequences of the exchange
offer. The Internal Revenue Service could take different positions concerning
the tax consequences of the exchange offer and the tax consequences of ownership
and disposition of the new notes discussed below and such positions could be
sustained.
The tax consequences to you of the exchange offer and of ownership and
disposition of the new notes may depend upon whether you are a "U.S. holder."
You are a "U.S. holder" if you are a beneficial owner of notes who or that is:
- a citizen or resident of the United States;
- a corporation, partnership or other legal entity created or organized in
or under the laws of the United States or one of its political
subdivisions;
- an estate, if your income is subject to U.S. federal income taxation
regardless of its source;
65
<PAGE> 67
- a trust if (A) a U.S. court is able to exercise primary supervision over
your administration and (B) one or more U.S. persons (as defined in
Section 7701(c)(30) of the Internal Revenue Code) has authority to
control all of your substantial decisions; or
- otherwise subject to U.S. federal income tax on a net income basis with
respect to the new notes.
If you are not a U.S. holder under these rules, you should review the
discussion below with respect to ownership of the new notes by a non-U.S.
holder.
WE STRONGLY URGE YOU TO CONSULT WITH YOUR OWN TAX ADVISOR REGARDING THE
PARTICULAR TAX CONSEQUENCES OF THE EXCHANGE OFFER TO YOU, AND REGARDING YOUR
PARTICULAR TAX CONSEQUENCES IN OWNING AND DISPOSING OF THE NEW NOTES, INCLUDING
THE EFFECT OF U.S. FEDERAL ESTATE AND GIFT TAX LAWS, AS WELL AS WITH RESPECT TO
THE EFFECT OF ANY FOREIGN, STATE, OR LOCAL LAWS APPLICABLE TO YOU.
EXCHANGE OFFER
Your exchange of old notes for new notes in the exchange offer will not be
treated as a taxable event for U.S. federal income tax purposes because the old
notes do not differ materially in kind or extent from the new notes. Your new
notes will be treated as a continuation of the old notes. You will have the same
tax basis and holding period in the new notes as you had in the old notes
immediately before the exchange.
OWNERSHIP AND DISPOSITION OF NEW NOTES BY U.S. HOLDERS
Taxation of interest. Stated interest on your new notes generally will be
taxable to you as ordinary income at the time it is paid or accrued, depending
on your method of accounting for federal income tax purposes. The new notes are
not expected to give rise to "original issue discount" to you.
Sale or redemption of a new note. You will recognize gain or loss upon the
sale, retirement, redemption or other taxable disposition of your new note. The
amount of gain or loss will be equal to the difference between the amount of
cash and the fair market value of other property you receive (except for cash or
other property attributable to accrued but unpaid stated interest), and your
adjusted tax basis in the new note. The gain or loss will be capital gain or
loss. However, you should know that a purchaser of a new note from you may be
subject to the "market discount" rules, discussed below.
Under the "market discount" rules of the Internal Revenue Code, someone who
purchases a new note from you at a discount generally will be required to
include as ordinary income a portion of any gain realized upon the subsequent
disposition or retirement of the new note equal to the amount of the market
discount the purchaser has not previously included in income.
OWNERSHIP AND DISPOSITION OF NEW NOTES BY NON-U.S. HOLDERS
U.S. withholding and income tax. You will not be subject to U.S.
withholding tax on interest payments on the new notes provided:
- you do not actually or constructively own 10% or more of the total
combined voting power of all classes of Verio stock;
- you are not a controlled foreign corporation for U.S. federal income tax
purposes that is related to Verio through stock ownership;
- you are not a bank that received the old note on an extension of credit
made pursuant to a loan agreement with Verio entered into in the ordinary
course of your trade or business; and
- you provide a statement to Verio signed under penalties of perjury that
includes your name and address and you certify that you are not a United
States person, as required by applicable tax regulations.
66
<PAGE> 68
If you cannot meet these requirements, you generally will be subject to
U.S. withholding tax at a rate of 30% on interest payments, unless you are
eligible for a reduced withholding tax rate under a U.S. tax treaty.
If you are engaged in a trade or business in the United States, and the
interest paid or accrued on the new note is effectively connected with your
conduct of that trade or business, you will be subject to federal income tax on
the interest to the same extent as if you were a U.S. holder. However, you will
not be subject to withholding tax if you provide a properly completed Internal
Revenue Service Form 4224 to Verio.
Sale or retirement of a new note. Any gain realized by you on a sale,
exchange, or redemption of a new note will not be subject to U.S. withholding or
income tax unless the gain is effectively connected with your conduct of a trade
or business in the United States or you are an individual who is present in the
United States for 183 days or more during the taxable year in which you realize
the gain and certain other conditions are satisfied.
U.S. estate tax. If you hold the new notes at the time of your death, the
new notes generally will not be includible in your estate for U.S. estate tax
purposes. However, the new notes will be included in your estate if, at the time
of your death, you owned, actually or constructively, 10% or more of the total
combined voting power of all classes of Verio stock or if the new notes were
effectively connected with your conduct of a trade or business in the United
States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
If you are a U.S. person and are not a corporation, you may be subject to
information reporting to the Internal Revenue Service with respect to the new
notes. You may also be subject to backup withholding at a rate of 31% on
payments of principal and interest on the new notes, and on the proceeds from
disposition of the new notes. However, backup withholding will be imposed on you
only if:
- you fail to furnish to Verio your taxpayer identification number, which,
if you are an individual, is normally your social security number;
- you furnish to Verio an incorrect taxpayer identification number;
- you are notified by the Internal Revenue Service you have failed to
properly report the receipt of interest or dividend income; or
- under certain circumstances, you fail to certify to Verio, under
penalties of perjury, that you have furnished Verio a correct taxpayer
identification number and that you have not been notified by the Internal
Revenue Service that you are subject to backup withholding.
Verio will also start backup withholding if the Internal Revenue Service
instructs it to do so.
You should consult your own tax advisor to determine whether you may
qualify for an exemption from information reporting or backup withholding and
the procedure for obtaining an exemption.
If you certify to Verio that you are a non-U.S. holder, you will not be
subject to information reporting or backup withholding with respect to payments
of interest on the new notes unless Verio has actual knowledge that you are a
U.S. holder.
If you dispose of the new notes to or through the U.S. office of any
broker, you will be subject to information reporting and you may be subject to
backup withholding unless you certify to the broker that you are a non-U.S.
holder or that you otherwise are exempt from information reporting or backup
withholding. You will also be subject to information reporting and may be
subject to backup withholding if the broker has actual knowledge that you are a
U.S. holder or that the conditions of your claimed exemption are not satisfied.
If you dispose of the new notes to or through a non-U.S. office of a
non-U.S. broker that is not a "U.S. related person" you will not be subject to
information reporting or backup withholding. For this purpose, a "U.S. related
person" is a corporation which is a "controlled foreign corporation" for U.S.
income tax purposes, or a foreign person, 50% or more of whose gross income from
all sources for the
67
<PAGE> 69
3-year period ending with the close of its taxable year preceding the payment,
or the period of the person's existence, if less than 3 years, is derived from
activities that are effectively connected with the conduct of a U.S. trade or
business.
If you dispose of the new notes to or through a non-U.S. office of a broker
that is a U.S. related person, information reporting will be required unless the
broker has documentary evidence in its files that you are a non-U.S. holder and
the broker has no knowledge to the contrary. However, backup withholding will
not apply to these payments unless the broker has actual knowledge that you are
a U.S. holder.
If a payment to you is subject to backup withholding, you will be allowed a
credit for the amount withheld against your U.S. income tax liability for the
year, or you may obtain a refund of the withheld amount if no tax is due and you
follow the necessary procedures for claiming a refund.
PROSPECTIVE TAX REGULATIONS AFFECTING NON-U.S. HOLDERS
In 1997, the Internal Revenue Service published new regulations to modify
the requirements imposed on non-U.S. holders and certain intermediaries to
establish the status of the holder as a non-U.S. holder eligible for exemption
from or reduction in U.S. withholding tax and from the backup withholding rules.
The new regulations generally will be effective for payments made after December
31, 2000, subject to certain transition rules. In general, the new regulations
do not significantly alter the substantive withholding and information reporting
requirements. Rather, they unify certification procedures and forms and clarify
reliance standards. In addition, the new regulations impose more stringent
conditions on the ability of financial intermediaries acting for non-U.S.
holders to provide certification on behalf of non-U.S. holders. Under the new
regulations, an intermediary may be required to enter into an agreement with the
Internal Revenue Service to audit certain documentation with respect to such
certifications. You should consult your own tax adviser to determine the effects
of the application of the new regulations to your particular circumstances.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of new notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of new notes received in exchange for old notes where such old
notes were acquired as a result of market-making activities or other trading
activities. Verio has agreed that, starting on the expiration date and ending
180 days after the expiration date, it will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any
resale. In addition, until such date, all dealers effecting transactions in the
new notes may be required to deliver a prospectus.
Verio will not receive any proceeds from any sales of new notes by
broker-dealers or others. New notes received by broker-dealers for their own
account in the exchange offer may be sold from time to time in one or more
transactions:
- in the over-the-counter market, in negotiated transactions;
- through the writing of options on the new notes; or
- a combination of such methods of resale.
They can be sold at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any such new notes. Any
broker-dealer that resells new notes that were received by it for its own
account in the exchange offer and any broker or dealer that participates in a
distribution of such new notes may be deemed to be an "underwriter" within the
meaning of the Securities Act. Any profit or commissions received by them from
any resale may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that by acknowledging that it will
68
<PAGE> 70
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration date, Verio will promptly
send additional copies of this prospectus, including any amendment or
supplement, to any broker-dealer that requests such documents in the letter of
transmittal. Verio has agreed to pay all expenses incident to the exchange
offer, including the expenses of one counsel for the holders of the respective
notes, other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the notes, including any broker-dealers, against
certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the new notes will be passed upon for Verio by Morrison &
Foerster LLP, San Francisco, California.
EXPERTS
The consolidated financial statements of Verio Inc. and subsidiaries as of
December 31, 1997 and 1998 and for the period from inception (March 1, 1996) to
December 31, 1996, and the years ended December 31, 1997 and 1998 and the
financial statements of NSNet, Inc. as of December 31, 1996 and 1997 and for the
years ended December 31, 1996 and 1997 and the period from January 1, 1998 to
February 27, 1998; Access One, Inc. as of December 31, 1997 and for the year
ended December 31, 1997 and the period from January 1, 1998 to February 27,
1998; STARnet, L.L.C. as of December 31, 1997 and for the year ended December
31, 1997 and the period from January 1, 1998 to April 14, 1998; Computing
Engineers Inc. as of December 31, 1996 and 1997 and for the years ended December
31, 1996 and 1997 and the period from January 1, 1998 to April 15, 1998; LI Net,
Inc. as of April 30, 1997 and January 31, 1998 and for the years ended April 30,
1996 and 1997, the nine months ended January 31, 1998 and the period from
February 1, 1998 to April 9, 1998; NTX, Inc. as of and for the nine months ended
June 30, 1998; and Best Internet Communications, Inc. and subsidiaries as of and
for the year ended December 31, 1998, are incorporated by reference in this
prospectus, which is part of the registration statement, in reliance upon the
reports of KPMG LLP, independent certified public accountants, appearing
elsewhere in this prospectus, which is part of the registration statement, and
upon the authority of said firm as experts in accounting and auditing.
69
<PAGE> 71
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OFFER TO EXCHANGE ALL OUTSTANDING
10 5/8% SENIOR NOTES DUE 2009
FOR
10 5/8% SENIOR NOTES DUE 2009
VERIO
----------
PROSPECTUS
----------
Dated , 2000
---------------------
YOU SHOULD DIRECT ALL TENDERED OLD NOTES, EXECUTED LETTERS OF TRANSMITTAL
AND OTHER RELATED DOCUMENTS TO THE EXCHANGE AGENT. YOU SHOULD DIRECT ALL
QUESTIONS AND REQUESTS FOR ASSISTANCE AND REQUEST FOR ADDITIONAL COPIES OF THIS
PROSPECTUS, THE LETTER OF TRANSMITTAL AND OTHER RELATED DOCUMENTS TO THE
EXCHANGE AGENT.
The exchange agent for this exchange offer is:
U.S. BANK TRUST NATIONAL ASSOCIATION
180 East Fifth Street
St. Paul, MN 55101
Attn: Specialized Finance Department
Facsimile Transmissions
(Eligible Institutions Only)
(651) 244-1537
To confirm by telephone
or for information call:
(651) 244-5011
By mail
U.S. BANK TRUST NATIONAL ASSOCIATION
180 East Fifth Street
St. Paul, MN 55101
Attn: Specialized Finance Department
(YOU SHOULD PROMPTLY SEND ORIGINALS OF ALL DOCUMENTS SUBMITTED BY FACSIMILE BY
HAND, OVERNIGHT COURIER, OR REGISTERED OR CERTIFIED MAIL.)
---------------------
Verio has not authorized any dealer, salesperson or other person to give
any information or represent anything not contained in this prospectus. You must
not rely on any unauthorized information. This prospectus does not offer to sell
or solicit an offer to buy, in any jurisdiction where, or to any person to whom,
it is unlawful. The delivery of this prospectus or any sale does not, under any
circumstances, create any implication that there has been no change in Verio's
affairs since the date as of which information is given in this prospectus.
---------------------
UNTIL , 2000 (180 DAYS AFTER THE COMMENCEMENT OF THIS EXCHANGE
OFFER), ALL DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT
PARTICIPATING IN THIS EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 72
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 145 of the General Corporation Law of the
State of Delaware which provides for indemnification of directors, officers and
other employees in certain circumstances, and to Section 102(b)(7) of the
General Corporation Law of the State of Delaware, which provides for the
elimination or limitation of the personal liability for monetary damages of
directors under certain circumstances. Article Eight of the Certificate of
Incorporation of the Registrant eliminates the personal liability for monetary
damages of directors under certain circumstances and provides indemnification to
directors and officers of the Registrant to the fullest extent permitted by the
General Corporation Law of the State of Delaware. Among other things, these
provisions provide indemnification for officers and directors against
liabilities for judgments in and settlements of lawsuits and other proceedings
and for the advance and payment of fees and expenses reasonably incurred by the
director or officer in defense of any such lawsuit or proceeding.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
3.1**** -- Restated Certificate of Incorporation of the Registrant.
3.2+++ -- Certificate of Designations of the Powers, Preferences
and Relative, Participating, Optional and Other Special
Rights of Series A 6.75% Convertible Preferred Stock and
Qualifications, Limitations and Restrictions Thereof
dated July 20, 1999.
3.3**** -- Bylaws of the Registrant.
4.1*** -- Form of Old 1997 Note.
4.2*** -- Form of New 1997 Note.
4.3*** -- Escrow Agreement, dated as of June 24, 1997, among First
Trust National Association (as escrow agent and trustee)
and the Registrant.
4.4** -- 1997 Indenture (See Exhibit 10.1).
4.5** -- 1997 Notes Registration Rights Agreement (See Exhibit
10.4).
4.6*** -- Purchase Agreement, dated as of June 17, 1997, by and
among Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated, and Lazard Freres & Co. LLC
(collectively, the "Initial 1997 Notes Purchasers"), and
the Registrant.
4.7*** -- Form of Old March 1998 Note.
4.8*** -- Form of New March 1998 Note.
4.9** -- 1998 Indenture (See Exhibit 10.23).
4.10** -- 1998 Notes Registration Rights Agreement (See Exhibit
10.24).
4.11*** -- Purchase Agreement, dated as of March 19, 1998, by and
among Salomon Brothers Inc, Lazard Freres & Co. LLC,
Chase Securities, Inc., and BancBoston Securities Inc.
(collectively, the "Initial March 1998 Notes
Purchasers"), and the Registrant.
4.12***** -- Form of Old November 1998 Note.
4.13***** -- Form of New November 1998 Note.
4.14++ -- Indenture (See Exhibit 10.34).
4.15++ -- Registration Rights Agreement (See Exhibit 10.35).
4.16++ -- Purchase Agreement, dated as of November 20, 1998, by and
among Salomon Smith Barney Inc., Credit Suisse First
Boston Corporation, Donaldson, Lufkin & Jenrette
Securities Corporation and First Union Capital Markets
(collectively, the "Initial November 1998 Notes
Purchasers"), and the Registrant.
4.17 -- Form of Old Note.
4.18 -- Form of New Note.
</TABLE>
II-1
<PAGE> 73
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.19 -- Indenture (See Exhibit 10.36).
4.20 -- Registration Rights Agreement (See Exhibit 10.37).
4.21 -- Purchase Agreement, dated November 16, 1999, by and among
Salomon Smith Barney Inc., Donaldson, Lufkin & Jenrette
Securities Corporation and Morgan Stanley & Co.
Incorporated (collectively, the "Initial November 1999
Notes Purchasers"), and the Registrant.
5.1 -- Opinion of Morrison & Foerster LLP.
10.1** -- Indenture, dated as of June 24, 1997, by and among the
Registrant and First Trust National Association (as
trustee).
10.2** -- Warrant Agreement, dated as of June 24, 1997, by and
between First Trust National Association and the
Registrant.
10.3** -- Common Stock Registration Rights Agreement, dated as of
June 17, 1997, by and among the Registrant, Brooks Fiber
Properties, Inc., Norwest Equity Partners V, Providence
Equity Partners, Centennial Fund V, L.P., Centennial Fund
IV, L.P. (as investors), and the Initial 1997 Notes
Purchasers.
10.4** -- Registration Rights Agreement, dated as of June 17, 1997,
by and among the Registrant and the Initial 1997 Notes
Purchasers.
10.5** -- Lease Agreement, dated as of June 20, 1997, by and
between the Registrant and Highland Park Ventures, LLC,
with respect to the property in Englewood, Colorado,
including the First Amendment to Lease Agreement, dated
as of December 16, 1997.
10.6** -- Lease Agreement, dated as of May 24, 1997, by and between
the Registrant and IM Joint Venture, with respect to the
property in Dallas, Texas, as amended.
10.7** -- Form of Indemnification Agreement between the Registrant
and each of its officers and directors.
10.8** -- Amended and Restated Stockholders Agreement, dated as of
May 20, 1997, by and between the Registrant, the Series A
Purchasers, the Series B Purchasers, the Series C
Purchasers and members of the Registrant's management.
10.9** -- The Registrant's 1996 Stock Option Plan, as amended.
10.10** -- The Registrant's 1997 California Stock Option Plan, as
amended.
10.11** -- The Registrant's 1998 Employee Stock Purchase Plan, as
amended.
10.12** -- The Registrant's 1998 Stock Incentive Plan, as amended.
10.13** -- Form of Compensation Protection Agreement between the
Registrant and each of its officers.
10.14** -- Master Service Agreement, dated as of August 23, 1996, by
and between the Registrant and MFS Datanet, Inc.
10.15** -- Agreement for Terminal Facility Collocation Space, dated
August 8, 1996, by and between MFS Telecom, Inc. and the
Registrant.
10.16** -- Bilateral Peering Agreement, dated May 19, 1997, between
AT&T Corp. and the Registrant.
10.17** -- Master Lease Agreement, dated November 17, 1997, by and
between Insight Investments Corp. and the Registrant.
10.18** -- Master Lease Agreement, dated October 27, 1997, by and
between Cisco Capital Systems Corporation and the
Registrant.
10.19**+ -- Lateral Exchange Networks Interconnection Agreement,
dated as of February 3, 1997, by and between the
Registrant and Sprint Communications Company L.P.
("Sprint").
10.20**+ -- Cover Agreement, dated September 30, 1996, by and between
the Registrant and Sprint.
10.21**+ -- Amendment One to Cover Agreement, dated November 7, 1996,
by and between the Registrant and Sprint.
10.22**+ -- Amendment Two to Cover Agreement, dated March 2, 1998, by
and between the Registrant and Sprint.
</TABLE>
II-2
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.23** -- Indenture, dated as of March 25, 1998, by and among the
Registrant and First Trust National Association (as
trustee).
</TABLE>
II-3
<PAGE> 74
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.24** -- Registration Rights Agreement, dated as of March 25,
1998, by and among the Registrant, and the Initial 1998
Notes Purchasers.
10.25**+ -- Capacity and Services Agreement, dated as of March 31,
1998, by and among the Registrant and Qwest
Communications Corporation.
10.26** -- Credit Agreement, dated as of April 6, 1998, by and among
the Registrant, The Chase Manhattan Bank (as
administrative agent) and Fleet National Bank (as
documentation agent).
10.27** -- Stock Purchase and Master Strategic Relationship
Agreement, dated as of April 7, 1998, by and among the
Registrant and Nippon Telegraph and Telephone Corporation
("NTT"), a Japanese corporation.
10.28**+ -- Investment Agreement, dated as of April 7, 1998, by and
among the Registrant and NTT.
10.29**+ -- Outside Service Provider Agreement, dated as of April 7,
1998, by and among the Registrant and NTT America, Inc.
10.30**+ -- Master Services Agreement, dated as of June 13, 1997, by
and between the Registrant and MCI Telecommunications
Corporation ("MCI").
10.31**+ -- MCI Domestic (US) Public Interconnection Agreement dated
as of June 12, 1997, by and between the Registrant and
MCI, as amended.
10.32** -- The Registrant's 1998 Non-Employee Director Stock
Incentive Plan.
10.33*+ -- Interconnection Agreement, effective as of April 1, 1998
by and between the Registrant and UUNET Technologies,
Inc.
10.34++ -- Indenture, dated as of November 25, 1998, by and among
the Registrant and U.S. Bank Trust National Association
(as trustee).
10.35++ -- Registration Rights Agreement, dated as of November 25,
1998, by and among the Registrant and the Initial
November 1998 Notes Purchasers.
10.36 -- Indenture, dated as of November 19, 1999, by and among
the Registrant and U.S. Bank Trust National Association
(as trustee).
10.37 -- Registration Rights Agreement, dated as of November 19,
1999, by and among the Registrant and the Initial
November 1999 Notes Purchasers.
10.38++ -- Amended and Restated Agreement and Plan of Merger, dated
as of November 17, 1998, by and among the Registrant,
Purple Acquisition, Inc. and Best Internet
Communications, Inc.
10.39+++ -- Purchase Agreement, dated July 14, 1999, by and among the
Registrant and Salomon Smith Barney Inc., Donaldson,
Lufkin & Jenrette Securities Corporation, Credit Suisse
First Boston Corporation, Deutsche Bank Securities Inc.
and First Union Capital Market Corp.
10.40+++ -- Deposit Agreement, dated as of July 20, 1999, by and
between the Registrant and Norwest Bank Minnesota, N.A.
10.41+++ -- Registration Rights Agreement, dated as of July 20, 1999,
by and among the Registrant and Salomon Smith Barney
Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Credit Suisse First Boston Corporation,
Deutsche Bank Securities Inc. and First Union Capital
Markets. Corp.
11.1 -- Not applicable.
21.1o -- List of Subsidiaries of the Registrant.
23.1 -- Consent of Morrison & Foerster LLP (contained in Exhibit
5.1).
24.1 -- Power of Attorney (see page II-6).
25.1 -- Form of T-1 Statement of Eligibility and Qualification
under the Trust Indenture Act of 1939 of First Trust
National Association.
27.1++++ -- Financial Data Schedule.
99.1o -- Form of Letter of Transmittal with respect to the
Exchange Offer.
99.2o -- Form of Notice of Guaranteed Delivery.
</TABLE>
II-4
<PAGE> 75
- ---------------
* Incorporated by reference from the Registrant's quarterly report on Form
10-Q filed with the Commission on August 13, 1998.
** Incorporated by reference from the Registration Statement on Form S-1 of
the Registrant (Registration No. 333-47099) filed with the Commission on
February 27, 1998, as amended.
*** Incorporated by reference from the Registration Statement on Form S-4 of
the Registrant (Registration No. 333-47497) filed with the Commission on
March 6, 1998, as amended.
**** Incorporated by reference from the Registration Statement on Form S-3 of
the Registrant (Registration No. 333-91051) filed with the Commission on
November 16, 1999, as amended.
***** Incorporated by reference from the Registration Statement on Form S-4 of
the Registrant (Registration No. 333-70727) filed with the Commission on
January 15, 1999, as amended.
+ Document for which confidential treatment has been requested.
++ Incorporated by reference from the Registration Statement on Form S-4 of
the Registrant (Registration No. 333-67715) filed with the Commission on
November 23, 1998, as amended.
+++ Incorporated by reference from the Registrant's quarterly report on Form
10-Q filed with the Commission on August 16, 1999.
++++ Incorporated by reference from the Registrant's quarterly report on Form
10-Q filed with the Commission on November 12, 1999.
o To be filed by amendment.
FINANCIAL STATEMENTS AND SCHEDULE:
Financial Statements and the Financial Statement Schedule are incorporated
by reference as part of this Registration Statement.
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions described in
Item 20 above, or otherwise, the Registrant has been advised that in the opinion
of the Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(2) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(3) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one
II-5
<PAGE> 76
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(d) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
(e) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-6
<PAGE> 77
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in Englewood, Colorado, on
February 25, 2000.
VERIO INC
By: /s/ JUSTIN L. JASCHKE
----------------------------------
Justin L. Jaschke
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Justin L. Jaschke, Peter B. Fritzinger and Carla
Hamre Donelson, and each of them, each with full power to act without the other,
his true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, for such person and in his name, place and
stead, in any and all capacities, to sign any or all further amendments or
supplements (including post-effective amendments filed pursuant to Rule 462(b)
of the Securities Act of 1933) to this Form S-4 Registration Statement and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each of
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each of said attorneys-in-fact
and agents, or his substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEPHEN C. HALSTEDT Chairman of the Board February 25, 2000
- -----------------------------------------------------
Stephen C. Halstedt
/s/ JUSTIN L. JASCHKE Chief Executive Officer and February 25, 2000
- ----------------------------------------------------- Director
Justin L. Jaschke
Director February , 2000
- -----------------------------------------------------
James C. Allen
/s/ TRYGVE E. MYHREN Director February 25, 2000
- -----------------------------------------------------
Trygve E. Myhren
Director February 25, 2000
- -----------------------------------------------------
Paul J. Salem
Director February 25, 2000
- -----------------------------------------------------
Yukimasa Ito
/s/ ARTHUR L. CAHOON Director February 25, 2000
- -----------------------------------------------------
Arthur L. Cahoon
/s/ PETER B. FRITZINGER Chief Financial Officer February 25, 2000
- ----------------------------------------------------- (Principal Accounting
Peter B. Fritzinger Officer)
</TABLE>
II-6
<PAGE> 78
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
3.1**** -- Restated Certificate of Incorporation of the Registrant.
3.2+++ -- Certificate of Designations of the Powers, Preferences
and Relative, Participating, Optional and Other Special
Rights of Series A 6.75% Convertible Preferred Stock and
Qualifications, Limitations and Restrictions Thereof
dated July 20, 1999.
3.3**** -- Bylaws of the Registrant.
4.1*** -- Form of Old 1997 Note.
4.2*** -- Form of New 1997 Note.
4.3*** -- Escrow Agreement, dated as of June 24, 1997, among First
Trust National Association (as escrow agent and trustee)
and the Registrant.
4.4** -- 1997 Indenture (See Exhibit 10.1).
4.5** -- 1997 Notes Registration Rights Agreement (See Exhibit
10.4).
4.6*** -- Purchase Agreement, dated as of June 17, 1997, by and
among Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated, and Lazard Freres & Co. LLC
(collectively, the "Initial 1997 Notes Purchasers"), and
the Registrant.
4.7*** -- Form of Old March 1998 Note.
4.8*** -- Form of New March 1998 Note.
4.9** -- 1998 Indenture (See Exhibit 10.23).
4.10** -- 1998 Notes Registration Rights Agreement (See Exhibit
10.24).
4.11*** -- Purchase Agreement, dated as of March 19, 1998, by and
among Salomon Brothers Inc, Lazard Freres & Co. LLC,
Chase Securities, Inc., and BancBoston Securities Inc.
(collectively, the "Initial March 1998 Notes
Purchasers"), and the Registrant.
4.12***** -- Form of Old November 1998 Note.
4.13***** -- Form of New November 1998 Note.
4.14++ -- Indenture (See Exhibit 10.34).
4.15++ -- Registration Rights Agreement (See Exhibit 10.35).
4.16++ -- Purchase Agreement, dated as of November 20, 1998, by and
among Salomon Smith Barney Inc., Credit Suisse First
Boston Corporation, Donaldson, Lufkin & Jenrette
Securities Corporation and First Union Capital Markets
(collectively, the "Initial November 1998 Notes
Purchasers"), and the Registrant.
4.17 -- Form of Old Note.
4.18 -- Form of New Note.
4.19 -- Indenture (See Exhibit 10.36).
4.20 -- Registration Rights Agreement (See Exhibit 10.37).
4.21 -- Purchase Agreement, dated November 16, 1999, by and among
Salomon Smith Barney Inc., Donaldson, Lufkin & Jenrette
Securities Corporation and Morgan Stanley & Co.
Incorporated (collectively, the "Initial November 1999
Notes Purchasers"), and the Registrant.
5.1 -- Opinion of Morrison & Foerster LLP.
10.1** -- Indenture, dated as of June 24, 1997, by and among the
Registrant and First Trust National Association (as
trustee).
10.2** -- Warrant Agreement, dated as of June 24, 1997, by and
between First Trust National Association and the
Registrant.
10.3** -- Common Stock Registration Rights Agreement, dated as of
June 17, 1997, by and among the Registrant, Brooks Fiber
Properties, Inc., Norwest Equity Partners V, Providence
Equity Partners, Centennial Fund V, L.P., Centennial Fund
IV, L.P. (as investors), and the Initial 1997 Notes
Purchasers.
10.4** -- Registration Rights Agreement, dated as of June 17, 1997,
by and among the Registrant and the Initial 1997 Notes
Purchasers.
10.5** -- Lease Agreement, dated as of June 20, 1997, by and
between the Registrant and Highland Park Ventures, LLC,
with respect to the property in Englewood, Colorado,
including the First Amendment to Lease Agreement, dated
as of December 16, 1997.
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.6** -- Lease Agreement, dated as of May 24, 1997, by and between
the Registrant and IM Joint Venture, with respect to the
property in Dallas, Texas, as amended.
</TABLE>
<PAGE> 79
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.7** -- Form of Indemnification Agreement between the Registrant
and each of its officers and directors.
10.8** -- Amended and Restated Stockholders Agreement, dated as of
May 20, 1997, by and between the Registrant, the Series A
Purchasers, the Series B Purchasers, the Series C
Purchasers and members of the Registrant's management.
10.9** -- The Registrant's 1996 Stock Option Plan, as amended.
10.10** -- The Registrant's 1997 California Stock Option Plan, as
amended.
10.11** -- The Registrant's 1998 Employee Stock Purchase Plan, as
amended.
10.12** -- The Registrant's 1998 Stock Incentive Plan, as amended.
10.13** -- Form of Compensation Protection Agreement between the
Registrant and each of its officers.
10.14** -- Master Service Agreement, dated as of August 23, 1996, by
and between the Registrant and MFS Datanet, Inc.
10.15** -- Agreement for Terminal Facility Collocation Space, dated
August 8, 1996, by and between MFS Telecom, Inc. and the
Registrant.
10.16** -- Bilateral Peering Agreement, dated May 19, 1997, between
AT&T Corp. and the Registrant.
10.17** -- Master Lease Agreement, dated November 17, 1997, by and
between Insight Investments Corp. and the Registrant.
10.18** -- Master Lease Agreement, dated October 27, 1997, by and
between Cisco Capital Systems Corporation and the
Registrant.
10.19**+ -- Lateral Exchange Networks Interconnection Agreement,
dated as of February 3, 1997, by and between the
Registrant and Sprint Communications Company L.P.
("Sprint").
10.20**+ -- Cover Agreement, dated September 30, 1996, by and between
the Registrant and Sprint.
10.21**+ -- Amendment One to Cover Agreement, dated November 7, 1996,
by and between the Registrant and Sprint.
10.22**+ -- Amendment Two to Cover Agreement, dated March 2, 1998, by
and between the Registrant and Sprint.
10.23** -- Indenture, dated as of March 25, 1998, by and among the
Registrant and First Trust National Association (as
trustee).
10.24** -- Registration Rights Agreement, dated as of March 25,
1998, by and among the Registrant, and the Initial 1998
Notes Purchasers.
10.25**+ -- Capacity and Services Agreement, dated as of March 31,
1998, by and among the Registrant and Qwest
Communications Corporation.
10.26** -- Credit Agreement, dated as of April 6, 1998, by and among
the Registrant, The Chase Manhattan Bank (as
administrative agent) and Fleet National Bank (as
documentation agent).
10.27** -- Stock Purchase and Master Strategic Relationship
Agreement, dated as of April 7, 1998, by and among the
Registrant and Nippon Telegraph and Telephone Corporation
("NTT"), a Japanese corporation.
10.28**+ -- Investment Agreement, dated as of April 7, 1998, by and
among the Registrant and NTT.
10.29**+ -- Outside Service Provider Agreement, dated as of April 7,
1998, by and among the Registrant and NTT America, Inc.
10.30**+ -- Master Services Agreement, dated as of June 13, 1997, by
and between the Registrant and MCI Telecommunications
Corporation ("MCI").
10.31**+ -- MCI Domestic (US) Public Interconnection Agreement dated
as of June 12, 1997, by and between the Registrant and
MCI, as amended.
10.32** -- The Registrant's 1998 Non-Employee Director Stock
Incentive Plan.
10.33*+ -- Interconnection Agreement, effective as of April 1, 1998
by and between the Registrant and UUNET Technologies,
Inc.
10.34++ -- Indenture, dated as of November 25, 1998, by and among
the Registrant and U.S. Bank Trust National Association
(as trustee).
</TABLE>
<PAGE> 80
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.35++ -- Registration Rights Agreement, dated as of November 25,
1998, by and among the Registrant and the Initial
November 1998 Notes Purchasers.
10.36 -- Indenture, dated as of November 19, 1999, by and among
the Registrant and U.S. Bank Trust National Association
(as trustee).
10.37 -- Registration Rights Agreement, dated as of November 19,
1999, by and among the Registrant and the Initial
November 1999 Notes Purchasers.
10.38++ -- Amended and Restated Agreement and Plan of Merger, dated
as of November 17, 1998, by and among the Registrant,
Purple Acquisition, Inc. and Best Internet
Communications, Inc.
10.39+++ -- Purchase Agreement, dated July 14, 1999, by and among the
Registrant and Salomon Smith Barney Inc., Donaldson,
Lufkin & Jenrette Securities Corporation, Credit Suisse
First Boston Corporation, Deutsche Bank Securities Inc.
and First Union Capital Market Corp.
10.40+++ -- Deposit Agreement, dated as of July 20, 1999, by and
between the Registrant and Norwest Bank Minnesota, N.A.
10.41+++ -- Registration Rights Agreement, dated as of July 20, 1999,
by and among the Registrant and Salomon Smith Barney
Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Credit Suisse First Boston Corporation,
Deutsche Bank Securities Inc. and First Union Capital
Markets. Corp.
11.1 -- Not applicable.
21.1o -- List of Subsidiaries of the Registrant.
23.1 -- Consent of Morrison & Foerster LLP (contained in Exhibit
5.1).
24.1 -- Power of Attorney (see page II-6).
25.1 -- Form of T-1 Statement of Eligibility and Qualification
under the Trust Indenture Act of 1939 of First Trust
National Association.
27.1++++ -- Financial Data Schedule.
99.1o -- Form of Letter of Transmittal with respect to the
Exchange Offer.
99.2o -- Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
* Incorporated by reference from the Registrant's quarterly report on Form
10-Q filed with the Commission on August 13, 1998.
** Incorporated by reference from the Registration Statement on Form S-1 of
the Registrant (Registration No. 333-47099) filed with the Commission on
February 27, 1998, as amended.
*** Incorporated by reference from the Registration Statement on Form S-4 of
the Registrant (Registration No. 333-47497) filed with the Commission on
March 6, 1998, as amended.
**** Incorporated by reference from the Registration Statement on Form S-3 of
the Registrant (Registration No. 333-91051) filed with the Commission on
November 16, 1999, as amended.
***** Incorporated by reference from the Registration Statement on Form S-4 of
the Registrant (Registration No. 333-70727) filed with the Commission on
January 15, 1999, as amended.
+ Document for which confidential treatment has been requested.
++ Incorporated by reference from the Registration Statement on Form S-4 of
the Registrant (Registration No. 333-67715) filed with the Commission on
November 23, 1998, as amended.
+++ Incorporated by reference from the Registrant's quarterly report on Form
10-Q filed with the Commission on August 16, 1999.
++++ Incorporated by reference from the Registrant's quarterly report on Form
10-Q filed with the Commission on November 12, 1999.
o To be filed by amendment.
<PAGE> 1
EXHIBIT 4.17
[FORM OF NOTE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1)
REPRESENTS THAT (a) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (b) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) (AN "ACCREDITED INVESTOR") OR (c) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 OF
REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (x) THE DATE WHICH IS TWO
YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE
SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY OR ANY PREDECESSOR OF THIS SECURITY AND (Y) SUCH LATER DATE, IF ANY, AS
MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"),
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (a) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (b) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (c) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (d) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S, (e) TO AN
ACCREDITED INVESTOR THAT IS ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT, OR FOR
THE
A-1-1
<PAGE> 2
ACCOUNT OF SUCH AN ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT (AND IF ACQUIRING THE SECURITIES FROM SUCH AN
ACCREDITED INVESTOR, IS ACQUIRING SECURITIES HAVING AN AGGREGATE PRINCIPAL
AMOUNT OF NOT LESS THAN $250,000), OR (f) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3)
AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY,
THE TRUSTEE, THE TRANSFER AGENT AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (e) OR (f) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING
CASES, TO REQUIRE THAT A CERTIFICATION OF TRANSFER IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
A-1-2
<PAGE> 3
VERIO INC.
-----------------
10-5/8% SENIOR NOTES DUE 2009, SERIES A
CUSIP No.
----------
No. $[ ]
-----------
VERIO INC., a corporation incorporated under the laws of the
State of Delaware (herein called the "Company," which term includes any
successor corporation under this Indenture hereinafter referred to), for value
received, hereby promises to pay to ___________ or registered assigns, the
principal sum of _______________ Dollars on November 15, 2009, at the office or
agency of the Company referred to below, and to pay interest thereon on May 15
and November 15 (each, an "Interest Payment Date"), of each year, commencing on
May 15, 2000, accruing from the Issue Date or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, at the rate
of 10-5/8% per annum, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture referred to
on the reverse hereof, be paid to the person in whose name this Note (or one or
more Predecessor Notes) is registered at the close of business on May 1 and
November 1 (each, a "Regular Record Date"), whether or not a Business Day, as
the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid, or duly provided for, and interest on such defaulted
interest at the then applicable interest rate borne by the Notes, to the extent
lawful, shall forthwith cease to be payable to the Holder on such Regular Record
Date, and may be paid to the person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on a Special Record
Date for the payment of such defaulted interest to be fixed by the Trustee,
notice of which shall be given to Holders of Notes not less than 10 days prior
to such Special Record Date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in such Indenture.
Payment of the principal of, premium, if any, and interest on
this Note will be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan in The City of New York, State of New
York, or at such other office or agency of the Company as may be maintained for
such purpose, in such coin or currency of the United
A-1-3
<PAGE> 4
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the address of the person
entitled thereto as such address shall appear on the Note Register.
Reference is hereby made to the further provisions of this Note
set forth on the reverse hereof.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.
[Remainder of Page Intentionally Left Blank]
A-1-4
<PAGE> 5
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated: VERIO INC.
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 10-5/8% Senior Notes due 2009, Series A,
referred to in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By:
---------------------------------------
Authorized Signatory
A-1-5
<PAGE> 6
[REVERSE OF NOTE]
1. Indenture. This Note is one of a duly authorized issue of
Notes of the Company designated as its 10-5/8% Senior Notes due 2009, Series A
(herein called the "Initial Notes"). The Notes are limited (except as otherwise
provided in the Indenture referred to below) in aggregate principal amount to
$400,000,000, which may be issued under an indenture (herein called the
"Indenture") dated as of November 19, 1999, by and between the Company and U.S.
Bank Trust National Association, as trustee (herein called the "Trustee," which
term includes any successor Trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Trustee and the Holders of the Notes, and of the
terms upon which the Notes are, and are to be, authenticated and delivered. The
Notes include the Initial Notes, the Private Exchange Notes and the Unrestricted
Notes (including the Exchange Notes referred to below), issued in exchange for
the Initial Notes pursuant to the Registration Rights Agreement. The Initial
Notes and the Unrestricted Notes are treated as a single class of securities
under the Indenture.
All capitalized terms used in this Note which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and the TIA for a statement of such terms.
No reference herein to the Indenture and no provisions of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, premium, if any,
and interest on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed.
2. Registration Rights. Pursuant to the Registration Rights
Agreement by and among the Company and the Initial Purchasers, the Company will
be obligated to consummate an exchange offer pursuant to which the Holder of
this Note shall have the right to exchange this Note for 10-5/8% Senior Notes
due 2009, Series B, of the Company (herein called the "Exchange Notes"), which
have been registered under the Securities Act, in like principal amount and
having identical terms as the Notes (other than as set forth in this paragraph).
The Holders of Notes shall be entitled to receive certain additional interest
payments in the event such exchange offer is not consummated and upon certain
other conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.
A-1-6
<PAGE> 7
3. Redemption. The Notes will be redeemable, at the option of the
Company, in whole or in part, on or after November 15, 2004 upon not less than
30 nor more than 60 days' written notice at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest thereon, if any, to the applicable redemption date, if redeemed during
the twelve-month period beginning on November 15, of each of the years indicated
below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004 ..... 105.313%
2005 ..... 103.542%
2006 ..... 101.771%
2007 ..... 100.000%
</TABLE>
Notwithstanding the foregoing, in the event that after the Issue
Date and prior to November 15, 2002 the Company issues, in one or more
transactions, Capital Stock (other than Disqualified Stock) of the Company to
one or more Strategic Equity Investors or in any Equity Offering (an "Equity
Sale"), the Company may redeem, at its option, up to a maximum of 35% of the
initially Outstanding aggregate principal amount of Notes from the net proceeds
thereof at a redemption price equal to 110.625% of the principal amount of the
Notes, together with accrued and unpaid interest to the date of redemption;
provided that not less than $260.0 million aggregate principal amount of Notes
is Outstanding following such redemption. Any such redemption may only be
effected once and must be effected upon not less than 30 nor more than 60 days'
notice given within 180 days after such Equity Sale.
4. Offers to Purchase. Sections 10.10 and 10.15 of the Indenture
provide that upon the occurrence of a Change of Control and following certain
Asset Sales, and subject to certain conditions and limitations contained
therein, the Company shall make an offer to purchase all or a portion of the
Notes in accordance with the procedures set forth in the Indenture.
5. Defaults and Remedies. If an Event of Default occurs and is
continuing, the principal of all of the Outstanding Notes, plus all accrued and
unpaid interest, if any, to and including the date the Notes are paid, may be
declared due and payable in the manner and with the effect provided in this
Indenture.
6. Defeasance. The Indenture contains provisions (which
provisions apply to this Note) for defeasance at any time of (a) the entire
indebtedness of the Company on this Note and (b) certain restrictive covenants
and related Defaults and Events of Default, in each case upon compliance by the
Company with certain conditions set forth therein.
A-1-7
<PAGE> 8
7. Amendments and Waivers. The Indenture permits, with certain
exceptions as provided therein, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal amount of the Notes
at the time Outstanding. The Indenture also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of the Notes at
the time Outstanding, on behalf of the Holders of all the Notes, to waive
compliance by the Company with certain provisions of the Indenture and certain
past Defaults under the Indenture and this Note and their consequences. Any such
consent or waiver by or on behalf of the Holder of this Note shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note.
8. Denominations, Transfer and Exchange. The Notes are issuable
only in registered form without coupons in denominations of $1,000 and any
integral multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Notes are exchangeable for a like aggregate
principal amount of Notes of a different authorized denomination, as requested
by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Note Register
of the Company, upon surrender of this Note for registration of transfer at the
office or agency of the Company maintained for such purpose in the Borough of
Manhattan in The City of New York, State of New York, or at such other office or
agency of the Company as may be maintained for such purpose, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
No service charge shall be made for any registration of transfer
or exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
9. Persons Deemed Owners. Prior to and at the time of due
presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the person in whose name
this Note is registered as the owner hereof for all purposes, whether or not
this Note shall be overdue, and neither the Company, the Trustee nor any agent
shall be affected by notice to the contrary.
10. GOVERNING LAW. THE INDENTURE, THIS NOTE AND ANY GUARANTEE SET
FORTH BELOW SHALL BE GOVERNED BY, AND CONSTRUED
A-1-8
<PAGE> 9
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture. Requests may be made to:
Verio Inc., 8005 South Chester Street, Suite 200, Englewood, Colorado 80112.
A-1-9
<PAGE> 10
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below and have your
signature guaranteed:
I or we assign and transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
----------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
In connection with any transfer of this Note occurring prior to
the date which is the earlier of (i) the date of the declaration by the SEC of
the effectiveness of a registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) the date two years (or such shorter period of time as
permitted by Rule 144 under the Securities Act or any successor provision
thereunder) after the later of the original issuance date appearing on the face
of this Note (or any Predecessor Note) or the last date on which the Company or
any Affiliate of the Company was the owner of this Note (or any Predecessor
Note), the undersigned confirms that it has not utilized any general
solicitation or general advertising in connection with the transfer and that:
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act provided by Rule 144A
thereunder.
or
A-1-10
<PAGE> 11
[ ] (b) this Note is being transferred other than in accordance with (a) above
and documents, including (i) a transferee certificate substantially in
the form of Exhibit C to the Indenture in the case of a transfer to
non-QIB Accredited Investors or (ii) a transferor certificate
substantially in the form of Exhibit D to the Indenture in the case of
a transfer pursuant to Regulation S, are being furnished which comply
with the conditions of transfer set forth in this Note and the
Indenture.
If none of the foregoing boxes is checked and, in the case of (b) above, if the
appropriate document is not attached or otherwise furnished to the Trustee, the
Trustee or Registrar shall not be obligated to register this Note in the name of
any person other than the Holder hereof unless and until the conditions to any
such transfer of registration set forth herein and in Section 3.17 of the
Indenture shall have been satisfied.
- --------------------------------------------------------------------------------
Date: Your signature:
----------------- -------------------------------------
-------------------------------------
(Sign exactly as your name appears on
the other side of this Note)
By:
----------------------------------
-------------------------------------
NOTICE: To be executed
by an executive officer
Signature Guarantee:
--------------------------------------
A-1-11
<PAGE> 12
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A (including the information
specified in Rule 144A(d)(4)) or has determined not to request such information
and that it is aware that the transferor is relying upon the undersigned's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A.
Dated:
-------------------- ----------------------------------------
NOTICE: To be executed by an executive
officer
A-1-12
<PAGE> 13
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant
to Section 10.10 or 10.15 of the Indenture, check the appropriate box:
Section 10.10 [ ] Section 10.15 [ ]
If you wish to have a portion of this Note purchased by the
Company pursuant to Section 10.10 or 10.15 of the Indenture, state the amount:
$
--------------
Date: Your signature:
---------------- ----------------------------------------
(Sign exactly as your name appears on
the other side of this Note)
By:
-------------------------------------
NOTICE: To be executed by an
executive officer
Signature Guarantee:
-----------------------------------
A-1-13
<PAGE> 1
EXHIBIT 4.18
VERIO INC.
-----------------
10-5/8% SENIOR NOTES DUE 2009, SERIES B
CUSIP No. $
----------
No.
-----------
VERIO INC., a corporation incorporated under the laws of the
State of Delaware (herein called the "Company," which term includes any
successor corporation under this Indenture hereinafter referred to), for value
received, hereby promises to pay to ___________ or registered assigns, the
principal sum of _______________ Dollars on November 15, 2009, at the office or
agency of the Company referred to below, and to pay interest thereon on May 15
and November 15 (each, an "Interest Payment Date"), of each year, commencing on
May 15, 2000, accruing from the Issue Date or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, at the rate
of 10-5/8% per annum, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture referred to
on the reverse hereof, be paid to the person in whose name this Note (or one or
more Predecessor Notes) is registered at the close of business on May 1 and
November 1 (each, a "Regular Record Date"), whether or not a Business Day, as
the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid, or duly provided for, and interest on such defaulted
interest at the then applicable interest rate borne by the Notes, to the extent
lawful, shall forthwith cease to be payable to the Holder on such Regular Record
Date, and may be paid to the person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on a Special Record
Date for the payment of such defaulted interest to be fixed by the Trustee,
notice of which shall be given to Holders of Notes not less than 10 days prior
to such Special Record Date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in such Indenture.
Payment of the principal of, premium, if any, and interest on
this Note will be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan in The City of New York, State of New
York, or at such other office or agency of the Company as may be maintained for
such purpose, in such coin or currency of the United
A-2-1
<PAGE> 2
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the address of the person
entitled thereto as such address shall appear on the Note Register.
Reference is hereby made to the further provisions of this Note
set forth on the reverse hereof.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.
[Remainder of Page Intentionally Left Blank]
A-2-2
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated: VERIO INC.
By:
--------------------------------------------
Name:
Title:
By:
--------------------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 10-5/8% Senior Notes due 2009, Series B,
referred to in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By:
--------------------------------------------
Authorized Signatory
A-2-3
<PAGE> 4
[REVERSE OF NOTE]
1. Indenture. This Note is one of a duly authorized issue of
Notes of the Company designated as its 10-5/8% Senior Notes due 2009, Series B
(herein called the "Initial Notes"). The Notes are limited (except as otherwise
provided in the Indenture referred to below) in aggregate principal amount to
$400,000,000, which may be issued under an indenture (herein called the
"Indenture") dated as of November 19, 1999, by and between the Company and U.S.
Bank Trust National Association, as trustee (herein called the "Trustee," which
term includes any successor Trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Trustee and the Holders of the Notes, and of the
terms upon which the Notes are, and are to be, authenticated and delivered. The
Notes include the Initial Notes, the Private Exchange Notes and the Unrestricted
Notes (including the Exchange Notes referred to below), issued in exchange for
the Initial Notes pursuant to the Registration Rights Agreement. The Initial
Notes and the Unrestricted Notes are treated as a single class of securities
under the Indenture.
All capitalized terms used in this Note which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and the TIA for a statement of such terms.
No reference herein to the Indenture and no provisions of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, premium, if any,
and interest on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed.
2. Redemption. The Notes will be redeemable, at the option of the
Company, in whole or in part, on or after November 15, 2004 upon not less than
30 nor more than 60 days' written notice at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest thereon, if any, to the applicable redemption date, if redeemed during
the twelve-month period beginning on November 15 of each of the years indicated
below:
A-2-4
<PAGE> 5
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004 ..... 105.313%
2005 ..... 103.542%
2006 ..... 101.771%
2007 ..... 100.000%
</TABLE>
Notwithstanding the foregoing, in the event that after the Issue
Date and prior to November 15, 2002 the Company issues, in one or more
transactions, Capital Stock (other than Disqualified Stock) of the Company to
one or more Strategic Equity Investors or in any Equity Offering (an "Equity
Sale"), the Company may redeem, at its option, up to a maximum of 35% of the
initially Outstanding aggregate principal amount of Notes from the net proceeds
thereof at a redemption price equal to 110.625% of the principal amount of the
Notes, together with accrued and unpaid interest to the date of redemption;
provided that not less than $260.0 million aggregate principal amount of Notes
is Outstanding following such redemption. Any such redemption may only be
effected once and must be effected upon not less than 30 nor more than 60 days'
notice given within 180 days after such Equity Sale.
3. Offers to Purchase. Sections 10.10 and 10.15 of the Indenture
provide that upon the occurrence of a Change of Control and following certain
Asset Sales, and subject to certain conditions and limitations contained
therein, the Company shall make an offer to purchase all or a portion of the
Notes in accordance with the procedures set forth in the Indenture.
4. Defaults and Remedies. If an Event of Default occurs and is
continuing, the principal of all of the Outstanding Notes, plus all accrued and
unpaid interest, if any, to and including the date the Notes are paid, may be
declared due and payable in the manner and with the effect provided in this
Indenture.
5. Defeasance. The Indenture contains provisions (which
provisions apply to this Note) for defeasance at any time of (a) the entire
indebtedness of the Company on this Note and (b) certain restrictive covenants
and related Defaults and Events of Default, in each case upon compliance by the
Company with certain conditions set forth therein.
6. Amendments and Waivers. The Indenture permits, with certain
exceptions as provided therein, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal amount of the Notes
at the time Outstanding. The Indenture also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of the Notes at
the time Outstanding, on behalf of the Holders of all the Notes, to waive
compliance by the Company with certain provisions of the Indenture and certain
past Defaults under the Indenture and this Note and their consequences. Any such
consent or waiver by or on behalf of the Holder of this Note shall be conclusive
and binding upon such Holder and upon all future
A-2-5
<PAGE> 6
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note.
7. Denominations, Transfer and Exchange. The Notes are issuable
only in registered form without coupons in denominations of $1,000 and any
integral multiple thereof. As provided in this Indenture and subject to certain
limitations therein set forth, the Notes are exchangeable for a like aggregate
principal amount of Notes of a different authorized denomination, as requested
by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Note Register
of the Company, upon surrender of this Note for registration of transfer at the
office or agency of the Company maintained for such purpose in the Borough of
Manhattan in The City of New York, State of New York, or at such other office or
agency of the Company as may be maintained for such purpose, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
No service charge shall be made for any registration of transfer
or exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
8. Persons Deemed Owners. Prior to and at the time of due
presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the person in whose name
this Note is registered as the owner hereof for all purposes, whether or not
this Note shall be overdue, and neither the Company, the Trustee nor any agent
shall be affected by notice to the contrary.
9. GOVERNING LAW. THE INDENTURE, THIS NOTE AND ANY GUARANTEE SET
FORTH BELOW SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of this Indenture. Requests may be made to:
Verio Inc., 8005 South Chester Street, Suite 200, Englewood, Colorado 80112.
A-2-6
<PAGE> 7
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below and have your
signature guaranteed:
I or we assign and transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
----------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
Date: Your signature:
--------------- ------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
By:
--------------------------------------
NOTICE: To be executed by an
executive officer
Signature Guarantee:
---------------------------
A-2-7
<PAGE> 8
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant
to Section 10.10 or 10.15 of this Indenture, check the appropriate box:
Section 10.10 [ ] Section 10.15 [ ]
If you wish to have a portion of this Note purchased by the
Company pursuant to Section 10.10 or 10.15 of this Indenture, state the amount:
$
-------------
Date: Your signature:
-------------- ------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
By:
--------------------------------------
NOTICE: To be executed by an
executive officer
Signature Guarantee:
------------------------------
A-2-8
<PAGE> 9
EXHIBIT B
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Note authenticated and delivered hereunder shall bear
a legend (which would be in addition to any other legends required in the case
of a Restricted Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THIS INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THIS INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF
THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY
A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THIS INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
B-1
<PAGE> 10
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
Verio Inc.
8005 South Chester Street
Suite 200
Englewood, Colorado 80112
Ladies and Gentlemen:
In connection with our proposed purchase of $ aggregate
principal amount of the 10-5/8% Senior Notes due 2009 (the "Notes") of Verio
Inc. (the "Company"), we confirm that:
1. We understand that the Notes have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and, unless
so registered, may not be sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any investor account
for which we are purchasing Notes to offer, sell or otherwise transfer such
Notes prior to (x) the date which is two years (or such shorter period of
time as permitted by Rule 144 under the Securities Act) after the later of
the date of original issue of the Notes and (y) such later date, if any, as
may be required by any subsequent change in applicable law (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the
Securities Act, (c) so long as the Notes are eligible for resale pursuant
to Rule 144A under the Securities Act, to a person we reasonably believe is
a "qualified institutional buyer" under Rule 144A (a "QIB") that purchases
for its own account or for the account of a QIB and to whom notice is given
that the transfer is being made in reliance on Rule 144A, (d) pursuant to
offers and sales that occur outside the United States to "foreign
purchasers" (as defined below) in offshore transactions meeting the
requirements of Rule 904 of Regulation S under the Securities Act, (e) to
an institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act (an
"Accredited Investor") that is purchasing for its own account or for the
account of such an institutional "accredited investor," or (f) pursuant to
any other available exemption from the registration requirements of the
Securities Act, subject, in each of the foregoing cases, to any requirement
of law that the disposition of our property or the property of such
investor account or accounts be at all times within our or their control
and to compliance
C-1
<PAGE> 11
with any applicable state securities laws. The foregoing restrictions on
resale will not apply subsequent to the Resale Restriction Termination
Date. If any resale or other transfer of the Notes is proposed to be made
pursuant to clause (c) above prior to the Resale Restriction Termination
Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Trustee, which shall
provide, among other things, that the transferee is an Accredited Investor
within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501
under the Securities Act and that it is acquiring such Notes for investment
purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Company, the Trustee and the Transfer Agent
and Registrar reserve the right prior to any offer, sale or other transfer
prior to the Resale Restriction Termination Date of the Notes pursuant to
clause (d), (e) or (f) above to require the delivery of an opinion of
counsel, certification and/or other information satisfactory to the Company
and the Trustee.
2. We are an Accredited Investor or a QIB purchasing Notes for
our own account or for the account of one or more Accredited Investors, and
we are acquiring the Notes for investment purposes and not with a view to,
or for offer or sale in connection with, any distribution in violation of
the Securities Act or the securities laws of any state of the United States
and we have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our investment in
the Notes, and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment in the Notes for an
indefinite period.
3. We are acquiring the Notes purchased by us for our own account
or for one or more accounts as to each of which we exercise sole investment
discretion and we and any such account are (a) a QIB, aware that the sale
is being made in reliance on Rule 144A under the Securities Act, (b) an
Accredited Investor, or (c) a person other than a U.S. person ("foreign
purchasers"), which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for
foreign beneficial owners (other than an estate or trust) in offshore
transactions meeting the requirements of Rules 903 and 904 of Regulation S
under the Securities Act.
4. We have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such questions
of representatives of the Company and receive answers thereto, as we deem
necessary in order to verify the information contained in the Offering
Memorandum.
5. We are not purchasing the Notes for or on behalf of, and will
not transfer the Notes to, any pension or welfare plan (as defined in
Section 3 of ERISA, except
C-2
<PAGE> 12
as may be permitted under ERISA and as described under "Notice to
Investors" in the Offering Memorandum.
6. In the event that we purchase any Notes, we will acquire Notes
having an outstanding principal amount of at least $250,000 for our own
account and $250,000 for each account for which we are acting.
We understand that the Trustee and the Transfer Agent will not be
required to accept for registration of transfer any Notes acquired by us, except
upon presentation of evidence satisfactory to the Company and the Trustee that
the foregoing restrictions on transfer have been complied with. We further
understand that the Notes purchased by us will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of this paragraph. We further agree to provide to any person
acquiring any of the Notes from us a notice advising such person that transfers
of such Notes are restricted as stated herein and that certificates representing
such Notes will bear a legend to that effect.
We represent that you, the Company, the Trustee and others are
entitled to rely upon the truth and accuracy of our acknowledgments,
representations and agreements set forth herein, and we agree to notify you
promptly in writing if any of our acknowledgments, representations or agreements
herein cease to be accurate and complete. You are also irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
We represent to you that we have full power to make the foregoing
acknowledgments, representations and agreements on our own behalf and on behalf
of any investor account for which we are acting as fiduciary agent.
As used herein, the terms "offshore transaction," "United States"
and "U.S. person" have the respective meanings given to them in Regulation S
under the Securities Act.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
(Name of Purchaser)
By:
--------------------------------
Date:
------------------------------
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<PAGE> 13
Upon transfer, the Notes would be registered in the name of the
new beneficial owner as follows:
Name:
------------------------------
Address:
---------------------------
C-4
<PAGE> 14
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
-----------------, -----
U.S. Bank Trust National Association
180 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: Verio Inc. (the "Company")
10-5/8% Senior Notes due 2009 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
D-1
<PAGE> 15
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities;
(6) if the circumstances set forth in Rule 904(c) under the
Securities Act are applicable, we have complied with the additional
conditions therein, including (if applicable) sending a confirmation or
other notice stating that the Securities may be offered and sold during the
restricted period specified in Rule 903(c)(2) or (3), as applicable, in
accordance with the provisions of Regulation S; pursuant to registration of
the Securities under the Securities Act; or pursuant to an available
exemption from the registration requirements under the Securities Act; and
(7) if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) are applicable thereto, we confirm that such
sale has been made in accordance with such provisions.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
------------------------------------------
Authorized Signature
D-2
<PAGE> 1
EXHIBIT 4.21
VERIO INC.
$400,000,000
10-5/8% SENIOR NOTES DUE 2009
PURCHASE AGREEMENT
New York, New York
November 16, 1999
SALOMON SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
c/o Salomon Smith Barney Inc.
390 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Verio Inc., a Delaware corporation (the "Company"), proposes
to sell, severally and not jointly, to Salomon Smith Barney Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Morgan Stanley & Co. Incorporated
(together, the "Initial Purchasers") $400,000,000 principal amount of its
10-5/8% Senior Notes Due 2009 (the "Securities") as set forth on Schedule I
hereto, to be issued under an indenture (the "Indenture") dated as of November
19, 1999 between the Company and U.S. Bank Trust National Association, as
trustee (the "Trustee").
The sale of the Securities to the Initial Purchasers will be
made without registration of the Securities under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon exemptions from the
registration requirements of the Securities Act. The Initial Purchasers have
advised the Company that the Initial Purchasers will offer and sell the
Securities purchased by them hereunder in accordance with Section 4 of this
agreement (this "Agreement" or the "Purchase Agreement") as soon as they deem
advisable.
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum, dated November 12, 1999 (including
any information incorporated by reference therein, the "Preliminary
Memorandum"), and a final offering memorandum, dated November 16, 1999
(including any information incorporated by reference therein, the "Final
Memorandum"). Each of the Preliminary Memorandum and the Final Memorandum sets
forth certain information concerning the Company and the Securities. The Company
<PAGE> 2
hereby confirms that it has authorized the use of the Preliminary Memorandum and
the Final Memorandum, and any amendment or supplement thereto, in connection
with the offer and sale of the Securities by the Initial Purchasers. Unless
stated to the contrary, all references herein to the Final Memorandum are to the
Final Memorandum at the Execution Time (as defined below) and are not meant to
include any amendment or supplement subsequent to the Execution Time. All
references in this Agreement to financial statements and schedules and other
information that is "contained", "included" or "stated", or words of similar
import, in the Preliminary Memorandum or Final Memorandum shall be deemed to
mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Preliminary Memorandum or
Final Memorandum, as the case may be.
The holders of the Securities will be entitled to the benefits
of the Registration Agreement to be dated as of November 19, 1999, between the
Company and the Initial Purchasers (the "Registration Agreement").
This Agreement, the Indenture, the Securities and the
Registration Agreement are referred to herein as the "Transaction Documents".
Capitalized terms used herein without definitions have the
respective meanings assigned to them in the Final Memorandum.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each Initial Purchaser as set forth
below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did not
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The Final
Memorandum, at the date hereof, does not, and at the Closing Date (as
defined below) will not (and any amendment or supplement thereto, at
the date thereof and at the Closing Date, will not), contain any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representation or warranty as to the
information contained in or omitted from the Preliminary Memorandum or
the Final Memorandum, or any amendment or supplement thereto, in
reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of the Initial Purchasers specifically
for inclusion therein.
(b) The documents incorporated or deemed to be incorporated by
reference in the Preliminary Memorandum and Final Memorandum, at the
time they were or hereafter are filed with the Securities and Exchange
Commission (the "Commission"), complied and will comply in all material
respects with the requirements of the
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<PAGE> 3
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations thereunder and, when read together with the
other information in the Preliminary Memorandum or Final Memorandum, as
the case may be, at the time issued did not, and as of the Closing Date
will not, contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(c) The Company has been advised by The Portal Market that the
Securities have been designated Portal-eligible securities in
accordance with the rules and regulations of the National Association
of Securities Dealers, Inc. (the "NASD").
(d) None of the Company nor any of its Affiliates (as defined
in Rule 501(b) under the Securities Act) has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Securities
Act) which could be integrated with the sale of the Securities in a
manner that would require the registration of the Securities under the
Securities Act.
(e) None of the Company nor any of its Affiliates (as defined
in Rule 501(b) under the Securities Act) or any person (other than the
Initial Purchasers, as to whom the Company makes no representation)
acting at the request of the Company has engaged, in connection with
the offering of the Securities, (A) in any form of general solicitation
or general advertising within the meaning of Rule 502(c) under the
Securities Act, (B) in any directed selling efforts within the meaning
of Rule 902 under the Securities Act in the United States in connection
with the Securities being offered and sold pursuant to Regulation S
under the Securities Act, (C) in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act or (D) in any
action which would require the registration of the offering and sale of
the Securities pursuant to this Agreement or which would violate
applicable state securities or "blue sky" laws.
(f) Assuming that the representations and warranties of the
Initial Purchasers contained in Section 4 are true, correct and
complete, and assuming compliance by the Initial Purchasers with their
covenants in Section 4, and assuming that the representations and
warranties deemed to be made by non-U.S. persons and "qualified
institutional buyers" ("QIBs") (as defined in Rule 144A under the
Securities Act) purchasing Securities are true and correct as of the
Closing Date, it is not necessary in connection with the offer, sale
and delivery of the Securities to the Initial Purchasers in the manner
contemplated by, or in connection with the initial resale of such
Securities by the Initial Purchasers in accordance with, this Agreement
to register the Securities under the Securities Act or to qualify any
indenture in respect of the Securities under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
-3-
<PAGE> 4
(g) The subsidiaries of the Company listed on Schedule II
hereto (also referred to herein as the "Subsidiaries") are the only
subsidiaries of the Company that constitute "significant subsidiaries"
within the meaning of Rule 1-02(w) of Regulation S-X under the
Securities Act. Each of the Company and the Subsidiaries has been duly
organized or incorporated, as the case may be, and is validly existing
and in good standing under the laws of its jurisdiction of organization
or incorporation, with all requisite power and authority under such
laws (a) to own, lease and operate their respective properties and to
conduct their respective businesses as now conducted and as described
in the Final Memorandum and (b) to enter into, deliver, incur and
perform their respective obligations under the Transaction Documents,
except, in the case of the foregoing subclause (a) for authorizations,
approvals, orders, leases, certificates and permits, the failure of
which to possess could not reasonably be expected to have a Material
Adverse Effect (as defined below); and are all duly qualified to do
business as foreign partnerships or corporations in good standing in
all other jurisdictions where the ownership or leasing of their
respective properties or the conduct of their respective businesses
requires such qualification, except where the failure to be so
qualified could not reasonably be expected to have a material adverse
effect (i) on the business, condition (financial or otherwise), results
of operations, business affairs or business prospects of the Company
and the Subsidiaries taken as a whole or (ii) on the ability of the
Company to perform any of its obligations under the Transaction
Documents or to consummate any of the transactions contemplated hereby
or thereby (a "Material Adverse Effect"). The Company has no ISP
affiliates (other than the Subsidiaries) that would individually
constitute a "significant subsidiary" of the Company within the meaning
of Rule 1-02(w) of Regulation S-X under the Securities Act, if any such
ISP affiliate were a subsidiary of the Company.
(h) The Securities, the Exchange Notes and the Private
Exchange Notes have been duly authorized by the Company, and the
Company has all requisite corporate power and authority to execute,
issue and deliver the Securities, the Exchange Notes and the Private
Exchange Notes and to incur and perform its obligations provided for
therein.
(i) The Securities, when executed, authenticated and issued in
accordance with the terms of the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the Trustee)
and when delivered against payment of the purchase price therefor as
provided in this Agreement, will constitute valid and binding
obligations of the Company, entitled to the benefits of the Indenture
and enforceable against the Company in accordance with the terms
thereof; and the Exchange Notes and the Private Exchange Notes, if any,
when executed, authenticated, issued and delivered by the Company in
exchange for the Securities in
-4-
<PAGE> 5
accordance with the terms of the Registration Agreement, will
constitute valid and binding obligations of the Company, entitled to
the benefits of the Indenture and enforceable against the Company in
accordance with the terms thereof; subject, in the case of each of the
foregoing, to (a) applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, (b) general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and (c) the
discretion of the court before which any proceeding therefor may be
brought (clauses (a), (b) and (c) being referred to herein as the
"Enforceability Limitations") and except that the waiver of stay or
extension laws contained in Section 5.15 of the Indenture may be
unenforceable.
(j) This Agreement has been, and, as of the Closing Date, the
Indenture, and the Registration Agreement will have been, duly
authorized, executed and delivered by the Company, and upon such
execution by the Company (assuming the due authorization, execution and
delivery by parties thereto other than the Company), as of the Closing
Date, the Indenture and the Registration Agreement will constitute the
valid and binding obligations of the Company, enforceable against the
Company in accordance with the terms hereof or thereof, subject only to
the Enforceability Limitations and except that the waiver of stay or
extension laws contained in Section 5.15 of the Indenture may be
unenforceable.
(k) No consent, waiver, authorization, approval, license,
qualification or order of, or filing or registration with, any court or
governmental or regulatory agency or body, domestic or foreign, is
required for the issue and sale of the Securities or the Exchange Notes
or the Private Exchange Notes, if any, the performance by the Company
of its obligations under the Transaction Documents, or for the
consummation of any of the transactions contemplated hereby or thereby,
including, without limitation, the issuance and sale of the Securities
hereunder, except such as may be required (A) in connection with the
registration under the Securities Act of the Exchange Notes or the
Private Exchange Notes, if any, pursuant to the Registration Agreement
(including any filing with the NASD), (B) in order to qualify the
Indenture under the Trust Indenture Act or (C) by state securities or
"blue sky" laws in connection with the offer and sale of the Securities
or the registration thereof or of the Exchange Notes or the Private
Exchange Notes pursuant to the Registration Agreement.
(l) The issuance, sale and delivery of the Securities, the
Exchange Notes and the Private Exchange Notes, if any, the execution,
delivery and performance by the Company of this Agreement, the
Indenture and the Registration Agreement and the consummation by the
Company of the transactions contemplated hereby, thereby and in the
Final Memorandum and the compliance by the Company with the terms of
the foregoing do not, and, at the Closing Date, will not conflict with
or constitute or result in a breach or violation by the Company or any
of the Subsidiaries of (A) any of the terms or provisions of, or
constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) by any of the Company or the
Subsidiaries
-5-
<PAGE> 6
or give rise to any right to accelerate the maturity or require the
prepayment of any indebtedness under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or the Subsidiaries under any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, authorization, permit, certificate or
other agreement or document to which any of the Company or the
Subsidiaries is a party or by which any of them may be bound, or to
which any of them or any of their respective assets or businesses is
subject (collectively, "Contracts") (and the Company has no knowledge
of any conflict, breach or violation of such terms or provisions or of
any such default, in any such case, which has occurred or will so
result), (B) the articles or by-laws (each, an "Organizational
Document") of each of the Company and the Subsidiaries or (C) any law,
statute, rule or regulation, or any judgment, decree or order, in any
such case, of any domestic or foreign court or governmental or
regulatory agency or other body having jurisdiction over the Company or
any of the Subsidiaries or any of their respective properties or
assets. Schedule III hereto lists each Contract with respect to which
any conflict, breach or violation of the terms or provisions thereof or
any default with respect thereto could have a Material Adverse Effect
(each such Contract being referred to herein as a "Material Contract").
(m) The Securities, the Exchange Notes, the Private Exchange
Notes, the Indenture and the Registration Agreement will each conform
in all material respects to the descriptions thereof in the Final
Memorandum.
(n) The audited financial statements included or incorporated
by reference in the Final Memorandum, including the notes thereto,
respectively present fairly the financial position of the Company and
its consolidated subsidiaries, NSNet, Inc., Access One, Inc., STARnet,
L.L.C., Computing Engineers Inc., LI Net, Inc., NTX, Inc. and Best
Internet Communications, Inc. at the dates indicated, and the statement
of operations, stockholders' deficit/equity and cash flows of each of
such persons and, where applicable, such persons' consolidated
subsidiaries for the periods indicated, have been prepared in
conformity with United States generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved.
The selected financial data and the summary financial information
included in the Final Memorandum present fairly the information shown
therein and have been compiled on a basis consistent with that of the
financial statements of the Company and its consolidated subsidiaries
included in the Final Memorandum. KPMG LLP, which has examined such
financial statements as set forth in its report included or
incorporated by reference in the Final Memorandum, is an independent
public accounting firm with respect to each of such persons and, where
applicable such persons' subsidiaries within the meaning of Regulation
S-X under the Securities Act. Except as disclosed in the Final
Memorandum, the pro forma financial information relating to the Company
and its Subsidiaries and the related notes thereto included in the
Final Memorandum
-6-
<PAGE> 7
present fairly the information shown therein, have been prepared in all
material respects in accordance with the Commission's rules and
guidelines with respect to pro forma financial adjustments and have
been properly computed on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(o) Since the respective dates as of which information is
given in the Final Memorandum, except as otherwise specifically stated
therein, there has been no (A) material adverse change in the business,
condition (financial or otherwise), results of operations, business
affairs or business prospects of the Company and the Subsidiaries taken
as a whole, whether or not arising in the ordinary course of business
(a "Material Adverse Change"), (B) transaction entered into by any of
the Company or the Subsidiaries, other than in the ordinary course of
business, that is material to the Company and the Subsidiaries taken as
a whole or (C) dividend or distribution of any kind declared, paid or
made by the Company on its capital stock.
(p) The Company has the authorized, issued and outstanding
capitalization set forth in the Final Memorandum under the caption
"Description of Capital Stock"; all of the outstanding capital stock of
the Company has been duly authorized and validly issued, is fully paid
and nonassessable and was not issued in violation of any preemptive or
similar rights (whether provided contractually or pursuant to any
Organizational Document). Except as set forth in the Final Memorandum
under the caption "Business-- The Verio Organization", the Company does
not own, directly or indirectly, any material amount of shares, or any
other material amount of equity or long-term debt securities or have
any material equity interest in any firm, partnership, joint venture or
other entity. Except as set forth in the Final Memorandum, no holder of
any securities of the Company is entitled to have such securities
(other than the Securities, the Exchange Notes and the Private Exchange
Notes, if any) registered under any registration statement contemplated
by the Registration Agreement. All of the outstanding capital stock of
each of the Subsidiaries has been duly authorized and validly issued,
is fully paid and nonassessable and was not issued in violation of any
preemptive or similar rights (whether provided contractually or
pursuant to any Organizational Document).
(q) None of the Company nor the Subsidiaries is (A) in
violation of its respective Organizational Documents, (B) in default
(or, with notice or lapse of time or both, would be in default) in the
performance or observance of any obligation, agreement, covenant or
condition contained in any Contract or (C) in violation of any law,
statute, judgment, decree, order, rule or regulation of any domestic or
foreign court with jurisdiction over the Company or the Subsidiaries or
any of their respective assets or properties, or other governmental or
regulatory authority, agency or other body,
-7-
<PAGE> 8
other than, in the case of clause (B) or (C), such defaults or
violations which could not, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect;
and any real property and buildings held under lease by the Company or
the Subsidiaries are held by the Company or such Subsidiary, as the
case may be, under valid, subsisting and enforceable leases with such
exceptions which could not, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect.
(r) Except as set forth in the Final Memorandum, each of the
Company and the Subsidiaries owns or possesses, or can acquire on
reasonable terms, adequate patents, patent rights, licenses,
trademarks, service marks, trade names, copyrights and know-how
(including trade secrets and other proprietary or confidential
information, systems or procedures) (collectively, "intellectual
property") necessary to conduct the business now or proposed to be
operated by it as described in the Final Memorandum, except where the
failure to own, possess or have the ability to acquire any such
intellectual property could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect; and none of the
Company nor the Subsidiaries has received any notice of infringement of
or conflict with (nor knows of any such infringement of or conflict
with) asserted rights of others with respect to any of such
intellectual property.
(s) Each of the Company and the Subsidiaries has obtained all
material consents, approvals, orders, certificates, licenses, permits,
franchises and other authorizations (collectively, the "Licenses") of
and from, and has made all declarations and filings with, all
governmental and regulatory authorities, all self-regulatory
organizations and all courts and other tribunals necessary to own,
lease, license and use its properties and assets and to conduct its
businesses in the manner described in the Final Memorandum. None of the
Company or the Subsidiaries has received any notice of proceedings
relating to the revocation or modification of, or denial of any
application for, any License which, if the subject of any unfavorable
decision, ruling or finding, could, singly or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect;
and no event has occurred which allows, or after notice or lapse of
time, or both, would allow, revocation or termination thereof or result
in any other material impairment of the rights of the holder of any
such License, except where such revocation or termination could not,
singly or in the aggregate, reasonably be expected to have or result in
a Material Adverse Effect; and the Licenses referred to above place no
restrictions on the Company or any of the Subsidiaries that are not
described in the Final Memorandum, except where such restrictions could
not, singly or in the aggregate, reasonably be expected to have or
result in a Material Adverse Effect.
(t) There is no legal action, suit, proceeding, inquiry or
investigation before or by any court or governmental body or agency,
domestic or foreign, now
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<PAGE> 9
pending or, to the best knowledge of the Company, threatened against
the Company or any of the Subsidiaries or any of their respective
properties which would be required to be disclosed in a registration
statement filed under the Securities Act.
(u) Each of the Company and the Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns,
and has paid all taxes shown as due thereon; and no tax deficiency has
been asserted against any of the Company or the Subsidiaries.
(v) Except as described in the Final Memorandum, including the
financial statements and notes thereto included therein, each of the
Company and the Subsidiaries has good and marketable title to all real
and personal property described in the Final Memorandum as being owned
by it and good and marketable title to a leasehold estate in the real
and personal property described in the Final Memorandum as being leased
by it, free and clear of all liens, charges, encumbrances or
restrictions, except to the extent the failure to have such title or
the existence of such liens, charges, encumbrances or restrictions
could not, individually or in the aggregate, reasonably be expected to
have or result in a Material Adverse Effect.
(w) None of the Company or any of the Subsidiaries is an
"investment company" or a company "controlled by" an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
(x) None of the Company nor any of the Subsidiaries nor any of
their respective directors, officers or controlling persons has taken,
directly or indirectly, any action designed, or which might reasonably
be expected, to cause or result, under the Securities Act or otherwise,
in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities, the Exchange Notes or the Private Exchange Notes.
(y) No strike, labor problem, dispute, slowdown, work stoppage
or disturbance with the employees of the Company or any of the
Subsidiaries exists or, to the best knowledge of the Company, is
threatened which could, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect.
(z) The Company has insurance in such amounts and covering
such risks and liabilities as are in accordance with normal industry
practice.
(aa) The statistical and market-related data included in the
Final Memorandum are based on or derived from independent sources which
the Company believes to be reliable and accurate in all material
respects or represent the Company's good faith estimates that are made
on the basis of data derived from such sources.
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<PAGE> 10
(bb) The Company is, and immediately after the Closing Date
will be, Solvent. As used herein, the term "Solvent" means, with
respect to the Company on a particular date, that on such date (A) the
fair market value of the assets of the Company exceeds its respective
liabilities (including without limitation, stated liabilities and
identified contingent liabilities), (B) the present fair salable value
of the assets of the Company will exceed its respective probable
liabilities on its debts (including without limitation, stated
liabilities and identified contingent liabilities), (C) the fair market
value of the Company's total assets exceeds its total liabilities,
including identified contingent liabilities, by an amount at least
equal to the total par value of its common stock both immediately prior
to and after the Offering, (D) the Company is and will be able to pay
its debts (including without limitation, stated liabilities and
identified contingent liabilities) as such debts mature and (E) the
Company will not have unreasonably small capital with which to conduct
its present and anticipated business.
(cc) Except as described in the Final Memorandum or as would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect (A) to the Company's knowledge, each of the
Company and the Subsidiaries is in compliance with and not subject to
any known liability under applicable Environmental Laws (as defined
below), (B) to the Company's knowledge, each of the Company and the
Subsidiaries (i) has made all filings and provided all notices required
under any applicable Environmental Law, and (ii) has, and is in
compliance with, all Permits required under any applicable
Environmental Laws, and (iii) each of them is in full force and effect,
(C) to the Company's knowledge, there is no civil, criminal or
administrative action, or, investigation, notice or demand letter or
request for information pending or threatened against the Company or
any of the Subsidiaries under any Environmental Law, and (D) to the
Company's knowledge, no lien, charge, encumbrance or restriction has
been recorded under any Environmental Law with respect to any assets,
facility or property owned, operated, leased or controlled by the
Company or any Subsidiary.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or
regulations relating to the protection of the environment, including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of "hazardous substances," as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended.
(dd) Except as described in the Final Memorandum, none of the
Company nor any of the Subsidiaries has incurred any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or
other plan which is subject to the Employee Retirement
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Income Security Act of 1974, as amended ("ERISA"), to which the Company
or the Subsidiaries makes or ever has made a contribution and in which
any employee of the Company or any such Subsidiary is or has ever been
a participant, which, individually in the aggregate, could reasonably
be expected to have or result in a Material Adverse Effect. With
respect to such plans, each of the Company and the Subsidiaries is in
compliance in all respects with all applicable provisions of ERISA,
except where the failure to so comply could not, individually or in the
aggregate, reasonably be expected to have or a result in a Material
Adverse Effect.
(ee) Each of the Company and the Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(ff) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(gg) Any certificate signed by any officer of the Company and
delivered to the Initial Purchasers or to Cahill Gordon & Reindel,
counsel for the Initial Purchasers ("Counsel for the Initial
Purchasers") pursuant to the terms of this Agreement shall be deemed a
representation and warranty by the Company to the Initial Purchasers as
to the matters covered thereby.
2. Purchase and Sale of the Securities. Subject to the terms
and conditions and in reliance upon the representations and warranties herein
set forth, the Company agrees to sell to each Initial Purchaser, and each
Initial Purchaser agrees, severally and not jointly, to purchase from the
Company, at a purchase price of 99.249% of the principal amount thereof, minus
2.000% of the principal amount thereof, the principal amount of Securities set
forth opposite such Initial Purchaser's name in Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the
Securities shall be made at 9:00 AM, New York City time, on November 19, 1999 or
such later date as the Initial Purchasers shall designate, which date and time
may be postponed by agreement among the Initial Purchasers and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of the Securities
shall be made to the Initial Purchasers for the respective accounts of the
Initial Purchasers against payment by the Initial Purchasers of the purchase
price thereof to or upon the order of the Company by wire transfer of same day
funds or such other manner
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<PAGE> 12
of payment as may be agreed by the Company and the Initial Purchasers. Delivery
of the Securities shall be made at such location as the Initial Purchasers shall
reasonably designate at least one business day in advance of the Closing Date
and payment for the Securities shall be made at the offices of Cahill Gordon &
Reindel, 80 Pine Street, New York, New York 10005, or such other location as may
be mutually agreed upon by the Company and the Initial Purchasers. Certificates
for the Securities shall be registered in such names and in such denominations
as the Initial Purchasers may request not less than two full business days in
advance of the Closing Date.
The Company agrees to have the Securities available for
inspection, checking and packaging by the Initial Purchasers in New York, New
York, not later than 10:00 AM on the business day prior to the Closing Date.
4. Offering of Securities. Each Initial Purchaser, severally
and not jointly, represents and warrants to and agrees with the Company that:
(a) It has not offered or sold, and will not offer or sell,
any Securities except (i) to those it reasonably believes to be QIBs
and that, in connection with each such sale, it has taken or will take
reasonable steps to ensure that the purchaser of such Securities is
aware that such sale is being made in reliance on Rule 144A, or (ii) in
accordance with the restrictions set forth in Exhibit A hereto.
(b) Neither it nor any person acting on its behalf has made or
will make offers or sales of the Securities in the United States by
means of any form of general solicitation or general advertising within
the meaning of Regulation D in the United States.
5. Agreements of the Company. The Company agrees with each
Initial Purchaser that:
(a) The Company will furnish to each Initial Purchaser and to
Counsel for the Initial Purchasers, without charge, during the period
referred to in paragraph (c) below, as many copies of the Preliminary
Memorandum and the Final Memorandum and any amendments and supplements
thereto as each Initial Purchaser and Counsel for the Initial
Purchasers may reasonably request.
(b) The Company will not at any time make any amendment or
supplement to the Preliminary Memorandum or the Final Memorandum
without the prior written consent of the Initial Purchasers.
(c) The Company will immediately notify each Initial Purchaser
and confirm such notice in writing of (x) any filing made by the
Company relating to the offering of the Securities with any securities
exchange or any other regulatory body in
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<PAGE> 13
the United States or any other jurisdiction and (y) prior to the
completion of the placement of the Securities by the Initial Purchasers
as evidenced by a notice in writing from the Initial Purchasers to the
Company, any material changes in or affecting the earnings, business
affairs or business prospects of the Company and its Subsidiaries that
(i) make any statement in the Final Memorandum false or misleading in
any material respect or (ii) are not disclosed in the Final Memorandum.
In such event or if at any time prior to completion of the distribution
of the Securities by the Initial Purchasers to purchasers who are not
its affiliates (as determined by the Initial Purchasers) any other
event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of the Initial Purchasers or Counsel for the
Initial Purchasers, to amend or supplement the Final Memorandum in
order that the Final Memorandum, as then amended or supplemented, will
not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a
purchaser, not misleading or if in the opinion of the Initial
Purchasers or Counsel for the Initial Purchasers, such amendment or
supplement is necessary to comply with applicable law, the Company
will, subject to paragraph (b) of this Section 5, promptly prepare, at
its own expense, such amendment or supplement as may be necessary to
correct such untrue statement or omission or to effect such compliance
(in form and substance agreed upon by the Initial Purchasers and
Counsel for the Initial Purchasers), so that as so amended or
supplemented, the statements in the Final Memorandum will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading or so that such Final Memorandum as so amended or
supplemented will comply with applicable law, as the case may be, and
furnish to the Initial Purchasers such number of copies of such
amendment or supplement as the Initial Purchasers may reasonably
request. The Company agrees to notify the Initial Purchasers in writing
to suspend use of the Final Memorandum as promptly as practicable after
the occurrence of an event specified in this paragraph (c), and the
Initial Purchasers hereby agree upon receipt of such notice from the
Company to suspend use of the Final Memorandum until the Company has
amended or supplemented the Final Memorandum to correct such
misstatement or omission or to effect such compliance.
(d) Neither the Company nor any of its Affiliates (as defined
in Rule 501(b) under the Securities Act) will solicit any offer to buy
or offer or sell the Securities, the Exchange Notes or the Private
Exchange Notes, if any, by means of any form of general solicitation or
general advertising (as such terms are used in Regulation D under the
Securities Act), or by means of any directed selling efforts (as
defined in Rule 902 under the Securities Act) in the United States in
connection with the Securities being offered and sold pursuant to
Regulation S or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act prior to the
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<PAGE> 14
effectiveness of a registration statement with respect to the
Securities, the Exchange Notes or the Private Exchange Notes, as
applicable.
(e) Neither the Company nor any of its Affiliates (as defined
in Rule 501(b) under the Securities Act) will offer, sell or solicit
offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) which could be integrated with the sale
of the Securities in a manner that would require the registration of
the Securities under the Securities Act.
(f) The Company (A) will, so long as the Securities are
outstanding, furnish to the Trustee on a timely basis, pursuant to the
Indenture, whether or not the Company has a class of securities
registered under the Exchange Act, (i) within 135 days of the end of
each fiscal year, audited year-end consolidated financial statements of
the Company (including a balance sheet, income statement and statement
of changes of cash flow) prepared in accordance with GAAP and
substantially in the form required under Regulation S-X under the
Securities Act and the information described in Item 303 of Regulation
S-K under the Securities Act with respect to such period and (ii)
within 60 days of the end of each fiscal quarter, unaudited quarterly
consolidated financial statements of the Company (including a balance
sheet, income statement and statement of changes of cash flow) prepared
in accordance with GAAP and substantially in the form required by
Regulation S-X under the Securities Act and the information described
in Item 303 of Regulation S-K under the Securities Act with respect to
such period, and (B) will furnish to the Initial Purchasers copies of
all such reports and information, together with such other documents,
reports and information as shall be furnished by the Company to the
holders of the Securities or to the Trustee. In the event the Company
is not subject to Section 13 or 15(d) of the Exchange Act, the Company
will furnish to holders of Securities and prospective purchasers of
Securities designated by such holders, upon request of such holders or
such prospective purchasers, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Act to permit compliance with
Rule 144A in connection with resales of the Securities.
(g) The Company will use its reasonable best efforts in
cooperation with the Initial Purchasers to (i) permit the Securities to
be eligible for clearance and settlement through DTC and (ii) permit
the Securities to be designated as securities eligible for trading in
The Portal Market in accordance with the rules and regulations of the
NASD.
(h) Prior to the Closing Date, the Company will furnish to
each Initial Purchaser, if and as soon as they have been prepared, a
copy of any unaudited interim consolidated financial statements of the
Company for any period subsequent to the
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<PAGE> 15
period covered by the most recent financial statements of the Company
appearing in the Final Memorandum which have been prepared in the
ordinary course of business.
(i) The Company will arrange for the registration and
qualification of the Securities for offering and sale under the
applicable securities or "blue sky" laws of such states and other
jurisdictions as the Initial Purchasers may designate in connection
with the resale of the Securities as contemplated by this Agreement and
the Final Memorandum and will continue such qualifications in effect
for as long as may be necessary to complete the distribution of the
Securities; provided that in no event shall the Company be obligated to
(i) qualify as a foreign corporation or as a dealer in securities in
any jurisdiction where it would not otherwise be required to so qualify
but for this Section 5(i), (ii) file any general consent to service of
process in any jurisdiction where it is not at the Closing Time then so
subject or (iii) subject itself to taxation in any such jurisdiction if
it is not so subject. The Company will file such statements and reports
as may be required by the laws of each jurisdiction in which the
Securities have been qualified as above provided. The Company shall
promptly advise the Initial Purchasers of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of the Securities for offering or sale in
any jurisdiction or the institution, threatening or contemplation of
any proceeding for such purpose.
(j) The Company will use the proceeds received from the
Offering in the manner specified in the Final Memorandum under the
heading "Use of Proceeds."
(k) The Company will not, and will not permit any of its
Affiliates (as defined in Rule 501(b) under the Securities Act) to,
resell any Securities that have been acquired by any of them.
6. Conditions to the Obligations of the Initial Purchasers.
The obligations of the Initial Purchasers to purchase the Securities shall be
subject to the accuracy of the representations and warranties on the part of the
Company contained herein at the date and time that this Agreement is executed
and delivered by the parties hereto (the "Execution Time"), and the Closing
Date, to the accuracy of the statements of the Company made in any certificates
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(a) (i) At the Closing Date, the Initial Purchasers shall have
received the opinion of Morrison & Foerster LLP, counsel to the
Company, dated as of the Closing Date, in the form set forth below and
otherwise reasonably satisfactory to the Initial Purchasers and Counsel
for the Initial Purchasers, to the effect that:
(1) The Company has been duly incorporated and is
validly existing under the laws of the State of Delaware, with
corporate power and authority to
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<PAGE> 16
own, lease and operate its assets and properties and conduct
its business as described in the Final Memorandum and to enter
into and perform its obligations under this Agreement and each
of the other Transaction Documents;
(2) The authorized, issued and outstanding capital
stock of the Company is as incorporated by reference in the
Final Memorandum in the Company's registration statement on
Form S-4 (registration number 333-70727) dated January 15,
1999, as amended, under the caption "Description of Capital
Stock";
(3) Each of the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease
and operate its properties and to conduct its business as
described in the Final Memorandum; all of the issued and
outstanding capital stock of each of the Subsidiaries has been
duly authorized and validly issued, is fully paid and
non-assessable and, to such counsel's knowledge and
information, except as set forth in the Final Memorandum under
the caption "Business -- The Verio Organization", is owned by
the Company directly, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity;
(4) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations
under this Agreement, the Securities, the Exchange Notes, the
Private Exchange Notes, the Indenture and the Registration
Agreement; and each of this Agreement, the Securities, the
Exchange Notes, the Private Exchange Notes, the Indenture and
the Registration Agreement has been duly authorized by the
Company;
(5) No consent, waiver, approval, authorization,
license, qualification or order of or filing or registration
with any court or governmental or regulatory agency or body is
required for the execution and delivery by the Company of this
Agreement, the Indenture or the Registration Agreement or for
the issue and sale of the Securities, the Exchange Notes or
the Private Exchange Notes, if any, or the performance by the
Company of its obligations under the Transaction Documents, or
for the consummation of any of the transactions contemplated
hereby or thereby, except such as may be required (A) in
connection with the registration under the Securities Act of
the Exchange Notes or the Private Exchange Notes, if any,
under the Registration Agreement, (B) in order to qualify the
Indenture under the Trust Indenture Act and (C) by state
securities or "blue sky" laws in connection with the purchase
and distribution of the Securities by the Initial Purchasers
(as to which such counsel need express no opinion);
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<PAGE> 17
(6) The issuance, sale and delivery of the Securities,
the Exchange Notes and the Private Exchange Notes, if any, the
execution, delivery and performance by the Company of this
Agreement, the Indenture and the Registration Agreement (in
each case assuming due authorization and execution by each
party other than the Company), and the consummation by the
Company of the transactions contemplated hereby and thereby
and the compliance by the Company with the terms of the
foregoing do not, and, at the Closing Date, will not, conflict
with or constitute or result in a breach or violation by the
Company or any of the Subsidiaries of (A) any provision of the
Certificate of Incorporation or By-laws of the Company, (B)
any of the terms or provisions of, or constitute a default (or
an event which, with notice or lapse of time or both, would
constitute a default) by the Company, or give rise to any
right to accelerate the maturity or require the prepayment of
any indebtedness under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Subsidiary under any
Material Contract identified in Schedule III hereto (provided
that such counsel need not express an opinion as to any
potential violation of any financial covenant contained in any
Material Contract) or (C) any law, statute, rule, or
regulation or any order, decree or judgment known to such
counsel to be applicable to the Company or any Subsidiary, of
any court or governmental or regulatory agency or body or
arbitrator known to such counsel to have jurisdiction over the
Company or any of the Subsidiaries or any of their respective
properties or assets;
(7) The Purchase Agreement has been duly authorized,
executed and delivered by the Company;
(8) The statements in the Offering Memorandum under
the headings "Offering Memorandum Summary - The Offering,"
"Description of Capital Stock," "Description of the 1997
Notes," "Description of the March 1998 Notes," "Description of
the November 1998 Notes," "Description of the Notes,"
"Exchange Offer; Registration Rights" and "Certain
Transactions," insofar as such statements purport to summarize
certain provisions of the Securities, the Exchange Notes, the
Indenture, the Registration Agreement, the Company's
authorized and outstanding capital stock, the Company's
13-1/2% Senior Notes due 2004, the Company's 10-3/8% Senior
Notes Due 2005, and the Company's 11-1/4% Senior Notes due
2008, provide a fair summary of such provisions of such
agreements and instruments;
(9) Each of the Indenture and the Registration
Agreement has been duly authorized, executed and delivered by
the Company and (assuming due authorization and execution by
each party thereto other than the Company)
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<PAGE> 18
constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by (a) with
respect to the Indenture and the Registration Agreement, the
Enforceability Limitations, including the waiver contained in
Section 5.15 of the Indenture, and (b) with respect to the
Registration Agreement, as to rights of indemnification and
contribution, principles of public policy or federal or state
securities laws relating thereto;
(10) Each of the Securities, when executed and
authenticated in accordance with the provisions of the
Indenture and delivered and paid for in accordance with the
terms of this Agreement, and the Exchange Notes and the
Private Exchange Notes, if any, when executed, authenticated
and delivered in exchange for the Securities in accordance
with the terms of the Registration Agreement, will be entitled
to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with its
terms except as the enforceability thereof may be limited by
the Enforceability Limitations;
(11) To the knowledge of such counsel, other than as
described in the Final Memorandum, no legal, regulatory or
governmental proceedings are pending to which the Company is a
party or to which the property or assets of the Company are
subject which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or
which, individually or in the aggregate, could have a material
adverse effect on the power or ability of the Company to
perform its obligations under the Transaction Documents or to
consummate the transactions contemplated thereby or by the
Offering Memorandum and to the knowledge of such counsel, no
such material proceedings have been threatened against the
Company or with respect to any of its respective assets or
properties;
(12) Assuming (a) the accuracy of, and compliance
with, the representations, warranties and covenants of the
Company in subsections 1(d) and 1(e) of the Purchase
Agreement, (b) the accuracy of, and compliance with, the
representations, warranties and covenants of the Initial
Purchasers in Section 4 of the Purchase Agreement, (c) the
compliance by the Initial Purchasers with the offering and
transfer procedures and restrictions described in the Final
Memorandum and (d) receipt by the purchasers to whom the
Initial Purchasers initially resell the Securities of a copy
of the Final Memorandum prior to such sale, it is not
necessary in connection with the offer, sale and delivery of
the Securities or in connection with the initial resale of
such Securities in the manner contemplated by the Purchase
Agreement and the Offering Memorandum to register the
Securities under the Securities Act or to qualify the
Indenture
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<PAGE> 19
under the Trust Indenture Act, it being understood that no
opinion is expressed as to any subsequent resale of any
Securities;
(13) When the Securities are issued and delivered
pursuant to this Agreement, such Securities will not be of the
same class (within the meaning of Rule 144A) as securities of
the Company which are listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a
U.S. automated inter-dealer quotation system; and
(14) Neither the consummation of the transactions
contemplated hereby nor the sale, issuance, execution or
delivery of the Securities will violate Regulation T, U or X
of the Board of Governors of the Federal Reserve System.
In addition, such counsel shall state that such counsel has
participated in conferences with representatives of the Initial
Purchasers, officers and other representatives of the Company and
representatives of the independent certified accountants of the
Company, at which conferences the contents of the Preliminary
Memorandum and Final Memorandum and the business and affairs of the
Company and the Subsidiaries were discussed, and although such counsel
has not independently verified and does not pass upon or assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Final Memorandum (except and only to the
extent set forth in subclause (8) above), on the basis of the foregoing
(relying as to materiality to the extent such counsel deemed
appropriate upon the representations and opinions of officers and other
representatives of the Company), no facts have come to the attention of
such counsel which lead such counsel to believe that the Final
Memorandum at the date thereof or as of the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading
(it being understood that such counsel need not express any comment
with respect to the financial statements, including the notes thereto
and supporting schedules, or any other financial or statistical data
set forth or referred to in the Final Memorandum).
In rendering such opinions, such counsel (A) need not express
any opinion with regard to the application of laws of any jurisdiction
other than the Federal law of the United States, the General
Corporation Law of the State of Delaware and the laws of the State of
New York and (B) may rely, as to matters of fact, to the extent they
deem proper on representations or certificates of responsible officers
of the Company and certificates of public officials.
References to the Final Memorandum in this subsection (a)(i)
include any supplements thereto at or prior to the Closing Date.
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<PAGE> 20
(ii) At the Closing Date, the Initial Purchasers shall have
received the opinion of Carla Hamre Donelson, Esq., General Counsel to
the Company, dated as of the Closing Date, in the form set forth below
and otherwise reasonably satisfactory to the Initial Purchasers and
Counsel for the Initial Purchasers, to the effect that:
(1) To the knowledge of such counsel, other than as
described in the Final Memorandum, no legal, regulatory or
governmental proceedings are pending to which any of the
Subsidiaries is a party or to which the property or assets of
the Subsidiaries are subject which, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect or which, individually or in the aggregate,
could have a material adverse effect on the power or ability
of the Company to perform its obligations under the
Transaction Documents or to consummate the transactions
contemplated thereby or by the Final Memorandum and to the
knowledge of such counsel, no such material proceedings have
been threatened against the Subsidiaries or with respect to
any of their respective assets or properties;
(2) To the best knowledge of such counsel, the
Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect;
(3) To the best knowledge of such counsel, each of
the Subsidiaries is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in
good standing individually or in the aggregate would not
result in a Material Adverse Effect; and
(2) None of the Company or the Subsidiaries is in
violation of its respective Organizational Documents; to the
knowledge of such counsel, no default by the Company or any of
the Subsidiaries exists in the due performance or observance
of any material obligation, agreement, covenant or condition
contained in any Material Contract which could reasonably be
expected to have a Material Adverse Effect; and to the
knowledge of such counsel, none of the Company nor the
Subsidiaries is in breach or violation of any law, statute,
rule or regulation, or any judgment, decree or order of any
governmental or regulatory agency or other body having
jurisdiction over the Company or any of the Subsidiaries or
any of their respective properties or assets such that any
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<PAGE> 21
such breach or violation could reasonably be expected to have
a Material Adverse Effect.
In addition, such counsel shall state that such counsel has
participated in conferences with representatives of the Initial
Purchasers, officers and other representatives of the Company and
representatives of the independent certified accountants of the
Company, at which conferences the contents of the Preliminary
Memorandum and Final Memorandum and the business and affairs of the
Company and the Subsidiaries were discussed, and although such counsel
has not independently verified and does not pass upon or assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Final Memorandum, on the basis of the
foregoing (relying as to materiality to the extent such counsel deemed
appropriate upon the representations and opinions of officers and other
representatives of the Company), no facts have come to the attention of
such counsel which lead such counsel to believe that the Final
Memorandum at the date thereof or as of the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading
(it being understood that such counsel need not express any comment
with respect to the financial statements, including the notes thereto
and supporting schedules, or any other financial or statistical data
set forth or referred to in the Final Memorandum).
In rendering such opinions, such counsel (A) need not express
any opinion with regard to the application of laws of any jurisdiction
other than the Federal law of the United States, the General
Corporation Law of the State of Delaware and the laws of the State of
Colorado and (B) may rely, as to matters of fact, to the extent she
deems proper on representations or certificates of responsible officers
of the Company and certificates of public officials.
References to the Final Memorandum in this subsection (a)(ii)
include any supplements thereto at or prior to the Closing Date.
(b) The Initial Purchasers shall have received the opinion,
dated as of the Closing Date, of Cahill Gordon & Reindel, Counsel for
the Initial Purchasers, with respect to certain matters set forth in
subclauses (8) (with respect to "Description of the Notes" and
"Exchange Offer; Registration Rights,") (9) (assuming the due
authorization, execution and delivery of each of the Indenture and
Registration Agreement by each party thereto), (10) and (12) of
subsection (a)(i) of this Section 6.
In rendering such opinions, such counsel (A) need not express
any opinion with regard to the application of laws of any jurisdiction
other than the Federal laws of the United States, the General
Corporation Law of the State of Delaware and the laws of the State of
New York and (B) may rely, as to matters of fact, to the extent they
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<PAGE> 22
deem proper on representations or certificates of responsible officers
of the Company and certificates of public officials.
In addition, such counsel shall state that such counsel has
participated in conferences with representative of the Initial
Purchasers, officers and other representatives of the Company and
representatives of the independent accountants for the Company at which
conferences the contents of the Preliminary Memorandum and Final
Memorandum and related matters were discussed, and although such
counsel has not verified and does not pass upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Final Memorandum, on the basis of the
foregoing (relying as to materiality to the extent such counsel deemed
appropriate upon the representations and opinions of officers and other
representatives of the Company), no facts have come to the attention of
such counsel which lead such counsel to believe that the Final
Memorandum, at the date thereof or as of the Closing Date, contained or
contains an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no comment with respect to
the financial statements, including the notes thereto, or any other
financial or statistical data set forth or referred to in the Final
Memorandum).
(c) The following conditions contained in clauses (i) and (ii)
of this subsection (c) shall have been satisfied at and as of the
Closing Date, and the Company shall have furnished to the Initial
Purchasers a certificate of the Company, signed by the Chairman of the
Board or the President and the principal financial or accounting
officer of the Company, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the Final
Memorandum, any amendment or supplement to the Final Memorandum and
this Agreement and that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date, and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied hereunder in all material
respects at or prior to the Closing Date; and
(ii) since the date of the most recent financial
statements included in the Final Memorandum (exclusive of any
amendment or supplement thereto), there has been no Material
Adverse Change, whether or not in the ordinary course of
business. As used in this subparagraph, the term "Final
Memorandum" means the Final Memorandum in the form first used
to confirm sales of the Securities.
-22-
<PAGE> 23
(d) At the Execution Time and at the Closing Date, KPMG LLP
shall have furnished to the Initial Purchasers a letter or letters,
dated respectively as of the Execution Time and as of the Closing Date,
in form and substance satisfactory to the Initial Purchasers,
confirming that they are independent accountants within the meaning of
the Securities Act and the Exchange Act and the applicable published
rules and regulations thereunder and Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public
Accountants (the "AICPA") and containing statements and information of
the type ordinarily included in accountants' "comfort letters" to
Initial Purchasers with respect to financial statements and certain
financial information contained in the Final Memorandum, in form and
substance satisfactory to Counsel for the Initial Purchasers.
All references in this Section 6(d) to the Final Memorandum
shall be deemed to include any amendment or supplement thereto at the
date of the letter.
(e) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Final Memorandum, there shall
not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (d) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company and its
subsidiaries the effect of which, in any case referred to in clause (i)
or (ii) above, is, in the judgment of the Initial Purchasers, so
material and adverse as to make it impractical or inadvisable to market
the Securities as contemplated by the Final Memorandum.
(f) On or prior to the Closing Date, the Company shall have
furnished to the Initial Purchasers such further information,
certificates and documents as the Initial Purchasers may reasonably
request.
(g) The Company and the Trustee shall have entered into the
Indenture.
(h) The Company and the Initial Purchasers shall have entered
into the Registration Agreement.
If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as provided in this Agreement, or if any of the
opinions and certificates mentioned above or elsewhere in this Agreement shall
not be in all material respects reasonably satisfactory in form and substance to
the Initial Purchasers and Counsel for the Initial Purchasers, this Agreement
and all obligations of the Initial Purchasers hereunder may be canceled at, or
at any time prior to, the Closing Date by the Initial Purchasers. Notice of such
cancellation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
-23-
<PAGE> 24
The documents required to be delivered by this Section 6 will
be delivered at the office of Counsel for the Initial Purchasers, at 80 Pine
Street, New York, New York, on the Closing Date.
7. Reimbursement of Expenses. (a) Whether or not any sale of
the Securities is consummated, the Company agrees to pay and bear all costs and
expenses incident to the performance of all of its obligations under this
Agreement, including (i) the preparation and printing of the Preliminary
Memorandum, the Final Memorandum and any amendments or supplements thereto and
the cost of furnishing copies thereof to the Initial Purchasers, (ii) the
preparation, issuance, printing and distribution of the Securities, the Exchange
Notes, the Private Exchange Notes, if any, and any survey of state securities or
"blue sky" laws or legal investment memoranda, (iii) the delivery to the Initial
Purchasers of the Securities, the Exchange Notes or the Private Exchange Notes,
(iv) the fees and disbursements of the Company's counsel and accountants, (v)
the qualification of the Securities under the applicable state securities or
"blue sky" laws in accordance with the provisions of Section 5(i) hereof and any
filing for review of the offering with the NASD, if required, including filing
fees and reasonable fees and disbursements of counsel to the Initial Purchasers
in connection therewith and in connection with the preparation of any survey of
state securities or "blue sky" laws or legal investment memoranda, (vi) any fees
charged by rating agencies for rating the Securities, the Exchange Notes and the
Private Exchange Notes, if any, (vii) the fees and expenses of the Trustee,
including the fees and disbursements of counsel for the Trustee, (viii) all
expenses (including travel expenses) of the Company and the Initial Purchasers
in connection with any meetings with prospective investors in the Securities and
(ix) all expenses and listing fees in connection with the application for
designation of the Securities as Portal-eligible securities and to permit the
Securities, the Exchange Notes and the Private Exchange Notes, as applicable, to
be eligible to clearance through The Depository Trust Company.
(b) If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth in Section 6 hereof is not satisfied, because of any termination
pursuant to Section 10 hereof or because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or comply with any
provision hereof other than by reason of a default by any of the Initial
Purchasers in payment for the Securities on the Closing Date, the Company will
reimburse the Initial Purchasers severally upon demand for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, the directors, officers,
employees and agents of each Initial Purchaser and each person who controls any
Initial Purchaser within the meaning of either the Securities Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the
-24-
<PAGE> 25
Securities Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Memorandum or the Final Memorandum or in any amendment thereof
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agree to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made in the Preliminary
Memorandum or the Final Memorandum, or in any amendment thereof or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Initial Purchasers specifically for
inclusion therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
The foregoing indemnity with respect to any untrue statement
contained in or any omission from the Preliminary Memorandum shall not inure to
the benefit of any Initial Purchaser (or any affiliate or person who controls
such Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) from whom the person asserting such loss,
liability, claim, damage or expense purchased any of the Securities that are the
subject thereof if such person was not sent or given a copy of the Final
Memorandum (or any amendment or supplement thereto), if the Company shall have
previously furnished copies thereof to the Initial Purchasers in accordance with
this Agreement, at or prior to the written confirmation of the sale of such
Securities to such person and the untrue statement contained in or the omission
from the Preliminary Memorandum was corrected in the Final Memorandum (or any
amendment or supplement thereto).
(b) Each Initial Purchaser severally and not jointly agrees to
indemnify and hold harmless the Company, its directors, officers and each person
who controls the Company within the meaning of either the Securities Act or the
Exchange Act to the same extent as the foregoing indemnity from the Company to
each Initial Purchaser, but only with reference to written information relating
to such Initial Purchaser furnished to the Company by or on behalf of such
Initial Purchaser specifically for inclusion in the Preliminary Memorandum or
the Final Memorandum (or in any amendment or supplement thereto). This indemnity
agreement will be in addition to any liability which any Initial Purchaser may
otherwise have. The Company acknowledges that the statements set forth in the
table, and the third and ninth paragraphs after the table under the heading
"Plan of Distribution" in the Preliminary Memorandum and the Final Memorandum
constitute the only information furnished in writing by or on
-25-
<PAGE> 26
behalf of the Initial Purchasers for inclusion in the Preliminary Memorandum or
the Final Memorandum (or in any amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company on the one hand and the Initial
Purchasers on the other hand agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively,
-26-
<PAGE> 27
"Losses") to which the Company or one or more of the Initial Purchasers, as
applicable, may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company or the Initial Purchasers from the
offering of the Securities; provided, however, that in no case shall any Initial
Purchaser be responsible for any amount in excess of the purchase discount or
commission applicable to the Securities purchased by such Initial Purchaser
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Initial Purchasers shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company or the Initial
Purchasers, as applicable, in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the offering received by each of them, respectively, (before
deducting expenses), and benefits received by the Initial Purchasers shall be
deemed to be equal to the total purchase discounts and commissions received by
the Initial Purchasers from the Company in connection with the purchase of the
Securities hereunder. Relative fault shall be determined by reference to whether
any alleged untrue statement or omission relates to information provided by the
Company or the Initial Purchasers. The Company and the Initial Purchasers agree
that it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this paragraph (d), no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8 each person who controls an
Initial Purchaser within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of an Initial
Purchaser shall have the same rights to contribution as such Initial Purchaser,
and each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act and each officer and director of the Company
shall have the same rights to contribution as the Company subject in each case
to the applicable terms and conditions of this paragraph (d).
9. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Securities agreed to be
purchased by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate principal amount of securities set forth opposite the names of all the
remaining Initial Purchasers) the Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate principal amount of Securities
which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Securities set
forth in Schedule I hereto, the remaining Initial Purchasers shall have the
right to purchase all, but shall not be
-27-
<PAGE> 28
under any obligation to purchase any, of the Securities, and if such
non-defaulting Initial Purchasers do not purchase all the Securities, this
Agreement will terminate without liability to any non-defaulting Initial
Purchaser or Company. In the event of a default by any Initial Purchaser as set
forth in this Section 9 the Closing Date shall be postponed for such period, not
exceeding seven days, as the Initial Purchasers shall determine in order that
the required changes in the Final Memorandum or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Initial Purchaser of its liability, if any, to the Company or any
non-defaulting Initial Purchaser for damages occasioned by its default
hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, by notice
given to the Company prior to delivery of and payment for the Securities, if
prior to such time (i) trading in any of the Company's securities shall have
been suspended by the Commission or trading in securities generally on the New
York Stock Exchange or the NASDAQ National Market shall have been suspended or
limited or minimum prices shall have been established on either of such
exchanges, (ii) a banking moratorium shall have been declared either by Federal
or New York State authorities or (iii) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make it, in the judgment of the Initial Purchasers,
impracticable or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Final Memorandum.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, and of the Initial Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Initial Purchasers or the Company
or any of the officers, directors or controlling persons referred to in Section
8 hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Initial Purchasers, will be
mailed, delivered or telegraphed and confirmed to them, care of Salomon Smith
Barney Inc., at 390 Greenwich Street, New York, New York 10013; if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at Verio
Inc., 8005 South Chester Street, Suite 200, Englewood, Colorado 80112,
Attention: Carla Hamre Donelson, Esq.; with a copy to Morrison & Foerster LLP,
425 Market Street, San Francisco, CA 94105, Attention: Gavin Grover, Esq.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and
-28-
<PAGE> 29
controlling persons referred to in Section 8 hereof, and, except as expressly
set forth in Section 5(f) hereof, no other person will have any right or
obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
15. Business Day. For purposes of this Agreement, "business
day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a
day on which banking institutions in the City of New York, New York are
authorized or obligated by law, executive order or regulation to close.
16. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
[Signature Page Follows]
-29-
<PAGE> 30
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this Agreement and your acceptance shall represent a binding agreement
between the Company and the Initial Purchasers.
Very truly yours,
VERIO INC.
By:
------------------------------
Name:
Title:
The foregoing Agreement is hereby con-
firmed and accepted as of the date first
above written.
Salomon Smith Barney Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Morgan Stanley & Co. Incorporated
By: Salomon Smith Barney Inc.
By:
------------------------------------
Name:
Title:
S-1
<PAGE> 31
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
of Notes
Initial Purchasers To Be Purchased
- ------------------ ---------------
<S> <C>
Salomon Smith Barney Inc...................................... $ 220,000,000
Donaldson, Lufkin & Jenrette Securities Corporation........... 120,000,000
60,000,000
Morgan Stanley & Co. Incorporated............................. -------------
$ 400,000,000
Total =============
</TABLE>
<PAGE> 32
SCHEDULE II
Subsidiaries
<TABLE>
<CAPTION>
Percentage
Organized Ownership
Name of Entity Under Laws of of Company
- -------------- ------------- ----------
<S> <C> <C>
Best Internet Communications, Inc. (d/b/a California 100%
Hiway Technologies)
digitalNATION, Inc. Virginia 100%
</TABLE>
<PAGE> 33
EXHIBIT A
Selling Restrictions for Offers and
Sales Outside the United States
(1) (a) The Securities have not been and will not be
registered under the Securities Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act. Each Initial
Purchaser represents and agrees that, except as otherwise permitted by Section
4(a)(i) or (ii) of the Agreement to which this is an exhibit, it has offered and
sold the Securities, and will offer and sell the Securities, (i) as part of
their distribution at any time and (ii) otherwise until 40 days after the later
of the commencement of the offering and the Closing Date, only in accordance
with Rule 903 of Regulation S under the Securities Act. Accordingly, each
Initial Purchaser represents and agrees that neither it, nor any of its
affiliates nor any person acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities, and that
it and they have complied and will comply with the offering restrictions
requirement of Regulation S. Each Initial Purchaser agrees that, at or prior to
the confirmation of sale of Securities (other than a sale of Securities pursuant
to Section 4(a)(i) or (ii) of the Agreement to which this is an exhibit), it
shall have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Securities from it during
the restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered or sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
or (ii) otherwise until 40 days after the later of the commencement of
the offering and [specify closing date of the offering], except in
either case in accordance with Regulation S or Rule 144A under the
Securities Act. Terms used above have the meanings given to them by
Regulation S."
(b) Each Initial Purchaser also represents and agrees
that it has not entered and will not enter into any contractual arrangement with
any distributor with respect to the distribution of the Securities, except with
its affiliates or with the prior written consent of the Company.
(c) Terms used in this section have the meanings given
to them by Regulation S.
<PAGE> 34
(2) Each Initial Purchaser represents and agrees that (i) it
has not offered or sold and will not offer or sell, in the United Kingdom, by
means of any document, any Securities other than to persons whose ordinary
business it is to buy or sell shares or debentures, whether as principal or as
agent (except in circumstances which do not constitute an offer to the public
within the meaning of the Companies Act 1985 of Great Britain), (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 of the United Kingdom with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 9(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1988
or is a person to whom the document may otherwise lawfully be issued or passed
on.
-2-
<PAGE> 1
Exhibit 5.1
_______ __, 2000
Verio Inc.
8005 South Chester Street
Suite 200
Englewood, CO 80112
Re: 10 5/8% Senior Notes due 2009;
Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as counsel for Verio Inc., a Delaware corporation (the
"Company"), in connection with the Registration Statement (the "Registration
Statement") on Form S-4 under the Securities Act of 1933, as amended, for the
registration and issuance of an aggregate of $400,000,000 principal amount of
10 5/8% Senior Notes due 2009 (the "New Notes") by the Company, in connection
with the exchange offer (the "Exchange Offer") of an aggregate of $400,000,000
principal amount of 10 5/8% Senior Notes due 2009 (the "Old Notes") for the New
Notes. The Old Notes have been, and the New Notes will be, issued pursuant to
the terms and conditions of, and in the form set forth in, an indenture, dated
as of November 19, 1999 (the "Indenture") between the Company and U.S. Bank
Trust National Association, as trustee (the "Trustee"). The form of the
Indenture has been filed as an exhibit to the Registration Statement.
We have examined originals or copies of the Indenture and the New Notes. In
addition, we have examined such records, documents, certificates of public
officials and of the Company, made such inquiries of officials of the Company,
and considered such questions of law as we have deemed necessary for the purpose
of rendering the opinions set forth herein.
We have assumed the genuineness of all signatures, the authenticity of all
New Notes submitted to us as originals and the conformity with originals of all
items submitted to us as copies. We have also assumed that each party to the
Indenture and the New Notes, other than the Company, has the power and authority
to execute and deliver, and to perform and observe the provisions of, the
Indenture and the New Notes, and has duly authorized, executed and delivered the
Indenture and the New Notes, that
<PAGE> 2
Verio Inc.
____ __, 2000
Page Two
the Indenture constitutes the legal, valid and binding obligations of the
Trustee, and that the New Notes have been duly authenticated by the Trustee and
will be duly qualified under the Trust Indenture Act of 1939, as amended. We
have also assumed compliance with all applicable state securities and "Blue Sky"
laws.
The opinions hereinafter expressed are subject to the following further
qualifications and exceptions:
(i) The effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, including, without limitation, laws relating to fraudulent
transfers or conveyances, preferences and equitable subordination;
(ii) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the New
Notes and the Indenture; and the effect of judicial decisions which have held
that certain provisions are unenforceable where their enforcement would violate
the implied covenants of good faith and fair dealing, or would be commercially
unreasonable, or where their breach is not material;
(iii) We express no opinion as to the effect on the opinions expressed
herein of (a) the compliance or non-compliance of any party to the Indenture or
the New Notes (other than the Company) with any laws or regulations applicable
to it, or (b) the legal or regulatory status or the nature of the business of
any such party;
(iv) The effect of judicial decisions which may permit the introduction of
extrinsic evidence to supplement the terms of the Indenture or the New Notes or
to aid in the interpretation of the Indenture or the New Notes;
(v) We express no opinion as to the enforceability of provisions of the
Indenture or the New Notes imposing, or which are construed as effectively
imposing, penalties;
(vi) We express no opinion as to the enforceability of provisions of the
Indenture or the New Notes which purport to establish evidentiary standards or
to make determinations conclusive; and
(vii) We express no opinion as to the enforceability of any choice of law
provisions contained in the Indenture or the New Notes or the enforceability of
any provisions which purport to establish a particular court as the forum for
adjudication of any controversy relating to the Indenture or the New Notes or
which purport to cause any party to waive or alter any right to a trial by jury
or which waive objection to jurisdiction.
<PAGE> 3
Verio Inc.
____ __, 2000
Page Three
Based upon and subject to the foregoing, we are of the opinion that the New
Notes, upon valid tender of the Old Notes to the Trustee, as exchange agent for
the Exchange Offer, and issuance of the New Notes in exchange for such tendered
Old Notes in accordance with the terms of the Registration Statement, will be
legally issued and will constitute binding obligations of the Company
enforceable against the Company in accordance with their terms.
We express no opinion as to matters governed by laws of any jurisdiction
other than the following as in effect on the date hereof: the substantive laws
of the State of New York (without reference to its choice of law rules), the
general corporation laws of the State of Delaware, and the federal laws of the
United States of America.
We hereby consent to the use of this opinion in connection with the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" therein.
Very truly yours,
<PAGE> 1
EXHIBIT 10.36
================================================================================
VERIO INC., as Issuer
and
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
---------------------
INDENTURE
Dated as of November 19, 1999
--------------------
$400,000,000
10-5/8% Senior Notes Due 2009, Series A
10-5/8% Senior Notes Due 2009, Series B
================================================================================
<PAGE> 2
Reconciliation and tie between Trust Indenture Act of 1939, as amended, and
Indenture, dated as of November 19, 1999
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C> <C>
Section 310 (a)(1)................................................................ 6.05, 6.09
(a)(2)................................................................ 6.05, 6.09
(a)(3)................................................................ 6.05
(a)(4)................................................................ 6.05
(b)................................................................... 6.05, 6.08, 6.10
Section 311 (a)................................................................... 6.07
(b)................................................................... 6.07
(c)................................................................... Not Applicable
Section 312 (a)................................................................... 3.05, 7.01
(b)................................................................... 7.02
(c)................................................................... 7.02
Section 313 (a)................................................................... 7.03
(b)................................................................... 7.03
(c)................................................................... 7.03
(d)................................................................... 7.03
Section 314 (a)................................................................... 7.04, 10.09
(b)................................................................... Not Applicable
(c)(1)................................................................ 1.04, 4.04, 12.01(c)
(c)(2)................................................................ 1.04, 4.04, 12.01(c)
(c)(3)................................................................
(d)................................................................... Not Applicable
(e)................................................................... 1.04
Section 315 (a)................................................................... 6.01(a)
(b)................................................................... 6.02
(c)................................................................... 6.01(b)
(d)................................................................... 6.01(c)
(e)................................................................... 5.14
Section 316 (a) (last sentence) .................................................. 3.14
(a)(1)(A)............................................................. 5.12
(a)(1)(B)............................................................. 5.13
(a)(2)................................................................ Not Applicable
(b)................................................................... 5.08
Section 317 (a)(1)................................................................ 5.03
(a)(2)................................................................ 5.04
(b)................................................................... 10.03
Section 318 (a)................................................................... 1.08
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TABLE OF CONTENTS
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PARTIES ................................................................................................. 1
RECITALS ................................................................................................. 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions........................................................................... 1
Section 1.02. Other Definitions..................................................................... 25
Section 1.03. Rules of Construction................................................................. 26
Section 1.04. Form of Documents Delivered to Trustee................................................ 26
Section 1.05. Acts of Holders....................................................................... 27
Section 1.06. Notices, etc., to the Trustee and the Company......................................... 28
Section 1.07. Notice to Holders; Waiver............................................................. 28
Section 1.08. Conflict with Trust Indenture Act..................................................... 29
Section 1.09. Effect of Headings and Table of Contents.............................................. 29
Section 1.10. Successors and Assigns................................................................ 29
Section 1.11. Separability Clause................................................................... 29
Section 1.12. Benefits of Indenture................................................................. 29
Section 1.13. GOVERNING LAW......................................................................... 29
Section 1.14. No Recourse Against Others............................................................ 30
Section 1.15. Independence of Covenants............................................................. 30
Section 1.16. Exhibits.............................................................................. 30
Section 1.17. Counterparts.......................................................................... 30
Section 1.18. Duplicate Originals................................................................... 30
ARTICLE TWO
NOTE FORMS
Section 2.01. Form and Dating....................................................................... 30
Section 3.01. Title and Terms....................................................................... 31
Section 3.02. Registrar and Paying Agent............................................................ 32
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ARTICLE THREE
THE NOTES
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Section 3.03. Execution and Authentication.......................................................... 32
Section 3.04. Temporary Notes....................................................................... 34
Section 3.05. Transfer and Exchange................................................................. 34
Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes........................................... 35
Section 3.07. Payment of Interest; Interest Rights Preserved........................................ 36
Section 3.08. Persons Deemed Owners................................................................. 37
Section 3.09. Cancellation.......................................................................... 37
Section 3.10. Computation of Interest............................................................... 38
Section 3.11. Legal Holidays........................................................................ 38
Section 3.12. CUSIP and CINS Numbers................................................................ 39
Section 3.13. Paying Agent To Hold Money in Trust................................................... 39
Section 3.14. Treasury Notes........................................................................ 38
Section 3.15. Deposits of Monies.................................................................... 39
Section 3.16. Book-Entry Provisions for Global Notes................................................ 39
Section 3.17. Special Transfer Provisions........................................................... 41
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Company's Option To Effect Defeasance or Covenant Defeasance.......................... 44
Section 4.02. Defeasance and Discharge.............................................................. 45
Section 4.03. Covenant Defeasance................................................................... 45
Section 4.04. Conditions to Defeasance or Covenant Defeasance....................................... 46
Section 4.05. Deposited Money and U.S. Government Obligations To Be Held in Trust;
Other Miscellaneous Provisions.................................................... 48
Section 4.06. Reinstatement......................................................................... 48
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default..................................................................... 49
Section 5.02. Acceleration of Maturity; Rescission and Annulment.................................... 50
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee....................... 51
Section 5.04. Trustee May File Proofs of Claims..................................................... 52
Section 5.05. Trustee May Enforce Claims Without Possession of Notes................................ 52
Section 5.06. Application of Money Collected........................................................ 53
Section 5.07. Limitation on Suits................................................................... 53
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Section 5.08. Unconditional Right of Holders To Receive Principal, Premium and
Interest.......................................................................... 54
Section 5.09. Restoration of Rights and Remedies.................................................... 54
Section 5.10. Rights and Remedies Cumulative........................................................ 54
Section 5.11. Delay or Omission Not Waiver.......................................................... 55
Section 5.12. Control by Majority................................................................... 55
Section 5.13. Waiver of Past Defaults............................................................... 55
Section 5.14. Undertaking for Costs................................................................. 56
Section 5.15. Waiver of Stay, Extension or Usury Laws............................................... 56
Section 5.16. Unconditional Right of Holders To Receive Payment..................................... 56
ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities................................................... 57
Section 6.02. Notice of Defaults.................................................................... 57
Section 6.03. Certain Rights of Trustee............................................................. 58
Section 6.04. Trustee Not Responsible for Recitals, Dispositions of Notes or
Application of Proceeds Thereof................................................... 59
Section 6.05. Trustee and Agents May Hold Notes; Collections; Etc................................... 59
Section 6.06. Money Held in Trust................................................................... 60
Section 6.07. Compensation and Indemnification of Trustee and Its Prior Claim....................... 60
Section 6.08. Conflicting Interests................................................................. 60
Section 6.09. Corporate Trustee Required; Eligibility............................................... 61
Section 6.10. Resignation and Removal; Appointment of Successor Trustee............................. 61
Section 6.11. Acceptance of Appointment by Successor................................................ 63
Section 6.12. Merger, Conversion, Amalgamation, Consolidation or Succession to
Business.......................................................................... 63
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company To Furnish Trustee Names and
Addresses of Holders.............................................................. 64
Section 7.02. Communications of Holders............................................................. 65
Section 7.03. Reports by Trustee.................................................................... 65
Section 7.04. Reports by Company.................................................................... 65
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ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
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Section 8.01. Company May Consolidate, etc., Only on Certain Terms.................................. 66
Section 8.02. Successor Substituted................................................................. 67
ARTICLE NINE
SUPPLEMENTAL INDENTURES AND WAIVERS
Section 9.01. Supplemental Indentures, Agreements and Waivers Without Consent of
Holders........................................................................... 67
Section 9.02. Supplemental Indentures, Agreements and Waivers with Consent of
Holders........................................................................... 68
Section 9.03. Execution of Supplemental Indentures, Agreements and Waivers.......................... 69
Section 9.04. Effect of Supplemental Indentures..................................................... 70
Section 9.05. Conformity with Trust Indenture Act................................................... 70
Section 9.06. Reference in Notes to Supplemental Indentures......................................... 70
Section 9.07. Record Date........................................................................... 70
Section 9.08. Revocation and Effect of Consents..................................................... 71
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and Interest............................................ 71
Section 10.02. Maintenance of Office or Agency....................................................... 71
Section 10.03. Money for Note Payments To Be Held in Trust........................................... 72
Section 10.04. Corporate Existence................................................................... 73
Section 10.05. Payment of Taxes and Other Claims..................................................... 73
Section 10.06. Maintenance of Properties............................................................. 74
Section 10.07. Insurance............................................................................. 74
Section 10.08. Books and Records..................................................................... 74
Section 10.09. Provision of Financial Statements..................................................... 74
Section 10.10. Change of Control..................................................................... 75
Section 10.11. Limitation on Additional Indebtedness................................................. 77
Section 10.12. Statement by Officers as to Default................................................... 77
Section 10.13. Limitation on Restricted Payments..................................................... 78
Section 10.14. Limitation on Transactions with Affiliates............................................ 81
Section 10.15. Disposition of Proceeds of Asset Sales................................................ 82
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Section 10.16. Limitation on Liens Securing Certain Indebtedness..................................... 85
Section 10.17. Limitation on Business................................................................ 85
Section 10.18. Limitation on Certain Guarantees and Indebtedness of Restricted
Subsidiaries...................................................................... 85
Section 10.19. Limitation on Issuances and Sales of Preferred Stock by Restricted
Subsidiaries...................................................................... 86
Section 10.20. Limitation on Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries........................................................... 86
Section 10.21. Limitation on Designations of Unrestricted Subsidiaries............................... 87
Section 10.22. Compliance Certificates and Opinions.................................................. 88
Section 10.23. Reports............................................................................... 89
Section 10.24. Limitation on Status as Investment Company............................................ 89
ARTICLE ELEVEN
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge of Indenture............................................... 90
Section 11.02. Application of Trust Money............................................................ 91
ARTICLE TWELVE
REDEMPTION
Section 12.01. Notices to the Trustee................................................................ 91
Section 12.02. Selection of Notes To Be Redeemed..................................................... 91
Section 12.03. Notice of Redemption.................................................................. 92
Section 12.04. Effect of Notice of Redemption........................................................ 93
Section 12.05. Deposit of Redemption Price........................................................... 93
Section 12.06. Notes Redeemed or Purchased in Part................................................... 93
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Exhibit A-1 - Form of Series A Note
Exhibit A-2 - Form of Series B Note
Exhibit B - Form of Legend for Book-Entry Securities
Exhibit C - Form of Certificate To Be Delivered in Connection with Transfers
to Non-QIB Accredited Investors
Exhibit D - Form of Certificate To Be Delivered in Connection with Transfers
Pursuant to Regulation S
-v-
<PAGE> 8
INDENTURE, dated as of November 19, 1999, between VERIO INC., a
corporation incorporated under the laws of the State of Delaware (the
"Company"), as issuer, and U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee (the
"Trustee").
RECITALS
The Company has duly authorized the creation of an issue of (i)
10-5/8% Senior Notes Due 2009, Series A, and (ii) 10-5/8% Senior Notes due 2009,
Series B, to be issued in exchange for the 10-5/8% Senior Notes due 2009, Series
A, pursuant to the Registration Rights Agreement (the "Notes"; such term to
include the Initial Notes, the Private Exchange Notes, if any, and the
Unrestricted Notes, if any, treated as a single class of securities under this
Indenture), of substantially the tenor and amount hereinafter set forth, and to
provide therefor the Company has duly authorized the execution and delivery of
this Indenture.
All things necessary have been done to make the Notes, when
executed by the Company, and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company and to make this
Indenture a valid agreement of each of the Company and the Trustee in accordance
with the terms hereof.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Notes by the Holders (as hereinafter defined) thereof, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the Notes,
as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
"1997 Notes" means the Company's 13-1/2% Senior Notes Due 2004.
"Acquired Indebtedness" means Indebtedness of a person existing
at the time such person becomes a Restricted Subsidiary or assumed in connection
with an Asset Acquisition by such person and not incurred in connection with, or
in anticipation of, such person becoming a Restricted Subsidiary or such Asset
Acquisition; provided that Indebtedness of such person which is redeemed,
defeased, retired or otherwise repaid at the time of or immediately upon
consummation of the transactions by which such person becomes a Restricted
Subsidiary or such Asset Acquisition shall not constitute Acquired Indebtedness.
<PAGE> 9
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"Affiliate" of any specified person means any other person which,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Acquisition" means (i) any capital contribution (by means
of transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Company or any
Restricted Subsidiary in any other person, or any acquisition or purchase of
Capital Stock of any other person by the Company or any Restricted Subsidiary,
in either case pursuant to which such person shall (a) become a Restricted
Subsidiary or (b) shall be merged with or into the Company or any Restricted
Subsidiary or (ii) any acquisition by the Company or any Restricted Subsidiary
of the assets of any person which constitute substantially all of an operating
unit or line of business of such person or which is otherwise outside of the
ordinary course of business.
"Asset Sale" means any direct or indirect sale, conveyance,
transfer or lease (that has the effect of a disposition and is not for security
purposes) or other disposition (that is not for security purposes) to any person
other than the Company or a Restricted Subsidiary, in one transaction or a
series of related transactions, of (i) any Capital Stock of any Restricted
Subsidiary (other than customary stock option programs), (ii) any assets of the
Company or any Restricted Subsidiary which constitute substantially all of an
operating unit or line of business of the Company and the Restricted
Subsidiaries or (iii) any other property or asset of the Company or any
Restricted Subsidiary outside of the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" shall not include (i) any
disposition of properties and assets of the Company that is governed under
Article Eight, (ii) sales of property or equipment that have become worn out,
obsolete or damaged or otherwise unsuitable for use in connection with the
business of the Company or any Restricted Subsidiary, as the case may be, and
(iii) for purposes of Section 10.15 hereof, any sale, conveyance, transfer,
lease or other disposition of any property or asset, whether in one transaction
or a series of related transactions occurring within one year, either (x)
involving assets with a Fair Market Value not in excess of $500,000 or (y) which
constitutes the incurrence of a Capitalized Lease Obligation.
"Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by dividing
(i) the sum of the products of (a) the number of years from such date to the
date or dates of each successive scheduled principal payment (including, without
limitation, any sinking fund requirements) of such Indebtedness multiplied by
(b) the amount of each such principal payment by (ii) the sum of all such
principal payments; provided that, in the case of any Capitalized Lease
Obligation, all calculations
<PAGE> 10
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hereunder shall give effect to any applicable options to renew in favor of the
Company or any Restricted Subsidiary.
"Bank Facility" means the $100.0 million revolving credit
facility among the Company, as borrower, Citicorp USA, Inc., as administrative
agent, First Union National Bank, as documentation agent, and Salomon Smith
Barney Inc., as lead arranger and book manager, and the financial institutions
party thereto from time to time as lenders, as such credit facility may be
amended or supplemented from time to time.
"Bankruptcy Law" means Title 11, United States Code or any
similar federal or state law relating to bankruptcy, insolvency, receivership,
winding-up, liquidation, reorganization or relief of debtors or the law of any
other jurisdiction relating to bankruptcy, insolvency, receivership, winding-up,
liquidation, reorganization or relief of debtors or any amendment to, succession
to or change in any such law.
"Bankruptcy Order" means any court order made in a proceeding
pursuant to or within the meaning of any Bankruptcy Law, containing an
adjudication of bankruptcy or insolvency, or providing for liquidation,
receivership, winding-up, dissolution, "concordate" or reorganization, or
appointing a Custodian of a debtor or of all or any substantial part of a
debtor's property, or providing for the staying, arrangement, adjustment or
composition of indebtedness or other relief of a debtor.
"Board" means the Board of Directors of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The City of New
York, New York or St. Paul, Minnesota are authorized or obligated by law,
regulation or executive order to close.
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting and/or non-voting) of, such person's capital
stock, whether outstanding on the Issue Date or issued after the Issue Date, and
any and all rights (other than any evidence of Indebtedness), warrants or
options exchangeable for or convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation to pay rent
or other amounts under a lease of (or other agreement conveying the right to
use) any property (whether real, personal or mixed, immovable or movable) that
is required to be classified and accounted for as a capitalized lease obligation
under GAAP, and for the purpose of this Indenture,
<PAGE> 11
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the amount of such obligation at any date shall be the capitalized amount
thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) any evidence of Indebtedness (with,
for purposes of Section 10.15 hereof only, a maturity of 365 days or less)
issued or directly and fully guaranteed or insured by the United States or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States is pledged in support thereof or such Indebtedness constitutes
a general obligation of such country); (ii) deposits, certificates of deposit or
acceptances (with, for purposes of Section 10.15 hereof only, a maturity of 365
days or less) of any financial institution that is a member of the Federal
Reserve System, in each case having combined capital and surplus and undivided
profits (or any similar capital concept) of not less than $500.0 million and
whose senior unsecured debt is rated at least "A-1" by S&P or "P-1" by Moody's;
(iii) commercial paper with a maturity of 365 days or less issued by a
corporation (other than an Affiliate of the Company) organized under the laws of
the United States or any State thereof and rated at least "A-1" by S&P or "P-1"
by Moody's; (iv) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States Government or issued by any agency thereof and backed by
the full faith and credit of the United States Government maturing within 365
days from the date of acquisition; (v) other debt obligations maturing in 365
days or less issued by a corporation (other than an Affiliate of the Company)
organized under the laws of the United States or any state thereof and rated at
least "A-" by S&P or "A3" by Moody's; and (vi) money market funds which invest
substantially all of their assets in securities of the type described in the
preceding clauses (i) through (v).
"Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), excluding WorldCom, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such right is
excercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total Voting Stock of the Company; or (b)
the Company consolidates with, or merges with or into, another person or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any person consolidates with,
or merges with or into, the Company, in any such event pursuant to a transaction
in which the outstanding Voting Stock of the Company is converted into or
exchanged for cash, securities or other property, other than any such
transaction where (i) the outstanding Voting Stock of the Company is converted
into or exchanged for (1) Voting Stock (other than Disqualified Stock) of the
surviving or transferee corporation or its parent corporation and/or (2) cash,
securities and other property in an amount which could be paid by the Company as
a Restricted Payment under this Indenture and (ii) immediately after such
transaction no "person" or "group" (as such terms are used in Section 13(d) and
14(d) of the Exchange Act), excluding
<PAGE> 12
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WorldCom, is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire, whether
such right is excercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total Voting Stock of the
surviving or transferee corporation or its parent corporation, as applicable; or
(c) during any consecutive two-year period, individuals who at the beginning of
such period constituted the Board (together with any new directors whose
election by the Board or whose nomination for election by the stockholders of
the Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason (other than by action of WorldCom) to constitute a majority of the Board
then in office. The good faith determination by the Board, based upon advice of
outside counsel, of the beneficial ownership of securities of the Company within
the meaning of Rules 13d-3 and 13d-5 under the Exchange Act shall be conclusive,
absent contrary controlling judicial precedent or contrary written
interpretation published by the SEC.
"Common Stock" means, with respect to any person, any and all
shares, interests or other participations in, and other equivalents (however
designated and whether voting or non-voting) of such person's common stock
whether outstanding at the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the person named as the "Company" in the first
paragraph of this Indenture, until a successor person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by any one of its Chairman of the Board,
its Vice-Chairman, its Chief Executive Officer, its President or a Vice
President, and by its Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and delivered to the Trustee.
"Consolidated Annualized Pro Forma Operating Cash Flow" means, at
any date of determination, Consolidated Operating Cash Flow for the latest
fiscal quarter for which consolidated financial statements of the Company are
available multiplied by four. For purposes of calculating "Consolidated
Operating Cash Flow" for any fiscal quarter for purposes of this definition, (i)
any Subsidiary of the Company that is a Restricted Subsidiary on the date of the
transaction (the "Transaction Date") giving rise to the need to calculate
"Consolidated Annualized Pro Forma Operating Cash Flow" shall be deemed to have
been a Restricted Subsidiary at all times during such fiscal quarter and (ii)
any Subsidiary of the Company that is not a Restricted Subsidiary on the
Transaction Date shall be deemed not to have been a Restricted Subsidiary at any
time during such fiscal quarter. In addition to and without limitation
<PAGE> 13
-6-
of the foregoing, for purposes of this definition, "Consolidated Operating Cash
Flow" shall be calculated after giving effect on a pro forma basis for the
applicable fiscal quarter to, without duplication, any Asset Sales or Asset
Acquisitions (including, without limitation, any Asset Acquisition giving rise
to the need to make such calculation as a result of the Company or one of the
Restricted Subsidiaries (including any person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness) occurring during the period
commencing on the first day of such fiscal quarter to and including the
Transaction Date, as if such Asset Sale or Asset Acquisition occurred on the
first day of such fiscal quarter.
"Consolidated Income Tax Expense" means, with respect to any
period, the provision for United States corporation, local, foreign and other
income taxes of the Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any
period, without duplication, the sum of (i) the interest expense of the Company
and the Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount, (b) the net cost under Interest Rate Obligations
(including any amortization of discounts), (c) the interest portion of any
deferred payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and similar transactions and (e) all accrued interest, (ii) the interest
component of Capitalized Lease Obligations paid, accrued and/or scheduled to be
paid or accrued by the Company and the Restricted Subsidiaries during such
period as determined on a consolidated basis in accordance with GAAP and (iii)
the amount of dividends in respect of Disqualified Stock paid by the Company and
the Restricted Subsidiaries during such period; provided that Consolidated
Interest Expense shall exclude the amortization of fees related to the issuance
of the Notes, the 1997 Notes, the March 1998 Notes and the November 1998 Notes,
and fees related to any Indebtedness under a Permitted Credit Facility.
"Consolidated Net Income" means, with respect to any period, the
consolidated net income of the Company and the Restricted Subsidiaries for such
period, adjusted, to the extent included in calculating such consolidated net
income, by excluding, without duplication, (i) all extraordinary, unusual or
nonrecurring gains or losses of such person (net of fees and expenses relating
to the transaction giving rise thereto) for such period, (ii) income of the
Company and the Restricted Subsidiaries derived from or in respect of all
Investments in persons other than Restricted Subsidiaries, except to the extent
of any dividends or distributions actually received by the Company or any
Restricted Subsidiary, (iii) the portion of net income (or loss) of such person
allocable to minority interests in Restricted Subsidiaries for such period, (iv)
net income (or loss) of any other person combined with such person on a "pooling
of
<PAGE> 14
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interests" basis attributable to any period prior to the date of combination,
(v) any gain or loss, net of taxes, realized by such person upon the termination
of any employee pension benefit plan during such period, (vi) gains or losses in
respect of any Asset Sales (net of fees and expenses relating to the transaction
giving rise thereto) during such period, (vii) except in the case of any
restriction or encumbrance permitted under clause (viii) of Section 10.20
hereof, the net income of any Restricted Subsidiary for such period to the
extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulations
applicable to that Restricted Subsidiary or its stockholders and (viii)
dividends or other distributions paid in respect of Capital Stock (other than
Disqualified Stock) to the extent that such dividend or distribution would
constitute a Restricted Payment or be paid out of the deposit account in respect
of the Company's 6.75% Series A Convertible Preferred Stock..
"Consolidated Net Worth" means, with respect to any person, the
consolidated stockholders' or partners' equity of such person reflected on the
most recent financial statements of such person, determined in accordance with
GAAP, less any amounts attributable to redeemable capital stock (as determined
under applicable accounting standards by the SEC) of such person.
"Consolidated Operating Cash Flow" means, with respect to any
period, the Consolidated Net Income of the Company and the Restricted
Subsidiaries for such period increased, to the extent deducted in arriving at
Consolidated Net Income for such period, by the sum of (i) the Consolidated
Income Tax Expense of the Company and the Restricted Subsidiaries accrued
according to GAAP for such period (other than taxes attributable to
extraordinary gains or losses and gains and losses from Asset Sales); (ii)
Consolidated Interest Expense for such period; (iii) depreciation of the Company
and the Restricted Subsidiaries for such period; (iv) amortization of the
Company and the Restricted Subsidiaries for such period, including, without
limitation, amortization of capitalized debt issuance costs for such period, all
determined on a consolidated basis in accordance with GAAP; and (v) other
non-cash charges decreasing Consolidated Net Income.
"consolidation" means, with respect to the Company, the
consolidation of the accounts of the Restricted Subsidiaries with those of the
Company, all in accordance with GAAP; provided that "consolidation" will not
include consolidation of the accounts of any Unrestricted Subsidiary with the
accounts of the Company. The term "consolidated" has a correlative meaning to
the foregoing.
"Corporate Trust Office" means the office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 180 East 5th Street, St. Paul, Minnesota 55101,
<PAGE> 15
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Attention: Corporate Trust Department, except for purposes of Sections 3.02 and
10.02 hereof. For purposes of such sections, such office is located at 100 Wall
Street, 20th Floor, New York, New York 10005.
"Custodian" means any receiver, interim receiver, receiver and
manager, receiver-manager, trustee, assignee, liquidator, sequestrator or
similar official under any Bankruptcy Law or any other law respecting secured
creditors and the enforcement of their security or any other person with like
powers whether appointed judicially or out of court and whether pursuant to an
interim or final appointment.
"Debt Securities" means any debt securities issued by the Company
in a public offering or a private placement.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Designation" has the meaning set forth under Section 10.21
hereof.
"Disinterested Director" means, with respect to any transaction
or series of related transactions, a member of the Board other than a director
who (i) has any material direct or indirect financial interest in or with
respect to such transaction or series of related transactions or (ii) is an
employee or officer of the Company or an Affiliate that is itself a party to
such transaction or series of transactions or an Affiliate of a party to such
transaction or series of related transactions.
"Disqualified Stock" means, with respect to any person, any
Capital Stock which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or becomes mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or becomes exchangeable for Indebtedness at the option
of the holder thereof, or becomes redeemable at the option of the holder
thereof, in whole or in part, on or prior to the final maturity date of the
Notes; provided such Capital Stock shall only constitute Disqualified Stock to
the extent it so matures or becomes so redeemable or exchangeable on or prior to
the final maturity date of the Notes; provided, further, that any Capital Stock
of the Company or any Restricted Subsidiary that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
final maturity date of the Notes shall not constitute Disqualified Stock if the
"asset sale" or "change of control" provisions applicable to such Capital Stock
are no more favorable to the holders of such Capital Stock than the
<PAGE> 16
-9-
provisions contained in Section 10.15 and Section 10.10 hereof described above
and such Capital Stock specifically provides that such person will not
repurchase or redeem any such stock pursuant to such provision prior to the
Company's repurchase of such Notes as are required to be repurchased pursuant to
Section 10.15 and Section 10.10 hereof.
"Equity Offering" means an underwritten offering of Capital Stock
(other than Disqualified Stock) made pursuant to a registration statement filed
with the SEC under the Securities Act or pursuant to Rule 144A under the
Securities Act.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Exchange Notes" means the 10-5/8% Senior Notes Due 2009, Series
B, to be issued in exchange for the Initial Notes pursuant to the Registration
Rights Agreement.
"Exchange Offer" shall have the meaning specified in the
Registration Rights Agreement.
"Existing ISP" means any ISP in which the Company or a Subsidiary
of the Company has an Investment on the Issue Date.
"Fair Market Value" means, with respect to any asset or property,
the price that could be negotiated in an arm's-length free market transaction,
for cash, between a willing seller and a willing buyer, neither of whom is under
pressure or compulsion to complete the transaction. Unless otherwise specified
in this Indenture, Fair Market Value shall be determined by the Board acting in
good faith and shall be evidenced by a Board Resolution.
"GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States and which are applicable as
of the date of determination and which are consistently applied for all
applicable periods.
"Global Notes" means one or more Regulation S Global Notes and
144A Global Notes.
"guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all
<PAGE> 17
-10-
or any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantee" has the meaning provided in Section 10.18.
"Guarantor" has the meaning provided in Section 10.18.
"Holder" or "Noteholder" means a person in whose name a Note is
registered in the Note Register.
"incur" means, with respect to any Indebtedness or other
obligation of any person, to create, issue, incur (by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation including by acquisition of Subsidiaries or the
recording, as required pursuant to GAAP or otherwise, of any such Indebtedness
or other obligation on the balance sheet of such person (and "incurrence,"
"incurred," "incurrable" and "incurring" shall have meanings correlative to the
foregoing); provided that a change in GAAP that results in an obligation of such
person that exists at such time becoming Indebtedness shall not be deemed an
incurrence of such Indebtedness and that neither the accrual of interest nor the
accretion of original issue discount shall be deemed an incurrence of
Indebtedness. Indebtedness otherwise incurred by a person before it becomes a
Subsidiary of the Company (whether by merger, consolidation, acquisition or
otherwise) shall be deemed to have been incurred at the time at which such
person becomes a Subsidiary of the Company.
"Indebtedness" means, with respect to any person, without
duplication, (i) any liability, contingent or otherwise, of such person (a) for
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such person or only to a portion thereof) or (b) evidenced by a note,
debenture or similar instrument or letter of credit (including a purchase money
obligation) or (c) for the payment of money relating to a Capitalized Lease
Obligation or other obligation relating to the deferred purchase price of
property (except to the extent representing funds deposited in escrow to secure
the deferred purchase price of an Asset Acquisition or a Permitted Investment)
or (d) in respect of an Interest Rate Obligation or currency agreement; or (ii)
any liability of others of the kind described in the preceding clause (i) which
the person has guaranteed or which is otherwise its legal liability; or (iii)
any obligation secured by a Lien (other than (x) Permitted Liens of the types
described in clauses (b), (d) or (e) of the definition of Permitted Liens;
provided that the obligations secured would not constitute Indebtedness under
clauses (i) or (ii) or (iii) of this definition, and (y) Liens on Capital Stock
or Indebtedness of any Unrestricted Subsidiary) to which the property or assets
of such person are subject, whether or not the obligations secured thereby shall
have been assumed by or shall otherwise be such person's legal liability (the
amount of such obligation being deemed to be the lesser of the value of such
property or asset or the amount of the obligation so secured); (iv) all
Disqualified Stock valued at the greater of its voluntary or involuntary
<PAGE> 18
-11-
maximum fixed repurchase price plus accrued and unpaid dividends; and (v) any
and all deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any liability of the kind described in any of
the preceding clauses (i), (ii), (iii) or (iv). In no event shall "Indebtedness"
include trade payables and accrued liabilities that are current liabilities
incurred in the ordinary course of business, excluding the current maturity of
any obligation which would otherwise constitute Indebtedness. For purposes of
Section 10.11 and Section 10.13 hereof and the definition of "Events of
Default," in determining the principal amount of any Indebtedness to be incurred
by the Company or a Restricted Subsidiary or which is outstanding at any date,
(x) the principal amount of any Indebtedness issued with original issue discount
shall be the face amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness at such date as
determined in conformity with GAAP and (y) the principal amount of any
Indebtedness shall be reduced by any amount of cash or Cash Equivalent
collateral securing on a perfected basis, and dedicated for disbursement
exclusively to the payment of principal of and interest on, such Indebtedness.
"Indenture" means this instrument as originally executed
(including all exhibits and schedules hereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Indenture Obligations" means the obligations of the Company and
any other obligor under this Indenture or under the Notes, to pay principal of,
premium, if any, and interest on the Notes when due and payable, whether at
maturity, by acceleration, call for redemption or repurchase or otherwise, and
all other amounts due or to become due under or in connection with this
Indenture or the Notes and the performance of all other obligations to the
Trustee (including, but not limited to, payment of all amounts due the Trustee
under Section 6.07 hereof) and the Holders of the Notes under this Indenture and
the Notes, according to the terms thereof.
"Independent Financial Advisor" means a United States investment
banking firm of national or regional standing in the United States (i) which
does not, and whose directors, officers and employees or Affiliates do not have,
a direct or indirect financial interest in the Company and (ii) which, in the
judgment of the Board, is otherwise independent and qualified to perform the
task for which it is to be engaged.
"Initial Notes" means the 10-5/8% Senior Notes Due 2009, Series
A, of the Company.
"Initial Purchasers" means Salomon Smith Barney Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Morgan Stanley & Co. Incorporated.
<PAGE> 19
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"Institutional Accredited Investor" means an institution that is
an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.
"interest", when used with respect to any Note, means the amount
of all interest accruing on such Note, including all additional interest payable
on the Notes pursuant to the Registration Rights Agreement and all interest
accruing subsequent to the occurrence of any events specified in Sections
5.01(viii), (ix) and (x) hereof or which would have accrued but for any such
event, whether or not such claims are allowable under applicable law.
"Interest Payment Date" means, when used with respect to any
Note, the Stated Maturity of an installment of interest on such Note, as set
forth in such Note.
"Interest Rate Obligations" means the obligations of any person
pursuant to any arrangement with any other person whereby, directly or
indirectly, such person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount and shall include without limitation, interest rate
swaps, caps, floors, collars, forward interest rate agreements and similar
agreements.
"Internet Service Business" means any business operating an
internet connectivity or internet enhancement service as it exists from time to
time, including, without limitation, dial up or dedicated internet service, web
hosting or collocation services, security solutions, the provision, development
and hosting of software and software applications in connection with the
services described herein, configuration services, electronic commerce, intranet
solutions, data backup and restoral, business content and collaboration,
communications tools or network equipment products or services (including,
without limitation, any business conducted by the Company or any Restricted
Subsidiary on the Issue Date), and any business reasonably related or ancillary
to the foregoing. A good faith determination by a majority of the Board as to
whether a business meets the requirements of this definition shall be
conclusive, absent manifest error.
"Investment" means, with respect to any person, any advance,
loan, account receivable (other than an account receivable arising in the
ordinary course of business), or other extension of credit (including, without
limitation, by means of any guarantee) or any capital contribution to (by means
of transfers of property to others, payments for property or services for the
account or use of others, or otherwise), or any purchase or ownership of any
stocks, bonds, notes, debentures or other securities of, any other person.
Notwithstanding the foregoing, in no event shall any issuance of Capital Stock
(other than Disqualified Stock) of the Company in exchange for Capital Stock,
property or assets of another person constitute an Investment by the Company in
such other person.
"ISP" means any person engaged principally in an Internet Service
Business.
<PAGE> 20
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"Issue Date" means the original date of issuance of the Notes.
"Lien" means any mortgage, charge, pledge, lien (statutory or
other), security interest, hypothecation, assignment for security, claim, or
preference or priority or other encumbrance upon or with respect to any property
of any kind. A person shall be deemed to own subject to a Lien any property
which such person has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement.
"March 1998 Notes" means the Company's 10-3/8% Senior Notes due
2005.
"Market Capitalization" of any person means, as of any day of
determination, the average Closing Price of such person's Common Stock over the
20 consecutive trading days immediately preceding such day. "Closing Price" on
any trading day with respect to the per share price of any shares of Common
Stock means the last reported sale price regular way or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the New York Stock Exchange or,
if such shares of Common Stock are not listed or admitted to trading on such
exchange, on the principal national securities exchange on which such shares are
listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, on the National Association of Securities Dealers
Automated Quotations National Market System or, if such shares are not listed or
admitted to trading on any national securities exchange or quoted on such
automated quotation system but the issuer is a Foreign Company (as defined in
Rule 3b-4(b) under the Exchange Act) and the principal securities exchange on
which such shares are listed or admitted to trading is a Designated Offshore
Securities Market (as defined in Rule 902(a) under the Securities Act), the
average of the reported closing bid and asked prices regular way on such
principal exchange, or, if such shares are not listed or admitted to trading on
any national securities exchange or quoted on such automated quotation system
and the issuer and principal securities exchange do not meet such requirements,
the average of the closing bid and asked prices in the over-the-counter marked
as furnished by any New York Stock Exchange member firm that is selected from
time to time by the Company for that purpose and is reasonably acceptable to the
Trustee.
"Material Restricted Subsidiary" means any Restricted Subsidiary
of the Company, which, at any date of determination, is a "Significant
Subsidiary" (as that term is defined in Regulation S-X issued under the
Securities Act), but shall, in any event, include (x) any Guarantor or (y) any
Restricted Subsidiary of the Company which, at any date of determination, is an
obligor under any Indebtedness in an aggregate principal amount equal to or
exceeding $15.0 million.
"Maturity Date" means, with respect to any Note, the date
specified in such Note as the fixed date on which the principal of such Note is
due and payable.
<PAGE> 21
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"Moody's" means Moody's Investors Service.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash (including assumed liabilities and other
items deemed to be cash under the proviso to the first sentence of Section 10.15
hereof) or Cash Equivalents including payments in respect of deferred payment
obligations when received in the form of cash or Cash Equivalents (except to the
extent that such obligations are financed or sold with recourse to the Company
or any Restricted Subsidiary) net of (i) brokerage commissions and other fees
and expenses (including fees and expenses of legal counsel and investment
bankers) related to such Asset Sale, (ii) provisions for all taxes payable as a
result of such Asset Sale, (iii) amounts required to be paid to any person
(other than the Company or any Restricted Subsidiary) owning a beneficial
interest in or having a Permitted Lien on the assets subject to the Asset Sale
and (iv) appropriate amounts to be provided by the Company or any Restricted
Subsidiary, as the case may be, as a reserve required in accordance with GAAP
against any liabilities associated with such Asset Sale and retained by the
Company or any Restricted Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
reflected in an Officers' Certificate delivered to the Trustee.
"New ISP" means any ISP in which the Company or a Subsidiary of
the Company makes its first Investment after the Issue Date.
"Non-U.S. Person" has the meaning assigned to such term in
Regulation S.
"Notes" shall have the meaning specified in the recitals of this
Indenture.
"November 1998 Notes" means the Company's 11-1/4% Senior Notes
due 2008.
"Offering Memorandum" means the Offering Memorandum dated
November 16, 1999 pursuant to which the Notes were offered, and any supplement
thereto.
"Officer" means, with respect to the Company, the Chairman of the
Board, a Vice Chairman, the President, a Vice President, the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman, the President or a Vice President, and
by the Secretary, an Assistant Secretary, the Treasurer or an Assistant
Treasurer, of the Company and delivered to the Trustee.
<PAGE> 22
-15-
"144A Global Note" means a permanent global note in registered
form representing the aggregate principal amount of Notes sold in reliance on
Rule 144A under the Securities Act.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or the Trustee, and who shall be reasonably
acceptable to the Trustee.
"Other Senior Debt Pro Rata Share" means the amount of the
applicable Excess Proceeds obtained by multiplying the amount of such Excess
Proceeds by a fraction, (i) the numerator of which is the aggregate accreted
value and/or principal amount, as the case may be, of all Indebtedness (other
than (x) the Notes and (y) Subordinated Indebtedness) of the Company outstanding
at the time of the applicable Asset Sale with respect to which the Company is
required to use Excess Proceeds to repay or make an offer to purchase or repay
and (ii) the denominator of which is the sum of (a) the aggregate principal
amount of all Notes Outstanding at the time of the applicable Asset Sale and (b)
the aggregate principal amount or the aggregate accreted value, as the case may
be, of all other Indebtedness (other than Subordinated Indebtedness) of the
Company outstanding at the time of the applicable Asset Sale Offer with respect
to which the Company is required to use the applicable Excess Proceeds to offer
to repay or make an offer to purchase or repay.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture, except:
(i) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company or any Affiliate
thereof) in trust or set aside and segregated in trust by the Company or
any Affiliate thereof (if the Company or such Affiliate shall act as Paying
Agent) for the Holders of such Notes; provided, however, that if such Notes
are to be redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the Trustee has
been made;
(iii) Notes with respect to which the Company has effected
defeasance or covenant defeasance as provided in Article Four, to the
extent provided in Sections 4.02 and 4.03 hereof; and
(iv) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture, other than any
such Notes in respect of which there shall have been presented to the
Trustee proof satisfactory to it
<PAGE> 23
-16-
that such Notes are held by a bona fide purchaser in whose hands the Notes
are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes that a Responsible Officer of the Trustee knows to be so
owned shall be so disregarded. The Company shall notify the Trustee, in writing,
when it repurchases or otherwise acquires Notes, of the aggregate principal
amount of such Notes so repurchased or otherwise acquired. Notes so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Notes and that the pledgee is not the Company or any other
obligor upon the Notes or any Affiliate of the Company or such other obligor. If
the Paying Agent holds, in its capacity as such, on any Maturity Date or on any
optional redemption date money sufficient to pay all accrued interest and
principal with respect to such Notes payable on that date and is not prohibited
from paying such money to the Holders thereof pursuant to the terms of this
Indenture, then on and after that date such Notes cease to be Outstanding and
interest on them ceases to accrue. Notes may also cease to be Outstanding to the
extent expressly provided in Article Four.
"Permitted Affiliate Agreement" means each of the Series A
Purchase Agreement, the Series B Purchase Agreement, the Series C Purchase
Agreement and the Stockholders Agreement, each as in effect on the Issue Date.
"Permitted Credit Facility" means any senior commercial term loan
and/or revolving credit facility (including any letter of credit subfacility)
entered into principally with commercial banks and/or other financial
institutions typically party to commercial loan agreements, including, without
limitation, the Bank Facility.
"Permitted Equipment Financing" means any credit facility or
other financing arrangement (including in the form of Capitalized Lease
Obligations and guarantees of Indebtedness of Restricted Subsidiaries) entered
into with any vendor or supplier (or any financial institution acting on behalf
of or for the purpose of directly financing purchases from such vendor or
supplier) to the extent the Indebtedness thereunder is incurred for the purpose
of financing the cost (including the cost of design, development, site
acquisition, construction, integration, manufacture or acquisition) of real or
personal property (tangible or intangible) used, or to be used, in an Internet
Service Business.
<PAGE> 24
-17-
"Permitted Indebtedness" means the following Indebtedness (each
of which shall be given independent effect):
(a) Indebtedness under the Notes and this Indenture;
(b) Indebtedness of the Company and/or any Restricted Subsidiary
outstanding on the Issue Date, including, without limitation, the 1997
Notes, the March 1998 Notes and the November 1998 Notes;
(c) (i) Indebtedness of any Restricted Subsidiary owed to and
held by the Company or a Restricted Subsidiary and (ii) Indebtedness of the
Company, not secured by any Lien, owed to and held by any Restricted
Subsidiary; provided that an incurrence of Indebtedness shall be deemed to
have occurred upon (x) any sale or other disposition (excluding assignments
as security to financial institutions) of any Indebtedness of the Company
or a Restricted Subsidiary referred to in this clause (c) to a person
(other than the Company or a Restricted Subsidiary) or (y) any sale or
other disposition of Capital Stock of a Restricted Subsidiary, or
Designation of a Restricted Subsidiary, which holds Indebtedness of the
Company or another Restricted Subsidiary such that such Restricted
Subsidiary, in any such case, ceases to be a Restricted Subsidiary;
(d) Interest Rate Obligations of the Company and/or any
Restricted Subsidiary relating to Indebtedness of the Company and/or such
Restricted Subsidiary, as the case may be (which Indebtedness (x) bears
interest at fluctuating interest rates and (y) is otherwise permitted to be
incurred under Section 10.11 hereof), but only to the extent that the
notional principal amount of such Interest Rate Obligations does not exceed
the principal amount of the Indebtedness (and/or Indebtedness subject to
commitments) to which such Interest Rate Obligations relate;
(e) Indebtedness of the Company and/or any Restricted Subsidiary
in respect of performance bonds of the Company or any Restricted Subsidiary
or surety bonds provided by the Company or any Restricted Subsidiary
incurred in the ordinary course of business;
(f) Indebtedness of the Company and/or any Restricted Subsidiary
to the extent it represents a replacement, renewal, refinancing or
extension (a "Refinancing") of outstanding Indebtedness of the Company
and/or of any Restricted Subsidiary incurred or outstanding pursuant to
clause (a), (b), (g), (h) or (i) of this definition or the proviso of
Section 10.11 hereof; provided that (1) Indebtedness of the Company may not
be Refinanced to such extent under this clause (f) with Indebtedness of any
Restricted Subsidiary and (2) any such Refinancing shall only be permitted
under this clause (f) to the extent that (x) it does not result in a lower
Average Life to Stated
<PAGE> 25
-18-
Maturity of such Indebtedness as compared with the Indebtedness being
Refinanced and (y) it does not exceed the sum of the principal amount (or,
if such Indebtedness provides for a lesser amount to be due and payable
upon a declaration of acceleration thereof, an amount no greater than such
lesser amount) of the Indebtedness being Refinanced plus the amount of
accrued interest thereon and the amount of any reasonably determined
prepayment premium necessary to accomplish such Refinancing and such
reasonable fees and expenses incurred in connection therewith;
(g) Indebtedness of the Company such that, after giving effect to
the incurrence thereof, the total aggregate principal amount of
Indebtedness incurred under this clause (g) plus the aggregate principal
amount of the November 1998 Notes and the Notes outstanding, and any
Refinancings thereof otherwise incurred in compliance with this Indenture,
would not exceed 200% of Total Incremental Equity;
(h) Indebtedness of the Company and/or any Restricted Subsidiary
incurred under any Permitted Credit Facility and/or Indebtedness of the
Company represented by Debt Securities of the Company, and any Refinancings
of the foregoing otherwise incurred in compliance with this Indenture, in
an aggregate principal amount not to exceed $250.0 million at any time
outstanding;
(i) Indebtedness of the Company and/or any Restricted Subsidiary
incurred under any Permitted Equipment Financing in an aggregate principal
amount not to exceed the Fair Market Value of the assets acquired with the
proceeds thereof;
(j) Acquired Indebtedness or other Indebtedness of the Company
and/or any Restricted Subsidiary incurred in connection with the
acquisition of, or an Investment in, a New ISP, including any obligations
in respect of the deferred purchase price (whether or not subject to a
contingency) of any such acquisition or Investment, in an aggregate
principal amount not to exceed $100.0 million at any time outstanding; and
(k) in addition to the items referred to in clauses (a) through
(j) above, Indebtedness of the Company and/or the Restricted Subsidiaries
having an aggregate principal amount not to exceed $50.0 million at any
time outstanding.
"Permitted Investments" means (a) Cash Equivalents; (b)
Investments in prepaid expenses, negotiable instruments held for collection and
lease, utility and workers' compensation, performance and other similar
deposits; (c) Interest Rate Obligations incurred in compliance with Section
10.11 hereof; (d) the extension by the Company and the Restricted Subsidiaries
of (i) trade credit to Subsidiaries of the Company and the ISPs, represented by
accounts receivable, extended on usual and customary terms in the ordinary
course of business or (ii) guarantees of commitments for the purchase of goods
or services by any ISP incurred in the ordinary course of business so long as
such guarantees to the extent constituting Indebtedness
<PAGE> 26
-19-
are permitted to be incurred under Section 10.11 hereof; (e) Strategic
Investments; and (f) Investments in Unrestricted Subsidiaries in an amount not
to exceed $50.0 million at any time outstanding.
"Permitted Liens" means (a) Liens on property of a person
existing at the time such person is merged into or consolidated with the Company
or any Restricted Subsidiary or becomes a Restricted Subsidiary; provided that
such Liens were in existence prior to the contemplation of such merger,
consolidation or acquisition and do not secure any property or assets of the
Company or any Restricted Subsidiary other than the property or assets subject
to the Liens prior to such merger or consolidation or acquisition; (b) Liens
imposed by law, such as carriers', warehousemen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business that secure payment of
obligations not more than 60 days past due or that are being contested in good
faith and by appropriate proceedings; (c) Liens existing on the Issue Date; (d)
Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted; provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (e) easements, rights of way, restrictions and other similar
easements, licenses, restrictions on the use of properties, or minor
imperfections of title that, in the aggregate, are not material in amount and do
not in any case materially detract from the properties subject thereto or
interfere with the ordinary conduct of the business of the Company or the
Restricted Subsidiaries; (f) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business; (g) Liens securing any
Permitted Credit Facility or Permitted Equipment Financing; (h) Liens to secure
Indebtedness incurred in compliance with clause (j) of the definition of
"Permitted Indebtedness" to the extent relating to the asset subject of the
particular Asset Acquisition or Investment; (i) Liens to secure any Refinancing
of any Indebtedness secured by Liens referred to in the foregoing clauses (a) or
(c), but only to the extent that such Liens do not extend to any other property
or assets and the principal amount of the Indebtedness secured by such Liens is
not increased; (j) Liens to secure the Notes; and (k) Liens on real property
incurred in connection with the financing of the purchase of such real property
(or incurred within 60 days of purchase) by the Company or any Restricted
Subsidiary.
"person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Note" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purposes of this definition, any
Note authenticated and delivered under Section 3.06
<PAGE> 27
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hereof in exchange for a mutilated Note or in lieu of a lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Note.
"Preferred Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated) of
such person's preferred or preference stock whether now outstanding, or issued
after the Issue Date, and including, without limitation, all classes and series
of preferred or preference stock of such person.
"Private Exchange Notes" shall have the meaning specified in the
Registration Rights Agreement.
"Private Placement Legend" shall mean the first paragraph of the
legend initially set forth in the Notes in the form set forth on Exhibit A-1.
"Public Capital Stock" means any class of Capital Stock which is
traded on the New York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Redemption Date" means, with respect to any Note to be redeemed,
the date fixed by the Company for such redemption pursuant to this Indenture and
the Notes.
"Redemption Price" means, with respect to any Note to be
redeemed, the price fixed for such redemption pursuant to the terms of this
Indenture and the Notes.
"Refinancing" has the meaning set forth in clause (f) of the
definition of "Permitted Indebtedness."
"Registrable Securities" shall have the meaning specified in the
Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of November 19, 1999 by and among the Company and the Initial
Purchasers, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"Regular Record Date" means the Regular Record Date specified in
the Notes.
"Regulation S" means Regulation S under the Securities Act.
<PAGE> 28
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"Regulation S Global Note" means a permanent global note in
registered form representing the aggregate principal amount of Notes sold in
reliance on Regulation S under the Securities Act.
"Responsible Officer" means, with respect to the Trustee, the
chairman or vice chairman of the board of directors, the chairman or vice
chairman of the executive committee of the board of directors, the president,
any vice president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller and any assistant controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer of the Trustee to whom
any corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Restricted Note" means a Note that constitutes a "restricted
security" within the meaning of Rule 144(a)(3) under the Securities Act;
provided, however, that the Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any Note
constitutes a Restricted Note.
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution on Capital
Stock of the Company or any payment made to the direct or indirect holders (in
their capacities as such) of Capital Stock of the Company (other than dividends
or distributions payable solely in Capital Stock (other than Disqualified Stock)
of the Company or in options, warrants or other rights to purchase Capital Stock
(other than Disqualified Stock) of the Company; (ii) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of the Company
(other than such Capital Stock owned by the Company or a Wholly Owned Restricted
Subsidiary); (iii) the purchase, redemption, defeasance or other acquisition or
retirement for value prior to any scheduled repayment, sinking fund or maturity
of any Subordinated Indebtedness (other than any Subordinated Indebtedness held
by a Wholly Owned Restricted Subsidiary); or (iv) the making by the Company or
any Restricted Subsidiary of any Investment (other than a Permitted Investment)
in any person (other than an Investment by a Restricted Subsidiary in the
Company or an Investment by the Company or a Restricted Subsidiary in a
Restricted Subsidiary or a person that becomes a Restricted Subsidiary as a
result of such Investment). It is not intended that payments made out of the
deposit account in respect of the Company's 6.75% Series A Convertible Preferred
Stock be considered Restricted Payments.
"Restricted Subsidiary" means any Subsidiary of the Company that
has not been designated by the Board, by a Board Resolution delivered to the
Trustee, as an Unrestricted Subsidiary pursuant to and in compliance with
Section 10.21 hereof. Any such designation
<PAGE> 29
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may be revoked by a Board Resolution delivered to the Trustee, subject to the
provisions of such covenant.
"Restricted Subsidiary Indebtedness" means Indebtedness of any
Restricted Subsidiary (i) which is not subordinated to any other Indebtedness of
such Restricted Subsidiary and (ii) in respect of which the Company is not also
obligated (by means of a guarantee or otherwise) other than, in the case of this
clause (ii), Indebtedness under any Permitted Credit Facilities.
"Revocation" has the meaning set forth under Section 10.21
hereof.
"Rollup" means an Investment in an Existing ISP or transaction or
series of related transactions as a result of which such Existing ISP becomes a
Restricted Subsidiary or is merged or consolidated with the Company.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Corporation.
"SEC" means the Securities and Exchange Commission, as from time
to time constituted, or if at any time after the execution of this Indenture
such Commission is not existing and performing the applicable duties now
assigned to it, then the body or bodies performing such duties at such time.
"Securities Act" means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated by the SEC thereunder.
"Series A Preferred Stock" has the meaning provided in the
Offering Memorandum.
"Series A Purchase Agreement" has the meaning provided in the
Offering Memorandum.
"Series B Preferred Stock" has the meaning provided in the
Offering Memorandum.
"Series B Purchase Agreement" has the meaning provided in the
Offering Memorandum.
"Series C Preferred Stock" has the meaning provided in the
Offering Memorandum.
<PAGE> 30
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"Series C Purchase Agreement" has the meaning provided in the
Offering Memorandum.
"Series D Preferred Stock" has the meaning provided in the
Offering Memorandum.
"Special Record Date" means, with respect to the payment of any
Defaulted Interest, a date fixed by the Trustee pursuant to Section 3.07 hereof.
"Stated Maturity" means, with respect to any Note or any
installment of interest thereon, the dates specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable and, when used with respect to any other Indebtedness, means the
date specified in the instrument governing such Indebtedness as the fixed date
on which the principal of such Indebtedness, or any installment of interest, is
due and payable.
"Stockholders Agreement" has the meaning provided in the Offering
Memorandum.
"Strategic Equity Investor" means any person engaged principally
in one or more communications businesses with a Market Capitalization or
Consolidated Net Worth of at least $1.0 billion.
"Strategic Investment" means an Investment in any person (other
than an Unrestricted Subsidiary) whose primary business is an Internet Service
Business provided that the Investment is determined by the Board of Directors of
the Company to promote or significantly benefit the business of the Company and
the Restricted Subsidiaries on the date of the Investment.
"Subordinated Indebtedness" means any Indebtedness of the Company
or any Guarantor which is expressly subordinated in right of payment to any
other Indebtedness of the Company or such Guarantor.
"Subsidiary" means, with respect to any person, (i) any
corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, by such person, or (ii) any other person of which
at least a majority of voting interest is at the time, directly or indirectly,
owned by such person.
"Total Consolidated Indebtedness" means, at any date of
determination, an amount equal to the aggregate amount of all Indebtedness of
the Company and the Restricted Subsidiaries outstanding as of the date of
determination.
<PAGE> 31
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"Total Incremental Equity" means, at any time of determination,
the sum of, without duplication, (i) the aggregate cash proceeds received by the
Company from capital contributions in respect of existing Capital Stock (other
than Disqualified Stock) or the issuance or sale of Capital Stock (other than
Disqualified Stock but including Capital Stock issued upon the conversion of
convertible Indebtedness or from the exercise of options, warrants or rights to
purchase Capital Stock (other than Disqualified Stock)) subsequent to the Issue
Date, other than to a Subsidiary of the Company, plus (ii) the Fair Market Value
(determined at the time of issuance) of any Capital Stock (other than
Disqualified Stock) of the Company issued as consideration for the acquisition
of Capital Stock of an ISP (other than the acquisition of Capital Stock of an
Existing ISP), plus (iii) the Fair Market Value (determined at the time of
issuance) of any Capital Stock (other than Disqualified Stock) of the Company
issued as consideration for the acquisition of Capital Stock of an Existing ISP
in a transaction as a result of which the Existing ISP becomes a Wholly Owned
Restricted Subsidiary, plus (iv) the aggregate cash proceeds received by the
Company or any Restricted Subsidiary from the sale, disposition or repayment (in
whole or in part) of any Investment that is or was made after the Issue Date and
that constitutes a Restricted Payment that has been deducted from Total
Incremental Equity pursuant to clause (v) below in an amount equal to the lesser
of (a) the return of capital with respect to the applicable portion of such
Investment and (b) the cost of the applicable portion of such Investment, in
either case, less the cost of the disposition of such Investment, minus (v) the
aggregate amount of all Restricted Payments declared or made on and after the
Issue Date (other than a Restricted Payment made pursuant to clauses (iii) or
(vii) of the third paragraph of Section 10.13 hereof) plus (vi) the amount, as
of the Issue Date, of the "Total Incremental Equity" as defined and determined
under the indenture governing the terms of the November 1998 Notes.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of
1939, as amended.
"Trustee" means the person named as the "Trustee" in the first
paragraph of this Indenture, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Notes" means one or more Notes that do not and are
not required to bear the Private Placement Legend in the form set forth in
Exhibit A, including, without limitation, the Exchange Notes.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to and in compliance with Section 10.21 hereof. Any
such designation may be revoked by a Board Resolution delivered to the Trustee,
subject to the provisions of such covenant.
<PAGE> 32
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"Voting Stock" means, with respect to any person, the Capital
Stock of any class or kind ordinarily having the power to vote for the election
of directors or other members of the governing body of such person.
"Wholly Owned Restricted Subsidiary" means any Restricted
Subsidiary of which 99% or more of the outstanding Capital Stock is owned by the
Company or another Wholly Owned Restricted Subsidiary; provided NorthWestNet
shall be deemed a Wholly Owned Restricted Subsidiary notwithstanding its
existing stock option plan and any stock options issued thereunder. For the
purposes of this definition, any directors' qualifying shares or investments by
foreign nationals mandated by applicable law shall be disregarded in determining
the ownership of a Restricted Subsidiary.
"WorldCom" means WorldCom, Inc. (and its successors by merger or
consolidation) and its controlled Affiliates.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Act" 1.05
"Affiliate Transaction" 10.14
"Agent Member" 3.16
"Asset Sale Offer" 10.15
"Asset Sale Offer Purchase Date" 10.15
"assumed liabilities" 10.15
"Change of Control Date" 10.10
"Change of Control Offer" 10.10
"Change of Control Payment Date" 10.10
"covenant defeasance" 4.03
"Defaulted Interest" 3.07
"defeasance" 4.02
"Defeased Notes" 4.01
"Designation" 10.21
"Designation Amount" 10.21
"Event of Default" 5.01
"Excess Proceeds" 10.15
"Guarantee" 10.18
"Guarantor" 10.18
"incur" 10.11
"insolvent person" 4.04
"Note Register" 3.05
"Offer Excess Proceeds" 10.15
"Paying Agent" or "Agent" 3.02
"Physical Notes" 3.03
"Registrar" 3.02
"Replacement Assets" 10.15
"Restricted Period" 3.17
"Revocation" 10.21
"surviving entity" 8.01
</TABLE>
<PAGE> 33
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Section 1.03. Rules of Construction.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein" "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(e) all references to "$" or "dollars" refer to the lawful
currency of the United States of America; and
(f) the words "include", "included" and "including" as used
herein are deemed in each case to be followed by the phrase "without
limitation".
Section 1.04. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
person, or that they be so certified or covered by only one document, but one
such person may certify or give an opinion with respect to some matters
<PAGE> 34
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and one or more other persons as to other matters, and any such person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated, with
proper identification of each matter covered therein, and form one instrument.
Section 1.05. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution (as provided below in
subsection (b) of this Section 1.05) of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind every
future Holder of the same Note or the Holder of every Note issued upon the
transfer thereof or in exchange therefor or in lieu
<PAGE> 35
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thereof to the same extent as the original Holder, in respect of anything done,
suffered or omitted to be done by the Trustee, any Paying Agent or the Company
in reliance thereon, whether or not notation of such action is made upon such
Note.
Section 1.06. Notices, etc., to the Trustee and the Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed,
in writing, to or with the Trustee at the Corporate Trust Office,
Attention: Corporate Trust Department or at any other address previously
furnished in writing to the Holders and the Company by the Trustee; or
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose (except as otherwise expressly provided
herein) hereunder if in writing and mailed, first-class postage prepaid, to
the Company addressed to it at Verio Inc., 8005 South Chester Street, Suite
200, Englewood, Colorado 80112, Attention: Chief Executive Officer, or at
any other address previously furnished in writing to the Trustee by the
Company.
Section 1.07. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise expressly provided
herein) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at the address of such Holder as it appears in the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Any notice when mailed
to a Holder in the aforesaid manner shall be conclusively deemed to have been
received by such Holder whether or not actually received by such Holder. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision
<PAGE> 36
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of this Indenture, then any method of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
Section 1.08. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such provision or requirement of the Trust Indenture Act shall
control.
If any provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or
excluded, as the case may be.
Section 1.09. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
Section 1.11. Separability Clause.
In case any provision in this Indenture or in the Notes issued
pursuant hereto shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Notes issued pursuant hereto,
express or implied, shall give to any person (other than the parties hereto and
their successors hereunder, any Paying Agent and the Holders) any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 1.13. GOVERNING LAW.
THIS INDENTURE, THE NOTES AND ANY GUARANTEE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
<PAGE> 37
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Section 1.14. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Notes or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation.
Section 1.15. Independence of Covenants.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or condition exists.
Section 1.16. Exhibits.
All exhibits attached hereto are by this reference made a part
hereof with the same effect as if herein set forth in full.
Section 1.17. Counterparts.
This Indenture may be executed in any number of counterparts and
by telecopier, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
Section 1.18. Duplicate Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
ARTICLE TWO
NOTE FORMS
Section 2.01. Form and Dating.
The Notes and the Trustee's certificate of authentication with
respect thereto shall be in substantially the forms set forth, or referenced, in
Exhibit A-1 and Exhibit A-2, respectively, annexed hereto, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may
<PAGE> 38
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be required to comply with any applicable law or with the rules of the
Depository, any clearing agency or any securities exchange or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution thereof.
The definitive Notes shall be printed, typewritten, lithographed
or engraved or produced by any combination of these methods or may be produced
in any other manner permitted by the rules of any securities exchange on which
the Notes may be listed, all as determined by the officers executing such Notes,
as evidenced by their execution of such Notes.
Each Note shall be dated the date of its issuance and shall show
the date of its authentication. The terms and provisions contained in the Notes
shall constitute, and are expressly made, a part of this Indenture.
ARTICLE THREE
THE NOTES
Section 3.01. Title and Terms.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to $400,000,000 in
aggregate principal amount of Notes, except for Notes authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Notes pursuant to Section 3.03, 3.04, 3.05, 3.06, 9.06, 10.10 or 10.15
hereof.
The final Stated Maturity of the Notes shall be November 15,
2009, and the Notes shall bear interest at the rate of 10-5/8% per annum from
the Issue Date or from the most recent Interest Payment Date to which interest
has been paid, as the case may be, payable semi-annually thereafter on May 15
and November 15, in each year, commencing on May 15, 2000, to the Holders of
record at the close of business on the May 1 and November 1, respectively,
immediately preceding such Interest Payment Dates, until the principal thereof
is paid or duly provided for. Interest on any overdue principal, interest (to
the extent lawful) or premium, if any, shall be payable on demand.
At the election of the Company, the entire Indebtedness on the
Notes or certain of the Company's obligations and covenants and certain Events
of Default thereunder may be defeased as provided in Article Four.
<PAGE> 39
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Section 3.02. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where Notes may be presented for registration of transfer or for exchange (the
"Registrar"), an office or agency (which shall be located in the Borough of
Manhattan in The City of New York, State of New York) where Notes may be
presented for payment (the "Paying Agent" or "Agent") and an office or agency
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may have one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
or "Agent" includes any additional paying agent. The Company may act as its own
Paying Agent, except for the purposes of payments on account of principal on the
Notes pursuant to Sections 10.10 and 10.15 hereof.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which shall incorporate the provisions
of the Trust Indenture Act. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to maintain a Registrar
or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 6.07 hereof.
The Company initially appoints the Trustee as the Registrar and
Paying Agent and agent for service of notices and demands in connection with the
Notes.
Section 3.03. Execution and Authentication.
The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A-1 hereto. The Exchange Notes and
the Trustee's certificate of authentication relating thereto shall be
substantially in the form of Exhibit A-2 hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. The
Company shall approve the form of the Notes and any notation, legend or
endorsement thereon. Each Note shall be dated the date of issuance and shall
show the date of its authentication.
The terms and provisions contained in the Notes annexed hereto as
Exhibits A-1 and A-2 shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A and Notes offered
and sold in reliance on Regulation S shall be issued initially in the form of
one or more Global Notes,
<PAGE> 40
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substantially in the form set forth in Exhibit A-1, deposited with the Trustee,
as custodian for the Depository, duly executed by the Company and authenticated
by the Trustee as hereinafter provided and shall bear the legend set forth in
Exhibit B. The aggregate principal amount of the Global Notes may from time to
time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depository, as hereinafter provided.
Notes (i) offered and sold to institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) and (ii) issued in exchange for interests in a Global Note pursuant to
Section 3.17 hereof may be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A-1 (the
"Physical Notes").
All Notes offered and sold in reliance on Regulation S shall
remain in the form of a Global Note until the consummation of the Exchange Offer
pursuant to the Registration Rights Agreement; provided, however, that all of
the time periods specified in the Registration Rights Agreement to be complied
with by the Company have been so complied with.
Two Officers, or an Officer and an Assistant Secretary, shall
sign, or one Officer shall sign, and one Officer or an Assistant Secretary (each
of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, the Notes for the Company by manual or
facsimile `signature.
If an Officer or Assistant Secretary whose signature is on a Note
was an Officer or Assistant Secretary at the time of such execution but no
longer holds that office or position at the time the Trustee authenticates the
Note, the Note shall nevertheless be valid.
The Trustee shall authenticate (i) Initial Notes for original
issue in an aggregate principal amount not to exceed $400,000,000, (ii) Private
Exchange Notes from time to time only in exchange for a like principal amount of
Initial Notes and (iii) Unrestricted Notes from time to time only in exchange
for (a) a like principal amount of Initial Notes or (b) a like principal amount
of Private Exchange Notes, in each case upon a written order of the Company in
the form of an Officers' Certificate of the Company. Each such written order
shall specify the amount of Notes to be authenticated and the date on which the
Notes are to be authenticated, whether the Notes are to be Initial Notes,
Private Exchange Notes or Unrestricted Notes and whether (subject to this
Section 3.03) the Notes are to be issued as Physical Notes or Global Notes and
such other information as the Trustee may reasonably request. The aggregate
principal amount of Notes Outstanding at any time may not exceed $400,000,000,
except as provided in Section 3.06 hereof.
Notwithstanding the foregoing, all Notes issued under this
Indenture shall vote and consent together on all matters (as to which any of
such Notes may vote or consent) as
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one class and no series of Notes will have the right to vote or consent as a
separate class on any matter.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Notes. Unless otherwise provided in
the appointment, an authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof.
Section 3.04. Temporary Notes.
Until definitive Notes are prepared and ready for delivery, the
Company may execute and upon a Company Order the Trustee shall authenticate and
deliver temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes, in any authorized denominations, but may have variations that
the Company reasonably considers appropriate for temporary Notes as conclusively
evidenced by the Company's execution of such temporary Notes.
If temporary Notes are issued, the Company will cause definitive
Notes to be prepared without unreasonable delay but in no event later than the
date that the Exchange Offer is consummated. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 10.02 hereof, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary Notes,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Notes of like tenor and
of authorized denominations. Until so exchanged the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as definitive
Notes.
Section 3.05. Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency designated pursuant to Section 10.02 hereof being
sometimes referred to herein as the "Note Register") in which, subject to such
reasonable regulations as the Registrar may prescribe, the Company shall provide
for the registration of Notes and of transfers and exchanges of Notes. The
Trustee is hereby initially appointed Registrar for the purpose of registering
Notes and transfers of Notes as herein provided.
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When Notes are presented to the Registrar or a co-Registrar with
a request from the Holder of such Notes to register the transfer or exchange for
an equal principal amount of Notes of other authorized denominations, the
Registrar shall register the transfer or make the exchange as requested;
provided, however, that every Note presented or surrendered for registration of
transfer or exchange shall be duly endorsed or be accompanied by a written
instrument of transfer or exchange in form satisfactory to the Company and the
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing. Whenever any Notes are so presented for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Notes which the
Holder making the exchange is entitled to receive. No service charge shall be
made to the Noteholder for any registration of transfer or exchange. The Company
may require from the Noteholder payment of a sum sufficient to cover any
transfer taxes or other governmental charge that may be imposed in relation to a
transfer or exchange, but this provision shall not apply to any exchange
pursuant to Section 10.10, 10.15 or 9.06 hereof (in which events the Company
will be responsible for the payment of all such taxes which arise solely as a
result of the transfer or exchange and do not depend on the tax status of the
Holder). The Trustee shall not be required to exchange or register the transfer
of any Note for a period of 15 days immediately preceding the first mailing of
notice of redemption of Notes to be redeemed or of any Note selected, called or
being called for redemption except, in the case of any Note where public notice
has been given that such Note is to be redeemed in part, the portion thereof not
to be redeemed.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as the
Notes surrendered upon such registration of transfer or exchange.
Any Holder of a beneficial interest in a Global Note shall, by
acceptance of such Global Note, agree that transfers of beneficial interests in
such Global Notes may be effected only through a book-entry system maintained by
the Holder of such Global Note (or its agent), and that ownership of a
beneficial interest in the Note shall be required to be reflected in a
book-entry system.
Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes.
If a mutilated Note is surrendered to the Trustee or if the
Holder of a Note of any series claims that the Note has been lost, destroyed or
wrongfully taken, the Company shall execute and upon a Company Order, the
Trustee shall authenticate and deliver a replacement Note of like tenor and
principal amount, bearing a number not contemporaneously outstanding if the
Holder of such Note furnishes to the Company and to the Trustee evidence
reasonably acceptable to them of the ownership and the destruction, loss or
theft of such Note and an indemnity bond shall be posted by such Holder,
sufficient in the judgment of the Company
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or the Trustee, as the case may be, to protect the Company, the Trustee or any
Agent from any loss that any of them may suffer if such Note is replaced. The
Company may charge such Holder for the Company's expenses in replacing such Note
(including (i) expenses of the Trustee charged to the Company and (ii) any tax
or other governmental charge that may be imposed) and the Trustee may charge the
Company for the Trustee's expenses in replacing such Note.
Every replacement Note issued pursuant to this Section in lieu of
any destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 3.07. Payment of Interest; Interest Rights Preserved.
Interest on any Note which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the person in
whose name that Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the then applicable interest rate borne by the Notes, to
the extent lawful (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the Regular Record Date; and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in subsection (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Note and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in trust
for the benefit of the persons entitled to such Defaulted Interest as
provided in this subsection (a). Thereupon the Trustee shall fix a
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Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company in writing of such Special Record Date. In the name and at the
expense of the Company, the Trustee shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to each Holder at its address as it
appears in the Note Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the persons in whose names the Notes (or their
respective Predecessor Notes) are registered on such Special Record Date
and shall no longer be payable pursuant to the following subsection (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after written notice given by the
Company to the Trustee of the proposed payment pursuant to this subsection
(b), such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
Section 3.08. Persons Deemed Owners.
Prior to and at the time of due presentment for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name any Note is registered in the Note Register
as the owner of such Note for the purpose of receiving payment of principal of,
premium, if any, and (subject to Section 3.07 hereof) interest on such Note and
for all other purposes whatsoever, whether or not such Note shall be overdue,
and neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
Section 3.09. Cancellation.
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall be delivered to the Trustee and, if not already
canceled, shall be promptly canceled by it. The Company may at any time deliver
to the Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in
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any manner whatsoever, and all Notes so delivered shall be promptly canceled by
the Trustee. The Registrar and the Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer or exchange, redemption
or payment. The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation. No
Notes shall be authenticated in lieu of or in exchange for any Notes canceled as
provided in this Section 3.09 hereof, except as expressly permitted by this
Indenture. All canceled Notes held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company unless by a Company
Order the Company shall direct that the canceled Notes be returned to it. The
Trustee shall provide the Company a list of all Notes that have been canceled
from time to time as requested by the Company.
Section 3.10. Computation of Interest.
Interest on the Notes shall be computed on the basis of a 360-day
year of twelve 30-day months and, in the case of a partial month, the actual
number of days elapsed.
Section 3.11. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
date established for the payment of Defaulted Interest or Stated Maturity of any
Note shall not be a Business Day, then (notwithstanding any other provision of
this Indenture or of the Notes) payment of principal, premium, if any, or
interest need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Redemption Date, date established for the payment of Defaulted Interest or
at the Stated Maturity, as the case may be. In such event, no interest shall
accrue with respect to such payment for the period from and after such Interest
Payment Date, Redemption Date, date established for the payment of Defaulted
Interest or Stated Maturity, as the case may be, to the next succeeding Business
Day and, with respect to any Interest Payment Date, interest for the period from
and after such Interest Payment Date shall accrue with respect to the next
succeeding Interest Payment Date.
Section 3.12. CUSIP and CINS Numbers.
The Company in issuing the Notes may use "CUSIP" and "CINS"
numbers (if then generally in use), and if so, the Trustee shall use the CUSIP
or CINS numbers, as the case may be, in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness or accuracy of the CUSIP or CINS
number, as the case may be, printed in the notice or on the Notes, and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Company shall promptly notify the Trustee in writing of any change in
the CUSIP or CINS number of any type of Notes.
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Section 3.13. Paying Agent To Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the
Noteholders or the Trustee all money held by the Paying Agent for the payment of
principal of, premium, if any, or interest on the Notes, and shall notify the
Trustee of any default by the Company in making any such payment. Money held in
trust by the Paying Agent need not be segregated except as required by law and
in no event shall the Paying Agent be liable for any interest on any money
received by it hereunder. The Company at any time may require the Paying Agent
to pay all money held by it to the Trustee and account for any funds disbursed
and the Trustee may at any time during the continuance of any Event of Default,
upon a Company Order to the Paying Agent, require such Paying Agent to pay
forthwith all money so held by it to the Trustee and to account for any funds
disbursed. Upon making such payment, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
Section 3.14. Treasury Notes.
In determining whether the Holders of the required aggregate
principal amount of Notes have concurred in any direction, waiver, consent or
notice, Notes owned by the Company or an Affiliate of the Company shall be
considered as though they are not Outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which the Trustee actually knows are so
owned shall be so considered. The Company shall notify the Trustee, in writing,
when it or any of its Affiliates repurchases or otherwise acquires Notes, of the
aggregate principal amount of such Notes so repurchased or otherwise acquired.
Section 3.15. Deposits of Monies.
Prior to 12:00 p.m. noon New York City time on each Interest
Payment Date, maturity date, Change of Control Payment Date and Asset Sale Offer
Purchase Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date, maturity date, Change of Control Payment Date and
Asset Sale Offer Purchase Date, as the case may be, in a timely manner which
permits the Paying Agent to remit payment to the Holders on such Interest
Payment Date, maturity date, Change of Control Payment Date and Asset Sale Offer
Purchase Date, as the case may be.
Section 3.16. Book-Entry Provisions for Global Notes.
(a) The Global Notes initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit B.
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Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.
(b) Transfers of Global Notes shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Notes may be transferred
or exchanged for Physical Notes in accordance with the rules and procedures of
the Depository and the provisions of Sections 3.03 and 3.17 hereof. In addition,
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in Global Notes if (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for any Global
Note, or that it will cease to be a "Clearing Agency" under the Exchange Act,
and in either case a successor Depository is not appointed by the Company within
90 days of such notice or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a written request from the Depository
to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of
the beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and principal amount of authorized denominations.
(d) In connection with the transfer of Global Notes as an
entirety to beneficial owners pursuant to paragraph (b), the Global Notes shall
be deemed to be surrendered to the Trustee for cancellation, and the Company
shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Notes, an equal aggregate principal amount at maturity of
Physical Notes of like tenor of authorized denominations.
(e) Any Physical Note constituting a Restricted Note delivered in
exchange for an interest in a Global Note pursuant to subparagraph (b), (c) or
(d) of this Section 3.16 shall, except as otherwise provided by Section 3.17
hereof, bear the Private Placement Legend.
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(f) The Holder of any Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
Section 3.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following additional provisions shall apply with respect to the registration of
any proposed transfer of an Initial Note to any Institutional Accredited
Investor which is not a QIB:
(i) the Registrar shall register the transfer of any Initial
Note, whether or not such Note bears the Private Placement Legend, if (x)
the requested transfer is after the second anniversary of the Issue Date;
provided, however, that neither the Company nor any Affiliate of the
Company has held any beneficial interest in such Note, or portion thereof,
at any time on or prior to the second anniversary of the Issue Date and
such transfer can otherwise be lawfully made under the Securities Act
without registering such Initial Notes thereunder or (y) the proposed
transferee has delivered to the Registrar a certificate substantially in
the form of Exhibit C hereto and any legal opinions and certifications
required thereby;
(ii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Note, upon receipt by the Registrar of (x)
written instructions given in accordance with the Depository's and the
Registrar's procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (i) above, together with any required
legal opinions and certifications, the Registrar shall register the
transfer and reflect on its books and records the date and a decrease in
the principal amount of the Global Note from which such interests are to be
transferred in an amount equal to the principal amount of the Notes to be
transferred and the Company shall execute and upon a Company Order, the
Trustee shall authenticate Physical Notes in a principal amount equal to
the principal amount of the Global Note to be transferred.
(b) Transfers to Non-U.S. Persons. The following additional
provisions shall apply with respect to the registration of any proposed transfer
of an Initial Note to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Initial
Note, whether or not such Note bears the Private Placement Legend, if (x)
the requested transfer is after the second anniversary of the Issue Date;
provided, however, that neither the Company nor any Affiliate of the
Company has held any beneficial interest in such Note, or portion thereof,
at any time on or prior to the second anniversary of the Issue Date and
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such transfer can otherwise be lawfully made under the Securities Act
without registering such Initial Notes thereunder or (y) the proposed
transferor has delivered to the Registrar a certificate substantially in
the form of Exhibit D hereto;
(ii) if the proposed transferee is an Agent Member and the Notes
to be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the Regulation S Global Note upon receipt by
the Registrar of (x) written instructions given in accordance with the
Depository's and the Registrar's procedures and (y) the appropriate
certificate, if any, required by clause (y) of paragraph (i) above,
together with any required legal opinions and certifications, the Registrar
shall register the transfer and reflect on its books and records the date
and an increase in the principal amount of the Regulation S Global Note in
an amount equal to the principal amount of Physical Notes to be
transferred, and the Trustee shall cancel the Physical Notes so
transferred;
(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Note, upon receipt by the Registrar of (x)
written instructions given in accordance with the Depository's and the
Registrar's procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (i) above, together with any required
legal opinions and certifications, the Registrar shall register the
transfer and reflect on its books and records the date and (a) a decrease
in the principal amount of the Global Note from which such interests are to
be transferred in an amount equal to the principal amount of the Notes to
be transferred and (b) an increase in the principal amount of the
Regulation S Global Note in an amount equal to the principal amount of the
Global Note to be transferred; and
(iv) until the 41st day after the Issue Date (the "Restricted
Period"), an owner of a beneficial interest in the Regulation S Global Note
may not transfer such interest to a transferee that is a U.S. person or for
the account or benefit of a U.S. person within the meaning of Rule 902(o)
of the Securities Act. During the Restricted Period, all beneficial
interests in the Regulation S Global Note shall be transferred only through
Cedel or Euroclear, either directly if the transferor and transferee are
participants in such systems, or indirectly through organizations that are
participants.
(c) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Note to a QIB
(excluding Non-U.S. Persons):
(i) the Registrar shall register the transfer of any Initial
Note, whether or not such Note bears the Private Placement Legend, if (x)
the requested transfer is after the second anniversary of the Issue Date;
provided, however, that neither the Company nor any Affiliate of the
Company has held any beneficial interest in such Note, or portion
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thereof, at any time on or prior to the second anniversary of the Issue
Date and such transfer can otherwise be lawfully made under the Securities
Act without registering such Initial Note thereunder or (y) such transfer
is being made by a proposed transferor who has checked the box provided for
on the form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A;
(ii) if the proposed transferee is an Agent Member and the Notes
to be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the 144A Global Note, upon receipt by the
Registrar of written instructions given in accordance with the Depository's
and the Registrar's procedures, the Registrar shall register the transfer
and reflect on its book and records the date and an increase in the
principal amount of the 144A Global Note in an amount equal to the
principal amount of Physical Notes to be transferred, and the Trustee shall
cancel the Physical Note so transferred; and
(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Note, upon receipt by the Registrar of
written instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall register the transfer and
reflect on its books and records the date and (a) a decrease in the
principal amount of the Global Note from which interests are to be
transferred in an amount equal to the principal amount of the Notes to be
transferred and (b) an increase in the principal amount of the 144A Global
Note in an amount equal to the principal amount of the Global Note to be
transferred.
(d) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) the circumstances contemplated by paragraph
(a)(i)(x) of this Section 3.17 exist, (ii) there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect
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that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act or
(iii) such Note has been sold pursuant to an effective registration statement
under the Securities Act.
(e) Other Transfers. If a Holder proposes to transfer a Note
constituting a Restricted Note pursuant to any exemption from the registration
requirements of the Securities Act other than as provided for by Section
3.17(a), (b) and (c) hereof, the Registrar shall only register such transfer or
exchange if such transferor delivers an Opinion of Counsel satisfactory to the
Company and the Registrar that such transfer is in compliance with the
Securities Act and the terms of this Indenture; provided, however, that the
Company may, based upon the opinion of its counsel, instruct the Registrar by a
Company Order not to register such transfer in any case where the proposed
transferee is not a QIB, Non-U.S. person or Institutional Accredited Investor.
(f) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 3.16 hereof or this
Section 3.17. The Company shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable prior written notice to the Registrar.
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Company's Option To Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any time,
with respect to the Notes, elect to have either Section 4.02 or Section 4.03
hereof be applied to all of the Outstanding Notes (the "Defeased Notes"), upon
compliance with the conditions set forth below in this Article Four.
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Section 4.02. Defeasance and Discharge.
Upon the Company's exercise under Section 4.01 hereof of the
option applicable to this Section 4.02, the Company shall be deemed to have been
discharged from their obligations with respect to the Defeased Notes on the date
the conditions set forth below are satisfied (hereinafter, "defeasance"). For
this purpose, such defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by the Defeased Notes,
which shall thereafter be deemed to be "Outstanding" only for the purposes of
Section 4.05 and the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Notes and this
Indenture insofar as such Notes are concerned (and the Trustee, at the expense
of the Company, and, upon Company Request, shall execute proper instruments
acknowledging the same), except for the following, which shall survive until
otherwise terminated or discharged hereunder: (a) the rights of Holders of
Defeased Notes to receive, solely from the trust fund described in Section 4.04
hereof and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments are
due, (b) the Company's obligations with respect to such Defeased Notes under
Sections 3.04, 3.05, 3.06, 10.02 and 10.03 hereof, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder, including, without
limitation, the Trustee's rights under Section 6.07 hereof, and (d) this Article
Four. Subject to compliance with this Article Four, the Company may exercise its
option under this Section 4.02 notwithstanding the prior exercise of its option
under Section 4.03 hereof with respect to the Notes.
Section 4.03. Covenant Defeasance.
Upon the Company's exercise under Section 4.01 hereof of the
option applicable to this Section 4.03, the Company shall be released from its
obligations under any covenant or provision contained in Sections 10.06 through
10.23 hereof and the provisions of Articles Eight shall not apply, with respect
to the Defeased Notes, on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"), and the Defeased Notes shall
thereafter be deemed not to be "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to the Defeased Notes, the Company may omit
to comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Section or Article, whether directly or
indirectly, by reason of any reference elsewhere herein to any such Section or
Article or by reason of any reference in any such Section or Article to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 5.01(iii) or
(iv) hereof, but, except as specified above, the remainder of this Indenture and
such Defeased Notes shall be unaffected thereby.
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Section 4.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 4.02 or Section 4.03 hereof to the Defeased Notes:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 6.09 hereof who shall agree to comply with the provisions of
this Article Four applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Notes, (a) cash in
an amount, or (b) U.S. Government Obligations which through the scheduled
payment of principal, premium, if any, and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment, money in an amount, or (c) a combination thereof,
in any such case, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall be
applied by the Trustee (or other qualifying trustee) to pay and discharge,
the principal of, premium, if any, and interest on the Defeased Notes at
the Stated Maturity of such principal or installment of principal, premium,
if any, or interest; provided, however, that the Trustee shall have been
irrevocably instructed to apply such cash or the proceeds of such U.S.
Government Obligations to said payments with respect to the Notes;
(2) No Default shall have occurred and be continuing on the date
of such deposit or, insofar as Section 5.01(viii) hereof is concerned, at
any time during the period ending on the ninety-first day after the date of
such deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period);
(3) Neither the Company nor any Subsidiary of the Company is an
"insolvent person" within the meaning of any applicable Bankruptcy Law on
the date of such deposit or at any time during the period ending on the
ninety-first day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of such
period);
(4) Such defeasance or covenant defeasance shall not cause the
Trustee for the Notes to have a conflicting interest in violation of
Section 6.08 hereof and for purposes of the Trust Indenture Act with
respect to any securities of the Company;
(5) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company is a party
or by which it is bound;
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(6) In the case of an election under Section 4.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel stating
that (x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (y) since the date hereof, there has
been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the
Holders of the Outstanding Notes will not recognize income, gain or loss
for Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance had not
occurred;
(7) In the case of an election under Section 4.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Holders of the Outstanding Notes will not recognize income,
gain or loss for Federal income tax purposes as a result of such covenant
defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred;
(8) The Company shall have delivered to the Trustee, an Opinion
of Counsel to the effect that, immediately following the ninety-first day
after the deposit, the trust funds established pursuant to this Article
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally under
any applicable U.S. Federal or state law;
(9) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Company pursuant to its
election under Section 4.02 or 4.03 hereof was not made by the Company with
the intent of preferring the Holders over the other creditors of the
Company or with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
(10) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that (i) all conditions
precedent (other than conditions requiring the passage of time) provided
for relating to either the defeasance under Section 4.02 or the covenant
defeasance under Section 4.03 (as the case may be) have been complied with
as contemplated by this Section 4.04 and (ii) if any other Indebtedness of
the Company shall then be outstanding or committed, such defeasance or
covenant defeasance will not violate the provisions of the agreements or
instruments evidencing such Indebtedness.
Opinions required to be delivered under this Section may have
such qualifications as are customary for opinions of the type required and
reasonably acceptable to the Trustee.
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Section 4.05. Deposited Money and U.S. Government Obligations To
Be Held in Trust; Other Miscellaneous Provisions.
Subject to the proviso of the last paragraph of Section 10.03,
all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 4.05, the "Trustee") pursuant to Section 4.04 in
respect of the Defeased Notes shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Notes and this Indenture, to the
payment, either directly or through any Paying Agent (other than the Company) as
the Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee and hold it
harmless against any tax, fee or other charge imposed on or assessed against the
U.S. Government Obligations deposited pursuant to Section 4.04 or the principal,
premium, if any, and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the Holders of the
Defeased Notes.
Anything in this Article Four to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 4.04 which, in the opinion of an internationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent defeasance or covenant
defeasance.
Section 4.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 4.02 or 4.03 hereof, as
the case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the obligations of the Company under this Indenture and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section
4.02 or 4.03 hereof, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money and U.S. Government
Obligations in accordance with Section 4.02 or 4.03 hereof, as the case may be;
provided, however, that if the Company makes any payment of principal, premium,
if any, or interest on any Note following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money and U.S. Government Obligations held by the
Trustee or Paying Agent.
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ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) default in the payment of interest on the Notes when it
becomes due and payable and continuance of such default for a period of 30
days or more; or
(ii) default in the payment of the principal of, or premium, if
any, on the Notes when due; or
(iii) default in the performance, or breach, of any covenant
described under Section 10.10, Section 10.15 or Article Eight; or
(iv) default in the performance, or breach, of any term, covenant
or agreement in the Notes, this Indenture (other than defaults specified in
clause (i), (ii) or (iii) above) and continuance of such default or breach
for a period of 30 days or more after written notice to the Company by the
Trustee or to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of the Outstanding Notes (in each case, when
such notice is deemed received in accordance with this Indenture); or
(v) failure to perform any term, covenant, condition or provision
of one or more classes or issues of Indebtedness in an aggregate principal
amount of $15.0 million or more under which the Company or a Material
Restricted Subsidiary is obligated, and either (a) such Indebtedness is
already due and payable in full or (b) such failure results in the
acceleration of the maturity of such Indebtedness; or
(vi) any holder of at least $15.0 million in aggregate principal
amount of Indebtedness of the Company or any Material Restricted Subsidiary
shall commence judicial proceedings or take any other action to foreclose
upon or dispose of assets of the Company or any Material Restricted
Subsidiary having an aggregate Fair Market Value, individually or in the
aggregate, of $15.0 million or more or shall have exercised any right under
applicable law or applicable security documents to take ownership of any
such assets in lieu of foreclosure; provided that, in any such case, the
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Company or any Material Restricted Subsidiary shall not have obtained,
prior to any such foreclosure or disposition of assets, a stay of all such
actions that remains in effect; or
(vii) one or more judgments, orders or decrees for the payment of
money of $15.0 million or more, either individually or in the aggregate,
shall be entered into against the Company or any Material Restricted
Subsidiary or any of their respective properties and shall not be
discharged and there shall have been a period of 60 days or more during
which a stay of enforcement of such judgment or order, by reason of pending
appeal or otherwise, shall not be in effect; or
(viii) the Company or any Material Restricted Subsidiary of the
Company pursuant to or under or within the meaning of any Bankruptcy Law;
or
(A) commences a voluntary case or proceeding;
(B) consents to the making of a Bankruptcy Order in an
involuntary case or proceeding or the commencement of any case
against it;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property;
(D) makes a general assignment for the benefit of its
creditors;
(E) files an answer or consent seeking reorganization or
relief;
(F) shall admit in writing its inability to pay its debts
generally; or
(G) consents to the filing of a petition in bankruptcy; or
(ix) a court of competent jurisdiction in any involuntary case or
proceeding enters a Bankruptcy Order against the Company or any Material
Restricted Subsidiary, and such Bankruptcy Order remains unstayed and in
effect for 60 consecutive days; or
(x) a Custodian shall be appointed out of court with respect to
the Company or any Material Restricted Subsidiary or with respect to all or
any substantial part of the assets or properties of the Company or any
Material Restricted Subsidiary.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified
in clause (viii), (ix) or (x) of Section 5.01 hereof with respect to the
Company) occurs and is continuing, then the Trustee or the holders of at least
25% in principal amount of the Outstanding Notes may,
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by written notice, and the Trustee upon the request of the holders of not less
than 25% in principal amount of the Outstanding Notes shall, declare the
principal amount of, premium (if any) on, and any accrued and unpaid interest
on, all outstanding Notes to be immediately due and payable and upon any such
declaration such amounts shall become immediately due and payable. If an Event
of Default specified in clause (viii), (ix) or (x) above with respect to the
Company occurs and is continuing, then the principal amount of, premium (if any)
on, and any accrued and unpaid interest on, all Outstanding Notes shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any holder.
After a declaration of acceleration, the holders of a majority in
aggregate principal amount of Outstanding Notes may, by notice to the Trustee,
rescind such declaration of acceleration if all existing Events of Default,
other than nonpayment of the principal of, premium (if any) on, and any accrued
and unpaid interest on, the Notes that has become due solely as a result of such
acceleration, have been cured or waived and if the rescission of acceleration
would not conflict with any judgment or decree.
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if an Event of Default specified in
Section 5.01(i) or 5.01(ii) shall have occurred and be continuing, the Company
will, upon demand of the Trustee, pay to the Trustee, for the benefit of the
Holders of such Notes, the whole amount then due and payable on such Notes for
principal, premium, if any, and interest, with interest upon the overdue
principal, premium, if any, and, to the extent that payment of such interest
shall be legally enforceable, upon overdue installments of interest, at the rate
then borne by the Notes; and, in addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may,
but is not obligated under this paragraph to, institute a judicial proceeding
for the collection of the sums so due and unpaid and may, but is not obligated
under this paragraph to, prosecute such proceeding to judgment or final decree,
and may, but is not obligated under this paragraph to, enforce the same against
the Company or any other obligor upon the Notes and collect the moneys adjudged
or decreed to be payable in the manner provided by law out of the property of
the Company or any other obligor upon the Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may
in its discretion, but is not obligated under this paragraph to, (i) proceed to
protect and enforce its rights and the rights of the Holders under this
Indenture by such appropriate private or judicial proceedings
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as the Trustee shall deem most effectual to protect and enforce such rights,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted herein or (ii)
proceed to protect and enforce any other proper remedy. No recovery of any such
judgment upon any property of the Company shall affect or impair any rights,
powers or remedies of the Trustee or the Holders.
Section 5.04. Trustee May File Proofs of Claims.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Notes or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Notes shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, fees, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any Custodian, in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
Section 5.05. Trustee May Enforce Claims Without Possession of
Notes.
All rights of action and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production
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thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name and as trustee of an express
trust, and any recovery of judgment shall, after provision for the payment of
the reasonable compensation, fees, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Holders of
the Notes in respect of which such judgment has been recovered.
Section 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal, premium,
if any, or interest, upon presentation of the Notes and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
First: to the Trustee for amounts due under Section 6.07;
Second: to Holders for interest accrued on the Notes, ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Notes for interest;
Third: to Holders for principal and premium, if any, amounts
owing under the Notes, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
premium, if any; and
Fourth: the balance, if any, to the Company.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Noteholders pursuant to this
Section 5.06.
Section 5.07. Limitation on Suits.
No Holder of any Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
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(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in aggregate principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Note or any Guarantee to affect, disturb or prejudice the
rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
any Note or any Guarantee, except in the manner provided in this Indenture and
for the equal and ratable benefit of all the Holders.
Section 5.08. Unconditional Right of Holders To Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive cash payment of the principal of, premium, if any, and (subject to
Section 3.07 hereof) interest on such Note on the respective Stated Maturities
expressed in such Note (or, in the case of redemption, on the respective
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Note and such proceeding
has been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case the
Company, the Trustee and the Holders shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as provided in Section 3.06, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or
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remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Note
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article Five or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 5.12. Control by Majority.
The Holders of a majority in aggregate principal amount of the
Outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, provided, however, that:
(a) such direction shall not be in conflict with any rule of law
or with this Indenture or any Note or expose the Trustee to personal
liability; and
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Notes may on behalf of the Holders of all the Notes
waive any past Default hereunder and its consequences, except a Default
(a) in the payment of the principal of, premium, if any, or
interest on any Note or
(b) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected thereby.
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture;
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but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.14 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Notes, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of, premium, if any, or interest on any Note on or after the
respective Stated Maturities expressed in such Note (or, in the case of
redemption, on or after the respective Redemption Dates).
Section 5.15. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury or other law wherever enacted, now or at any time hereafter in force,
which would prohibit or forgive the Company from paying all or any portion of
the principal of, premium, if any, or interest on the Notes contemplated herein
or in the Notes or which may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
Section 5.16. Unconditional Right of Holders To Receive Payment.
Notwithstanding any other provision in this Indenture and any
other provision of any Note, the right of any Holder of any Note to receive
payment of the principal of, premium, if any, and interest on such Note on or
after the respective Stated Maturities (or the respective Redemption Dates, in
the case of redemption) expressed in such Note, or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
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ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform
to the requirements of this Indenture.
(b) During the existence of an Event of Default, the Trustee is
required to exercise such rights and powers vested in it under this Indenture
and use the same degree of care and skill in its exercise thereof as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 6.01.
Section 6.02. Notice of Defaults.
Within 45 days after the occurrence of any Default, the Trustee
shall transmit by mail to all Holders, as their names and addresses appear in
the Note Register, notice of
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such Default hereunder known to the Trustee, unless such Default shall have been
cured or waived; provided, however, that, except in the case of a Default in the
payment of the principal of, premium, if any, or interest on any Note, the
Trustee shall be protected in withholding such notice if and so long as a trust
committee of Responsible Officers of the Trustee in good faith determines that
the withholding of such notice is in the interest of the Holders.
Section 6.03. Certain Rights of Trustee.
Subject to Section 6.01 hereof and the provisions of Section 315
of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of the Board may be sufficiently evidenced by a Board
Resolution thereof;
(c) the Trustee may consult with counsel and any written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon in accordance
with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by the
Trustee in compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within
the discretion, rights or powers conferred upon it by this Indenture other
than any liabilities arising out of its own negligence;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security, other
evidence of indebtedness or other paper or document unless requested in
writing so to do by the Holders of not less than a majority in aggregate
principal
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amount of the Notes then Outstanding; provided, however, that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of every such
investigation shall be paid by the Company or, if paid by the Trustee or
any predecessor Trustee, shall be repaid by the Company upon demand;
provided, further, the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may deem fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(h) Except with respect to Section 10.01, the Trustee shall have
no duty to inquire as to the performance of the Company's covenants in
Article Ten. In addition, the Trustee shall not be deemed to have knowledge
of any Default or Event of Default except (i) any Event of Default
occurring pursuant to Sections 5.01(i), 5.01(ii) and 10.01 or (ii) any
Default or Event of Default of which the Trustee shall have received
written notification or obtained actual knowledge.
Section 6.04. Trustee Not Responsible for Recitals, Dispositions
of Notes or Application of Proceeds Thereof.
The recitals contained herein and in the Notes, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Notes except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Notes and
perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-1, if any, to be supplied
to the Company are true and accurate subject to the qualifications set forth
therein. The Trustee shall not be accountable for the use or application by the
Company of Notes or the proceeds thereof.
Section 6.05. Trustee and Agents May Hold Notes; Collections;
Etc.
The Trustee, any Paying Agent, Registrar or any other agent of
the Company, in its individual or any other capacity, may become the owner or
pledgee of Notes, with the
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same rights it would have if it were not the Trustee, Paying Agent, Registrar or
such other agent and, subject to Section 6.08 hereof and Sections 310 and 311 of
the Trust Indenture Act, may otherwise deal with the Company and receive,
collect, hold and retain collections from the Company with the same rights it
would have if it were not the Trustee, Paying Agent, Registrar or such other
agent.
Section 6.06. Money Held in Trust.
All moneys received by the Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which they were
received, but need not be segregated from other funds except to the extent
required herein or by law. The Trustee shall not be under any liability for
interest on any moneys received by it hereunder.
Section 6.07. Compensation and Indemnification of Trustee and Its
Prior Claim.
The Company covenants and agrees: (a) to pay to the Trustee from
time to time, and the Trustee shall be entitled to, reasonable compensation for
all services rendered by it hereunder (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); (b) to reimburse the Trustee and each predecessor Trustee upon its
request for all reasonable expenses, fees, disbursements and advances incurred
or made by or on behalf of it in accordance with any of the provisions of this
Indenture (including the reasonable compensation, fees, and the expenses and
disbursements of its counsel and of all agents and other persons not regularly
in its employ), except any such expense, disbursement or advance as may arise
from its negligence or bad faith; and (c) to indemnify the Trustee and each
predecessor Trustee for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of this Indenture or in
respect of the trusts hereunder and its duties hereunder, including enforcement
of this Section 6.07. The obligations of the Company under this Section to
compensate and indemnify the Trustee and each predecessor Trustee and to pay or
reimburse the Trustee and each predecessor Trustee for expenses, fees,
disbursements and advances shall constitute an additional obligation hereunder
and shall survive the satisfaction and discharge of this Indenture. To secure
the obligations of the Company to the Trustee under this Section 6.07, the
Trustee shall have a prior Lien upon all property and funds held or collected by
the Trustee as such, except funds and property paid by the Company and held in
trust for the benefit of the Holders of particular Notes.
Section 6.08. Conflicting Interests.
The Trustee shall be subject to and comply with the provisions of
Section 310(b) of the Trust Indenture Act.
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Section 6.09. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under Trust Indenture Act Sections 310(a)(1) and (2)
and which shall have a combined capital and surplus of at least $25,000,000, and
have a Corporate Trust Office in the Borough of Manhattan in The City of New
York, State of New York. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of any Federal, state,
territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.10. Resignation and Removal; Appointment of Successor
Trustee.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee, or any trustee or trustees hereinafter
appointed, may at any time resign by giving written notice thereof to the
Company at least 20 Business Days prior to the date of such proposed
resignation. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee by written instrument executed by authority
of the Board, a copy of which shall be delivered to the resigning Trustee and a
copy to the successor Trustee. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 20 Business Days
after the giving of such notice of resignation, the resigning Trustee may, or
(if an instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 Business Days after the giving of such notice
of resignation) any Holder who has been a bona fide Holder of a Note for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee. Such court may thereupon, after such notice, if any, as it may deem
proper, appoint a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the
Holders of a majority in principal amount of the Outstanding Notes, delivered to
the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act in accordance with Section 6.08
hereof after written request
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therefor by the Company or by any Holder who has been a bona fide Holder of
a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.09
hereof and shall fail to resign after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Note for at
least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose or
rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 5.14, the Holder of any Note who has been a bona fide
Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor Trustee.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Notes delivered to
the Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders of the Notes
and accepted appointment in the manner hereinafter provided, the Holder of any
Note who has been a bona fide Holder for at least six months may, subject to
Section 5.14, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Notes as their names and addresses appear in the Note Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
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Section 6.11. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee as if originally named as
Trustee hereunder; but, nevertheless, on the written request of the Company or
the successor Trustee, upon payment of amounts due it pursuant to Section 6.07,
such retiring Trustee shall duly assign, transfer and deliver to the successor
Trustee all moneys and property at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers, duties and obligations of the retiring Trustee. Upon request of
any such successor Trustee, the Company shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor Trustee
all such rights and powers. Any Trustee ceasing to act shall, nevertheless,
retain a prior claim upon all property or funds held or collected by such
Trustee to secure any amounts then due it pursuant to the provisions of Section
6.07.
No successor Trustee with respect to the Notes shall accept
appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor Trustee shall be eligible to act as Trustee under this
Article.
Upon acceptance of appointment by any successor Trustee as
provided in this Section 6.11, the successor shall give notice thereof to the
Holders of the Notes, by mailing such notice to such Holders at their addresses
as they shall appear on the Note Register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
6.10. If the Company fails to give such notice within 10 days after acceptance
of appointment by the successor Trustee, the successor Trustee shall cause such
notice to be given at the expense of the Company.
Section 6.12. Merger, Conversion, Amalgamation, Consolidation or
Succession to Business.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated or amalgamated, or any corporation
resulting from any merger, conversion, amalgamation or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided such
corporation shall be eligible under this Article Six to serve as Trustee
hereunder.
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In case at the time such successor to the Trustee under this
Section 6.12 shall succeed to the trusts created by this Indenture any of the
Notes shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor Trustee
and deliver such Notes so authenticated; and, in case at that time any of the
Notes shall not have been authenticated, any successor to the Trustee under this
Section 6.12 may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificate shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Trustee shall have been
authenticated.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company To Furnish
Trustee Names and Addresses of Holders.
(a) The Trustee shall preserve the names and addresses of the
Noteholders and otherwise comply with TIA Section 312(a). If the Trustee is not
the Registrar, the Company shall furnish or cause the Registrar to furnish to
the Trustee before each Interest Payment Date, and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Noteholders.
Neither the Company nor the Trustee shall be under any responsibility with
regard to the accuracy of such list.
(b) The Company will furnish or cause to be furnished to the
Trustee
(i) semi-annually, not more than 15 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably require, of
the names and addresses of the Holders as of such Regular Record Date; and
(ii) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Registrar, no
such list need be furnished pursuant to this Subsection 7.01(b).
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Section 7.02. Communications of Holders.
Holders may communicate with other Holders with respect to their
rights under this Indenture or under the Notes pursuant to Section 312(b) of the
Trust Indenture Act. The Company and the Trustee and any and all other persons
benefited by this Indenture shall have the protection afforded by Section 312(c)
of the Trust Indenture Act.
Section 7.03. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the
first May 15 following the date of this Indenture, the Trustee shall mail to all
Holders, as their names and addresses appear in the Note Register, a brief
report dated as of such May 15, in accordance with, and to the extent required
under Section 313 of the Trust Indenture Act. At the time of its mailing to
Holders, a copy of each such report shall be filed by the Trustee with the
Company, the SEC and with each stock exchange on which the Notes are listed. The
Company shall notify the Trustee when the Notes are listed on any stock
exchange.
Section 7.04. Reports by Company.
The Company shall:
(a) file with the SEC the copies of annual reports and of the
information, documents and other reports (or copies of such portions of any
of the foregoing as the SEC may from time to time by rules and regulations
prescribe) required to be filed with the SEC pursuant to Section 13 or
Section 15 of the Exchange Act, whether or not the Company has a class of
securities registered under the Exchange Act;
(b) file with the Trustee within 15 days after it files or would
be required to file the information specified in subsection (a) of this
Section 7.04 reports and documents with the SEC copies of such information;
(c) file with the Trustee and the SEC in accordance with rules
and regulations prescribed from time to time by the SEC, such additional
information, documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(d) transmit by mail to all Holders, as their names and addresses
appear in the Note Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to subsections (a) and (c) of
this Section as may be required by rules and regulations prescribed from
time to time by the SEC.
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Notwithstanding anything to the contrary herein, the Trustee
shall have no duty to review information provided pursuant to subsection (b) of
this Section 7.04 for purposes of determining compliance with any provisions of
this Indenture.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
Section 8.01. Company May Consolidate, etc., Only on Certain
Terms.
The Company will not (i) consolidate or combine with or merge
with or into or, directly or indirectly, sell, assign, convey, lease, transfer
or otherwise dispose of all or substantially all of its properties and assets to
any person or persons in a single transaction or through a series of
transactions, or (ii) permit any of the Restricted Subsidiaries to enter into
any such transaction or series of transactions if it would result in the
disposition of all or substantially all of the properties or assets of the
Company and the Restricted Subsidiaries on a consolidated basis, unless, in the
case of either (i) or (ii), (a) the Company shall be the continuing person or,
if the Company is not the continuing person, the resulting, surviving or
transferee person (the "surviving entity") shall be a company organized and
existing under the laws of the United States or any State or territory thereof;
(b) the surviving entity shall expressly assume all of the obligations of the
Company under the Notes, and this Indenture, and shall, if required by law to
effectuate such assumption, execute a supplemental indenture to effect such
assumption, which supplemental indenture shall be delivered to the Trustee and
shall be in form and substance reasonably satisfactory to the Trustee; (c)
immediately after giving effect to such transaction or series of transactions on
a pro forma basis (including, without limitation, any Indebtedness incurred or
anticipated to be incurred in connection with or in respect of such transaction
or series of transactions), the Company or the surviving entity (assuming such
surviving entity's assumption of the Company's obligations under the Notes and
this Indenture), as the case may be, would be able to incur $1.00 of
Indebtedness under the proviso of Section 10.11; provided that, in the case of
any transaction or series of transactions comprised solely of one or more
Rollups, this clause (c) shall be deemed satisfied if the Company or the
surviving entity and the Restricted Subsidiaries would have been able to incur
all of their outstanding Indebtedness as Permitted Indebtedness; (d) immediately
after giving effect to such transaction or series of transactions on a pro forma
basis (including, without limitation, any Indebtedness incurred or anticipated
to be incurred in connection with or in respect of such transaction or series of
transactions), no Default shall have occurred and be continuing; and (e) the
Company or the surviving entity, as the case may be, shall have delivered to the
Trustee an Officers' Certificate stating that such transaction or series of
transactions, and, if a supplemental indenture is required in connection with
such transaction or series of transactions to effectuate such assumption, such
supplemental indenture, complies with this
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covenant and that all conditions precedent in this Indenture relating to the
transaction or series of transactions have been satisfied.
Section 8.02. Successor Substituted.
Upon any consolidation or merger or any sale, assignment,
conveyance, lease, transfer or other disposition of all or substantially all of
the assets of the Company in accordance with the foregoing in which the Company
or the Restricted Subsidiary, as the case may be, is not the continuing
corporation, the successor corporation formed by such a consolidation or into
which the Company or such Restricted Subsidiary is merged or to which such
transfer is made will succeed to, and be substituted for, and may exercise every
right and power of, the Company or such Restricted Subsidiary, as the case may
be, under this Indenture, and the Notes with the same effect as if such
successor corporation had been named as the Company or such Restricted
Subsidiary therein; and thereafter, except in the case of (i) any lease or (ii)
any sale, assignment, conveyance, transfer, lease or other disposition to a
Restricted Subsidiary of the Company, the Company shall be discharged from all
obligations and covenants under this Indenture and the Notes.
For all purposes of this Indenture and the Notes (including the
provision of this Article Eight and Sections 10.11, Section 10.13 and Section
10.16), Subsidiaries of any surviving entity will, upon such transaction or
series of related transactions, become Restricted Subsidiaries or Unrestricted
Subsidiaries as provided pursuant to Section 10.21 and all Indebtedness, and all
Liens on property or assets, of the Company and the Restricted Subsidiaries in
existence immediately prior to such transaction or series of related
transactions will be deemed to have been incurred upon such transaction or
series of related transactions.
ARTICLE NINE
SUPPLEMENTAL INDENTURES AND WAIVERS
Section 9.01. Supplemental Indentures, Agreements and Waivers
Without Consent of Holders.
Without the consent of any Holders, the Company, and when
authorized by a Board Resolution of the Board, and the Trustee, at any time and
from time to time, may amend, waive, modify or supplement this Indenture or the
Notes for any of the following purposes:
(a) to evidence the succession of another person to the Company,
and the assumption by any such successor of the covenants of the Company in
the Notes;
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(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company, herein, in the Notes;
(c) to cure any ambiguity, to correct or supplement any provision
herein, in the Notes which may be defective or inconsistent with any other
provision herein or to make any other provisions with respect to matters or
questions arising under this Indenture or the Notes; provided, however,
that, in each case, such provisions shall not materially adversely affect
the legal rights of any Holder;
(d) to comply with the requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the Trust Indenture
Act, as contemplated by Section 9.05 hereof or otherwise;
(e) to evidence and provide the acceptance of the appointment of
a successor Trustee hereunder;
(f) to mortgage, pledge, hypothecate or grant a security interest
in any property or assets in favor of the Trustee for the benefit of the
Holders as security for the payment and performance of Indenture
Obligations; or
(g) to make any other change that does not materially adversely
affect the legal rights of any Holder;
provided, however, that the Company has delivered to the Trustee an Opinion of
Counsel stating that such change, agreement or waiver does not materially
adversely affect the legal rights of any Holder.
Section 9.02. Supplemental Indentures, Agreements and Waivers
with Consent of Holders.
With the written consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Notes delivered to the
Company and the Trustee, the Company when authorized by a Board Resolution,
together with the Trustee, may amend, waive, modify or supplement any other
provision of this Indenture or the Notes; provided, however, that no such
amendment, waiver, modification or supplement may, without the written consent
of the Holder of each Outstanding Note affected thereby:
(i) reduce the principal amount of, change the fixed maturity of,
or alter the redemption provisions of, the Notes,
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(ii) change the currency in which any Notes or amounts owing
thereon is payable,
(iii) reduce the percentage of the aggregate principal amount
Outstanding of Notes which must consent to an amendment, supplement or
waiver or consent to take any action under this Indenture or the Notes,
(iv) impair the right to institute suit for the enforcement of
any payment on or with respect to the Notes,
(v) waive a default in payment with respect to the Notes,
(vi) reduce the rate or change the time for payment of interest
on the Notes,
(vii) following the occurrence of a Change of Control or an Asset
Sale, alter the Company's obligation to purchase the Notes in accordance
with this Indenture or waive any default in the performance thereof,
(viii) affect the ranking of the Notes in a manner adverse to the
holder of the Notes, or
(ix) release any Guarantee except in compliance with the terms of
the Indenture.
Upon the written request of the Company accompanied by a copy of
a Board Resolution of the Board authorizing the execution of any such
supplemental indenture or other agreement, instrument or waiver, and upon the
filing with the Trustee of evidence of the consent of Holders as aforesaid, the
Trustee shall join with the Company in the execution of such supplemental
indenture or other agreement, instrument or waiver.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture or
other agreement, instrument or waiver, but it shall be sufficient if such Act
shall approve the substance thereof.
Section 9.03. Execution of Supplemental Indentures, Agreements
and Waivers.
In executing, or accepting the additional trusts created by, any
supplemental indenture, agreement, instrument or waiver permitted by this
Article Nine or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
6.01 hereof) shall be fully protected in relying upon, an Opinion of Counsel and
an Officers' Certificate from each obligor under the Notes entering into such
supplemental indenture, agreement, instrument or waiver, each stating that the
execution of such
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supplemental indenture, agreement, instrument or waiver (a) is authorized or
permitted by this Indenture and (b) does not violate the provisions of any
agreement or instrument evidencing any other Indebtedness of the Company or any
other Subsidiary of the Company. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture, agreement, instrument or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture, the Notes or otherwise.
Section 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article Nine, this Indenture and/or the Notes, if applicable, shall be modified
in accordance therewith, and such supplemental indenture shall form a part of
this Indenture and/or the Notes, if applicable, as the case may be, for all
purposes; and every Holder of Notes theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
Section 9.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
Nine shall conform to the requirements of the Trust Indenture Act as then in
effect.
Section 9.06. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Board, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee upon a Company Order in
exchange for Outstanding Notes.
Section 9.07. Record Date.
The Company may, but shall not be obligated to, fix, a record
date for the purpose of determining the Holders entitled to consent to any
supplemental indenture, agreement or instrument or any waiver, and shall
promptly notify the Trustee of any such record date. If a record date is fixed,
those persons who were Holders at such record date (or their duly designated
proxies), and only those persons, shall be entitled to consent to such
supplemental indenture, agreement or instrument or waiver or to revoke any
consent previously given, whether or not such persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
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Section 9.08. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if a notation of the consent is not made on any
Note. However, any such Holder, or subsequent Holder, may revoke the consent as
to his Note or portion of a Note if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. An
amendment or waiver shall become effective in accordance with its terms and
thereafter bind every Holder.
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of,
premium, if any, and interest on the Notes in accordance with the terms of the
Notes and this Indenture.
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan in The City
of New York, State of New York, an office or agency where Notes may be presented
or surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The office of the Trustee
at its Corporate Trust Office will be such office or agency of the Company,
unless the Company shall designate and maintain some other office or agency for
one or more of such purposes. The Company will give prompt written notice to the
Trustee of any change in the location of any such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside of The City of New York, State of New
York) where the Notes may be presented or surrendered for any or all such
purposes, and may from time to time rescind such designation; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in The City of New York, State
of New York for such purposes. The Company will give prompt written notice to
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the Trustee of any such designation or rescission and any change in the location
of any such other office or agency.
Section 10.03. Money for Note Payments To Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of, premium, if any, or
interest on any of the Notes, segregate and hold in trust for the benefit of the
Holders entitled thereto a sum sufficient to pay the principal, premium, if any,
or interest so becoming due until such sums shall be paid to such persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
If the Company is not acting as Paying Agent, the Company will,
on or before each due date of the principal of, premium, if any, or interest on,
any Notes, deposit with a Paying Agent a sum in same day funds sufficient to pay
the principal, premium, if any, or interest so becoming due, such sum to be held
in trust for the benefit of the Holders entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will
cause each Paying Agent other than the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent will agree with the Trustee,
subject to the provisions of this Section 10.03, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Notes in trust for the benefit of the
Holders entitled thereto until such sums shall be paid to such Holders or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company (or any
other obligor upon the Notes) in the making of any payment of principal of,
premium, if any, or interest on the Notes;
(c) at any time during the continuance of any such Default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all aspects with
the provisions of this Indenture relating to the duties, rights and
liabilities of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any
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Paying Agent to pay, to the Trustee all sums held in trust by the Company or
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying Agent; and,
upon such payment by any Paying Agent to the Trustee, such Paying Agent will be
released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company upon receipt of a Company Request therefor, or (if then held by
the Company) will be discharged from such trust; and the Holder of such Note
will thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, will thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, at the option of the Company
in the New York Times or the Wall Street Journal (national edition), notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining shall be repaid to the Company.
Section 10.04. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect the corporate
existence, rights (charter and statutory), licenses and franchises of the
Company and each of the Restricted Subsidiaries; provided, however, that the
Company will not be required to preserve any such right, license or franchise if
the Board shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and the Restricted Subsidiaries as
a whole and that the loss thereof is not adverse in any material respect to the
Holders; provided, further, that the foregoing will not prohibit a sale,
transfer or conveyance of a Subsidiary of the Company or any of its assets in
compliance with the terms of this Indenture.
Section 10.05. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all material taxes,
assessments and governmental charges levied or imposed (i) upon the Company or
any of its Restricted Subsidiaries or (ii) upon the income, profits or property
of the Company or any of the Restricted Subsidiaries and (b) all material lawful
claims for labor, materials and supplies, which, if unpaid, could reasonably be
expected to become a Lien upon the property of the Company or any of the
Restricted Subsidiaries; provided, however, that the Company will not be
required to pay or discharge
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or cause to be paid or discharged any such tax, assessment, charge or claim (x)
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings properly instituted and diligently conducted or (y) if
the failure to so pay, discharge or cause to be paid or discharged could not
reasonably be expected to have a Material Adverse Effect (as defined in the
Purchase Agreement).
Section 10.06. Maintenance of Properties.
The Company will cause all material properties owned by the
Company or any of the Restricted Subsidiaries or used or held for use in the
conduct of their respective businesses to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section 10.06 will prevent the Company from discontinuing the
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business or the business of any
of the Restricted Subsidiaries and is not adverse in any material respect to the
Holders.
Section 10.07. Insurance.
The Company will at all times keep all of its and the Restricted
Subsidiaries' properties which are of an insurable nature insured with insurers,
believed by the Company in good faith to be financially sound and responsible,
against loss or damage to the extent that property of similar character is
usually and customarily so insured by corporations similarly situated and owning
like properties.
Section 10.08. Books and Records.
The Company will keep proper books of record and account, in
which full and correct entries will be made of all financial transactions and
the assets and business of the Company and each Restricted Subsidiary of the
Company in material compliance with GAAP.
Section 10.09. Provision of Financial Statements.
Subject to Section 10.23, the Company will file with the SEC (so
long as the SEC will accept any such filings) the Trustee and the Initial
Purchasers the annual reports, quarterly reports and other documents required to
be filed with the SEC pursuant to Sections 13 and 15 of the Exchange Act,
whether or not the Company has a class of securities registered under the
Exchange Act. The Company will also comply with the other provisions of Section
314(a) of the Trust Indenture Act.
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Section 10.10. Change of Control.
Upon the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall make an offer
to purchase (the "Change of Control Offer"), on a Business Day (the "Change of
Control Payment Date") not later than 60 days following the Change of Control
Date, all Notes then Outstanding at a purchase price equal to 101% of the
principal amount thereof on any Change of Control Payment Date, plus accrued and
unpaid interest, if any, to such Change of Control Payment Date. Notice of a
Change of Control Offer shall be given to holders of Notes not less than 25 days
nor more than 45 days before the Change of Control Payment Date. The Change of
Control Offer is required to remain open for at least 20 Business Days. Failure
to mail the notice of a Change of Control Offer on the date specified below or
to have satisfied the foregoing condition precedent by the date that such notice
is required to be mailed will constitute a covenant Default under Section
5.01(iii).
Notice of a Change of Control Offer shall be mailed by the
Company not more than 20 Business Days after the Change of Control Date to the
Holders of Notes at their last registered addresses with a copy to the Trustee
and the Paying Agent. The Change of Control Offer shall remain open from the
time of mailing for at least 20 Business Days and until 5:00 p.m., New York City
time, on the Change of Control Payment Date. The notice, which shall govern the
terms of the Change of Control Offer, shall include such disclosures as are
required by law and shall state:
(a) that the Change of Control Offer is being made pursuant to
this Section 10.10 and that all Notes tendered into the Change of Control
Offer will be accepted for payment;
(b) the purchase price (including the amount of accrued interest,
if any) for each Note, the Change of Control Payment Date and the date on
which the Change of Control Offer expires;
(c) that any Note not tendered for payment will continue to
accrue interest in accordance with the terms thereof;
(d) that, unless the Company shall default in the payment of the
purchase price, any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(e) that Holders electing to have Notes purchased pursuant to a
Change of Control Offer will be required to surrender their Notes to the
Paying Agent at the address specified in the notice prior to 5:00 p.m., New
York City time, on the Change of
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Control Payment Date and must complete any form letter of transmittal
proposed by the Company and acceptable to the Trustee and the Paying Agent;
(f) that Holders of Notes will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New York
City time, on the Change of Control Payment Date, a facsimile transmission
or letter setting forth the name of the Holders, the principal amount of
Notes the Holders delivered for purchase, the Note certificate number (if
any) and a statement that such Holder is withdrawing his election to have
such Notes purchased;
(g) that Holders whose Notes are purchased only in part will be
issued Notes of like tenor equal in principal amount to the unpurchased
portion of the Notes surrendered;
(h) the instructions that Holders must follow in order to tender
their Notes; and
(i) information concerning the business of the Company, the most
recent annual and quarterly reports of the Company filed with the SEC
pursuant to the Exchange Act (or, if the Company is not required to file
any such reports with the SEC, the comparable reports prepared pursuant to
Section 10.09), a description of material developments in the Company's
business, information with respect to pro forma historical financial
information after giving effect to such Change of Control and such other
information concerning the circumstances and relevant facts regarding such
Change of Control and Change of Control Offer as would, in the good faith
judgment of the Company, be material to a Holder of Notes in connection
with the decision of such Holder as to whether or not it should tender
Notes pursuant to the Change of Control Offer.
On the Change of Control Payment Date, the Company will (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money, in immediately
available funds, sufficient to pay the purchase price of all Notes or portions
thereof so tendered and accepted and (iii) deliver to the Trustee the Notes so
accepted together with an Officers' Certificate setting forth the Notes or
portions thereof tendered to and accepted for payment by the Company. The Paying
Agent will promptly mail or deliver to the Holders of Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Note of like tenor equal
in principal amount to any unpurchased portion of the Note surrendered. Any
Notes not so accepted shall be promptly mailed or delivered by the Company to
the Holder thereof. The Company will publicly announce the results of the Change
of Control Offer not later than the first Business Day following the Change of
Control Payment Date. Except as described above with respect to a Change of
Control, this Indenture
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does not contain provisions that permit the holders of the Notes to require that
the Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction which may be highly leveraged. If a
Change of Control Offer is made, there can be no assurance that the Company will
have available funds sufficient to pay for all of the Notes that might be
delivered by holders of Notes seeking to accept the Change of Control Offer. The
Company shall not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
If the Company is required to make a Change of Control Offer, the
Company will comply with all applicable tender offer laws and regulations,
including, to the extent applicable, Section 14(e) and Rule 14e-1 under the
Exchange Act, and any other applicable securities laws and regulations. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of this Section 10.10, the Company will comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 10.10 by virtue thereof.
Section 10.11. Limitation on Additional Indebtedness.
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, incur, any Indebtedness (including any
Acquired Indebtedness), except for Permitted Indebtedness (including Acquired
Indebtedness to the extent it would constitute Permitted Indebtedness);
provided, however, that (i) the Company will be permitted to incur Indebtedness
(including Acquired Indebtedness) and (ii) a Restricted Subsidiary will be
permitted to incur Acquired Indebtedness, if, in either case, immediately after
giving pro forma effect to such incurrence (including the application of the net
proceeds therefrom), the ratio of Total Consolidated Indebtedness to
Consolidated Annualized Pro Forma Operating Cash Flow would be less than 6.0 to
1.0.
For purposes of determining compliance with this Section 10.11,
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness permitted by this covenant, the Company in its sole
discretion shall classify such item of Indebtedness and only be required to
include the amount of such Indebtedness as one of such types.
Section 10.12. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, a
written statement signed by the chairman or a chief executive officer, the
principal financial officer or principal accounting
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officer of the Company, stating (i) that a review of the activities of the
Company during the preceding fiscal year has been made under the supervision of
the signing officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and (ii)
that, to the knowledge of each officer signing such certificate, the Company has
kept, observed, performed and fulfilled each and every covenant and condition
contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions, conditions and covenants hereof (or,
if a Default shall have occurred, describing all such Defaults of which such
officers may have knowledge, their status and what action the Company is taking
or proposes to take with respect thereto). When any Default under this Indenture
has occurred and is continuing, or if the Trustee or any Holder or the trustee
for or the holder of any other evidence of Indebtedness of the Company or any
Restricted Subsidiary gives any notice or takes any other action with respect to
a claimed default (other than with respect to Indebtedness (other than
Indebtedness evidenced by the Notes) in the principal amount of less than
$7,500,000), the Company will promptly notify the Trustee of such Default,
notice or action and will deliver to the Trustee by registered or certified mail
or by telegram, or facsimile transmission followed by hard copy by registered or
certified mail an Officers' Certificate specifying such event, notice or other
action within five Business Days after the Company becomes aware of such
occurrence and what action the Company is taking or proposes to take with
respect thereto.
Section 10.13. Limitation on Restricted Payments.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, make, directly or indirectly, any Restricted Payment unless:
(i) no Default shall have occurred and be continuing at the time
of or upon giving effect to such Restricted Payment;
(ii) immediately after giving effect to such Restricted Payment,
the Company would be able to incur $1.00 of Indebtedness under the proviso
of Section 10.11 hereof; and
(iii) immediately after giving effect to such Restricted Payment,
the aggregate amount of all Restricted Payments declared or made on or
after the Issue Date and all Designation Amounts made on or after the Issue
Date does not exceed an amount equal to the sum of, without duplication,
(a) 50% of the Consolidated Net Income of the Company accrued on a
cumulative basis during the period beginning on October 1, 1999 and ending
on the last day of the fiscal quarter of the Company immediately preceding
the date of such proposed Restricted Payment (or, if such cumulative
Consolidated Net Income of the Company for such period is a deficit, minus
100% of such deficit), plus (b) the aggregate net cash proceeds received by
the Company either (x) as capital contributions to the Company after the
Issue Date or (y) from the issue and sale
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(other than to a Restricted Subsidiary of the Company) of its Capital Stock
(other than Disqualified Stock) on or after the Issue Date (including upon
exercise of warrants, options or rights), plus (c) the aggregate net
proceeds received by the Company from the issuance (other than to a
Restricted Subsidiary of the Company) on or after the Issue Date of its
Capital Stock (other than Disqualified Stock) upon the conversion of, or in
exchange for, Indebtedness of the Company, plus (d) in the case of the
disposition or repayment (in whole or in part) of any Investment
constituting a Restricted Payment made after the Issue Date (except for
Investments made (1) pursuant to clause (vi) of the second following
paragraph that are not subject to clause (e) of this paragraph below, and
(2) pursuant to clause (vii) of the second following paragraph), an amount
equal to the lesser of the return of capital with respect to the applicable
portion of such Investment and the cost of the applicable portion of such
Investment, in either case, less the cost of the disposition of such
Investment, plus (e) in the case of any Revocation with respect to a
Subsidiary of the Company that was made subject to a Designation after the
Issue Date, an amount equal to the lesser of the Designation Amount with
respect to such Subsidiary or the Fair Market Value of the Investment of
the Company and the Restricted Subsidiaries in such Subsidiary at the time
of Revocation, plus (f) the amount of capacity available for "Restricted
Payments" under clause (iii) of the first paragraph of Section 10.13 of the
indenture governing the November 1998 Notes (which is similar to this
paragraph) determined as of the Issue Date (without regard to clause (i) or
(ii) of such covenant but taking account of the effect of the balance of
such covenant, in each case as of the Issue Date). For purposes of the
preceding clauses (b)(y) and (c), as applicable, the value of the aggregate
net proceeds received by the Company upon the issuance of Capital Stock
either upon the conversion of convertible Indebtedness or in exchange for
outstanding Indebtedness or upon the exercise of options, warrants or
rights will be the net cash proceeds received upon the issuance of such
Indebtedness, options, warrants or rights plus the incremental amount
received, if any, by the Company upon the conversion, exchange or exercise
thereof.
For purposes of determining the amount expended for Restricted
Payments, cash distributed shall be valued at the face amount thereof and
property other than cash shall be valued at its Fair Market Value.
The provisions of this Section 10.13 shall not prohibit the
following (each of which shall be given independent effect):
(i) the payment of any dividend or other distribution within 60
days after the date of declaration thereof if at such date of declaration
such payment would be permitted by the provisions of the Indenture;
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(ii) the purchase, redemption, retirement or other acquisition of
any shares of Capital Stock of the Company in exchange for, or out of the
net cash proceeds of the substantially concurrent issue and sale (other
than to a Restricted Subsidiary of the Company) of, shares of Capital Stock
of the Company (other than Disqualified Stock); provided that any such net
cash proceeds are excluded from clause (iii)(b) of the second preceding
paragraph;
(iii) so long as no Default shall have occurred and be
continuing, the purchase, redemption, retirement, defeasance or other
acquisition of Subordinated Indebtedness made by exchange for, or out of
the net cash proceeds of, a substantially concurrent issue and sale (other
than to a Restricted Subsidiary of the Company) of (x) Capital Stock (other
than Disqualified Stock) of the Company or (y) other Subordinated
Indebtedness to the extent that its stated maturity for the payment of
principal thereof is not prior to the 180th day after the final stated
maturity of the Notes; provided that any such net cash proceeds are
excluded from clause (iii)(b) of the second preceding paragraph;
(iv) bonds, notes, debentures or other securities received as a
result of Asset Sales pursuant to and in compliance with Section 10.15
hereof;
(v) so long as no Default shall have occurred and be continuing,
purchases or redemptions of Capital Stock (including cash settlements of
stock options) held by employees, officers or directors upon or following
termination of their employment with the Company or one of its
Subsidiaries; provided that payments shall not exceed $2.0 million in any
fiscal year in the aggregate or $4.0 million in the aggregate during the
term of the Notes;
(vi) so long as no Default shall have occurred and be continuing,
Investments in Unrestricted Subsidiaries to the extent reasonably promptly
made with the proceeds of a substantially concurrent (1) capital
contribution to the Company or (2) issue or sale of Capital Stock (other
than Disqualified Stock) of the Company (other than to a Restricted
Subsidiary of the Company); provided that any such proceeds are excluded
from clause (iii)(b) of the second preceding paragraph;
(vii) loans or advances to employees of the Company or any
Restricted Subsidiary made in the ordinary course of business, including to
fund the purchase of Capital Stock of the Company (provided that any
proceeds from such purchase are excluded from clause (iii)(b) of the second
preceding paragraph to the extent such loan or advance is not reimbursed)
in an amount not to exceed $2.0 million at any time outstanding; and
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(viii) cash payments in lieu of fractional shares pursuant to any
warrant, option or other similar agreement.
In no event shall a Restricted Payment made on the basis of
consolidated financial statements prepared in good faith in accordance with GAAP
be subject to rescission or constitute a Default by reason of any requisite
subsequent restatement of such financial statements which would have made such
Restricted Payment prohibited at the time that it was made.
In determining the amount of Restricted Payments permissible
under clause (iii) of the first paragraph of this Section 10.13, amounts
expended since the Issue Date pursuant to clauses (i), (iv) and (v) of the
second preceding paragraph above shall be included, without duplication, as
Restricted Payments.
Section 10.14. Limitation on Transactions with Affiliates.
The Company will not, and will not permit, cause or suffer any
Restricted Subsidiary to, conduct any business or enter into any transaction (or
series of related transactions which are similar or part of a common plan) with
or for the benefit of any of their respective Affiliates (other than Affiliates
that are not also Affiliates of the Company or any Wholly Owned Restricted
Subsidiary) or any beneficial holder of 10% or more of the Common Stock of the
Company or any officer or director of the Company (each, an "Affiliate
Transaction"), unless the terms of the Affiliate Transaction are set forth in
writing, and are fair and reasonable to the Company or such Restricted
Subsidiary, as the case may be. Each Affiliate Transaction involving aggregate
payments or other Fair Market Value in excess of $1.0 million shall be approved
by a majority of the Board, such approval to be evidenced by a Board Resolution
stating that the Board has determined that such transaction or transactions
comply with the foregoing provisions. In addition to the foregoing, each
Affiliate Transaction involving aggregate consideration of $5.0 million or more
shall be approved by a majority of the Disinterested Directors; provided that,
in lieu of such approval by the Disinterested Directors, the Company may obtain
a written opinion from an Independent Financial Advisor stating that the terms
of such Affiliate Transaction to the Company or the Restricted Subsidiary, as
the case may be, are fair from a financial point of view. For purposes of this
Section 10.14, any Affiliate Transaction approved by a majority of the
Disinterested Directors or as to which a written opinion has been obtained from
an Independent Financial Advisor, on the basis set forth in the preceding
sentence, shall be deemed to be on terms that are fair and reasonable to the
Company or the Restricted Subsidiaries, as the case may be, and, therefore,
shall be permitted under this Section 10.14.
Notwithstanding the foregoing, the restrictions set forth in this
Section 10.14 shall not apply to (i) transactions with or among, or solely for
the benefit of, the Company and/or any of the Restricted Subsidiaries, (ii)
transactions pursuant to agreements and arrangements
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existing on the Issue Date, (iii) transactions related to the provision of
internet services in the ordinary course of business; provided that (x) such
transactions are entered into on an arm's length basis and are fair and
reasonable to the Company or such Restricted Subsidiary, as the case may be, and
(y) in the good faith judgment of the Company or the applicable Restricted
Subsidiary, the Fair Market Value of the consideration received by the Company
or such Restricted Subsidiary, as the case may be, reasonably approximates the
Fair Market Value of the services provided, (iv) dividends paid by the Company
pursuant to and in compliance with Section 10.13 hereof, (v) customary
directors' fees, indemnification and similar arrangements, consulting fees,
employee salaries, bonuses, employment agreements and arrangements, compensation
or employee benefit arrangements or legal fees, (vi) transactions contemplated
by any of the Permitted Affiliate Agreements as in effect on the Issue Date and
(vii) grants of customary registration rights with respect to securities of the
Company.
Section 10.15. Disposition of Proceeds of Asset Sales.
The Company will not, and will not permit any Restricted
Subsidiary to, make any Asset Sale unless (a) the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value of the shares or assets sold or
otherwise disposed of and (b) at least 75% of such consideration consists of
cash, Cash Equivalents or Qualified Consideration; provided that the following
shall be treated as cash for purposes of this Section 10.15: (x) the amount of
any liabilities (other than Subordinated Indebtedness or Indebtedness of a
Restricted Subsidiary that would not constitute Restricted Subsidiary
Indebtedness) that are assumed by the transferee of any such assets pursuant to
an agreement that unconditionally releases the Company or such Restricted
Subsidiary from further liability ("assumed liabilities") and (y) the amount of
any notes or other obligations that within 30 days of receipt, are converted
into cash (to the extent of the cash received). The Company or the applicable
Restricted Subsidiary, as the case may be, may (i) apply the Net Cash Proceeds
from such Asset Sale within 365 days of the receipt thereof to repay an amount
of Indebtedness (other than Subordinated Indebtedness) of the Company in an
amount not exceeding the Other Senior Debt Pro Rata Share and elect to
permanently reduce the amount of the commitments thereunder by the amount of the
Indebtedness so repaid, (ii) apply the Net Cash Proceeds from such Asset Sale to
repay any Restricted Subsidiary Indebtedness and elect to permanently reduce the
commitments thereunder by the amount of the Indebtedness so repaid or (iii)
apply such Net Cash Proceeds within 365 days thereof, to an investment in
properties and assets that will be used in an Internet Service Business (or in
Capital Stock and other securities of any person that will become a Restricted
Subsidiary as a result of such investment to the extent such person owns
properties and assets that will be used in an Internet Service Business) of the
Company or any Restricted Subsidiary ("Replacement Assets"). Any Net Cash
Proceeds from any Asset Sale that are neither used to repay, and permanently
reduce the commitments under, any Restricted Subsidiary Indebtedness
<PAGE> 90
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as set forth in clause (ii) of the preceding sentence or invested in Replacement
Assets within the 365-day period as set forth in clause (iii) shall constitute
"Excess Proceeds." Any Excess Proceeds not used as set forth in clause (i) of
the second preceding sentence shall constitute "Offer Excess Proceeds" subject
to disposition as provided below.
When the aggregate amount of Offer Excess Proceeds equals or
exceeds $10.0 million, the Company shall make an offer to purchase (an "Asset
Sale Offer"), from all holders of the Notes, that aggregate principal amount of
Notes as can be purchased by application of such Offer Excess Proceeds at a
price in cash equal to 100% of the principal amount thereof on any purchase
date, plus accrued and unpaid interest, if any, to any purchase date. Each Asset
Sale Offer shall remain open for a period of 20 Business Days or such longer
period as may be required by law. To the extent that the principal amount of
Notes tendered pursuant to an Asset Sale Offer is less than the Offer Excess
Proceeds, the Company or any Restricted Subsidiary may use such deficiency for
general corporate purposes. If the principal amount of Notes validly tendered
and not withdrawn by holders thereof exceeds the amount of Notes which can be
purchased with the Offer Excess Proceeds, Notes to be purchased will be selected
on a pro rata basis. Upon completion of such Asset Sale Offer, the amount of
Offer Excess Proceeds shall be reset to zero.
Notice of an Asset Sale Offer shall be mailed by the Company not
more than 20 Business Days after the obligation to make such Asset Sale Offer
arises to the Holders of Notes at their last registered addresses with a copy to
the Trustee and the Paying Agent. The Asset Sale Offer shall remain open from
the time of mailing for at least 20 Business Days and until 5:00 p.m., New York
City time, on the date fixed for Purchase of Notes validly tendered and not
withdrawn, which date shall be not later than the 30th Business Day following
the mailing of such Asset Sale Offer (the "Asset Sale Offer Purchase Date"). The
notice, which shall govern the terms of the Asset Sale Offer, shall include such
disclosures as are required by law and shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 10.15 and that all Notes tendered into the Asset Sale Offer will be
accepted for payment; provided, however, that if the aggregate principal
amount of Notes tendered in an Asset Sale Offer plus accrued interest at
the expiration of such offer exceeds the aggregate amount of the Offer
Excess Proceeds, the Company shall select the Notes to be purchased on a
pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Notes in denominations of $1,000 or multiples thereof
shall be purchased) and that the Asset Sale Offer shall remain open for a
period of 20 Business Days or such longer period as may be required by law;
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(b) the purchase price (including the amount of accrued interest,
if any) for each Note, the Asset Sale Offer Purchase Date and the date on
which the Asset Sale Offer expires;
(c) that any Note not tendered for payment will continue to
accrue interest in accordance with the terms thereof;
(d) that, unless the Company shall default in the payment of the
purchase price, any Note accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest after the Asset Sale Offer Purchase
Date;
(e) that Holders electing to have Notes purchased pursuant to an
Asset Sale Offer will be required to surrender their Notes to the Paying
Agent at the address specified in the notice prior to 5:00 p.m., New York
City time, on the Asset Sale Offer Purchase Date and must complete any form
letter of transmittal proposed by the Company and acceptable to the Trustee
and the Paying Agent;
(f) that Holders of Notes will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New York
City time, on the Asset Sale Offer Purchase Date, a facsimile transmission
or letter setting forth the name of the Holders, the principal amount of
Notes the Holders delivered for purchase, the Note certificate number (if
any) and a statement that such Holder is withdrawing his election to have
such Notes purchased;
(g) that Holders whose Notes are purchased only in part will be
issued Notes of like tenor equal in principal amount to the unpurchased
portion of the Notes surrendered;
(h) the instructions that Holders must follow in order to tender
their Notes; and
(i) information concerning the business of the Company, the most
recent annual and quarterly reports of the Company filed with the
Commission pursuant to the Exchange Act (or, if the Company is not required
to file any such reports with the SEC, the comparable reports prepared
pursuant to Section 10.09), a description of material developments in the
Company's business, information with respect to pro forma historical
financial information after giving effect to such Asset Sale and such other
information concerning the circumstances and relevant facts regarding such
Asset Sale and Asset Sale Offer as would, in the good faith judgment of the
Company, be material to a Holder of Notes in connection with the decision
of such Holder as to whether or not it should tender Notes pursuant to the
Asset Sale Offer.
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On the Asset Sale Offer Purchase Date, the Company will (i)
accept for payment Notes or portions thereof tendered pursuant to the Asset Sale
Offer, (ii) deposit with the Paying Agent money, in immediately available funds,
sufficient to pay the purchase price of all Notes or portions thereof so
tendered and accepted and (iii) deliver to the Trustee the Notes so accepted
together with an Officers' Certificate setting forth the Notes or portions
thereof tendered to and accepted for payment by the Company. The Paying Agent
will promptly mail or deliver to the Holders of Notes so accepted payment in an
amount equal to the purchase price, and the Trustee shall promptly authenticate
and mail or deliver to such Holders a new Note of like tenor equal in principal
amount to any unpurchased portion of the Note surrendered. Any Notes not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company will publicly announce the results of the Asset Sale Offer
not later than the first Business Day following the Asset Sale Offer Purchase
Date.
If the Company is required to make an Asset Sale Offer, the
Company shall comply with all applicable tender offer rules, including to the
extent applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any
other applicable securities laws or regulations.
Section 10.16. Limitation on Liens Securing Certain Indebtedness.
The Company will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or suffer to exist any Liens of any kind
against or upon any property or assets of the Company or any Restricted
Subsidiary, whether now owned or hereafter acquired, or any proceeds therefrom,
which secure either (x) Subordinated Indebtedness, unless the Notes are secured
by a Lien on such property, assets or proceeds that is senior in priority to the
Liens securing such Subordinated Indebtedness or (y) Indebtedness of the Company
that is not Subordinated Indebtedness, unless the Notes are equally and ratably
secured with the Liens securing such other Indebtedness, except, in the case of
this clause (y), Permitted Liens.
Section 10.17. Limitation on Business.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, engage in a business which is not substantially an Internet
Service Business.
Section 10.18. Limitation on Certain Guarantees and Indebtedness
of Restricted Subsidiaries.
The Company will not permit any Restricted Subsidiary, directly
or indirectly, to assume, guarantee or in any other manner become liable with
respect to (i) any Subordinated Indebtedness or (ii) any Indebtedness of the
Company that is not Subordinated Indebtedness (other than, in the case of this
clause (ii), Indebtedness under any Permitted Credit Facility to the extent
constituting Permitted Indebtedness), unless, in each case, such Restricted
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Subsidiary simultaneously executes and delivers a supplemental indenture
providing for the guarantee of payment of the Notes by such Restricted
Subsidiary on a basis senior to any such Subordinated Indebtedness or pari passu
with any such other Indebtedness referred to in clause (ii), as the case may be.
Each guarantee created pursuant to such provisions is referred to as a
"Guarantee" and the issuer of each such Guarantee, so long as the Guarantee
remains outstanding, is referred to as a "Guarantor".
Notwithstanding the foregoing, in the event of the unconditional
release of any Guarantor from its obligations in respect of the Indebtedness
which gave rise to the requirement that a Guarantee be given, such Guarantor
shall be released from all obligations under its Guarantee. In addition, upon
any sale or disposition (by merger or otherwise) of any Guarantor by the Company
or a Restricted Subsidiary of the Company to any person that is not an Affiliate
of the Company or any of its Restricted Subsidiaries which is otherwise in
compliance with the terms of this Indenture and as a result of which such
Guarantor ceases to be a Restricted Subsidiary of the Company, such Guarantor
will be deemed to be automatically and unconditionally released from all
obligations under its Guarantee; provided that each such Guarantor is sold or
disposed of in accordance with Section 10.15 hereof.
Section 10.19. Limitation on Issuances and Sales of Preferred
Stock by Restricted Subsidiaries.
The Company will not permit any Restricted Subsidiary to issue
any Preferred Stock (other than to the Company or a Restricted Subsidiary).
Section 10.20. Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries.
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise enter into or cause
to become effective any consensual encumbrance or consensual restriction of any
kind on the ability of any Restricted Subsidiary to (a) pay dividends, in cash
or otherwise, or make any other distributions on its Capital Stock or any other
interest or participation in, or measured by, its profits to the extent owned by
the Company or any Restricted Subsidiary, (b) pay any Indebtedness owed to the
Company or any Restricted Subsidiary, (c) make any Investment in the Company or
any other Restricted Subsidiary or (d) transfer any of its properties or assets
to the Company or to any Restricted Subsidiary, except for (in each case except
as otherwise noted in the following clause (ii)) (i) any encumbrance or
restriction in existence on the Issue Date, (ii) any encumbrance or restriction
existing under agreements relating to an Investment in an ISP (which in the case
of clauses (a) and (b) shall not be permitted in the case of ISPs that are
Restricted Subsidiaries) to the extent consistent with past practice, (iii)
customary non-assignment provisions, (iv) any encumbrances or restrictions
pertaining to an asset subject to a Lien to the extent set forth in the security
documentation governing such Lien, (v) any encumbrance or restriction applicable
to
<PAGE> 94
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a Restricted Subsidiary at the time that it becomes a Restricted Subsidiary that
is not created in contemplation thereof, (vi) any encumbrance or restriction
existing under any agreement that refinances or replaces an agreement containing
a restriction permitted by clause (v) above; provided that the terms and
conditions of any such encumbrance or restriction are not materially less
favorable to the holders of Notes than those under or pursuant to the agreement
being replaced or the agreement evidencing the Indebtedness refinanced, (vii)
any encumbrance or restriction imposed upon a Restricted Subsidiary pursuant to
an agreement which has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted Subsidiary
or any Asset Sale to the extent limited to the Capital Stock or assets in
question and (viii) any customary encumbrance or restriction applicable to a
Restricted Subsidiary that is contained in an agreement or instrument governing
or relating to Indebtedness contained in any Permitted Credit Facility; provided
that the provisions of such agreement permit the payment of interest and
principal and mandatory repurchases pursuant to the terms of this Indenture and
the Notes and other Indebtedness that is solely an obligation of the Company,
but, provided, further, that such agreement may nevertheless contain customary
net worth, leverage, invested capital and other financial covenants, customary
covenants regarding the merger of or sale of all or any substantial part of the
assets of the Company or any Restricted Subsidiary, customary restrictions on
transactions with affiliates, and customary subordination provisions governing
Indebtedness owed to the Company or any Restricted Subsidiary.
Section 10.21. Limitation on Designations of Unrestricted
Subsidiaries.
The Company will not designate any Subsidiary of the Company
(other than a newly created Subsidiary in which no Investment has previously
been made) as an "Unrestricted Subsidiary" under this Indenture (a
"Designation") unless:
(a) no Default shall have occurred and be continuing at the time
of or after giving effect to such Designation;
(b) except in the case of a Permitted Investment or an Investment
made pursuant to clause (vi) of the third paragraph of Section 10.13
hereof, immediately after giving effect to such Designation, the Company
would be able to incur $1.00 of Indebtedness under the proviso of Section
10.11 hereof; and
(c) the Company would not be prohibited under this Indenture from
making an Investment at the time of Designation (assuming the effectiveness
of such Designation) in an amount (the "Designation Amount") equal to the
Fair Market Value of the net Investment of the Company or any other
Restricted Subsidiary in such Restricted Subsidiary on such date.
<PAGE> 95
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In the event of any such Designation made on or after the Issue
Date, the Company shall be deemed to have made an Investment constituting a
Restricted Payment pursuant to Section 10.13 hereof for all purposes of this
Indenture in the Designation Amount. Neither the Company nor any Restricted
Subsidiary shall at any time (x) provide a guarantee of, or similar credit
support to, any Indebtedness of any Unrestricted Subsidiary (including of any
undertaking, agreement or instrument evidencing such Indebtedness); provided
that the Company may pledge Capital Stock or Indebtedness of any Unrestricted
Subsidiary on a nonrecourse basis such that the pledgee has no claim whatsoever
against the Company other than to obtain such pledged property, (y) be directly
or indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (z)
be directly or indirectly liable for any other Indebtedness which provides that
the holder thereof may (upon notice, lapse of time or both) declare a default
thereon (or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity) upon the occurrence of a default with respect to any
other Indebtedness that is Indebtedness of an Unrestricted Subsidiary (including
any corresponding right to take enforcement action against such Unrestricted
Subsidiary), except in the case of clause (x) or (y) to the extent permitted
under Section 10.13 and Section 10.14 hereof.
The Company will not revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") unless:
(a) no Default shall have occurred and be continuing at the time
of and after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of this
Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions delivered to the Trustee certifying compliance with the foregoing
provisions.
Section 10.22. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company and any other
obligor on the Notes will furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in this Indenture
(including any covenants compliance with which constitutes a condition
precedent) relating to the proposed action have been complied with, and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of such documents,
certificates and/or opinions is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
<PAGE> 96
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Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture will include:
(i) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether such covenant or condition has
been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 10.23. Reports.
Whether or not the Company has a class of securities registered
under the Exchange Act, the Company shall furnish without cost to each holder of
Notes and file with the Trustee and file with the SEC, (i) within the applicable
time period required under the Exchange Act, after the end of each fiscal year
of the Company, the information required by Form 10-K (or any successor form
thereto) under the Exchange Act with respect to such period, (ii) within the
applicable time period required under the Exchange Act after the end of each of
the first three fiscal quarters of each fiscal year of the Company, the
information required by Form 10-Q (or any successor form thereto) under the
Exchange Act with respect to such period and (iii) any current reports on Form
8-K (or any successor forms) required to be filed under the Exchange Act.
Section 10.24. Limitation on Status as Investment Company.
The Company will not and will not permit any of its Subsidiaries
or controlled Affiliates to, conduct its business in a fashion that would cause
the Company to be required to register as an "investment company" (as that term
is defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act")), or otherwise become subject to regulation under the Investment
Company Act. For purposes of establishing the Company's compliance with this
provision, any exemption which is or would become available under Section
3(c)(1) or Section 3(c)(7) of the Investment Company Act will be disregarded.
<PAGE> 97
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ARTICLE ELEVEN
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to
surviving rights or registration of transfer or exchange of Notes herein
expressly provided for) and the Trustee, on written demand of and at the expense
of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when either
(a) all Notes theretofore authenticated and delivered (other than
(a) Notes which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.06 hereof and (b) Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 10.03) have been
delivered to the Trustee for cancellation; or
(b) (i) all such Notes not theretofore delivered to the Trustee
for cancellation have become due and payable and the Company has
irrevocably deposited or caused to be deposited with the Trustee in trust
an amount of money in dollars sufficient to pay and discharge the entire
Indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for the principal of, premium, if any, and interest to the
date of such deposit;
(ii) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(iii) the Company has delivered to the Trustee (i)
irrevocable instructions to apply the deposited money toward payment
of the Notes at the Stated Maturities and the Redemption Dates
thereof, and (ii) an Officers' Certificate and an Opinion of Counsel
each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture have been
complied with; provided, that such Opinion of Counsel may rely, as to
matters of fact, upon an Officers' Certificate.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07 and, if money shall
have been deposited with the Trustee pursuant to subclause (a)(ii) of this
Section 11.01, the obligations of the Trustee under Section 11.02 and the last
paragraph of Section 10.03 shall survive.
<PAGE> 98
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Section 11.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.03,
all money deposited with the Trustee pursuant to Section 11.01 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the persons entitled thereto, of the principal of, premium, if
any, and interest on the Notes for whose payment such money has been deposited
with the Trustee.
ARTICLE TWELVE
REDEMPTION
Section 12.01. Notices to the Trustee.
If the Company elects to redeem Notes pursuant to Paragraph 3 of
the Initial Notes or Paragraph 2 of the Exchange Notes, it shall notify the
Trustee of the Redemption Date and principal amount of Notes to be redeemed.
The Company shall notify the Trustee of any redemption at least
45 days before the Redemption Date by an Officers' Certificate, stating that
such redemption will comply with the provisions hereof and of the Notes.
Section 12.02. Selection of Notes To Be Redeemed.
In the event that less than all of the Notes are to be redeemed
at any time, selection of such Notes for redemption will be made by the Trustee
in compliance with any applicable requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not then listed on a national securities exchange (or if the Notes are so listed
but the exchange does not impose requirements with respect to the selection of
debt securities for redemption), on a pro rata basis, by lot or by such method
as the Trustee in its sole discretion shall deem fair and appropriate; provided,
however, that no Notes of a principal amount of $1,000 or less shall be redeemed
in part.
The Trustee shall promptly notify the Company and the Registrar
in writing of the Notes selected for redemption and, in the case of any Notes
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Notes shall relate, in the
case of any Note redeemed or to
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be redeemed only in part, to the portion of the principal amount of such Note
which has been or is to be redeemed.
Section 12.03. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Notes to be redeemed, at the address of such Holder
appearing in the Note register maintained by the Registrar.
All notices of redemption shall identify the Notes to be redeemed
and shall state:
(a) the Redemption Date;
(b) the Redemption Price and the amount of accrued interest, if
any, to be paid;
(c) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date, and the only remaining right of the Holders of
such Notes is to receive payment of the Redemption Price plus unpaid
interest on the Notes through the Redemption Date, upon surrender to the
Paying Agent of the Notes redeemed;
(d) if any Note is to be redeemed in part, the portion of the
principal amount (equal to $1,000 or any integral multiple thereof) of such
Note to be redeemed and that on and after the Redemption Date, upon
surrender for cancellation of such Note to the Paying Agent, a new Note or
Notes in the aggregate principal amount equal to the unredeemed portion
thereof will be issued without charge to the Noteholder;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price and the name and address of
the Paying Agent; and
(f) the CUSIP number, if any, relating to such Notes.
Notice of redemption of Notes to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written request,
by the Trustee in the name and at the expense of the Company.
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Section 12.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Notes called for redemption
become due and payable on the Redemption Date and at the Redemption Price. Upon
surrender to the Paying Agent, such Notes called for redemption shall be paid at
the Redemption Price plus accrued interest, if any, to the Redemption Date, but
interest installments whose maturity is on or prior to such Redemption Date will
be payable on the relevant Interest Payment Dates to the Holders of record at
the close of business on the relevant record dates referred to in the Notes.
Section 12.05. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit
with the Paying Agent an amount of money in same day funds sufficient to pay the
Redemption Price of, and any accrued interest on, all the Notes or portions
thereof which are to be redeemed on that date, other than Notes or portions
thereof called for redemption on that date which have been delivered by the
Company to the Trustee for cancellation.
If the Company complies with the preceding paragraph, then,
unless the Company defaults in the payment of such Redemption Price, interest on
the Notes to be redeemed will cease to accrue on and after the applicable
Redemption Date, whether or not such Notes are presented for payment, and the
Holders of such Notes shall have no further rights with respect to such Notes
except for the right to receive the Redemption Price plus unpaid interest on the
Notes through the Redemption Date, upon surrender of such Notes. If any Note
called for redemption shall not be so paid upon surrender thereof for
redemption, the principal, premium, if any, and, to the extent lawful, accrued
interest thereon shall, until paid, bear interest from the Redemption Date at
the rate provided in the Notes.
Section 12.06. Notes Redeemed or Purchased in Part.
Upon surrender to the Paying Agent of a Note which is to be
redeemed in part, the Company shall execute and the Trustee shall authenticate
and deliver to the Holder of such Note without service charge, a new Note or
Notes, of any authorized denomination as requested by such Holder in aggregate
principal amount equal to, and in exchange for, the unredeemed portion of the
principal of the Note so surrendered that is not redeemed.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed as of the day and year first above written.
VERIO INC.
By:
-----------------------------------------
Name:
Title:
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By:
-----------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.37
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of November 19, 1999
by and among
VERIO INC.
and
SALOMON SMITH BARNEY INC.,
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
as Initial Purchasers
================================================================================
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of November 19, 1999 by and among VERIO INC., a Delaware
corporation (the "Company"), and SALOMON SMITH BARNEY INC. ("Salomon"),
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and Morgan Stanley &
Co. Incorporated ("MSDW" and, together with Salomon and DLJ, the "Initial
Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated
as of November 16, 1999 by and among the Company and the Initial Purchasers (the
"Purchase Agreement"), which provides for, among other things, the sale by the
Company to the Initial Purchasers of an aggregate of $400,000,000 principal
amount of the Company's 10-5/8% Senior Notes due 2009 (the "Notes"). In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the Company
has agreed to provide to the Initial Purchasers and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
and delivery of this Agreement is a condition to the closing under the Purchase
Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"Additional Interest" see Section 2(e) hereof.
"Advice" see the last paragraph Section 3 hereof.
"Agreement" shall have the meaning set forth in the preamble to
this Agreement.
"Applicable Period" see Section 3(s) hereof.
"Business Day" shall mean a day that is not a Saturday, a Sunday,
or a day on which banking institutions in New York, New York are required
to be closed.
"Closing Time" shall mean the Closing Time as defined in the
Purchase Agreement.
<PAGE> 3
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"Company" shall have the meaning set forth in the preamble to
this Agreement and also includes the Company's successors and permitted
assigns.
"Depositary" shall mean The Depository Trust Company, or any
other depositary appointed by the Company; provided, however, that such
depositary must have an address in the Borough of Manhattan, in The City of
New York.
"Effectiveness Period" see Section 2(b) hereof.
"Effectiveness Target Date" see Section 2(e) hereof.
"Event Date" see Section 2(e) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" shall mean the 10-5/8% Senior Notes due 2009,
Series B issued by the Company under the Indenture containing terms
identical to the Notes (except that (i) interest thereon shall accrue from
the last date on which interest was paid on the Notes or, if no such
interest has been paid, from November 19, 1999, (ii) the transfer
restrictions with respect to the Notes and all registration rights in
respect thereof shall be eliminated and (iii) the provisions relating to
Additional Interest shall be eliminated) to be offered to Holders of Notes
in exchange for Notes pursuant to the Exchange Offer.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Notes for Notes pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-1, S-3 or S-4 (or, if applicable, on
another appropriate form), and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
<PAGE> 4
-3-
"Exchange Period" see Section 2(a) hereof.
"Holders" shall mean the Initial Purchasers, for so long as they
own any Transfer Restricted Notes, each of their direct and indirect
successors, assigns and transferees who become registered owners of
Transfer Restricted Notes under the Indenture and each Participating
Broker-Dealer that holds Exchange Notes for so long as such Participating
Broker-Dealer is required to deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of such Exchange Notes.
"Indenture" shall mean the Indenture relating to the Notes dated
as of November 19, 1999 between the Company, and U.S. Bank Trust National
Association, as trustee, as the same may be amended from time to time in
accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the
preamble to this Agreement.
"Inspectors" see Section 3(m) hereof.
"Issue Date" shall mean the date on which the Notes are
originally issued.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Transfer Restricted Notes.
"Notes" shall have the meaning set forth in the preamble to this
Agreement.
"Participating Broker-Dealer" shall have the meaning set forth in
Section 3(s) hereof.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Private Exchange" see Section 2(a) hereof.
"Private Exchange Notes" see Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus,
<PAGE> 5
-4-
and any such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the terms of
the offering of any portion of the Transfer Restricted Notes covered by a
Shelf Registration Statement, and by all other amendments and supplements
to a prospectus, including post-effective amendments, and in each case
including all material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble to this Agreement.
"Records" see Section 3(m) hereof.
"Registration Expenses" shall mean any and all expenses incident
to performance of or compliance by the Company with this Agreement,
including without limitation: (i) all applicable SEC, stock exchange or
National Association of Securities Dealers, Inc. (the "NASD") registration
and filing fees, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws (including reasonable
fees and disbursements of one counsel for Holders that are Initial
Purchasers in connection with blue sky qualification of any of the Exchange
Notes or Transfer Restricted Notes) and compliance with the rules of the
NASD, (iii) all applicable expenses incurred by the Company in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus and any amendments or supplements
thereto, and in preparing or assisting in preparing any other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, if any, (v) the fees and disbursements of counsel for
the Company, (vii) all fees and expenses incurred in connection with the
listing, if any, of any of the Transfer Restricted Notes on any securities
exchange or exchanges, if the Company, in its discretion, elects to make
any such listing; but excluding fees of counsel to the Holders and
underwriting discounts and commissions and transfer taxes, if any, relating
to the sale or disposition of Transfer Restricted Notes by a Holder.
"Registration Statement" shall mean any registration statement
(including, without limitation, the Exchange Offer Registration Statement
and the Shelf Registration
<PAGE> 6
-5-
Statement) of the Company which covers any of the Exchange Notes or
Transfer Restricted Notes pursuant to the provisions of this Agreement, and
all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Shelf Registration" shall mean a registration effected pursuant
to Section 2(b) hereof.
"Shelf Registration Event Date" see Section 2(b).
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) hereof
which covers all of the Transfer Restricted Notes or all of the Private
Exchange Notes, as the case may be, on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the
SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Target Consummation Date" see Section 2(a).
"Target Effectiveness Date" see Section 2(a).
"TIA" shall have the meaning set forth in Section 3(k) hereof.
"Transfer Restricted Notes" means each Note until (i) the date on
which such has been exchanged by a person other than a broker-dealer for an
Exchange Note in the Exchange Offer, (ii) following the exchange by a
broker-dealer in the Exchange Offer of a Note for an Exchange Note, the
date on which such Exchange Note is sold to a purchaser who receives from
such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained
<PAGE> 7
-6-
in the Exchange Offer Registration Statement, (iii) the date on which such
Note has been effectively registered under the Securities Act and disposed
of in accordance with the Shelf Registration Statement, (iv) the date on
which such Note is distributed to the public pursuant to Rule 144(k) under
the Securities Act (or any similar provision then in force, but not Rule
144A under the Securities Act), (v) such Note shall have been otherwise
transferred by the holder thereof and a new Note not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of such Note shall not require registration or
qualification under the Securities Act or any similar state law then in
force or (vi) such Note ceases to be outstanding.
"Trustee" shall mean the trustee with respect to the Notes under
the Indenture.
2. Registration Under the Securities Act.
(a) Exchange Offer. The Company shall, for the benefit of the
Holders, at the Company's cost, (i) unless the Exchange Offer would not be
permitted by applicable law or SEC policy, file with the SEC within 90 days
after the Closing Time an Exchange Offer Registration Statement on an
appropriate form under the Securities Act covering the offer by the Company to
the Holders to exchange all of the Transfer Restricted Notes (other than Private
Exchange Notes (as defined below)) for a like principal amount of Exchange
Notes, (ii) unless the Exchange Offer would not be permitted by applicable law
or SEC policy, use its best efforts to have such Exchange Offer Registration
Statement declared effective under the Securities Act by the SEC not later than
the date which is 180 days after the Closing Time (the "Target Effectiveness
Date"), (iii) have such Registration Statement remain effective until the
closing of the Exchange Offer and (iv) unless the Exchange Offer would not be
permitted by applicable law or SEC policy, commence the Exchange Offer and use
its best efforts to issue, on or prior to the date which is 30 days after the
date on which the Exchange Offer Registration Statement was declared effective
by the SEC (the "Target Consummation Date"), Exchange Notes in exchange for all
Notes tendered prior thereto in the Exchange Offer. Upon the effectiveness of
the Exchange Offer Registration Statement, the Company shall promptly commence
the Exchange Offer, it being the objective of such Exchange Offer to enable
<PAGE> 8
-7-
each Holder eligible and electing to exchange Transfer Restricted Notes for
Exchange Notes (assuming that such Holder is not an affiliate of the Company
within the meaning of Rule 405 under the Securities Act and is not a
broker-dealer tendering Transfer Restricted Notes acquired directly from the
Company for its own account, acquires the Exchange Notes in the ordinary course
of such Holder's business and has no arrangements or understandings with any
Person to participate in the Exchange Offer for the purpose of distributing
(within the meaning of the Securities Act) the Exchange Notes) and to transfer
such Exchange Notes from and after their receipt without any limitations or
restrictions under the Securities Act and under state securities or blue sky
laws.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of
not less than 20 Business Days after the date notice thereof is mailed to
the Holders (or longer if required by applicable law) (such period referred
to herein as the "Exchange Period");
(iii) utilize the services of the Depositary for the Exchange
Offer;
(iv) permit Holders to withdraw tendered Notes at any time prior
to the close of business, New York time, on the last Business Day of the
Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Notes delivered for exchange, and a
statement that such Holder is withdrawing his election to have such Notes
exchanged; and
(v) otherwise comply in all material respects with all applicable
laws relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer the Initial
Purchasers hold any Notes acquired by them and having the status of an unsold
allotment in the initial distribution,
<PAGE> 9
-8-
the Company upon the request of any Initial Purchaser shall, simultaneously with
the delivery of the Exchange Notes in the Exchange Offer, issue and deliver to
such Initial Purchaser in exchange (the "Private Exchange") for the Notes held
by such Initial Purchaser, a like principal amount of debt securities of the
Company that are identical (except that such securities shall bear appropriate
transfer restrictions) to the Exchange Notes (the "Private Exchange Notes").
The Exchange Notes and the Private Exchange Notes shall be issued
under (i) the Indenture or (ii) an indenture identical to all material respects
to the Indenture and which, in either case, has been qualified under the TIA or
is exempt from such qualification and shall provide that the Exchange Notes
shall not be subject to the transfer restrictions set forth in the Indenture.
The Indenture or such indenture shall provide that the Exchange Notes, the
Private Exchange Notes and the Notes shall vote and consent together on all
matters as one class and that none of the Exchange Notes, the Private Exchange
Notes or the Notes will have the right to vote or consent as a separate class on
any matter. The Private Exchange Notes shall be of the same series as and the
Company shall use all commercially reasonable efforts to have the Private
Exchange Notes bear the same CUSIP number as the Exchange Notes. The Company
shall not have any liability under this Agreement solely as a result of such
Private Exchange Notes not bearing the same CUSIP number as the Exchange Notes.
The Exchange Offer and the Private Exchange shall not be subject
to any conditions, other than that (i) the Exchange Offer or Private Exchange,
as the case may be, does not violate applicable law or any applicable
interpretation of the staff of the SEC (ii) no action or proceeding shall have
been instituted or threatened in any court or by any governmental agency which
might materially impair the ability of the Company to proceed with the Exchange
Offer or the Private Exchange, and no material adverse development shall have
occurred in any existing action or proceeding with respect to the Company and
(iii) all governmental approvals shall have been obtained, which approvals the
Company deems necessary for the consummation of the Exchange Offer or Private
Exchange. As soon as practicable after the close of the Exchange Offer and/or
the Private Exchange, as the case may be, the Company shall:
<PAGE> 10
-9-
(i) accept for exchange all Transfer Restricted Notes or portions
thereof properly tendered and not validly withdrawn pursuant to the
Exchange Offer in accordance with the terms of the Exchange Offer
Registration Statement and the letter of transmittal which is an exhibit
thereto;
(ii) accept for exchange all Notes properly tendered pursuant to the
Private Exchange; and
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation all Transfer Restricted Notes or portions thereof so accepted
for exchange by the Company, and issue, and cause the Trustee under the
Indenture to promptly authenticate and deliver to each Holder, a new
Exchange Note or Private Exchange Note, as the case may be, equal in
principal amount to the principal amount of the Transfer Restricted Notes
surrendered by such Holder and accepted for exchange.
To the extent not prohibited by any law or applicable
interpretation of the staff of the SEC, the Company shall use its best efforts
to complete the Exchange Offer as provided above, and shall comply with the
applicable requirements of the Securities Act, the Exchange Act and other
applicable laws in connection with the Exchange Offer. The Exchange Offer shall
not be subject to any conditions, other than those set forth in the immediately
preceding paragraph. Each Holder of Transfer Restricted Notes who wishes to
exchange such Transfer Restricted Notes for Exchange Notes in the Exchange Offer
will be required to make certain customary representations in connection
therewith, including representations that such Holder is not an affiliate of the
Company within the meaning of Rule 405 under the Securities Act, that any
Exchange Notes to be received by it will be acquired in the ordinary course of
business and that at the time of the commencement of the Exchange Offer it has
no arrangement with any Person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes. The Company shall inform
the Initial Purchasers of the names and addresses of the Holders to whom the
Exchange Offer is made, and the Initial Purchasers shall have the right to
contact such Holders and otherwise facilitate the tender of Transfer Restricted
Notes in the Exchange Offer.
<PAGE> 11
-10-
Upon consummation of the Exchange Offer in accordance with this
Section 2(a), the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Transfer Restricted Notes that are Private
Exchange Notes and Exchange Notes held by Participating Broker-Dealers, and the
Company shall have no further obligation to register Transfer Restricted Notes
(other than Private Exchange Notes) pursuant to Section 2(b) hereof.
(b) Shelf Registration. If (i) the Company is not permitted to
file the Exchange Offer Registration Statement or to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or SEC
policy, (ii) the Exchange Offer is not for any other reason consummated by the
Target Consummation Date, (iii) any holder of Notes notifies the Company within
a specified time period that (a) due to a change in law or policy, in the
opinion of counsel, it is not entitled to participate in the Exchange Offer, (b)
due to a change in law or policy, in the opinion of counsel, it may not resell
the Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and (x) the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
holder and (y) such prospectus is not promptly amended or modified in order to
be suitable for use in connection with such resales for such holder and all
similarly situated holders or (c) it is a broker-dealer and owns Notes acquired
directly from the Company or an affiliate of the Company, (iv) the holders of a
majority of the Notes may not resell the Exchange Notes acquired by them in the
Exchange Offer to the public without restriction under the Securities Act and
without restriction under applicable blue sky or state securities laws or (v)
the Exchange Offer shall not have been consummated within 180 days after the
Issue Date (the date of any of (i)-(v), the "Shelf Registration Event Date"),
then the Company shall, at its cost, use its best efforts to cause to be filed a
Shelf Registration Statement prior to the later of (A) 30 days after the Shelf
Registration Event Date or (B) 210 days after the Issue Date and use its best
efforts to cause the Shelf Registration Statement to be declared effective by
the SEC on or prior to 90 days after such obligation arises. Each Holder as to
which any Shelf Registration is being effected agrees to furnish to the Company
all information with respect to such Holder necessary to make any information
previously furnished to the Company by such Holder not materially misleading.
<PAGE> 12
-11-
The Company agrees to use its best efforts to keep the Shelf
Registration Statement continuously effective for a period of two years from the
Issue Date (subject to extension pursuant to the last paragraph of Section 3
hereof) (or such shorter period that will terminate when all of the Transfer
Restricted Notes covered by such Shelf Registration Statement have been sold
pursuant thereto) or cease to be outstanding (the "Effectiveness Period");
provided, however, that the Effectiveness Period in respect of the Shelf
Registration Statement shall be extended to the extent required to permit
dealers to comply with the applicable prospectus delivery requirements of Rule
174 under the Securities Act and as otherwise provided herein. The Company shall
not permit any securities other than Transfer Restricted Notes to be included in
the Shelf Registration. The Company further agrees, if necessary, to supplement
or amend the Shelf Registration Statement, if required by the rules, regulations
or instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registrations, and the Company agrees to
furnish to the Holders of Transfer Restricted Notes copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) or 2(b) hereof and the
reasonable fees and expenses of one counsel, if any, designated in writing by
the Majority Holders to act as counsel for the Holders of the Transfer
Restricted Notes in connection with a Shelf Registration Statement. Except as
provided in the preceding sentence, each Holder shall pay all expenses of its
counsel, underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Transfer Restricted Notes
pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration
Statement pursuant to Section 2(b) hereof will not be deemed to have become
effective unless it has been declared effective by the SEC; provided, however,
that if, after it has been declared effective, the offering of Transfer
<PAGE> 13
-12-
Restricted Notes pursuant to a Shelf Registration Statement is interfered with
by any stop order, injunction or other order or requirement of the SEC or any
other governmental agency or court, such Registration Statement will be deemed
not to have been effective during the period of such interference, until the
offering of Transfer Restricted Notes may legally resume. The Company will be
deemed not to have used its best efforts to cause the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
to become, or to remain, effective during the requisite period if it voluntarily
takes any action that would result in any such Registration Statement not being
declared effective or in the Holders of Transfer Restricted Notes covered
thereby not being able to exchange or offer and sell such Transfer Restricted
Notes during that period, unless such action is required by applicable law and
except as otherwise provided in the second paragraph of Section 2(e) below.
(e) Additional Interest. In the event that (i) the applicable
Registration Statement is not filed with the SEC on or prior to the date
specified herein for such filing, (ii) the applicable Registration Statement is
not declared effective on or prior to the date specified herein for such
effectiveness after such obligation arises (the "Effectiveness Target Date"),
(iii) if the Exchange Offer is required to be consummated hereunder, the Company
fails to consummate the Exchange Offer within 30 days of the date on which the
Exchange Offer Registration Statement is declared effective or (iv) the
applicable Registration Statement is filed and declared effective during the
period effectiveness is required by Section 2(e) and 3(a) but shall thereafter
cease to be effective or usable without being succeeded immediately by an
additional Registration Statement covering the Transfer Restricted Notes which
has been filed and declared effective (each such event referred to in clauses
(i) through (iv), a "Registration Default"), then the interest rate on the
Transfer Restricted Notes as to which such Registration Default relates will
increase ("Additional Interest"), with respect to the first 90-day period (or
portion thereof) while a Registration Default is continuing immediately
following the occurrence of such Registration Default in an amount equal to
0.50% per annum of the principal amount of the Notes. The rate of additional
Interest will increase by an additional 0.50% per annum of the principal amount
of the Notes for each subsequent 90-day period (or portion thereof) while a
Registration Default is continuing until all Registration Defaults
<PAGE> 14
-13-
have been cured, up to a maximum amount of 1.50% of the principal amount of the
Notes. Additional Interest shall be computed based on the actual number of days
elapsed during which any such Registration Defaults exist. Following the cure of
a Registration Default, the accrual of Additional Interest with respect to such
Registration Default will cease.
If the Company issues a notice that the Shelf Registration
Statement is unusable due to the pendency of an announcement of a material
corporate transaction, or such notice is required under applicable securities
laws to be issued by the Company, and the aggregate number of days in any
consecutive twelve-month period for which the Shelf Registration Statement shall
not be usable due to all such notices issued or required to be issued exceeds 30
days in the aggregate, then the interest rate borne by the Notes will be
increased by 0.50% per annum of the principal amount of the Notes for the first
90-day period (or portion thereof) beginning on the 31st such date that such
Shelf Registration Statement ceases to be usable, which rate shall be increased
by an additional 0.50% per annum of the principal amount of the Notes at the
beginning of each subsequent 90-day period, up to a maximum amount of 1.50% of
the principal amount of the Notes. Upon the Shelf Registration Statement once
again becoming usable, the interest rate borne by the Notes will be reduced to
the original interest rate if the Company is otherwise in compliance with this
Agreement at such time. Additional Interest shall be computed based on the
actual number of days elapsed in each 90-day period in which the Shelf
Registration Statement is unusable.
The Company shall notify the Trustee within three Business Days
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Additional
Interest shall be paid by depositing with the Trustee, in trust, for the benefit
of the Holders of Transfer Restricted Notes, on or before the applicable
semiannual interest payment date, immediately available funds in sums sufficient
to pay the Additional Interest then due. The Additional Interest due shall be
payable on each interest payment date to the record Holder of Notes entitled to
receive the interest payment to be paid on such date as set forth in the
Indenture. Each obligation to pay Additional Interest shall be deemed to accrue
from and including the day following the applicable Event Date.
<PAGE> 15
-14-
3. Registration Procedures. In connection with the obligations of
the Company with respect to the Registration Statements pursuant to Sections
2(a) and 2(b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which form (i) shall be selected
by the Company, (ii) shall, in the case of a Shelf Registration, be
available for the sale of the Transfer Restricted Notes by the selling
Holders thereof and (iii) shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith; and use their best
efforts to cause such Registration Statement to become effective and remain
effective in accordance with Section 2 hereof. The Company shall not file
any Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must provide information for
inclusion therein without the Holders being afforded an opportunity to
review such documentation a reasonable time prior to the filing of such
document if the Majority Holders or such Participating Broker-Dealer, as
the case may be, their counsel or the managing underwriters, if any, shall
reasonably object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
Effectiveness Period or the Applicable Period, as the case may be; and
cause each Prospectus to be supplemented by any required prospectus
supplement and as so supplemented to be filed pursuant to Rule 424 (or any
similar provision then in force) under the Securities Act, and comply with
the provisions of the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder applicable to it with respect to the
disposition of all securities covered by each Registration Statement during
the Effectiveness Period or the Applicable Period, as the case may be, in
accordance with the intended method or methods of distribution by the
<PAGE> 16
-15-
selling Holders thereof described in this Agreement (including sales by any
Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder
of Transfer Restricted Notes, at least three Business Days prior to filing,
that a Shelf Registration Statement with respect to the Transfer Restricted
Notes is being filed and advising such Holder that the distribution of
Transfer Restricted Notes will be made in accordance with the method
selected by the Majority Holders; and (ii) furnish to each Holder of
Transfer Restricted Notes, without charge, as many copies of each
Prospectus, and any amendment or supplement thereto and such other
documents as such Holder may reasonably request, in order to facilitate the
disposition of the Transfer Restricted Notes; and (iii) subject to the last
paragraph of Section 3 hereof, hereby consent to the use of the Prospectus
or any amendment or supplement thereto by each of the selling Holders of
Transfer Restricted Notes in connection with the offering and sale of the
Transfer Restricted Notes covered by such Prospectus or any amendment or
supplement thereto subject to the limitations on the use thereof provided
in Sections 2(b) and 2(c);
(d) in the case of a Shelf Registration, use its best efforts to
register or qualify, as may be required by applicable law, the Transfer
Restricted Notes under all applicable state securities or "blue sky" laws
of such jurisdictions by the time the applicable Registration Statement is
declared effective by the SEC as any Holder of Transfer Restricted Notes
covered by a Registration Statement shall reasonably request in advance of
such date of effectiveness, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in each such jurisdiction of such Transfer
Restricted Notes owned by such Holder; provided, however, that the Company
shall not be required to (i) qualify as a foreign corporation or as a
broker or dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (ii) file any
general consent to service of process or (iii) subject itself to taxation
in any such jurisdiction if it is not so subject;
<PAGE> 17
-16-
(e) in the case of (1) a Shelf Registration or (2) Participating
Broker-Dealers who have notified the Company that they will be utilizing
the Prospectus contained in the Exchange Offer Registration Statement as
provided in Section 3(t) hereof, notify each Holder of Transfer Restricted
Notes, or such Participating Broker-Dealers, as the case may be, their
counsel, if any, promptly and confirm such notice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by
the SEC or any state securities authority for amendments and supplements to
a Registration Statement or Prospectus or for additional information after
the Registration Statement has become effective, (iii) of the issuance by
the SEC or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) if the Company receives any notification
with respect to the suspension of the qualification of the Transfer
Restricted Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction or the initiation of
any proceeding for such purpose, (v) of the happening of any event or the
failure of any event to occur or the discovery of any facts or otherwise,
during the period a Shelf Registration Statement is effective which makes
any statement made in such Registration Statement or the related Prospectus
untrue in any material respect or which causes such Registration Statement
or Prospectus to omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and (vi) the Company's reasonable determination that a
post-effective amendment to the Registration Statement would be
appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement as soon as
practicable;
(g) in the case of a Shelf Registration, furnish to each Holder
of Transfer Restricted Notes, without charge, at least one conformed copy
of each Registration Statement relating to such Shelf Registration and any
post-effective
<PAGE> 18
-17-
amendment thereto (without documents incorporated therein by reference or
exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Transfer Restricted Notes to facilitate the timely
preparation and delivery of certificates not bearing any restrictive
legends representing Notes covered by such Shelf Registration to be sold
and relating to the subsequent transfer of such Notes; and cause such
Transfer Restricted Notes to be in such denominations (consistent with the
provisions of the Indenture) and registered in such names as the selling
Holders may reasonably request at least two Business Days prior to the
closing of any sale of Transfer Restricted Notes;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(iv), 3(e)(v) or 3(e)(vi) hereof, use
their best efforts to prepare a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Transfer Restricted
Notes, such Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and to notify each Holder to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and each
Holder hereby agrees to suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or
omission;
(j) obtain a CUSIP number for all Exchange Notes or Transfer
Restricted Notes, as the case may be, not later than the effective date of
a Registration Statement, and provide the Trustee with certificates for the
Exchange Notes or the Transfer Restricted Notes, as the case may be, in a
form eligible for deposit with the Depositary;
(k) cause the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended, (the "TIA") in connection with the registration of
the Exchange Notes or Transfer Restricted Notes, as the case may be,
cooperate
<PAGE> 19
-18-
with the Trustee and the Holders to effect such changes to the Indenture as
may be required for the Indenture to be so qualified in accordance with the
terms of the TIA and execute, and use its best efforts to cause the Trustee
to execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to enable
the Indenture to be so qualified in a timely manner;
(l) in the case of a Shelf Registration, enter into such
agreements (including underwriting agreements) and take all such other
appropriate actions as are reasonably requested in order to expedite or
facilitate the registration or the disposition of such Transfer Restricted
Notes, and in such connection, (i) make such representations and warranties
to Holders of such Transfer Restricted Notes with respect to the business
of the Company and its subsidiaries as then conducted and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings, and confirm the same if
and when requested; (ii) obtain opinions of counsel to the Company and
updates thereof in form and substance reasonably satisfactory to the
Holders of a majority in principal amount of the Transfer Restricted Notes
being sold, addressed to each selling Holder covering the matters
customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Holders; (iii)
obtain "cold comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements
and financial data are, or are required to be, included in the Registration
Statement, addressed to the selling Holders of Transfer Restricted Notes,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested by
such selling Holders; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no
less favorable than those set forth in Section 4 hereof (or such other
provisions and
<PAGE> 20
-19-
procedures acceptable to the Company and the Holders of a majority in
aggregate principal amount of Transfer Restricted Notes covered by such
Registration with respect to all parties to be indemnified pursuant to said
Section (including, without limitation, such selling Holders). The above
shall be done at each closing in respect of the sale of Transfer Restricted
Notes, or as and to the extent required thereunder;
(m) if (1) a Shelf Registration is filed pursuant to Section 2(b)
or (2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2(a) is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, make available for inspection
by each such person who would be an "underwriter" as a result of either (i)
the sale by such person of Notes covered by such Shelf Registration
Statement or (ii) the sale during the Applicable Period by a Participating
Broker-Dealer of Exchange Notes (provided that a Participating
Broker-Dealer shall not be deemed to be an underwriter solely as a result
of it being required to deliver a prospectus in connection with any resale
of Exchange Notes) and any attorney, accountant or other agent retained by
any such person (collectively, the "Inspectors"), at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and
its subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the
Company and its subsidiaries to supply all information in each case
reasonably requested by any such Inspector in connection with such
Registration Statement. Records which the Company determines, in good
faith, to be confidential and any Records which it notifies the Inspectors
are confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or omission in such Registration Statement, (ii) the release
of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or (iii) the information in such Records
has been made generally available to the public. Each selling Holder of
such Transfer Restricted Notes and
<PAGE> 21
-20-
each such Participating Broker-Dealer will be required to agree that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company unless and until such is made
generally available to the public. Each selling Holder of such Transfer
Restricted Notes and each such Participating Broker-Dealer will be required
to further agree that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company at its expense to undertake appropriate
action to prevent disclosure of the Records deemed confidential;
(n) comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 60 days after the end of any 12-month period (or 135 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Transfer Restricted
Notes are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which
statements shall cover said 12-month periods;
(o) upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company addressed to the Trustee for
the benefit of all Holders of Transfer Restricted Notes participating in
the Exchange Offer or the Private Exchange, as the case may be, and which
includes an opinion that (i) the Company has duly authorized, executed and
delivered the Exchange Notes and Private Exchange Notes, and (ii) each of
the Exchange Notes or the Private Exchange Notes, as the case may be,
constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its respective terms (in
each case, with customary exceptions);
<PAGE> 22
-21-
(p) if an Exchange Offer or a Private Exchange is to be
consummated, upon proper delivery of the Transfer Restricted Notes by
Holders to the Company (or to such other Person as directed by the Company)
in exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Company shall mark, or cause to be marked, on such
Transfer Restricted Notes and on the books of the Trustee, the Transfer
Agent, the Registrar and the Depositary delivered by such Holders that such
Transfer Restricted Notes are being canceled in exchange for the Exchange
Notes or the Private Exchange Notes, as the case may be; but in no event
shall such Transfer Restricted Notes be marked as paid or otherwise
satisfied solely as a result of being exchanged for Exchange Notes or
Private Exchange Notes in the Exchange Offer or the Private Exchange, as
the case may be;
(q) cooperate with each seller of Transfer Restricted Notes
covered by any Registration Statement participating in the disposition of
such Transfer Restricted Notes and one counsel acting on behalf of all such
sellers in connection with the filings, if any, required to be made with
the NASD;
(r) use its best efforts to take all other steps necessary to
effect the registration of the Transfer Restricted Notes covered by a
Registration Statement contemplated hereby; and
(s) (A) in the case of the Exchange Offer Registration Statement
(i) include in the Exchange Offer Registration Statement a section entitled
"Plan of Distribution," which section shall be reasonably acceptable to
Salomon, as representative of the Initial Purchasers, and which shall
contain a summary statement of the positions taken or policies made by the
staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer (a "Participating Broker-Dealer") that holds Transfer
Restricted Notes acquired for its own account as a result of market-making
activities or other trading activities and that will be the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes
to be received by such broker-dealer in the Exchange Offer, whether such
positions or policies have been publicly disseminated by the staff of the
SEC or such positions or policies, in the
<PAGE> 23
-22-
reasonable judgment of Salomon, as representative of the Initial Purchasers
or such other representative, represent the prevailing views of the staff
of the SEC, including a statement that any such broker-dealer who receives
Exchange Notes for Transfer Restricted Notes pursuant to the Exchange Offer
may be deemed a statutory underwriter and must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of
such Exchange Notes, (ii) furnish to each Participating Broker-Dealer who
has delivered to the Company the notice referred to in Section 3(e),
without charge, as many copies of each Prospectus included in the Exchange
Offer Registration Statement, and any amendment or supplement thereto, as
such Participating Broker-Dealer may reasonably request; (iii) hereby
consent to the use of the Prospectus forming part of the Exchange Offer
Registration Statement or any amendment or supplement thereto, by any
Person subject to the prospectus delivery requirements of the SEC,
including all Participating Broker-Dealers, in connection with the sale or
transfer of the Exchange Notes covered by the Prospectus or any amendment
or supplement thereto, (iv) use their best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be
lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons
must comply with such requirements in order to resell the Exchange Notes;
provided, however, that such period shall not be required to exceed 90 days
(or such longer period if extended pursuant to the last sentence of Section
3 hereof) (the "Applicable Period"), and (iv) include in the transmittal
letter or similar documentation to be executed by an exchange offeree in
order to participate in the Exchange Offer (x) the following provision:
"If the exchange offeree is a broker-dealer holding Transfer
Restricted Notes acquired for its own account as a result of
market-making activities or other trading activities, it will deliver
a prospectus meeting the requirements of the Securities Act in
connection with any resale of Exchange Notes received in respect of
such Transfer Restricted Notes pursuant to the Exchange Offer";
<PAGE> 24
-23-
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus
in connection with the exchange of Transfer Restricted Notes, such
broker-dealer will not be deemed to admit that it is an underwriter
within the meaning of the Securities Act; and
(B) in the case of any Exchange Offer Registration Statement, the
Company agrees to deliver, upon request, to the Trustee or to
Participating Broker-Dealers upon consummation of the Exchange Offer
(i) an opinion of counsel substantially in the form attached hereto as
Exhibit A, and (ii) an officers' certificate containing certifications
substantially similar to those set forth in Section 6(c) of the
Purchase Agreement.
The Company may require each seller of Transfer Restricted Notes
as to which any registration is being effected to furnish to the Company such
information regarding such seller and the proposed distribution of such Transfer
Restricted Notes, as the Company may from time to time reasonably request in
writing. The Company may exclude from such registration the Transfer Restricted
Notes of any seller who fails to furnish such information within a reasonable
time (not to exceed 10 Business Days) after receiving such request and shall be
under no obligation to compensate any such seller for any lost income, interest
or other opportunity forgone, or any liability incurred, as a result of the
Company's decision to exclude such seller.
In the case of (1) a Shelf Registration Statement or (2)
Participating Broker-Dealers who have notified the Company that they will be
utilizing the Prospectus contained in the Exchange Offer Registration Statement
as provided in Section 3(t) hereof, that are seeking to sell Exchange Notes and
are required to deliver Prospectuses, each Holder agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 3(e)(ii), 3(e)(iii), 3(e)(v), 3(e)(vi) or 3(e)(vii) hereof, such
Holder will forthwith discontinue disposition of Transfer Restricted Notes
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(i) hereof or
until it is advised in writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and, if so directed by the Company,
<PAGE> 25
-24-
such Holder will deliver to the Company (at the Company's expense) all copies in
such Holder's possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Transfer Restricted Notes or
Exchange Notes, as the case may be, current at the time of receipt of such
notice. If the Company shall give any such notice to suspend the disposition of
Transfer Restricted Notes or Exchange Notes, as the case may be, pursuant to a
Registration Statement, the Company shall use its best efforts to file and have
declared effective (if an amendment) as soon as practicable an amendment or
supplement to the Registration Statement and, in the case of an amendment, have
such amendment declared effective as soon as practicable and shall extend the
period during which such Registration Statement shall be maintained effective
pursuant to this Agreement by the number of days in the period from and
including the date of the giving of such notice to and including the date when
the Company shall have made available to the Holders (x) copies of the
supplemented or amended Prospectus necessary to resume such dispositions or (y)
the Advice.
4. Indemnification and Contribution. (a) The Company shall
indemnify and hold harmless each Initial Purchaser, each Holder, each
Participating Broker-Dealer, each underwriter who participates in an offering of
Transfer Restricted Notes, their respective affiliates, each Person, if any, who
controls any of such parties within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment or
supplement thereto), covering Transfer Restricted Notes or Exchange
Notes, including all documents incorporated therein by reference, or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
<PAGE> 26
-25-
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any investigation
or proceeding by any court or governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission; provided
that (subject to Sections 4(c) and 4(d) below) any such settlement is
effected with the prior written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of one counsel (in addition to
any local counsel) chosen by Salomon, such Holder, such Participating
Broker-Dealer or any underwriter (except to the extent otherwise expressly
provided in Section 4(c) hereof)), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any court or governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent
that any such expense is not paid under subparagraph (i) or (ii) of this
Section 4(a);
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission (i) made in reliance upon and
in conformity with written information furnished in writing to the Company by or
on behalf of such Initial Purchaser, such Holder, such Participating
Broker-Dealer or any underwriter with respect to such Initial Purchaser, Holder,
Participating Broker-Dealer or underwriter, as the case may be, expressly for
use in the Registration Statement (or any amendment or supplement thereto) or
any Prospectus (or any amendment or supplement thereto) or (ii) contained in any
preliminary prospectus if such Initial Purchaser, such Holder, such
Participating Broker-Dealer or such underwriter failed to send or deliver a copy
of the Prospectus (in the form it was first provided to such parties for
confirmation of sales) to the Person asserting such losses, claims, damages or
liabilities on or prior to the delivery of written confirmation of any sale of
securities covered thereby to such Person in any case where the Company shall
have previously furnished copies thereof to such Initial Purchaser, such
<PAGE> 27
-26-
Holder, such Participating Broker-Dealer or such underwriter, as the case may
be, in accordance with this Agreement, at or prior to the written confirmation
of the sale of such Notes to such Person and the untrue statement contained in
or the omission from the preliminary prospectus was corrected in the Final
Prospectus (or any amendment or supplement thereto). Any amounts advanced by the
Company to an indemnified party pursuant to this Section 4 as a result of such
losses shall be returned to the Company if it shall be finally determined by a
court of competent jurisdiction in a judgment not subject to appeal or final
review that such indemnified party was not entitled to indemnification by the
Company.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, each Initial Purchaser, each underwriter who
participates in an offering of Transfer Restricted Notes and the other selling
Holders and each of their respective directors and each Person, if any, who
controls any of the Company, any Initial Purchaser, any underwriter or any other
selling Holder within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, against any and all loss, liability, claim, damage and expense
whatsoever described in the indemnity contained in Section 4(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment or supplement thereto) or any Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such selling Holder with respect to
such Holder expressly for use in the Registration Statement (or any supplement
thereto), or any such Prospectus (or any amendment thereto); provided, however,
that, in the case of the Shelf Registration Statement, no such Holder shall be
liable for any claims hereunder in excess of the amount of net proceeds received
by such Holder from the sale of Transfer Restricted Notes pursuant to the Shelf
Registration Statement; provided, further, however, that for purposes of Section
4(a)(iii), such counsel shall (subject to Section 4(c) hereof) be chosen by the
Company.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
<PAGE> 28
-27-
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 4(a) above, one counsel to all the
indemnified parties shall be selected by Salomon, and, in the case of parties
indemnified pursuant to Section 4(b) above, counsel to all the indemnified
parties shall be selected by the Company. An indemnifying party may participate
at its own expense in the defense of any such action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. Notwithstanding the
foregoing, if it so elects within a reasonable time after receipt of such
notice, an indemnifying party, jointly with any other indemnifying parties
receiving such notice, may assume the defense of such action with counsel chosen
by it and approved by the indemnified parties defendant in such action (which
approval shall not be unreasonably withheld), unless such indemnified parties
reasonably object to such assumption on the ground that there may be legal
defenses available to them which are different from or in addition to those
available to such indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 4 (whether or
not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes a full and unconditional
release of each indemnified party from all liability arising out of such
litigation, investigation, proceeding or claim and the offer and sale of any
Notes and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
<PAGE> 29
-28-
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees and
expenses of counsel pursuant to Section 4(a)(iii) above, then such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 4(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company, the Initial
Purchasers and the Holders, as applicable, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnity agreement incurred by the Company, the Initial Purchasers and the
Holders; provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person that was not guilty of such
fraudulent misrepresentation. As between the Company and the Initial Purchasers
and the Holders, such parties shall contribute to such aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement in such proportion as shall be appropriate to reflect the
relative fault of the Company on the one hand and of the Holder of Transfer
Restricted Notes, the Participating Broker-Dealer or Initial Purchaser, as the
case may be, on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative fault of the Company on the one hand and the Holder
of Transfer Restricted Notes, the Participating Broker-Dealer or the Initial
Purchasers, as the case may be, on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material
<PAGE> 30
-29-
fact relates to information supplied by the Company, or by the Holder of
Transfer Restricted Notes, the Participating Broker-Dealer or the Initial
Purchasers, as the case may be, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Holders of the Transfer Restricted Notes and
the Initial Purchasers agree that it would not be just and equitable if
contribution pursuant to this Section 4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 4.
For purposes of this Section 4, each affiliate of any Person, if
any, who controls a Holder of Transfer Restricted Notes, an Initial Purchaser or
a Participating Broker-Dealer within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such other Person, and each director of the Company, each affiliate of the
Company, each executive officer of the Company who signed the Registration
Statement, and each Person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Company.
5. [Intentionally Omitted]
6. [Intentionally Omitted]
7. Miscellaneous.
(a) Rule 144 and Rule 144A. The Company shall provide to each
Holder such reports as are required under Section 10.23 of the Indenture and,
upon the request of any Holder of Transfer Restricted Notes (a) make publicly
available such information as is necessary to permit sales pursuant to Rule 144
under the Securities Act, (b) deliver such information to a prospective
purchaser as is necessary to permit sales pursuant to Rule 144A under the
Securities Act and it will take such further action as any Holder of Transfer
Restricted Notes may reasonably request, and (c) take such further action, if
any, that is reasonable in the circumstances, in each case, to the extent
required from time to time to enable such Holder to sell its Transfer Restricted
Notes without registration under the Securities Act within the limitation of the
exemptions provided
<PAGE> 31
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by (i) Rule 144 under the Securities Act, as such rule may be amended from time
to time, (ii) Rule 144A under the Securities Act, as such rule may be amended
from time to time, or (iii) any similar rules or regulations hereafter adopted
by the SEC. Upon the reasonable request of any Holder of Transfer Restricted
Notes, the Company will deliver to such Holder a written statement as to whether
they have complied with such requirements.
(b) No Inconsistent Agreements. The rights granted to the Holders
hereunder do not, and will not for the term of this Agreement in any way
conflict with and are not, and will not during the term of this Agreement be
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any other agreements entered into by the
Company.
(c) Amendments and Waivers. The provisions of this Agreement,
including provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of the Company
and the Majority Holders; provided, however, that no amendment, modification, or
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Transfer
Restricted Notes or the Company unless consented to in writing by such Holder of
Transfer Restricted Notes or the Company, as the case may be.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 7(d), which address initially is, with respect to the Initial
Purchasers, the address set forth in the Purchase Agreement; and (ii) if to the
Company, initially at the Company's address set forth in the Purchase Agreement
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 7(d).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited
<PAGE> 32
-31-
in the mail, postage prepaid, if mailed; when answered back, if telexed; when
receipt is acknowledged, if telecopied; and on the next Business Day, if timely
delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Trustee, at
the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of the
Initial Purchasers, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Transfer Restricted Notes in violation of the terms of the Purchase Agreement or
the Indenture. If any transferee of any Holder shall acquire Transfer Restricted
Notes, in any manner, whether by operation of law or otherwise, such Transfer
Restricted Notes shall be held subject to all of the terms of this Agreement,
and by taking and holding such Transfer Restricted Notes, such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
(f) Third Party Beneficiary. Each of the Initial Purchasers and
each Holder shall be a third party beneficiary of the agreements made hereunder
between the Company, on the one hand, and the Initial Purchasers, on the other
hand, and shall have the right to enforce such agreements directly to the extent
it deems such enforcement necessary or advisable to protect its rights or the
rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE> 33
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(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Notes Held by the Company or any of its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Transfer
Restricted Notes is required hereunder, Transfer Restricted Notes held by the
Company or any of their affiliates (as such term is defined in Rule 405 under
the Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
[Signature Page Follows]
<PAGE> 34
S-1
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
VERIO INC.
By:
-------------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
SALOMON SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
By: SALOMON SMITH BARNEY INC.
By:
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Name:
Title:
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EXHIBIT A
Form of Opinion of Counsel
1. Each of the Exchange Offer Registration Statement and the
Prospectus (other than the financial statements, notes or schedules thereto and
other financial and statistical information and supplemental schedules included
or referred to therein or omitted therefrom and the Form T-1, as to which such
counsel need express no opinion), complies as to form in all material respects
with the applicable requirements of the Securities Act and the applicable rules
and regulations promulgated under the Securities Act.
2. In the course of such counsel's review and discussion of the
contents of the Exchange Offer Registration Statement and the Prospectus with
certain officers and other representatives of the Company and representatives of
the independent certified public accountants of the Company, but without
independent check or verification or responsibility for the accuracy,
completeness or fairness of the statements contained therein, on the basis of
the foregoing (relying as to materiality to a large extent upon representations
and opinions of officers and other representatives of the Company), no facts
have come to such counsel's attention which cause such counsel to believe that
the Exchange Offer Registration Statement (other than the financial statements,
notes and schedules thereto and other financial and statistical information
contained or referred to therein and the Form T-1, as to which such counsel need
express no belief), at the time the Exchange Offer Registration Statement became
effective and at the time of the consummation of the Exchange Offer, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading, or that the Prospectus (other than the financial
statements, notes and schedules thereto and other financial and statistical
information contained or referred to therein, as to which such counsel need
express no belief) contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading.
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EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM T-1
Statement of Eligibility Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
U.S. BANK TRUST NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0257700
(State of Incorporation) (I.R.S. Employer
Identification No.)
U.S. Bank Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
(Address of Principal Executive Offices) (Zip Code)
VERIO INC.
(Exact name of Registrant as specified in its charter)
Delaware 84-1339720
(State of Incorporation) (I.R.S. Employer
Identification No.)
8005 South Chester Street, Suite 200
Englewood, Colorado 80112
(303) 645-1900
(Address of Principal Executive Offices)
10 5/8% SENIOR NOTES DUE 2009
(Title of the Indenture Securities)
GENERAL
1. General Information Furnish the following information as to the Trustee.
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency
Washington, D.C.
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(b) Whether it is authorized to exercise corporate trust powers.
Yes
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe each
such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.
16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement
of eligibility and qualification.
1. Copy of Articles of Association.*
2. Copy of Certificate of Authority to Commence Business.*
3. Authorization of the Trustee to exercise corporate trust powers
(included in Exhibits 1 and 2; no separate instrument).*
4. Copy of existing By-Laws.*
5. Copy of each Indenture referred to in Item 4. N/A.
6. The consents of the Trustee required by Section 321(b) of the act.
7. Copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority is incorporated by reference to Registration Number
333-70709.
* Incorporated by reference to Registration Number 22-27000.
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NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors, or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, U.S. Bank Trust National Association, an Association organized and
existing under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Saint Paul and State of Minnesota on the 23rd day of February,
2000.
U.S. BANK TRUST NATIONAL ASSOCIATION
/s/ Richard H. Prokosch
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Richard H. Prokosch
Asst. Vice President
/s/ Harry Hall, Jr.
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Harry Hall, Jr.
Assistant Secretary
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EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, U.S. BANK TRUST NATIONAL ASSOCIATION hereby consents that reports
of examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: February 23, 2000
U.S. BANK TRUST NATIONAL ASSOCIATION
/s/ Richard H. Prokosch
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Richard H. Prokosch
Asst. Vice President
