<PAGE>
As filed with the Securities and Exchange Commission on December 29, 1999.
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
EQUINIX, INC.
(Exact Name of Registrant as Specified in its Charter)
---------------
Delaware 4813 77-0487526
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Classification Identification Number)
Incorporation or Code Number)
Organization)
901 Marshall Street
Redwood City, CA 94063
(650) 298-0400
(Address, Including zip code, and telephone number, including area code, of
registrant's principal executive offices)
ALBERT M. AVERY, IV
President and Chief Executive Officer
Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
(650) 298-0400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Copies to:
SCOTT C. DETTMER
RENEE F. LANAM
BRANDI L. GALVIN
MARGARET E. PAIGE
Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
(650) 321-2400
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
---------------
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, as amended (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
<TABLE>
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- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Proposed
Maximum Proposed Maximum
Title of each Class of Amount to be Offering Price Aggregate Amount of
Securities to be Registered Registered Per Unit Offering Price(1) Registration Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
13% Senior Notes due 2007................. $200,000,000 100% $200,000,000 $52,800.00
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f) under the Securities Act.
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 that specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus is not complete and may be +
+changed. We may not exchange these securities until the registration +
+statement filed with the Securities and Exchange Commission is effective. +
+This preliminary prospectus is not an offer to sell or exchange these +
+securities and it is not soliciting an offer to buy or exchange these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED [ ], 2000
PRELIMINARY PROSPECTUS
EQUINIX, INC.
Exchange Offer for
$200,000,000 of its
13% Senior Notes Due 2007
TERMS OF THE EXCHANGE OFFER:
- --It expires at 5:00 p.m., New York City time, on, 2000, unless extended.
- --All initial notes that are validly tendered and not withdrawn will be
exchanged.
- --We believe that the exchange of initial notes will not be a taxable exchange
for United States federal income tax purposes, but you should see the section
entitled "United States Federal Income Tax Consequences" on page 88 for more
information.
- --Tenders of initial notes may be withdrawn at any time before the expiration
of the exchange offer.
- --The terms of the exchange notes we will issue in the exchange offer are
substantially identical to those of the initial notes, except that transfer
restrictions and registration rights relating to the initial notes will not
apply to the exchange notes.
- --We will not receive any proceeds from the exchange offer.
- --The exchange notes are new securities and there is currently no established
market for them.
See the "Description of the Exchange Notes" section on page 58 for more
information about the exchange notes to be issued in this exchange offer.
BEFORE PARTICIPATING IN THIS EXCHANGE OFFER PLEASE REFER TO THE SECTION IN
THIS PROSPECTUS ENTITLED "RISK FACTORS" COMMENCING ON PAGE 10.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the notes to be distributed in the
exchange offer or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this Prospectus is , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................. 1
Risk Factors............................................................. 10
Forward-Looking Statements............................................... 19
Use of Proceeds.......................................................... 20
Capitalization........................................................... 21
Selected Consolidated Financial Data..................................... 22
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 23
Business................................................................. 27
Management............................................................... 37
Related-Party Transactions............................................... 42
Principal Stockholders................................................... 44
Description of Other Indebtedness........................................ 46
The Exchange Offer....................................................... 49
Description of the Exchange Notes........................................ 58
Book-Entry; Delivery and Form............................................ 85
United States Federal Income Tax Considerations.......................... 88
Plan of Distribution..................................................... 93
Legal Matters............................................................ 93
Experts.................................................................. 93
Available Information.................................................... 94
Index to Consolidated Financial Statements............................... F-1
</TABLE>
<PAGE>
SUMMARY
This summary may not contain all of the information that may be important to
you. You should read the entire prospectus, including the financial data and
related notes, before deciding whether to tender your initial notes in the
exchange offer.
The Company
Overview
Equinix's business is to design, build and operate the first neutral
Internet Business Exchange, or IBX, facilities. By providing a neutral meeting
ground for Internet businesses to interconnect with each other, our IBX
facilities will serve as a catalyst for Internet business growth and
development. We provide equipment colocation, direct high-speed connections,
switched interconnections and professional services to our e-commerce related
and Internet business customers who include content providers, or CPs, Internet
service providers, or ISPs, carriers and component service providers, or CSPs.
By locating at our IBX facilities, our customers place their Internet
operations at a central exchange point for Internet traffic while gaining the
benefits of the highest level of security, redundancy, scalability and service.
As a result, our customers are better positioned to capitalize on market
opportunities, expand their business offerings and enter new markets. We intend
to open approximately 30 IBX facilities in major Internet markets in the U.S.,
Europe, Asia, South America and Australia. In July 1999, we opened the
Washington, D.C. IBX facility, our first IBX facility, located in Ashburn,
Virginia. In December 1999 we opened our second IBX facility in Newark, New
Jersey, and intend to open IBX facilities in San Jose and Los Angeles,
California, during the first quarter of 2000. Our current customers include
Akamai, Cable & Wireless, Concentric Network, Ernst & Young Technologies, iBeam
Broadcasting, MCI WorldCom, NaviNet, NetRail, NorthPoint Communications and
Teleglobe.
We were founded in June 1998 and are led by Albert M. Avery, IV, our
president and chief executive officer, and Jay S. Adelson, our vice president,
engineering and chief technology officer, who were responsible for designing,
building and operating the Palo Alto Internet Exchange, or PAIX, one of the
most active global Internet traffic exchange points. PAIX launched commercial
service in July 1996 and was functioning at full capacity within one year of
introduction.
Since March 1999, we have raised more than $300 million to fund the rollout
of our IBX facilities. Our stockholders are many of the most influential
companies driving the development, operation and utilization of the Internet
and its transformation to a reliable, trusted medium for commerce. They include
America Online, Artemis S.A., Benchmark Capital, the Carlyle Group, Cisco
Systems, Comdisco Ventures, Dell Corporation, E*Trade Group, Enron Corporation,
epartners Capital (News Corp.), Finlayson Investments (Temasek), Microsoft
Corporation, Millennium System Trading Limited (Pacific Century Group), Morgan
Stanley Dean Witter, NorthPoint Communications, Reuters and Salomon Smith
Barney.
Market Opportunity
Since the early 1990s, the Internet has experienced tremendous growth and is
emerging as a global medium for communications and commerce. This growth has
led to chronic problems in the quality and reliability of Internet-related
services delivered to the end user. Infrastructure has not kept pace with
demand. Businesses have tried to alleviate these problems by relocating
Internet content closer to core communications centers, upgrading network
bandwidth and employing technologies such as web page caching. Unfortunately,
these attempts have not been sufficient to ensure consistently high service
quality. As broadband access, e-commerce and streaming media applications
continue to gain market acceptance, businesses must find new solutions to
ensure that the Internet infrastructure will meet their needs for Internet
commerce.
1
<PAGE>
The distribution of content and delivery of services between thousands of
individual networks that make up the Internet has traditionally occurred at
network access points, or NAPs. These original NAPs were typically built in
pre-existing telecommunications carrier facilities and are run by companies
such as MCI WorldCom, Sprint and Pacific Bell. Because operating the NAPs is
not a core business for these carriers, they have not made the necessary
investments in the NAPs to effectively manage the rapid growth in Internet
traffic. As a result, these NAPs have emerged as one of the primary bottlenecks
to improved Internet communications. The problems inherent in the NAPs stem
from a number of sources, including carrier circuit monopoly, limited
scalability and legacy technologies. Moreover, the lack of AC power, poor air
conditioning, lack of financial-grade security, inadequately trained support
staff and limited facility access has made it impractical for content providers
to locate their content at these central communications exchange points. In
addition, the limited number of NAPs outside the U.S. has caused routing
inefficiencies, burdening international ISPs with high operating costs and
resulting in slow and unreliable transmissions. As a result of these problems,
businesses have been restrained in their ability to effectively grow and manage
their Internet operations and employ the Internet as a commerce medium.
A variety of businesses, including emerging carriers, Web site hosting
companies, ISPs and more focused new entrants are beginning to provide improved
colocation services for Internet content. Forrester Research predicts that a
combination of rapid Internet growth and increased outsourcing of Internet-
related services will create an acute need for Internet-related hosting and
colocation services, producing revenue growth from approximately $875 million
in 1998 to approximately $14.6 billion by 2003 in the U.S. While the demand for
these colocation services is significant, most new colocation facilities are
being constructed by telecommunications carriers and ISPs. Internet and e-
commerce companies who choose to colocate equipment at these facilities
typically have no choice but to purchase bandwidth from the owner of the
facility. This can be costly, given the lack of competition, and a significant
risk if the facility owner's network were to fail or have performance problems.
The Equinix Solution
Our neutral IBX facilities are designed to solve many of the infrastructure
problems facing Internet businesses today. These facilities will provide
environments that stimulate efficient business growth by encouraging
independent Internet supplier companies to deliver a wide diversity of
services. We provide the following key benefits to our customers:
Choice. We believe that the ability of customers to choose among a
variety of product and service providers is the fundamental driver of
dynamic growth in commerce. By offering the crucial element of choice, our
IBX facilities are designed to serve as a catalyst for our customers that
creates synergy among them and makes it possible for them to adapt their
business models to successfully scale with the growth of each other and of
the Internet.
Opportunity to Increase Revenues and Reduce Costs. As a result of the
proposed size of our IBX facilities and the anticipated large amount of
Internet and e-commerce related business in these centers, our customers
will have a better opportunity to increase the size of their addressable
markets, accelerate revenue growth and improve the quality of their
services. In addition, participants will be able to enhance their ability
to control costs by aggregating their service purchases at a single
location and through improved purchasing power.
Scalability. We design our IBX facilities for physical scalability and
scalability from the perspective of an individual customer's ability to
transact business. As a result, our IBX facilities will both stimulate and
support the efficient growth of our customers. In addition, through our
global presence we will have a broad capacity to meet customers' multi-
market and multi-geographic requirements.
2
<PAGE>
Reliability. Our IBX design provides our customers with highly reliable
and disaster-resistant facilities that are necessary for optimum Internet
commerce interconnection. We believe that the level of excellence and
consistency achieved in our IBX architecture and design will result in
premium, secure, fault-tolerant exchanges.
Value-Added Services. In addition to our core services, we offer
advanced products and value-added services that are intended to assist
customers in improving the quality of their interconnection and traffic
exchange. Such services include high-speed interconnects through our
central switching fabric, route servers, root DNS servers, rubidium-
disciplined clock sources and NTP servers. We also provide a collaborative
research environment where Equinix customers and Equinix engineers work
side-by-side on developing Internet technologies.
Equinix Strategy
Our objective is to be the market leader for business-to-business Internet
communications for Internet commerce by attracting a wide variety of
complementary business partners and providing the highest level of service in
our IBX facilities. To accomplish this objective we are employing the following
strategies:
Capitalize on Our Neutrality. IBX neutrality means we provide our
customers with free choice of their preferred product and service
providers. We believe that this is a significantly improved approach from
the current Internet model where ISPs and telecommunications carriers own
the majority of colocation and exchange facilities.
Target a Balanced IBX Customer Base. As a key aspect to fostering
efficient interaction and promoting choice, reliability and redundancy, we
intend to actively manage our customer base at each IBX facility to include
a balanced number of Internet and e-commerce related businesses.
Expand Globally and Capitalize on First Mover Advantage. We currently
plan to launch an aggressive IBX rollout program over the next twelve to
eighteen months and open a total of 12 IBX facilities in the United States
and internationally. We believe the demand for our international IBX
facilities and services will be significant due to the early stage of
Internet infrastructure deployment outside of the U.S.
Establish Equinix as the Leading Brand for IBX facilities. We plan to
establish Equinix as the industry standard for the highest quality Internet
connections. Through brand awareness and promotion, we intend to create a
strong following among all leading CPs, ISPs, carriers and CSPs.
Leverage Blue-Chip Investor Base. Our stockholders are many of the most
influential companies driving the development, operation and utilization of
the Internet. They provide us with invaluable technical and business
insight, industry contacts and customer relationships to help expedite the
expansion of our business. These stockholders include America Online,
Artemis S.A., Benchmark Capital, the Carlyle Group, Cisco Systems, Comdisco
Ventures, Dell Corporation, E*Trade Group, Enron Corporation, epartners
Capital (News Corp.), Finlayson Investments (Temasek), Microsoft
Corporation, Millennium System Trading Limited (Pacific Century Group),
Morgan Stanley Dean Witter, NorthPoint Communications, Reuters and Salomon
Smith Barney.
Continue Providing Leading-Edge Products and Services. We encourage our
customers to research and test their new technologies within our state-of-
the-art research and development environment. By collaborating with leading
technology companies we believe we are positioned at the forefront of
Internet technology development.
Recent Developments
On November 16, 1999, we entered into a definitive agreement with MCI
WorldCom, or MCI, whereby MCI agreed to install high-bandwidth Internet
connectivity at our first seven U.S. IBX facilities in exchange for
3
<PAGE>
warrants to purchase common stock in our company. Among other things, MCI has
agreed to provide timely and sufficient connectivity to fulfill the
requirements of all customers in the designated IBX facility locations.
Pursuant to the terms of this agreement, MCI has installed Internet
connectivity in our Washington D.C. IBX facility.
On December 18, 1999, we entered into a definitive agreement with Bechtel
Corporation, or Bechtel, whereby Bechtel has agreed to act as our exclusive
contractor for our IBX facilities worldwide. In this regard, they have agreed
to assist us with site identification and evaluation, design, build-out, and
testing of our IBX facilities in exchange for a warrant to purchase common
stock in our company.
Equinix is located at 901 Marshall Street, Redwood City, California 94063.
Our phone number is (650) 298-0400.
4
<PAGE>
Summary of the Exchange Offer
Securities Offered.......
Up to $200 million principal amount of 13%
Senior Notes due 2007, which will be
registered under the Securities Act. The
terms of the exchange notes and the initial
notes are identical except for transfer
restrictions and registration rights
relating to the initial notes that will not
be applicable to the exchange notes.
Issuance of Initial The initial notes were issued on December
Notes....................... 1, 1999 to Salomon Smith Barney Inc.,
Morgan Stanley & Co. Incorporated and
Goldman, Sachs & Co., who placed the
initial notes with qualified institutional
buyers and institutional accredited
investors, and to buyers in offshore
transactions in reliance on Regulation S
under the Securities Act.
The Exchange Offer.......
We are offering to exchange $1,000
principal amount of exchange notes for each
$1,000 principal amount of initial notes.
There are $200 million aggregate principal
amount of initial notes outstanding. The
issuance of the exchange notes is intended
to satisfy our obligations contained in the
registration rights agreement we entered
into with Salomon Smith Barney Inc., Morgan
Stanley & Co. Incorporated and Goldman,
Sachs & Co. in connection with the issuance
of the initial notes.
Conditions to the The exchange offer is not conditioned upon
Exchange Offer.............. any minimum principal amount of initial
notes being tendered for exchange. However,
the exchange offer is subject to customary
conditions, which may be waived by us. See
"The Exchange Offer--Conditions." Except
for the requirements of applicable federal
and state securities laws, there are no
federal or state regulatory requirements to
be complied with or obtained by us in
connection with the exchange offer.
Procedures for If you want to tender your initial notes in
Tendering................... the exchange offer, you must complete, sign
and date the letter of transmittal
according to the instructions contained in
this prospectus and the letter of
transmittal. You must then mail or fax the
letter of transmittal, together with any
other required documents, to the exchange
agent, either with the initial notes to be
tendered or in compliance with the
specified procedures for guaranteed
delivery of initial notes. You should allow
sufficient time to ensure timely delivery.
Some brokers, dealers, commercial banks,
trust companies and other nominees may also
effect tenders by book-entry transfer. If
you own initial notes registered in the
name of a broker, dealer, commercial bank,
trust company or other nominee, you are
urged to contact that person promptly if
you wish to tender initial notes in the
exchange offer. Letters of transmittal and
certificates representing the initial notes
should not be sent to Equinix.
5
<PAGE>
These documents should only be sent to the
exchange agent. Questions regarding how to
tender initial notes and requests for
information should also be directed to the
exchange agent. See "The Exchange Offer--
Procedures for Tendering Initial Notes."
Expiration Date;
Withdrawal.................. The exchange offer will expire at 5:00
p.m., New York City time on , 2000. We will
accept for exchange any and all initial
notes that are validly tendered in the
exchange offer on or before 5:00 p.m., New
York City time, on the expiration date. The
tender of initial notes may be withdrawn at
any time before the expiration date. Any
initial note not accepted for exchange for
any reason will be returned without expense
to the tendering holder as promptly as
practicable after the expiration or
termination of the exchange offer. The
exchange notes issued in the exchange offer
will be delivered promptly following the
expiration date. See "The Exchange Offer--
Expiration of the Exchange Offer" and "--
Withdrawal of Tenders."
Guaranteed Delivery If you wish to tender your initial notes
Procedures.................. and (1) your initial notes are not
immediately available or (2) you cannot
deliver your initial notes together with
the letter of transmittal to the exchange
agent before the expiration date, you may
tender your initial notes according to the
guaranteed delivery procedures contained in
the letter of transmittal. See "The
Exchange Offer--Guaranteed Delivery
Procedure."
Acceptance of Initial Notes
and Delivery of Exchange
Notes.......................
Upon effectiveness of the registration
statement of which this prospectus
constitutes a part and consummation of the
exchange offer, we will accept any and all
initial notes that are properly tendered in
the exchange offer on or before 5:00 p.m.,
New York City time, on the expiration date.
The exchange notes issued pursuant to the
exchange offer will be delivered
promptly after acceptance of the initial
notes. See "The Exchange Offer--Acceptance
of Initial Notes for Exchange; Delivery of
Exchange Notes."
Tax Considerations.......... For U.S. federal income tax purposes, the
exchange of initial notes for exchange
notes should not be considered a sale or
exchange or otherwise a taxable event to
the holders of notes. See "United States
Federal Income Tax Considerations."
Use of Proceeds............. We will receive no proceeds from the
exchange offer.
Exchange Agent..............
State Street Bank and Trust Company of
California, N.A. is serving as exchange
agent in connection with the exchange
offer.
Fees and Expenses........... We will bear all expenses related to the
exchange offer. See "The Exchange Offer--
Fees and Expenses."
6
<PAGE>
Consequences of Not
Exchanging the Initial
Notes.......................
If you do not tender your initial notes or
your initial notes are not properly
tendered, the existing transfer
restrictions will continue to apply. The
initial notes are currently eligible for
sale pursuant to Rule 144A through the
PORTAL Market. Because we anticipate that
most holders will elect to exchange initial
notes for exchange notes due to the absence
of restrictions on the resale of exchange
notes under the Securities Act in most
cases, we anticipate that the liquidity of
the market for any initial notes remaining
after the consummation of the exchange
offer may be substantially limited. See
"Risk Factors--There could be negative
consequences to you if you do not exchange
your initial notes for exchange notes."
Summary Description of the Exchange Notes
The terms of the exchange notes and the initial notes are identical in all
respects, except that the terms of the exchange notes do not include the
transfer restrictions and registration rights relating to the initial notes.
The initial notes and the exchange notes are referred to collectively as the
notes.
The exchange notes will bear interest from the most recent date to which
interest has been paid on the initial notes. Accordingly, registered holders of
exchange notes on the relevant record date for the first interest payment date
following the completion of the exchange offer will receive interest accruing
from the most recent date on which interest has been paid. Initial notes
accepted for exchange will cease to accrue interest from and after the date of
completion of the exchange offer. Holders of initial notes whose initial notes
are accepted for exchange will not receive any payment in respect of interest
on the initial notes otherwise payable on any interest payment date that occurs
on or after completion of the exchange offer.
Maturity Date............ December 1, 2007.
Interest.................
The interest on the notes will be payable semi-
annually in arrears on each June 1 and December
1, commencing on June 1, 2000.
Interest Escrow.......... We have deposited with the escrow agent an amount
of cash or U.S. government securities totaling
approximately $37.0 million that, together with
the proceeds from the investment thereof, will be
sufficient to pay, when due, the first three
interest payments on the notes, with us retaining
any balance. The notes will be collateralized by
a first priority security interest in the escrow
account.
Sinking Fund............. None
Optional Redemption......
Generally, we may not redeem the notes before
December 1, 2003. On or after December 1, 2003,
we may redeem the notes, in whole or in part, at
any time, at the redemption prices set forth
under the section entitled "Description of the
Exchange Notes" together with accrued and unpaid
interest, if any, to the redemption date.
Change of Control........ Upon a "Change of Control" as defined under the
section entitled "Description of the Notes," you
as a holder of notes will have the right to
require us to repurchase all of your notes at a
repurchase
7
<PAGE>
price equal to 101% of the aggregate principal
amount of such notes, plus accrued and unpaid
interest, if any, through the date of repurchase.
Ranking..................
Except for the noteholders' security interest in
the escrow account, the notes will be general
unsecured obligations, will rank without
preference with all of our other existing and
future senior unsecured indebtedness and will be
effectively subordinated to all our existing and
future secured indebtedness to the extent of the
value of the assets that secure such indebtedness
and to all of our subsidiaries' existing or
future indebtedness, whether or not secured.
Restrictive Covenants.... The indenture under which the notes will be
issued will limit:
. the incurrence of additional indebtedness or
preferred stock by us and our subsidiaries;
. the payment of dividends on, and repurchase or
redemption of, our capital stock and our
subsidiaries' capital stock and the repurchase
or redemption of our subordinated obligations;
. our making of investments;
. the selling of our assets or the stock of our
subsidiaries;
. transactions with our affiliates;
. the incurrence of additional liens;
. our ability to permit restrictions to exist on
the ability of our subsidiaries to pay
dividends or make payments to us; and
. our ability to engage in consolidations,
mergers and transfers of all or substantially
all of our assets.
All of these limitations and prohibitions will be
subject to a number of important qualifications
and exceptions. See "Description of the Exchange
Notes."
Exchange Rights..........
Holders of the exchange notes will not be
entitled to any exchange or registration rights
relating to the exchange notes. Holders of the
initial notes are entitled to certain exchange
rights pursuant to the registration rights
agreement entered into concurrently with the
initial offering between us and Salomon Smith
Barney Inc., Morgan Stanley & Co. Incorporated
and Goldman, Sachs & Co. This exchange offer is
intended to satisfy our obligations under the
registration rights agreement. Once the exchange
offer is consummated, we will have no further
obligations to register any of the initial notes
not tendered by the holders for exchange. See
"Risk Factors--There could be negative
consequences to you if you do not exchange your
initial notes for exchange notes."
Risk Factors
You should carefully consider the information provided in the section in
this prospectus entitled "Risk Factors" beginning on page 10 and all the other
information provided to you in this prospectus in deciding whether to tender
your initial notes in the exchange offer.
8
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data should be read in
conjunction with our consolidated financial statements and their related notes
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The consolidated statement
of operations data for the period from June 22, 1998 (inception) to December
31, 1998 and the balance sheet data as of December 31, 1998 are derived from,
and are qualified by reference to, the audited consolidated financial
statements and their related notes, which are included in this prospectus. The
consolidated statement of operations data for the nine months ended September
30, 1999 and the balance sheet data as of September 30, 1999 are derived from,
and qualified by reference to, our unaudited condensed interim consolidated
financial statements and their related notes included in this prospectus. The
Pro Forma column gives effect to the issuance of additional Series B preferred
stock from October through December 1999 and the additional drawing of debt.
The Pro Forma As Adjusted column gives effect to the issuance of the initial
notes.
<TABLE>
<CAPTION>
Period from June 22, Nine Months Ended
1998 (inception) to September 30,
December 31, 1998 1999
-------------------- -----------------
(in thousands)
<S> <C> <C>
Statement of Operations Data:
Revenues.............................. $ -- $ --
Operating expenses....................
Selling, general, and administrative
expenses............................. 782 6,860
Depreciation and amortization......... 4 248
Stock-based compensation.............. -- 306
------ -------
Total operating expenses............ 786 7,414
------ -------
Loss from operations.................. (786) (7,414)
Interest expense....................... -- 138
Interest income........................ (150) (267)
Interest charge on beneficial
conversion of convertible debt........ 220 --
------ -------
Net loss............................... $ (856) $(7,285)
====== =======
Other Financial Data:
EBITDA (1)............................. $ (782) $(7,166)
Net cash provided by (used in)
operating activities.................. (544) 349
Net cash used in investing activities.. (5,517) (62,961)
Net cash provided by financing
activities............................ 10,226 62,029
Ratio of earnings to fixed charges(2).. -- --
</TABLE>
<TABLE>
<CAPTION>
As of September 30, 1999
-----------------------------
As of Pro Forma
December 31, 1998 Actual Pro Forma As Adjusted
----------------- ------- --------- -----------
(in thousands)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and
short-term investments....... $9,165 $46,489 $84,150 $239,838
Restricted cash(3)............ -- -- -- 37,012
Property and equipment, net... 482 2,879 2,879 2,879
Construction in progress...... 31 22,590 22,590 22,590
Total assets.................. 10,001 75,353 113,014 313,014
Total long-term debt,
excluding current portion.... -- 3,734 10,877 201,873
Total stockholders' equity.... 9,590 59,855 87,516 96,520
</TABLE>
- --------
(1) EBITDA consists of the net loss excluding interest, depreciation and
amortization of capital assets. EBITDA is presented to enhance an
understanding of our operating results and is not intended to represent
cash flow or results of operations in accordance with generally accepted
accounting principles for the period indicated and may be calculated
differently than EBITDA for other companies.
(2) In calculating the ratio of earnings to fixed charges, earnings consist of
net loss before income tax expense and fixed charges. Fixed charges consist
of interest expense. The ratio of earnings to fixed charges was less than
1.0 to 1.0 for each of the periods presented. Earnings available for fixed
charges were thus inadequate to cover fixed charges. The coverage
deficiency for the period from June 22, 1998 (inception) to December 31,
1998 and the nine months ended September 30, 1999 was $856,000 and
$7,285,000 respectively.
(3) Reflects the portion of the net proceeds from the issuance of the initial
notes to be used to purchase a portfolio of U.S. government securities to
fund the first three scheduled interest payments on the notes.
9
<PAGE>
RISK FACTORS
You should carefully consider the information set forth under the caption
"Risk Factors" and all other information in this prospectus before tendering
your initial notes in the exchange offer, including information in the section
of this prospectus entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Special Note Regarding Forward-Looking
Statements."
Risks Related to Our Business
We are an early-stage company, which makes evaluating our business difficult.
We were founded in June 1998. The construction of our first IBX facility was
completed in July 1999, and we began accepting customers the same month. We did
not recognize any revenue until November 1999. Our limited history and lack of
meaningful financial or operating data makes evaluating our business operations
difficult. Moreover, the neutrality aspect of our business model is unique and
largely unproven. We expect that we will encounter challenges and difficulties
frequently experienced by early-stage companies in new and rapidly evolving
markets, such as our ability to generate cash flow, hire and train sufficient
operational and technical talent, and implement our plan with minimal delays.
We may not successfully address any or all of these challenges and the failure
to do so would seriously harm our business and operating results.
We have incurred losses since inception and we expect future losses.
As an early-stage company without recognized revenues, we have experienced
operating losses since inception. As of September 30, 1999, we had cumulative
net losses of $8.1 million and cumulative cash used by operating activities of
$195,000 since inception. We expect to incur significant losses in the future.
In addition, as we commence operations, our losses will increase as we:
. increase the number of IBX facilities;
. increase our sales and marketing activities, including expanding our
direct sales force; and
. enlarge our customer support and professional services organizations.
Our IBX facilities may not generate sufficient revenue to achieve
profitability. Our ability to generate sufficient revenues to achieve
profitability will depend on a number of factors, including:
. the timely completion of our IBX facilities;
. demand for space and services at our IBX facilities;
. our pricing policies and the pricing policies of our competitors;
. the timing of customer installations and related payments;
. competition in our markets;
. the timing and magnitude of our expenditures for sales and marketing;
. direct costs relating to the expansion of our operations;
. growth of Internet use;
. economic conditions specific to the Internet industry; and
. general economic factors.
Some of these factors are beyond our control.
10
<PAGE>
We are substantially leveraged and we may not generate sufficient cash flow to
meet our debt service and working capital requirements.
We are highly leveraged since the issuance of the initial notes. We have
total indebtedness of $215.0 million. Our highly leveraged position could have
important consequences, including:
. impairing our ability to obtain additional financing for working capital,
capital expenditures, acquisitions or general corporate purposes;
. requiring us to dedicate a substantial portion of our operating cash flow
to paying principal and interest on our indebtedness, thereby reducing
the funds available for operations;
. limiting our ability to grow and make capital expenditures due to the
financial covenants contained in our debt arrangements;
. impairing our ability to adjust rapidly to changing market conditions,
invest in new or developing technologies, or take advantage of
significant business opportunities that may arise; and
. making us more vulnerable if a general economic downturn occurs or if our
business experiences difficulties.
In the past, we have experienced unforeseen delays in connection with our
IBX construction activities. We will need to successfully implement our current
rollout schedule and our business strategy to meet our debt service and working
capital needs. We may not successfully implement our business strategy, and
even if we do, we may not realize the anticipated results of our strategy or
generate sufficient operating cash flow to meet our debt service obligations
and working capital needs.
In the event our cash flow is inadequate to meet our obligations, we could
face substantial liquidity problems. If we are unable to generate sufficient
cash flow or otherwise obtain funds needed to make required payments under our
indebtedness, or if we breach any covenants under our indebtedness, we would be
in default under the terms thereof, and the holders of such indebtedness may be
able to accelerate the maturity of such indebtedness, which could cause
defaults under our other indebtedness. Any such default would have a material
adverse effect on our business, results of operations and financial condition.
We will need significant additional funds, which we may not be able to obtain.
We currently intend to pursue a rollout strategy of approximately 30 IBX
facilities in major Internet markets around the world over the next four years.
We intend to finance these IBX facilities through our internal cash flow and
approximately $750.0 million of additional financing. We currently have $221.9
million in cash, cash equivalents and short-term investments available to us.
We anticipate that the funds available to us after the issuance of the initial
notes will be sufficient to fund the capital expenditure and working capital
requirements, including operating losses associated with the initial rollout of
eight IBX facilities and expansion projects within three of those IBX
facilities. To complete the implementation of our approximately 30 site rollout
plan within our proposed time frame we anticipate that we will need to raise
funds through additional debt or equity financing. In the past, we have had
difficulties obtaining debt financing due to the early stage of our company.
Financing may not be available to us at the time we seek to raise additional
funds, or if such financing is available, it may only be available on terms, or
in amounts, which are unfavorable to us. If we cannot raise sufficient
additional funds on acceptable terms we may delay the rollout of additional IBX
facilities or permanently reduce our rollout plans.
The anticipated timing and amount of our capital requirements is forward-
looking and therefore inherently uncertain. In the past, we have experienced
unforeseen delays and expenses in connection with our IBX construction
activities. Our future capital requirements may vary significantly from what we
currently project and the timing of our rollout plan may be affected by
unforeseen construction delays and expenses and the amount of time it takes us
to lease space within our IBX facilities. If we encounter any of these problems
or if we have underestimated our capital expenditure requirements or the
operating losses or working capital requirements, we may require significantly
more financing than we currently anticipate.
11
<PAGE>
Our rollout plan is preliminary and we may need to reallocate funds.
Our IBX facility rollout plan is preliminary and has been developed from our
current market data and research, projections and assumptions. We expect to
continually reevaluate our business and rollout plan in light of evolving
competitive and market conditions, and as a result, we may alter our IBX
facility rollout and reallocate funds if there are:
. changes or inaccuracies in our market data and research, projections or
assumptions;
. unexpected results of operations or strategies in our target markets;
. regulatory, technological, and competitive developments (including
additional market developments and new opportunities); or
. changes in, or discoveries of, specific market conditions or factors
favoring expedited development in other markets.
We must manage our growth and expansion.
Our anticipated growth may significantly strain our resources as a result of
an increase in the number of our employees, the number of operating IBX
facilities and our international expansion. Any failure to manage growth
effectively could seriously harm our business and operating results. To
succeed, we will need to:
. hire and train new employees and qualified engineering personnel at each
IBX facility;
. implement additional management information systems;
. locate additional office space for our corporate headquarters;
. improve our operating, administrative, financial and accounting systems
and controls; and
. maintain close coordination among our executive, engineering, accounting,
finance, marketing, sales and operations organizations.
We face risks associated with international operations that could harm our
business.
We intend to construct IBX facilities outside of the United States and we
will commit significant resources to our international sales and marketing
activities. Our management has limited experience conducting business outside
of the United States and we may not be aware of all the factors that affect our
business in foreign jurisdictions. We will be subject to a number of risks
associated with international business activities that may increase our costs,
lengthen our sales cycles and require significant management attention. These
risks include:
. increased costs and expenses related to the leasing of foreign
facilities;
. difficulty or increased costs of constructing IBX facilities in foreign
countries;
. difficulty in staffing and managing foreign operations;
. increased expenses associated with marketing services in foreign
countries;
. business practices that favor local competition and protectionist laws;
. difficulties associated with enforcing agreements through foreign legal
systems;
. general economic and political conditions in international markets;
. potentially adverse tax consequences, including complications and
restrictions on the repatriation of earnings;
. currency exchange rate fluctuations;
. unusual or burdensome regulatory requirements or unexpected changes
thereto;
12
<PAGE>
. tariffs, export controls and other trade barriers; and
. longer accounts receivable payment cycles and difficulties in collecting
accounts receivable.
To the extent that our operations are incompatible with, or not economically
viable within, any given foreign market, we may not be able to locate an IBX
facility in that particular foreign jurisdiction.
We depend on third parties to provide bandwidth connectivity to our IBX
facilities.
The presence of diverse bandwidth fiber from communications carriers' fiber
networks to an Equinix IBX facility is critical to our ability to attract new
customers. To date, we have been successful in selling our services before
establishing such carrier presence, however, we believe that the availability
of such carrier capacity will directly affect our ability to achieve our
projected results.
We are not a communications carrier, and as such rely on third parties to
provide our customers with carrier facilities. We intend to rely primarily on
revenue opportunities from our customers to encourage carriers to incur the
expenses required to build facilities from their points of presence to our IBX
facilities. Carriers will likely evaluate the revenue opportunity of an IBX
facility based on the assumption that the environment will be highly
competitive. There can be no assurance that, after conducting such an
evaluation, any carrier will elect to offer its services within our IBX
facilities.
The construction required to connect multiple carrier facilities to our IBX
facilities is complex and involves factors outside of our control, including
regulatory processes and the availability of construction resources. If the
establishment of highly diverse bandwidth connectivity to our IBX facilities
does not occur or is materially delayed, our operating results and cash flow
will be adversely affected.
We have a new management team; we must retain and attract key personnel.
We have recently hired many key personnel, including our chief financial
officer, vice president of operations, vice president of worldwide sales,
director of business development, vice president of marketing and vice
president of IBX development. As a result, our management team has worked
together for only a brief time. Our ability to effectively execute our
strategies will depend in part upon our ability to integrate our current and
future managers into our operations. If our executives are unable to operate
together effectively, our business, results of operations and financial
condition will be materially adversely affected.
We require the services of additional management personnel in positions
related to our growth. For example, we need to expand our marketing and direct
sales operations to increase market awareness of our IBX facilities, market our
services to a greater number of enterprises and generate increased revenues. As
a result, we plan to hire additional personnel in related capacities. Our
success depends on our ability to identify, hire, integrate and retain
additional qualified management personnel, particularly in areas related to our
anticipated growth and geographic expansion.
We may not be successful in attracting, assimilating or retaining qualified
personnel. In addition, due to generally tight labor markets, our industry, in
particular, suffers from a lack of available qualified personnel. Moreover,
none of our present senior management or other key personnel is bound by an
employment agreement. If we lose one or more of our key employees, we may not
be able to find a replacement and our business and operating results could be
adversely affected.
We will operate in a new highly competitive market and we may be unable to
compete successfully against new entrants and established companies with
greater resources.
We believe that our market will likely have an increasing number of
competitors. To be successful in this emerging market, we must be able to
differentiate ourself from existing colocation and web hosting companies. We
may also face competition from persons seeking to replicate our IBX concept. We
may not be successful in differentiating ourself or achieving widespread market
acceptance of our business. Furthermore, enterprises that
13
<PAGE>
have already invested substantial resources in peering arrangements may be
reluctant or slow to adopt our approach that may replace, limit or compete with
their existing systems. If we are unable to complete our IBX facilities in a
timely manner, other companies may be able to attract the same customers that
we are targeting. Once the customers are located in our competitors'
facilities, it will be extremely difficult to convince them to relocate to our
IBX facilities.
We may encounter competition from a number of sources, some of which may
also be our customers, including:
. Web site hosting, colocation and ISP companies such as AboveNet, Digital
Island, Exodus, Frontier GlobalCenter, Globix, PSINet and Verio;
. established communications carriers such as AT&T, Level 3, MCI WorldCom,
Qwest and Sprint; and
. emerging colocation service providers such as Colo.com, IX Europe,
Neutral Nap and Telehouse.
Potential competitors may bundle their products or incorporate colocation
services in a manner that is more attractive to our potential customers than
purchasing cabinet space in our IBX facilities and utilizing our services.
Furthermore, new competitors or alliances among competitors may emerge and
rapidly acquire significant market share. Our competitors may be able to
respond more quickly to new or emerging technologies and changes in customer
requirements than we can.
Some of our potential competitors have longer operating histories and
significantly greater financial, technical, marketing and other resources than
we do. In particular, carriers and several web hosting and colocation companies
have extensive customer bases and broad customer relationships that they can
leverage, including relationships with many of our potential customers. These
companies also have significantly greater customer support and professional
services capabilities than we do. Because of their greater financial resources,
some of these companies have the ability to adopt aggressive pricing policies.
As a result, in the future, we may suffer from pricing pressure which would
adversely affect our ability to generate revenues and affect our operating
results.
We may experience fluctuations in our operating results.
Our operating results may fluctuate significantly depending upon a variety
of factors. These factors include:
. the timing of capital expenditures related to our rollout;
. our customer retention rate;
. changes in pricing policies by our competitors; and
. changes in demand for network and Internet services.
Due to the foregoing factors, we believe that period-to-period comparisons
of our operating results may not necessarily be meaningful and that such
comparisons may not be an indication of our future performance.
Any failure of our physical infrastructure or services could lead to
significant costs and disruptions which could reduce our revenue and harm our
business reputation and financial results.
Our business depends on providing our customers with highly reliable
service. The services we provide are subject to failure resulting from numerous
factors, including:
. human error;
. physical or electronic security breaches;
. fire, earthquake, flood and other natural disasters;
14
<PAGE>
. power loss; and
. sabotage and vandalism.
Problems at one or more of our sites, whether or not within our control,
could result in service interruptions or significant equipment damage. Any loss
of services, particularly in the early stage of our development, could reduce
the confidence of our customers and could consequently impair our ability to
obtain and retain customers which would adversely affect our ability to
generate revenues and affect our operating results.
Our computer systems and those of third parties with whom we do business may
not be year 2000 compliant, which may cause system failure and disruptions of
operations.
Currently, many computer and software products are coded to accept two digit
entries in the date code field. These date code fields will need to accept four
digit entries to distinguish a date using "00" as the year 1900 rather than the
year 2000. As a result, many companies' software and computer systems may need
to be upgraded or replaced to comply with year 2000 requirements. We recognize
the need to ensure that our operations will not be adversely impacted by year
2000 software and computer system failures.
We have completed assessments of the year 2000 readiness of our information
technology systems. In addition, we have assurances from our material hardware
and software vendors that their products are year 2000 compliant. Although we
have not incurred any material expenditure in connection with identifying or
evaluating year 2000 compliance issues to date, we do not at this time possess
the information necessary to estimate the potential costs of revisions or
replacements to our software and systems or third-party software, hardware or
services that are determined not to be year 2000 compliant. Such expenses could
have a material adverse effect on our business.
We are not aware of any year 2000 compliance problems relating to our
information technology systems that would have a material adverse effect on our
business, however, we cannot assure you that we will not discover any such
compliance problems. Our failure to fix or replace our software, hardware or
services on a timely basis could result in lost revenues, increased operating
costs and the loss of customers and other business interruptions, any of which
could have a material adverse effect on our business. Moreover, the failure to
adequately address year 2000 compliance issues in our information technology
systems could result in claims of mismanagement, misrepresentation or breach of
contract and related litigation, which could be costly and time-consuming to
defend.
We depend on the development and growth of a balanced customer base.
Our ability to maximize revenues depends on our ability to develop and grow
a balanced customer base as we roll out our IBX facilities. Our ability to
attract customers to our IBX facilities will depend on a variety of factors,
including the presence of multiple carriers, the overall mix of our customers,
our operating reliability and security and our ability to effectively market
our services. Construction delays, our inability to find suitable locations to
build additional IBX facilities, equipment and material shortages or our
inability to obtain necessary permits on a timely basis could delay our IBX
facility rollout schedule and prevent us from developing our anticipated
customer base. If we fail to develop and grow our customer base, our business
and operating results will be materially adversely affected.
A customer's decision to lease cabinet space in our IBX facilities typically
involves a significant commitment of resources and will be influenced by, among
other things, the customer's confidence that other Internet and e-commerce
related businesses will be located in a particular IBX facility. In particular,
some customers will be reluctant to commit to locating in our IBX facilities
until they are confident that the IBX facility has adequate carrier
connections.
15
<PAGE>
In addition, some of our customers will be Internet companies that face many
competitive pressures and that may not ultimately be successful. If these
customers do not succeed, they will not continue to use our IBX facilities.
This may be disruptive to our business and may adversely affect our operating
results.
Risks Related to Our Industry
We depend on continued use of the Internet and growth of electronic business.
Rapid growth in the use of and interest in the Internet has occurred only
recently. Acceptance and use may not continue to develop at historical rates
and a sufficiently broad base of consumers may not adopt or continue to use the
Internet and other online services as a medium of commerce. Demand and market
acceptance for recently introduced Internet services and products are subject
to a high level of uncertainty and there are few proven services and products.
As a result, we cannot be certain that a viable market for our IBX facilities
will emerge or be sustainable. If our market fails to develop, or develops more
slowly than expected, our business and operating results would be materially
adversely affected.
We must respond to rapid technological change and evolving industry standards.
The market for IBX facilities will be marked by rapid technological change,
frequent enhancements, changes in customer demands and evolving industry
standards. Our success will depend, in part, on our ability to address the
increasingly sophisticated and varied needs of our current and prospective
customers. Our failure to adopt and implement the latest technology in our
business could negatively affect our business and operating results.
In addition, we have made and will continue to make assumptions about the
standards that may be adopted by our customers and competitors. If the
standards adopted differ from those on which we have based anticipated market
acceptance of our services or products, our existing services could become
obsolete. This would have a material adverse effect on our businesses.
Government regulation may adversely effect the use of the Internet and our
business.
Laws and regulations governing Internet services, related communications
services and information technologies, and electronic commerce are beginning to
emerge but remain largely unsettled, even in areas where there has been some
legislative action. It may take years to determine whether and how existing
laws, such as those governing intellectual property, privacy, libel,
telecommunications, and taxation, apply to the Internet and related services
such as ours. In addition, the development of the market for online commerce
and the displacement of traditional telephony services by the Internet and
related communications services may prompt increased calls for more stringent
consumer protection laws or other regulation, both in the United States and
abroad, that may impose additional burdens on companies conducting business
online and their service providers. The adoption or modification of laws or
regulations relating to the Internet, or interpretations of existing law, could
have a material adverse effect on our business.
Risks Related to the Exchange Offer
There could be negative consequences to you if you do not exchange your initial
notes for exchange notes.
Following the consummation of the exchange offer, holders who did not tender
their initial notes generally will not have any further rights under the
registration rights agreement and these initial notes will continue to be
subject to restrictions on transfer. As a result of making the exchange offer,
we will have fulfilled our obligations under the registration rights agreement.
Holders who do not tender their initial notes generally will not have any
further registration rights or rights to receive the liquidated damages
specified in the registration rights agreement for our failure to register the
exchange notes. In addition, the initial notes that are not
16
<PAGE>
exchanged for exchange notes will remain restricted securities. Accordingly,
the initial notes may be resold only:
. to Equinix or one of its subsidiaries;
. to a qualified institutional buyer;
. to an institutional accredited investor;
. to a party outside the United States under Regulation S under the
Securities Act;
. under an exemption from registration provided by Rule 144 under the
Securities Act; or
. under an effective registration statement.
The issuance of the exchange notes may adversely affect the market for the
initial notes.
Following commencement of the exchange offer, you may continue to trade the
initial notes on the Private Offerings, Resales and Trading through Automated
Linkages, or PORTAL, market. However, if initial notes are tendered for
exchange and accepted in the exchange offer, the trading market for untendered
and tendered but unaccepted initial notes could be adversely affected. Any
initial notes tendered and exchanged in the exchange offer will reduce the
aggregate principal amount of initial notes outstanding. Because we anticipate
that most holders will elect to exchange their initial notes for exchange notes
due to the absence of most restrictions on the resale of exchange notes, we
anticipate that the liquidity of the market for any initial notes remaining
outstanding after the exchange offer may be substantially limited.
You may find it difficult to sell your exchange notes.
The exchange notes will be registered under the Securities Act but will not
be eligible for trading on the PORTAL market. The exchange notes will
constitute a new issue of securities with no established trading market, and
there can be no assurance as to:
. the development of any market for the exchange notes;
. the liquidity of any market for the exchange notes that may develop;
. your ability to sell your exchange notes; or
. the price at which you would be able to sell your exchange notes.
We have been advised by the initial purchasers for the initial notes that
they presently intend to make a market in the exchange notes. However, they are
not obligated to do so and may discontinue any market-making activity relating
to the exchange notes at any time without notice. If a market for the exchange
notes were to exist, the exchange notes could trade at prices that may be
higher or lower than their principal amount or purchase price, depending on
many factors, including prevailing interest rates, the market for similar
debentures and our financial performance. Historically, the market for non-
investment grade debt has been subject to disruptions that have caused
substantial volatility in the prices of securities similar to the exchange
notes. We cannot assure you that the market for the exchange notes, if any,
will not be subject to similar disruptions. Any disruption may adversely affect
you as a holder of the exchange notes.
Some people who participate in the exchange offer must deliver a prospectus in
connection with resales of the exchange notes.
Based on certain no-action letters issued by the staff of the Securities and
Exchange Commission, we believe that you may offer for resale, resell or
otherwise transfer the exchange notes without compliance with the registration
and prospectus delivery requirements of the Securities Act. However, in some
instances described in this prospectus under "The Exchange Offer," you will
remain obligated to comply with the registration and prospectus delivery
requirements of the Securities Act to transfer your exchange notes. In these
17
<PAGE>
cases, if you transfer any exchange note without delivering a prospectus
meeting the requirements of the Securities Act or without an exemption from
registration of your exchange notes under this Act, you may incur liability
under the Securities Act. We do not and will not assume or indemnify you
against this liability.
Risks Related to the Exchange Notes
The exchange notes are unsecured and effectively rank behind our secured
indebtedness.
The exchange notes will be general unsecured senior obligations and will
rank equally in right of payment with all our existing and future senior
indebtedness. The exchange notes will be effectively subordinated to all of our
secured indebtedness to the extent of the value of the assets securing such
indebtedness. All of the obligations under our current credit facilities are
either secured by all of the assets of Equinix-DC, Inc. or the assets purchased
from the proceeds of specific indebtedness. We anticipate that all of the
obligations under our future credit facilities will be secured. In a
bankruptcy, liquidation or reorganization of our company, our assets securing
other indebtedness will be available to pay obligations on the exchange notes
only after all indebtedness secured by such assets has been paid in full, at
which point there may not be sufficient proceeds remaining to pay amounts due
on the exchange notes then outstanding.
Management discretion relating to certain business matters will be limited by
restrictive covenants contained in our indebtedness.
Our credit facilities contain, and the indenture governing the exchange
notes contains, a number of restrictive covenants that will limit the
discretion of our management relating to certain business matters. We expect
that our future indebtedness will also contain similar restrictive covenants.
These covenants, among other things, will restrict our ability to incur
additional indebtedness, pay dividends and make other distributions, prepay
subordinated indebtedness, make investments and other restricted payments,
engage in mergers and consolidations, create liens, sell assets, and enter into
certain transactions with affiliates. There can be no assurance that such
covenants will not adversely affect our ability to finance our future
operations or capital needs or to engage in other business activities which may
be in the interests of our company.
We may not have sufficient funds to purchase the exchange notes as required
upon a change of control.
The indenture governing the exchange notes contains provisions relating to
certain events constituting a "change in control" of Equinix. Upon the
occurrence of such a change in control, we will be required to make an offer to
purchase all outstanding exchange notes at a purchase price equal to 101% of
the aggregate principal amount thereof, in addition to the accrued and unpaid
interest (if any) up to the purchase date. We cannot assure you that we would
have sufficient funds to pay the purchase price for exchange notes tendered by
holders seeking to accept such an offer to purchase. Our failure to purchase
all exchange notes validly tendered pursuant to such an offer to purchase would
result in an event of default under the indenture.
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<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These statements relate
to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology--for instance, may, will,
should, expect, plan, anticipate, believe, estimate, predict, potential or
continue, the negative of these terms or other comparable terminology. These
statements are only predictions. Actual events or results may differ
materially. In evaluating these statements, you should specifically consider
various factors, including the risks outlined in the Risk Factors section.
These factors may cause our actual results to differ materially from any
forward-looking statement.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of the forward-
looking statements. We are under no duty to update any of the forward-looking
statements after the date of this prospectus to conform these statements to
actual results or to changes in our expectations.
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<PAGE>
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the exchange
notes in exchange for the outstanding initial notes. The exchange offer is
intended solely to satisfy certain of our obligations under the registration
rights agreement. In consideration for issuing the exchange notes, we will
receive initial notes in like aggregate principal amount.
The net proceeds to us from the original issuance of the initial notes,
after deducting discounts, commissions, expenses and restricted cash were
approximately $155.7 million. We invested approximately $37.0 million of the
net proceeds in a portfolio of U.S. government securities, which were then
pledged as security for the payment in full of interest on the initial notes
through June 1, 2001. We intend to use the balance of such net proceeds for the
buildout of our IBX facilities in the United States and abroad and for other
capital expenditures, working capital and general corporate purposes, including
possible acquisitions of other companies or assets. We currently intend to
allocate substantial proceeds to each of these uses. However, the precise
allocation of funds among these uses will depend on future technological,
regulatory and other developments in or affecting our business, the competitive
climate in which we operate and the emergence of future opportunities.
We have invested such proceeds in U.S. government securities or other short-
term, interest bearing, investment grade securities. We are not currently and
do not expect as a result to become subject to the registration requirements of
the Investment Company Act of 1940, as amended. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
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CAPITALIZATION
The following unaudited table sets forth our capitalization as of September
30, 1999:
. on an actual basis;
. pro forma to give effect to the issuance of additional Series B preferred
stock from October through December 1999 and the additional drawing of
debt; and
. pro forma as adjusted to give effect to the issuance of the initial
notes.
Please read this table in conjunction with our consolidated financial
statements, the related notes to the financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this offering memorandum.
<TABLE>
<CAPTION>
September 30, 1999
------------------------------
Pro Forma
Actual Pro Forma As Adjusted
------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Cash, cash equivalents and short-term
investments.................................... $46,489 $84,150 $239,838
======= ======= ========
Restricted cash (1)............................. $ -- $ -- $ 37,012
======= ======= ========
Current portion of debt and capital lease
obligations.................................... $ 1,706 $ 4,563 $ 4,563
======= ======= ========
Long-term debt, net of current portion:
Debt and capital lease obligations............ 3,734 10,877 10,877
13% Senior notes due 2007..................... -- -- 190,996
------- ------- --------
Total long-term debt......................... 3,734 10,877 201,873
------- ------- --------
Stockholders' equity
Series A convertible preferred stock, $0.001
par value; 14,000,000 shares authorized;
12,455,000 shares issued and outstanding
(2).......................................... 12 12 12
Series B convertible preferred stock, $0.001
par value; 16,000,000 shares authorized
actual, pro forma and pro forma as adjusted;
6,731,290 shares issued and outstanding
actual and 10,511,125 issued and outstanding
pro forma and pro forma as adjusted.......... 7 11 11
Common stock, $0.001 par value; 75,000,000
shares authorized; 6,987,464 shares issued
and outstanding (3).......................... 7 7 7
Additional paid-in capital...................... 69,056 96,713 105,717
Deferred stock-based compensation............... (1,233) (1,233) (1,233)
Accumulated other comprehensive income.......... 147 147 147
Deficit accumulated during the development
stage.......................................... (8,141) (8,141) (8,141)
------- ------- --------
Total stockholders' equity................... 59,855 87,516 96,520
------- ------- --------
Total capitalization....................... $63,589 $98,393 $298,393
======= ======= ========
</TABLE>
- --------
(1) Reflects the portion of the net proceeds from this offering to be used
to purchase a portfolio of U.S. government securities to fund the first
three scheduled interest payments on the notes.
(2) Excludes 830,000 shares of Series A preferred stock issuable upon the
exercise of outstanding warrants.
(3) Excludes 910,430 shares of common stock issuable upon the exercise of
outstanding warrants, 530,000 shares of common stock issued between
September 30, 1999 and November 30, 1999 upon the exercise of options
and 1,748,596 shares of common stock issuable upon the exercise of
outstanding options as of November 30, 1999.
21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following statement of operations data for the periods from our
inception on June 22, 1998 to December 31, 1998, and for the nine months ended
September 30, 1999, and the balance sheet data as of December 31, 1998 and
September 30, 1999 (actual) have been derived from our consolidated financial
statements and the related notes to the financial statements. The statement of
operations data for the nine months ended September 30, 1999 and balance sheet
data as of September 30, 1999, were derived from our unaudited condensed
interim consolidated financial statements included elsewhere in this
prospectus, which, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, which we consider necessary
for a fair presentation of our financial position and results of operations for
this period. Our historical results are not necessarily indicative of the
results to be expected for the full year or future periods. The Pro Forma
column gives effect to the issuance of additional Series B preferred stock from
October through December 1999 and the additional drawing of debt. The Pro Forma
As Adjusted column gives effect to the issuance of the initial notes. The
following selected financial data should be read in conjunction with our
consolidated financial statements and the related notes to the consolidated
financial statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Period from June 22, Nine Months Ended
1998 (inception) to September 30,
December 31, 1998 1999
-------------------- -----------------
(in thousands)
<S> <C> <C>
Statement of Operations Data:
Revenues.............................. $ -- $ --
Operating expenses
Selling, general, and administrative
expenses........................... 782 6,860
Depreciation and amortization....... 4 248
Stock-based compensation............ -- 306
------ -------
Total operating expenses.......... 786 7,414
------ -------
Loss from operations.................. (786) (7,414)
Interest expense....................... -- 138
Interest income........................ (150) (267)
Interest charge on beneficial
conversion of convertible debt........ 220 --
------ -------
Net loss............................... $ (856) $(7,285)
====== =======
Other Financial Data:
EBITDA (1)............................. $ (782) $(7,166)
Net cash provided by (used in)
operating activities.................. (544) 349
Net cash used in investing activities.. (5,517) (62,961)
Net cash provided by financing
activities............................ 10,226 62,029
Ratio of earnings to fixed charges
(2)................................... -- --
</TABLE>
<TABLE>
<CAPTION>
As of September 30, 1999
----------------- -----------------------------
As of Pro Forma
December 31, 1998 Actual Pro Forma As Adjusted
----------------- ------- --------- -----------
(in thousands)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and
short-term investments....... $9,165 $46,489 $84,150 $239,838
Restricted cash (3)........... -- -- -- 37,012
Property and equipment, net... 482 2,879 2,879 2,879
Construction in progress...... 31 22,590 22,590 22,590
Total assets.................. 10,001 75,353 113,014 313,014
Total long-term debt,
excluding current portion.... -- 3,734 10,877 201,873
Total stockholders' equity.... 9,590 59,855 87,516 96,520
</TABLE>
- --------
(1) EBITDA consists of the net loss excluding interest, depreciation and
amortization of capital assets. EBITDA is presented to enhance an
understanding of our operating results and is not intended to represent
cash flow or results of operations in accordance with generally accepted
accounting principles for the period indicated and may be calculated
differently than EBITDA for other companies.
(2) In calculating the ratio of earnings to fixed charges, earnings consist of
net loss before income tax expense and fixed charges. Fixed charges consist
of interest expense. The ratio of earnings to fixed charges was less than
1.0 to 1.0 for each of the periods presented. Earnings available for fixed
charges were thus inadequate to cover fixed charges. The coverage
deficiency for the period from June 22, 1998 (inception) to December 31,
1998 and the nine months ended September 30, 1999 was $856,000 and
$7,285,000, respectively.
(3) Reflects the portion of the net proceeds from the issuance of the initial
notes to be used to purchase a portfolio of U.S. government securities to
fund the first three scheduled interest payments on the notes.
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Equinix's business is to design, build and operate the first neutral
Internet Business Exchange, or IBX, facilities. By providing a neutral meeting
ground for Internet businesses to connect with each other, our IBX facilities
will serve as a catalyst for Internet business growth and development. We
provide equipment colocation, direct high-speed connections, switched
interconnections and professional services to our e-commerce related and
Internet business customers. Over the next four years, we intend to open
approximately 30 IBX facilities in major Internet markets in the U.S., Europe,
Asia and Australia. In July 1999, we opened our first IBX facility in the
Washington, D.C. area. We opened our second IBX facility in Newark, New Jersey,
in December 1999 and intend to open our facilities in San Jose and Los Angeles,
California during the first quarter of 2000. From our inception on June 22,
1998 through September 30, 1999, our operating activities consisted primarily
of designing and building our initial IBX facilities in Washington, D.C. and
Newark, N.J., searching for space for additional IBX facilities, developing our
management team and raising private equity and third party debt to fund the
design and building of our IBX facilities.
We intend to generate revenues primarily from the leasing of cabinet space
and the provisioning of direct interconnections between our customers. In
addition, we intend to offer value-added services which include interconnection
services to our customers through our centrally located switches and access to
our research and development testing environment and professional services
including "Smart Hands" service for customer equipment installations and
maintenance, and network consulting and system integration activities. Customer
contracts for the lease of cabinets, interconnections and switch ports are
renewable and typically range from one to three years with payments for
services on a monthly basis. We entered into our first customer contract in
April 1999. Our non-recurring revenues are comprised of installation charges
that are billed upon successful installation of our customer cabinets,
interconnections and switch ports.
Cost of revenues will consist primarily of rental payments on our IBX
facilities, amortization and depreciation of IBX facility build-out costs and
equipment, utility costs, engineering power, redundancy and security systems
support and services and site employee's salaries and benefits. We expect that
our cost of revenues will increase significantly as we continue our rollout of
additional IBX facilities.
Our selling, general and administrative expenses consist primarily of costs
associated with recruiting, training and managing new employees, salaries and
related costs of our operations, marketing and sales, customer fulfillment and
support functions costs, administrative and finance personnel and professional
fees. To date, we have had no significant sales and marketing activities. We
also intend to expand our sales force. As a result, we expect to significantly
increase our sales and marketing activities.
We expect increased competition in our market and, as a result, a key aspect
of our strategy is to capitalize on our first mover advantage and to execute
our rapid IBX facility rollout program. The rollout of these additional IBX
facilities will significantly increase our fixed and operating expenses,
including expenses associated with hiring, training and managing new employees,
purchasing new equipment, implementing power and redundancy systems, including
engineering support, implementing security services, leasing additional real
estate and related costs and depreciation.
Results of Operations
Period from Inception (June 22, 1998) through December 31, 1998 and the Nine
Month Period ended September 30, 1999
Since our inception in June 1998, we have experienced operating losses and
negative cash flows from operations in each quarter. As of September 30, 1999,
we had an accumulated deficit of $8.1 million. The revenue and income potential
of our business and market is unproven, and our short operating history makes
an
23
<PAGE>
evaluation of our business and prospects difficult. There can be no assurance
that we will ever achieve profitability on a quarterly or annual basis or, if
achieved, will sustain such profitability. See "Risk Factors--We are an early-
stage company, which makes evaluating our business difficult."
Net Revenues. We did not offer IBX facility colocation or interconnection
exchange services from inception through September 30, 1999 as our first IBX
facility in Washington, D.C. had not yet obtained its fiber connectivity from
its telecommunication carriers. We have, however, entered into contracts with
customers and allocated cabinet space to these customers as of September 30,
1999. Although we entered into these customer contracts, including the
collection and receipt of installation fees and other customer deposits, we
have not recognized such amounts as revenues as the sales cycle was not yet
complete. Accordingly, no net revenues were recorded from the date of inception
to December 31, 1998 or during the nine month period ended September 30, 1999.
Cost of Revenues. We did not offer IBX facility colocation or
interconnection exchange services from inception through September 30, 1999 as
our first IBX facility in Washington, D.C. had not yet obtained its fiber
connectivity from its telecommunication carriers. Accordingly, no cost of
revenues was recorded from the date of inception to December 31, 1998 or during
the nine month period ended September 30, 1999.
Selling, General and Administrative. Selling, general and administrative
expenses were $786,000 from the date of inception to December 31, 1998 and $7.1
million in the nine month period ended September 30, 1999. We anticipate that
selling, general and administrative expenses will increase due to increased
sales and marketing activity coinciding with the launch of the our services,
increased staffing levels consistent with the growth in the our infrastructure,
and related operating costs associated with our regional and corporate
expansion efforts.
Stock Based Compensation. As of September 30, 1999, we recorded deferred
stock-based compensation expense aggregating $1.5 million for the difference at
the date of grant between the exercise price and the fair value of the common
stock underlying stock options granted to employees and for the unvested
options held by nonemployees which are subject to revaluation at each balance
sheet date based on the then current fair market value. Of this amount $306,000
was recognized in the nine month period ended September 30, 1999.
Interest Income, net. Interest expense, net of interest income earned on our
cash and cash equivalent balances of $150,000, was $70,000 from the date of
inception to December 31, 1998. Interest income, net of interest expense of
$139,000, was $128,000 in the nine month period ended September 30, 1999.
Interest income consists of short-term interest earned on our cash and cash
equivalent balances for the period ended September 30, 1999.
Liquidity and Capital Resources
From inception through September 30, 1999, we have financed our operations
and capital requirements primarily through the private sale of Series A
preferred stock, Series B preferred stock and partial debt financings for
aggregate gross proceeds of approximately $72.1 million. During 1998, cash
utilized by operating activities was $544,000. The cash utilized in 1998
reflected working capital necessary for employee-related expenses and
facilities expenses.
Our principal source of liquidity as of December 31, 1998 consisted of $9.2
million in cash, cash equivalents and short-term investments. In March 1999, we
entered into a loan and security agreement in the amount of $7.0 million
bearing interest at 7.5% to 9.0% per annum repayable in 36 to 42 equal monthly
payments with a final payment equal to 15% of the advance amounts due at
maturity. In May 1999, we entered into a master lease agreement in the amount
of $1.0 million. This master lease agreement was increased by addendum in
August 1999 by $5.0 million. This agreement bears interest at either 7.5% or
8.5% and is repayable over 42 months in equal monthly payments with a final
payment equal to 15% of the advance amounts due on maturity. In August 1999, we
entered into a loan agreement in the amount of $10.0 million. This loan
agreement bears interest at 8.5% and is repayable over 42 months in equal
monthly payments with a
24
<PAGE>
final payment equal to 15% of the advance amounts due on maturity. At November
30, 1999, we had total debt and capital lease financing available of $23.0
million. Of this amount, $15.2 million was outstanding at November 30, 1999.
On December 10, 1999, we completed the private sale of Series B preferred
stock in the aggregate amount of $82.8 million. As of such date, we had $221.9
million of cash, cash equivalents and short-term investments.
We currently intend to open approximately 30 IBX facilities over the next
four years, 12 of which we expect to complete by the end of 2000. We intend to
finance these IBX facilities through cash flow from our existing IBX facilities
and approximately $750.0 million of additional financing. Currently we have
$221.9 million in cash, cash equivalents and short-term investments available
to us. We anticipate that the funds currently available to us are sufficient to
fund the capital expenditure and working capital requirements, including
operating losses, associated with the initial rollout of eight IBX facilities
and three IBX facility expansion projects, which we expect to complete by the
end of 2000. To complete the implementation of our approximately 30 site
rollout plan within our proposed time frame we anticipate that we will need to
raise funds through a combination of additional debt or equity financing. If we
cannot raise sufficient additional funds on acceptable terms, or in amounts
required by us, we may delay the rollout of additional IBX facilities or
permanently reduce our rollout plans. We anticipate each IBX facility will be
able to generate cash flows sufficient to cover its costs and expenses. If we
are unable to raise additional funds to further our rollout, we anticipate that
the cash flow generated from the IBX facilities, for which we will have
obtained financing, will be sufficient to meet the working capital, debt
service and corporate overhead requirements associated with those IBX
facilities.
The anticipated operating results of our IBX facilities are projections and
are inherently uncertain. When you evaluate this information, you should
consider the information contained in the risk factors section of this
prospectus.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards, or SFAS, No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including derivative
instruments embedded in other contracts, and for hedging activities. SFAS No.
133, as amended by SFAS No. 137, Deferral of the Effective Date of FASB
Statement No. 133, is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. This statement does not currently apply to us
and we do not have any derivative instruments or hedging activities.
Year 2000 Compliance
The year 2000 issue is the result of computer programs written using two
digits rather than four to define the applicable year, the "year 2000 issue."
Computer programs that have such date-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in a
system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send
invoices or engage in similar normal business activities.
We are heavily dependent upon the proper functioning of our own computer or
data-dependent systems. This includes, but is not limited to, our information
systems in business, finance, operations and service. Any failure or
malfunctioning on the part of these or other systems could adversely affect us
in ways that are not currently known, discernible, quantifiable or otherwise
anticipated by us.
We have conducted and completed an initial review of our critical internal
financial, informational and operational systems to identify and evaluate those
areas that may be affected by the year 2000 issue. We are currently devising a
plan to implement and test any necessary modifications to these key areas to
ensure that they are year 2000 compliant. We anticipate that this plan will
include:
25
<PAGE>
. independent validation of our year 2000 assessment procedures;
. initiation of formal communications with all of our significant
suppliers, large customers and tools vendors to determine the extent to
which we are vulnerable to those third parties' failure to remedy their
own year 2000 issues;
. testing of critical systems to the extent possible; and
. the development of contingency plans to address situations that may
result if we are unable to achieve year 2000 readiness of our critical
operations.
We anticipate that any required remediation programs will be completed by the
end of calendar 1999.
To date, we have not incurred incremental material costs associated with
efforts to become year 2000 compliant, as the majority of the costs have
recently been incurred in the normal course of business. Furthermore, we
believe that future costs associated with our year 2000 compliance efforts will
not be material.
In addition to the risks associated with our own systems, we have
relationships with, and are to varying degrees dependent upon, a large number
of third parties that provide information, goods and services to us. Our
business and results of operations could experience material adverse effects if
our key suppliers were to experience year 2000 related problems that caused
them to delay manufacturing or shipment of finished product to us. In addition,
our results of operations could be materially adversely affected if any of our
key customers encounter year 2000 related problems that cause them to delay or
cancel substantial purchase orders or delivery of our product. We have begun to
initiate formal communications to ascertain the year 2000 compliance of our key
suppliers and determine the extent to which we may be vulnerable to those third
parties' failure to remedy their own year 2000 issues.
While we plan to complete modifications or upgrades of our business-critical
systems prior to the year 2000, we cannot be certain that we will be able to
upgrade any or all of our major systems in accordance with such plan. If such
modifications or upgrades or modifications by key suppliers or customers are
not completed in a timely manner or are not successful, we may be unable to
conduct our business, which would substantially harm our operations and
financial position. In addition, we cannot be certain that any such upgrades
will effectively address the year 2000 issue. Furthermore, there can be no
guarantee that the systems of other companies on which we rely for the
manufacture of our products will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with our
systems, would not have a material adverse effect on our business. We cannot
predict the extent of any such impact.
We cannot be certain that we or any third party will be able to avoid any
unforeseen problems with respect to any of our systems, which unforeseen
problems could have a material adverse effect on our operations and financial
position. We are currently evaluating possible actions, including accumulating
excess inventory of our finished products, to be taken in the event that the
assessment of the year 2000 issue is not successfully completed on a timely
basis. However, we have not yet established a formal contingency plan.
Quantitative and Qualitative Disclosures About Market Risk
Equinix has limited exposure to financial market risks, including changes in
interest rates. An increase or decrease in interest rates would not
significantly increase or decrease interest expense on debt obligations due to
the fixed nature of our debt obligations. Our interest income is sensitive to
changes in the general level of U.S. interest rates, particularly since the
majority of our investments are in short-term instruments. Due to the short-
term nature of our investments, we believe that we are not subject to any
material market risk exposure. Equinix does not currently have any foreign
operations and thus is not currently exposed to foreign currency fluctuations.
26
<PAGE>
BUSINESS
Overview
Equinix's business is to design, build and operate the first neutral
Internet Business Exchange, or IBX, facilities. By proving a neutral meeting
ground for Internet businesses to interconnect with each other, our IBX
facilities are designed to serve as a catalyst for Internet business growth and
development. We provide equipment colocation, direct high-speed connections,
switched interconnections and professional services to our e-commerce related
and Internet business customers that include content providers, or CPs,
Internet service providers, or ISPs, carriers and component service providers,
or CSPs. By locating at our IBX facilities, our customers place their Internet
operations at a central exchange point for Internet traffic while gaining the
benefits of the highest level of security, redundancy, scalability and service.
As a result, our customers are better positioned to capitalize on market
opportunities, expand their business offerings and enter new markets. We intend
to open approximately 30 IBX facilities in major Internet markets in the U.S.,
Europe, Asia, South America and Australia. In July 1999, we opened our first
IBX facility in the Washington, D.C. area and in December 1999 we opened our
second IBX facility in Newark, New Jersey. We intend to open IBX facilities in
San Jose and Los Angeles, California, during the first quarter of 2000. Our
current customers include Akamai, Cable & Wireless, Concentric Network, Ernst &
Young Technologies, iBeam Broadcasting, MCI WorldCom, NaviNet, NetRail,
NorthPoint Communications and Teleglobe.
We were founded in June 1998 and are led by Albert M. Avery, IV, our
president and chief executive officer, and Jay S. Adelson, our vice president,
engineering and site development and chief technology officer, who were
responsible for designing, building and operating the Palo Alto Internet
Exchange, or PAIX, one of the most active global Internet traffic exchange
points. PAIX launched commercial service in July 1996 and was functioning at
full capacity within one year of introduction.
Since March 1999, we have raised more than $300 million to fund the rollout
of our IBX facilities. Our stockholders are many of the most influential
companies driving the development, operation and utilization of the Internet
and its transformation to a reliable, trusted medium for commerce. They include
America Online, Artemis S.A., Benchmark Capital, the Carlyle Group, Cisco
Systems, Comdisco Ventures, Dell Corporation, E*Trade Group, Enron Corporation,
epartners Capital (News Corp.), Finlayson Investments (Temasek), Microsoft
Corporation, Millennium System Trading Limited (Pacific Century Group), Morgan
Stanley Dean Witter, NorthPoint Communications, Reuters and Salomon Smith
Barney.
Market Opportunity
Since the early 1990s, the Internet has experienced tremendous growth and is
emerging as a global medium for communications and commerce. According to
International Data Corporation, or IDC, the number of Internet business-to-
business users worldwide will increase from approximately 142 million at the
end of 1998 to approximately 502 million by 2003. In addition, according to
Forrester Research, the number of Internet sites worldwide is expected to grow
from fewer than 500,000 in 1997 to approximately 4.0 million in 2002. IDC also
states that worldwide Internet business commerce sales are forecast to grow
from approximately $50 billion at the end of 1998 to approximately $1.3
trillion by the end of 2003.
The Internet's explosive growth has led to chronic problems in the quality
and reliability of Internet-related services delivered to the end user.
Infrastructure has not kept pace with demand. Businesses have tried to
alleviate these problems by relocating Internet content closer to core
communications centers, upgrading network bandwidth and employing technologies
such as web page caching. Unfortunately, these attempts have not been
sufficient to ensure consistently high quality service. As broadband access, e-
commerce and streaming media applications continue to gain market acceptance,
businesses must find new solutions to ensure that the Internet infrastructure
will meet their needs for Internet commerce.
Traditionally, the Internet was thought of as just a network of networks.
The distribution of content and delivery of services between thousands of
individual networks occurred at network access points, or NAPs. These original
NAPs were typically built in pre-existing telecommunications carrier facilities
and run by
27
<PAGE>
companies such as MCI WorldCom, Sprint and Pacific Bell. Because operating the
NAPs is not a core business for these carriers, they have not made the
necessary investments in the NAPs to effectively manage the rapid growth in
Internet traffic. As a result, these NAPs have emerged as one of the primary
bottlenecks to improved Internet communications. The problems inherent in the
NAPs stem from a number of sources:
Carrier monopoly. Ownership by the major carriers results in a lack of
neutrality, essentially providing the carriers with a monopoly on all
communications services provided. This can cause the services to be costly
and provides no redundancy to the ISPs and other carriers within the
facilities.
Limited scalability. There are a limited number of NAPs in the U.S. that
handle the majority of Internet traffic exchange. These NAPs are physically
constrained and unable to handle the tremendous growth in Internet traffic.
As a result, only the largest carriers and ISPs receive preferential space
allocation at the NAPs, leaving small and mid-sized companies without the
ability to colocate at these facilities.
Legacy technologies. The NAPs were designed around outdated technologies
that have limited their capacity. For example, the core switches in these
facilities cannot scale to meet the traffic growth, which in some cases has
resulted in significant packet loss and latency. The lack of direct
connections between ISPs within the NAPs has compounded this problem.
On the Internet today, business content has become more valuable than many
of the networks that support it. In the legacy NAPs, however, the lack of AC
power, poor air conditioning, lack of financial-grade security, inadequately
trained support staff and limited facility access have made it impractical for
content providers to locate their content at central communications exchange
points.
A variety of businesses, including emerging carriers, Web site hosting
companies, ISPs and more focused new entrants are beginning to provide improved
colocation services for Internet content. Forrester Research predicts that a
combination of rapid Internet growth and increased outsourcing of Internet-
related services will create an acute need for Internet-related hosting and
colocation services, producing revenue growth in the U.S. from approximately
$875 million in 1998 to approximately $14.7 billion by 2003. While the demand
for these colocation services is significant, most new colocation facilities
are being constructed by telecommunications carriers and ISPs. Internet and e-
commerce companies who choose to colocate equipment at these facilities
typically have no choice but to purchase bandwidth from the owner of the
facility. This can be costly, given the lack of competition, and a significant
risk if the facility owner's network were to fail or have performance problems.
IDC estimates that the number of non-U.S. Internet users will grow from
approximately 79 million at the end of 1998 to approximately 325 million by the
end of 2003. Rapid growth of international Internet usage has created an
unprecedented need for additional internationally-based central Internet
traffic exchange points. Unfortunately, there are a limited number of NAPs
outside of the U.S. As a result, non-U.S. traffic is often routed through one
of the U.S. NAPs, whether or not that serves as the most efficient route,
resulting in inefficiency and wasted resources. These routing inefficiencies
burden international ISPs with high operating costs and often result in slow,
unreliable transmissions.
As a result of tremendous competitive, time-to-market and technological
pressures, Internet and e-commerce companies are demanding facilities that
provide multiple interconnections with a broad cross-section of service
providers and customers in a neutral environment conducive to rapid growth and
optimal flexibility. Unfortunately, the tremendous growth of Internet usage and
e-commerce has aggravated the inefficiencies of the current Internet
architecture, which has constrained businesses' abilities to effectively grow
and manage their Internet operations.
The Equinix Solution
Our neutral IBX facilities are designed to solve many of the infrastructure
problems facing Internet businesses today. They will provide environments that
stimulate efficient business growth by encouraging
28
<PAGE>
independent Internet supplier companies to deliver a wide variety of services.
We are able to provide the following key benefits to our customers:
Choice. We believe that the ability of customers to choose among a variety
of product and service providers is the fundamental driver of dynamic growth in
commerce. By offering this crucial element of choice, our IBX facilities are
designed to serve as a catalyst for our customers that creates synergy among
them and makes it possible for them to adapt their business models to
successfully scale with the growth of each other and of the Internet. Internet
and e-commerce related businesses view the IBX facility as a forum to attract
additional customers and diversify sources of supply for their businesses.
Opportunity to Increase Revenues and Reduce Costs. As a result of the
proposed size of our IBX facilities and the anticipated large amount of
Internet and e-commerce related business we expect to attract, our customers
will have access to a multitude of potential business partners. Accordingly,
our customers will have a better opportunity to increase the size of their
addressable markets, accelerate revenue growth and improve the quality of their
services at our IBX facilities. In addition, participants will be able to
enhance their ability to control costs by aggregating their service purchases
at a single location and through improved purchasing power.
Scalability. We design our IBX facilities for physical scalability and
scalability from the perspective of an individual customer's ability to
transact business. As a result, our IBX facilities will both stimulate and
support the efficient growth of our customers. From a facility perspective, we
construct our IBX facilities to be large enough to accommodate our customers'
short-term needs, and our plan is to maintain sufficient available expansion
space to meet their long-term growth needs where possible. In addition, through
our global presence we will have a broad capacity to meet customers' multi-
market and multi-geographic requirements. On an individual basis, customers are
able to design their own unique cabinet configurations within a shared or
private cage environment. As the need arises, customers can expand within their
original cage or upgrade into a cage which meets their expanded requirements.
We predict that customers will require this added capacity as they interconnect
with each other and expand their customer reach.
Reliability. Our IBX design provides our customers with reliable and
disaster-resistant environments that are necessary for optimum Internet
commerce interconnection. We believe that the level of excellence and
consistency achieved in our IBX architecture and design results in premium,
secure, fault-tolerant exchanges. Our IBX facilities are designed to offer our
customers redundant, high-bandwidth Internet connectivity through multiple
third-party connections. Additionally, our solutions include multi-level
financial grade security, scalable cabinet space availability, on-site trained
staff 24x365, dedicated areas for customer care and equipment staging,
redundant AC/DC power systems and multiple other redundant, fault-tolerant
infrastructure systems.
Value Added Services. In addition to our core services, we offer advanced
products and value-added services that are intended to assist customers in
improving the quality of their interconnection and traffic exchange. Such
services include high-speed interconnects through our central switching fabric,
route servers, root DNS servers, rubidium-disciplined clock sources and NTP
servers, as well as a collaborative research environment. In addition, we
enable collaborative research activities amongst our customers, which provide
our customers with the opportunity to test their advanced products and services
in a high-bandwidth production setting as well as gain exposure to leading-edge
Internet products and technologies.
Equinix Strategy
Our objective is to be the business-to-business Internet communications
market leader for Internet commerce by attracting a wide variety of
complementary business partners and providing the highest level of service in
our IBX facilities. To accomplish this objective we are employing the following
strategies:
Capitalize on Our Neutrality. IBX neutrality means we provide our customers
with the freedom to choose their preferred product and service providers. We
call this a neutral environment and it is one of the fundamental
characteristics of an IBX facility. This is a significantly improved approach
compared with the
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current Internet model where ISPs and telecommunications carriers own and
operate the majority of colocation and exchange facilities. Our customers
benefit from a neutral environment that stimulates efficient business growth
through accelerated network economics created by the efficient and rapidly
growing interaction between business Internet service providers, sometimes
called "network effects."
Target a Balanced IBX Customer Base. As a key aspect to fostering efficient
interaction and promoting choice, reliability and redundancy, we intend to
actively manage our customer base at each IBX facility to include a balanced
number of Internet and e-commerce related businesses. For example, we will seek
to ensure that an e-mail service provider located in an Equinix IBX facility
will be able to market its services to many CPs, ISPs, or, a CP located in an
Equinix IBX facility will have a choice of multiple bandwidth providers to
establish redundancy while commanding the purchasing leverage to demand higher
service quality at a lower bandwidth cost.
Expand Globally and Capitalize on First Mover Advantage. We believe that
capitalizing on our first mover advantage is essential to establishing
leadership in the rapidly developing neutral Internet business exchange market.
As a result, we currently plan to launch an aggressive IBX facility rollout
program over the next twelve to eighteen months and open a total of 12 IBX
facilities in the United States and internationally. Three additional IBX
facilities are scheduled to open in the United States by the end of the first
quarter of 2000. Another eight IBX facilities are scheduled to open in 2000 in
the U.S., Europe, Asia and Australia. We believe the demand for our
international IBX facilities and services will be significant due to the early
stage of Internet infrastructure deployment outside of the U.S.
Establish Equinix as the Leading Brand for IBX facilities. We plan to
establish Equinix as the industry standard for the highest quality Internet
connections. Through brand awareness and promotion we intend to create a strong
following among all top CPs, ISPs, carriers and CSPs. We believe that this
strong brand awareness, combined with our ability to provide the highest
quality Internet interconnection services and physical facilities and
professional services will provide us with a competitive advantage in our
market.
Leverage Blue-Chip Investor Base. Our stockholders are some of the most
influential companies driving the development, operation and utilization of the
Internet. They provide us with invaluable technical and business insight,
industry contacts and customer relationships to help expedite the expansion of
our business. These stockholders include America Online, Artemis S.A.,
Benchmark Capital, the Carlyle Group, Cisco Systems, Comdisco Ventures, Dell
Corporation, E*Trade Group, Enron Corporation, epartners Capital (News Corp.),
Finlayson Investments (Temasek), Microsoft Corporation, Millennium System
Trading Limited (Pacific Century Group), Morgan Stanley Dean Witter, NorthPoint
Communications, Reuters and Salomon Smith Barney.
Continue Providing Leading-Edge Products and Services. Part of our
competitive advantage is our ability to provide leading edge products and
services to our customers. To this end, we encourage our customers to research
and test their new technologies within our state-of-the-art research and
development environment. We make available our on-site support and research
areas and enable our customers to house their own equipment within the IBX
facility. By collaborating with leading technology companies we believe we are
positioned at the forefront of Internet technology development. As we increase
our scale and customer base, we will have numerous opportunities to cross-sell
additional infrastructure services such as measurement and testing, network-
monitoring, network consulting and design and system integration.
Customers
Customers typically sign renewable contracts of one to three years in
length, often with options on additional space. Our current customers,
including Akamai, Cable & Wireless, Concentric Network, Ernst & Young
Technologies, iBeam Broadcasting, MCI WorldCom, NaviNet, NetRail, NorthPoint
Communications, Teleglobe and others, have subscribed for approximately 27% of
the capacity of our Washington, D.C. IBX facility. Additionally, Akamai,
NetRail and NorthPoint Communications have signed multi-site agreements.
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Historically, Internet businesses have been vertically integrated and
provided all services directly to their customers. These services typically
include marketing, access and backbone connectivity, server hosting, and other
services such as e-mail and usenet newsgroups. Continued rapid growth,
innovation, competition and scarce human resources have opened the door for
companies to specialize in core Internet services and turn to best-of-breed
suppliers to provide other elements of their product. These specialized players
include:
. content providers supplying information, education or entertainment
content and conducting the sale of goods and services;
. Internet service providers offering end-users Internet access and
customer support;
. carriers, such as long haul and local loop fiber, DSL and fixed wireless
access; and
. component service providers offering ASP and web hosting, e-mail, usenet
newsgroups and content distribution.
We consider these specialized players to be the core of our customer base
and we offer each customer solutions that are designed to meet their unique and
changing needs.
We believe our IBX facilities provide the following benefits to our
customers:
Type of Customer: Benefits
Content Providers . Choice among multiple bandwidth providers and
CSPs
. Avoidance of local loop and transport charges
. Scalable, flexible, fault-tolerant environment
. Cost savings through aggregating purchases at a
single location
. Expedited provisioning of services
. Minimize packet loss and latency issues
. Colocation at a central exchange point for
Internet traffic
. Financial grade security and 24x7 Internet
trained staff
Internet Service Providers . Direct peering with other ISPs over private
high-speed dedicated interconnections
. Simplified outsourcing of various component
services, including DSL, e-mail, usenet and
content distribution
. Expedited, flexible, scalable and cost-efficient
bandwidth provisioning
. Elimination of capital investments for
facilities
. Centralized audience for products and services
Carriers . Economies of scale with reduced capital costs
. Ability to focus on core competencies
. Centralized market with access to dozens of
potential customers
Component Service Providers
. Proximity to customers reduces operations,
technology and marketing costs and speeds
service deployment
. Avoidance of local loop and transport charges
. Improved quality of service through direct
connections
Services
Within our IBX facilities we provide our customers with equipment colocation
and interconnection, value-added services, and professional services.
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Equipment Colocation Services
Within our IBX facilities, customers can colocate and interconnect their
equipment and perform high bandwidth communications while bypassing the public
Internet and avoiding local loop and transport charges often associated with
such arrangements. Customers can use these interconnections for a variety of
purposes, including private peering, delivery of services or connecting to
private WANs.
Cabinets. Customers have the choice of colocating their equipment in shared
cages or in their own locked, secure cabinets and, in either case, are able to
design their own unique cabinet configurations. Cabinet spaces are available in
half height (42), sufficient for a basic networking presence or full height
(84), suitable for networking and server colocation. Cable trays support cables
between and among cabinets. Stationary or slide shelves and enclosed cabinets
are available upon request. As a customer's colocation requirements increase,
they can expand within their original cage or upgrade into a cage that meets
their expanded requirements.
Shared Cages. A shared cage environment is designed for customers needing
less than ten full cabinets to house their equipment. Each cabinet in a shared
cage is individually secured with an advanced trackable electronic locking
system and the cage itself is secured with a biometric hand-geometry system.
Private Cages. Customers that contract for a minimum of ten full cabinets
can use a private cage to house their equipment. Private cages are also
available in larger full cabinet sizes. Each private cage is individually
secured with a biometric hand-geometry system.
Direct Connections. Customers requiring a dedicated communications link may
directly connect to each other. Direct connections are Any Mode Any Speed,
which means they can include single-mode fiber, multi-mode fiber, and other
media upon request, as well as handle any speed required by the customer. These
cross connections are customized and terminated per customer instructions and
may be implemented within 24 hours of request.
Value-Added Services
Central Switching Fabric. Customers may choose to connect to our redundant
central switching fabric rather than purchase direct connections. Our central
switching fabric can accommodate select port connections at speeds of OC-3, OC-
12 and OC-48c with transmission speeds of 155 Mbps, 622 Mbps and 2,488 Mbps,
respectively.
Core Infrastructure Services. Those customers with a port connection on the
central switching fabric have access to multiple core infrastructure services.
These services address critical intelligent networking requirements and assist
customers in improving the quality of their interconnection and traffic
exchange. Current core infrastructure services include route servers, root DNS
servers, rubidium-disciplined clock sources and NTP servers.
Emerging Technologies Environment. Our IBX customers enjoy access to a
research and development environment for testing new products and technology in
a production setting. For example, this environment features alternative
central switching fabric platforms on various participating vendor's equipment,
each operating with simulated production-level traffic, dedicated cabinet space
and on-site and remote technical support. Customers can connect to these
systems to perform various tests. Other technologies, such as new protocols,
server-based information services, multicast and caching may be staged and
tested in our IBX facilities. Our philosophy is to collaborate with our
customers and work independently to test, prove and select the best
technologies and solutions for next-generation networking to enhance the
scalability of Internet-related businesses. Current projects address monitoring
and caching technologies, multicast networks and systems and various switching
products.
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Professional Services
Our IBX facilities are staffed with highly trained Internet and
telecommunications specialists who are available on a 24x365 basis. These
professionals are trained to perform installations of customer equipment and
cross connections, and integration and support services.
"Smart Hands" Services. Our customers can take advantage of our professional
"Smart Hands" service, which gives customers access to our IBX staff for a
variety of troubleshooting tasks, when their own staff is not on site. These
tasks include power cycling, card swapping, and performing emergency equipment
replacement. Services are available on-demand or by customer contract.
Other Professional Services. We also provide network consulting and system
integration services to our customers.
IBX Design and Staffing
Our IBX facilities are designed to provide a state-of-the-art, secure, full-
service, neutral operating environment of typically 900 cabinets (50,000 square
feet) in the first-phase buildout for colocation of customer equipment. The IBX
facilities are designed to provide specific and compelling improvements over
legacy facilities, including improved security, redundancy of all key
infrastructure systems and improved customer care. An IBX facility is divided
into six basic functional areas--access, customer care, colocation,
telecommunications access, mechanical and power systems and operations.
Access Area. The access area includes a bullet-resistant guard booth; a
welcome area, a hand-geometry enrollment station, and a mantrap to further
control access to the IBX facility. All doors and access ways are secured with
biometric hand-geometry readers to ensure absolute identification and
authentication. All customers and Equinix employees entering an Equinix IBX
facility must be cleared through this secured zone.
Customer Care Area. The customer care area includes a seating section,
conference rooms, Internet workstations, customer equipment preparation work
areas, equipment lockers, a game room, bathrooms, showers and a kitchen.
Colocation Area. The colocation area is divided into large cages to house
networking and customer computer equipment that is secured by biometric
security access systems. This area includes dual independent AC and DC power
distribution systems, full-automated CCTV digital camera security surveillance,
and a tamper-proof overhead cable-management system with separate trays for
fiber and copper data, AC power and DC power cables. Access to the colocation
area is through the customer care area.
Telecommunications Access Area. All IBX facilities will have a minimum of
two dedicated fiber entry vaults for telecommunications carrier access to the
colocation area. In addition, every IBX facility has roof space or a separate
platform for customers who access the IBX facility via wireless devices such as
satellite dishes, radio antennae and microwave.
Mechanical and Power Systems Area. The mechanical and power systems area
includes machine rooms and space used to house all mechanical, power safety and
security equipment. Fully redundant heating, ventilation, air conditioning and
power systems, as well as dual electric utility feeds support all areas of the
IBX facility. Power systems are designed and periodically tested to
transparently handle rapid transition from public utility power to back-up
power. The AC uninterruptable power supply and DC battery systems are
configured to operate a fully occupied IBX facility for a minimum of fifteen
minutes. If there is a utility power failure, the on-site generator system
could be brought on-line in less than eight seconds through an automatic
transfer switch to supply seamless, uninterrupted power to the IBX facility.
The emergency generators, located in a specially equipped area, supply power to
the AC and DC systems. On-site fuel tanks store sufficient fuel to power a
fully occupied IBX facility for a minimum of 48 hours.
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Operations Area. The operations area houses the IBX manager's office, an
operations center for staff technicians and office space for visiting Equinix
employees. It includes consoles for monitoring all IBX environmental systems
and for tracking all activities at the IBX facility. In selected IBX
facilities, this area will house regional operations centers that will monitor
the operations of several IBX facilities.
Other Specifications
Security System. All access controls and other security functions are
connected to a central security computer system that controls access to the
interior and exterior perimeters of the IBX facilities. An armed security guard
located behind the bullet-resistant security console controls access to the
colocation area. The caged sections of the colocation area can only be accessed
through hand-geometry readers located on cage doors. CCTV digital cameras
connected to a central system at the security console monitor and record all
activity within the IBX facility, as well as the perimeter and the roof.
Staffing. A typical IBX facility is staffed with nine Equinix employees,
including one IBX manager and eight technical service personnel who provide
24x365 coverage for customer support needs. In addition, an IBX facility has
two armed security guards on duty at all times, a chief engineer and 24-hour
technical support.
Other. For security purposes, an Equinix IBX facility is anonymous. No
indications of facility ownership or function are visible from the exterior. In
addition, there are no raised floors and all walls are airtight and without
windows. Our IBX facilities are designed with advanced fire suppression
systems, either a FM-200 gas type or a multi-zoned dry-pipe system, both of
which are armed with sensory mechanisms to sample the air and raise alarms
before pressurization or release. Finally, an Equinix IBX facility is designed
to withstand a seismic event of 7.5 as measured on the Richter scale.
IBX Rollout Schedule
The objective of our global rollout strategy is to rapidly establish a
leadership position in the mission critical Internet and e-commerce market. We
intend to open approximately 30 IBX facilities in major Internet markets in the
U.S., Europe, Asia, South America and Australia over the next four years. We
opened our first IBX facility in July 1999 in Ashburn, Virginia, our
Washington, D.C. IBX facility, and, in December 1999, we opened our second IBX
facility in Newark, New Jersey. During the first quarter of 2000, we intend to
open additional IBX facilities in San Jose and Los Angeles, California. Through
the remainder of 2000, our rollout consists of opening IBX facilities in
Chicago, Illinois; Atlanta, Georgia; London, England; Hong Kong; Dallas, Texas;
Amsterdam, Netherlands; Paris, France; and Frankfurt, Germany. In addition, we
are planning major expansions to our Washington, D.C. and San Jose IBX
facilities. The scalable nature of our IBX model enables us to be flexible in
response to changing market opportunities. As a result, the timing and
placement of our IBX facilities will vary depending on numerous factors,
including competitive, technological, regulatory and other developments.
Sales and Marketing
Sales
We use a direct sales force to market our services to Internet and e-
commerce related businesses. We are organizing our sales force by customer
segments as well as establishing a sales presence in diverse geographic
regions, which will enable efficient servicing of the customer base from a
network of regional offices. A regional office is comprised of a manager, sales
representatives and technical support personnel. While we may contemplate other
distribution channels and reseller arrangements in the future, through the year
2000 substantially all revenues will be generated by direct sales.
Before opening an IBX facility, we will focus on securing key anchor
customers and generating sales commitments for at least 20% of the available
capacity. Our sales strategy is to focus our efforts on the top 25 companies in
our customer segments, which include content providers, ISPs, carriers and
CSPs. Momentum in
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the selling process and the presence of anchor customers are important to
attracting additional potential customers who see the IBX facility as an
opportunity to generate new customers and revenues in a business exchange
environment and to improve the quality of their colocation services. We expect
a substantial number of customers to contract for services at multiple IBX
facilities and have already received orders from three such customers. At each
IBX facility, our sales representatives will screen prospective customers and
will manage the population of the IBX facility to ensure an appropriate mix of
customer types.
Marketing
To support our sales effort and to actively promote and solidify the
Equinix brand, we plan to conduct comprehensive marketing programs. Our
marketing strategies will include an active public relations campaign, print
advertisements, online advertisements, trade shows, speaking engagements,
strategic partnerships and on-going customer communications programs. We are
focusing our marketing effort on business and trade publications, online media
outlets, industry events and sponsored activities. We participate in a variety
of Internet, computer and financial industry conferences and encourage our
officers and employees to pursue speaking engagements at these conferences. In
addition to these activities, we intend to build recognition through
sponsoring industry technical forums, participating in Internet industry
standard-setting bodies, such as the Internet Engineering Task Force, and
delivering white papers that address Internet infrastructure issues at
conferences.
Competition
Our market is new, rapidly evolving, and likely to have an increasing
number of competitors. To be successful in this emerging market, we must be
able to differentiate ourselves from existing colocation and web hosting
companies. We may also face competition from persons seeking to replicate our
IBX concept. We may not be successful in differentiating ourselves or
achieving widespread market acceptance of our business. Furthermore,
enterprises that have already invested substantial resources in peering
arrangements may be reluctant or slow to adopt our approach that may replace,
limit or compete with their existing systems. If we are unable to complete our
IBX facilities in a timely manner, other companies will be able to attract the
same customers that we are targeting. Once the customers are located in our
competitors' facilities, it will be very difficult, if not impossible, to
convince them to relocate to our IBX facilities.
We may encounter competition from a number of sources, some of which may
also be our customers, including:
Web site hosting, colocation and ISP companies such as AboveNet, Digital
Island, Exodus, Frontier GlobalCenter, Globix, PSINet and Verio;
established communications carriers such as AT&T, Level 3, MCI WorldCom,
Qwest and Sprint; and
emerging colocation service providers such as Colo.com, IX Europe,
Neutral Nap and Telehouse.
Potential competitors may bundle their products or incorporate colocation
services in a manner that is more attractive to our potential customers than
purchasing cabinet space in our IBX facilities and utilizing our services.
Furthermore, new competitors or alliances among competitors may emerge and
rapidly acquire significant market share. Our competitors may be able to
respond more quickly to new or emerging technologies and changes in customer
requirements than we can.
Some of our potential competitors have longer operating histories and
significantly greater financial, technical, marketing and other resources than
we do. In particular, carriers and several hosting and colocation companies
have extensive customer bases and broad customer relationships that they can
leverage, including relationships with many of our potential customers. These
companies also have significantly greater customer support and professional
service capabilities than we do. Because of their greater financial resources,
some of these companies have the ability to adopt aggressive pricing policies.
As a result, in the future we may have to
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adopt pricing strategies that compete with such competitors to attract and
retain customers. Any such pricing pressures would adversely affect our ability
to generate revenues.
Employees
As of November 30, 1999, we had 85 full-time employees and two full-time
consultants. We had 67 employees based at our corporate headquarters in Redwood
City, California and our regional sales offices in New York, NY and Reston, VA,
and 18 employees based at our Washington, D.C. and Newark, N.J. IBX facilities.
Of those employees, 49 were in engineering and operations, 20 were in sales and
marketing and 16 were in management and finance.
Properties
Our executive offices are located in Redwood City, CA. We have entered into
lease commitments for IBX facilities in Ashburn, VA, Newark, NJ, San Jose and
Los Angeles, CA and Chicago, IL. Relating to future IBX facilities, we do not
intend to own real estate or buildings but rather continue to enter into lease
agreements with a minimum term of ten years, renewal options and rights of
first refusal on space for expansion.
Legal Proceedings
We are currently not involved in any litigation.
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MANAGEMENT
Officers, Key Employees and Directors
Our officers, key employees and directors, and their ages as of December 29,
1999, are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Albert M. Avery, IV......... 56 President, Chief Executive Officer and Director
Jay S. Adelson.............. 29 Vice President, Engineering, Chief Technology
Officer and Director
Philip J. Koen.............. 47 Chief Financial Officer and Secretary
Marjorie S. Backaus......... 37 Vice President, Marketing
Roy A. Earle................ 43 Vice President, IBX Development
Peter T. Ferris............. 42 Vice President, Worldwide Sales
Gregory F. McHugh........... 50 Vice President, Operations
William B. Norton........... 35 Director of Business Development
Andrew S. Rachleff.......... 40 Director
Michelangelo Volpi.......... 33 Director
</TABLE>
Albert M. Avery, IV, one of our founders, has served as Equinix's president,
chief executive officer and a director since our inception in June 1998. During
the period from February 1996 to June 1998, Mr. Avery was general manager of
the Palo Alto Internet Exchange (PAIX) of Digital Equipment Corporation (DEC),
a division of Compaq. During the period from March 1994 to February 1996, Mr.
Avery served as chief of staff to the vice president of research and advanced
development at DEC. Before holding this position, Mr. Avery held a variety of
sales, business and engineering management roles at DEC, which he joined in
1968. Mr. Avery holds a B.S. in electrical engineering from Lafayette College
and an M.S. in computing from the University of California at Los Angeles.
Jay S. Adelson, one of our founders, has served as Equinix's vice president,
engineering, chief technology officer and a director since our inception in
June 1998. During the period from February 1997 to June 1998, Mr. Adelson was
operations manager at PAIX. Before joining PAIX, Mr. Adelson was a founding
member of Netcom On-Line Communications, Inc., an Internet services
corporation, where, during the period from January 1994 to February 1997, he
managed both access and network operations. Mr. Adelson holds a B.S. in
communications from Boston University.
Philip J. Koen has served as Equinix's chief financial officer and secretary
since July 1999. Before joining Equinix, Mr. Koen was employed at PointCast,
Inc., an Internet company, where he served as chief executive officer during
the period from March 1999 to June 1999; chief operating officer during the
period from November 1998 to March 1999; and chief financial officer and
executive vice president responsible for software development, network
operations, finance, information technology, legal and human resources during
the period from July 1997 to November 1998. From December 1993 to May 1997, Mr.
Koen was vice president of finance and chief financial officer of Etec Systems,
Inc., a semi-conductor equipment company. Mr. Koen currently serves as a
director of Zitel Corporation and of Centura Software Corp., both public
companies. Mr. Koen holds a B.A. in economics from Claremont McKenna University
and an M.B.A. from the University of Virginia.
Marjorie S. Backaus has served as Equinix's vice president, marketing since
November 1999. During the period from August 1996 to November 1999, Ms. Backaus
was vice president of marketing at Global One, a telecommunications company.
From November 1987 to August 1996, Ms. Backaus served in various positions at
AT&T, including that of division manager, DirecTV. Ms. Backaus holds a B.B.A.A.
in accounting from Kennesaw State University and an M.B.A. from Emory
University.
Roy A. Earle has served as Equinix's vice president, IBX development since
November 1999. Before joining Equinix, Mr. Earle was employed at Etec Systems,
a semiconductor equipment company where he served as vice president and general
manager of display products from September 1997 to November 1999 and
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as vice president for operations from October 1995 to September 1997. From July
1994 to October 1995, Mr. Earle served as chief operating officer and plant
manager at Temic Siliconix, a semiconductor company. Mr. Earle holds a B.S. in
chemistry from the University College in Dublin, Ireland and an M.S. in
materials science from the University of Sheffield, United Kingdom.
Peter T. Ferris has served as Equinix's vice president, worldwide sales
since July 1999. During the period from June 1997 to July 1999, Mr. Ferris was
vice president of sales for Frontier Global Center, a provider of complex web
site hosting services. From June 1996 to June 1997, Mr. Ferris served as vice
president, eastern sales at Genvity Inc., an Internet services provider. From
December 1993 to June 1996, Mr. Ferris was vice president, mid-Atlantic sales
at MFS DataNet Inc., a telecommunications services provider. Mr. Ferris holds a
B.A. in economics from Ohio Wesleyan University.
Gregory F. McHugh has served as Equinix's vice president, operations since
March 1999. During the period from February 1996 to March 1999, Mr. McHugh was
a principal at Pittiglio, Rabin, Todd & McGrath, a high-technology consulting
firm. During the period from September 1993 to November 1995, Mr. McHugh was
vice president of operations for Cadence Design Systems, an electronic design
firm. Mr. McHugh has held a number of executive roles in information systems
for such companies as Quantum, Analog Devices, National Semiconductor and
Motorola. He also has experience managing service operations and Internet
services at Pacific Bell. Mr. McHugh holds a B.S. in engineering from San
Francisco State University and an M.S.E.E. in electrical engineering from
Stanford University.
William B. Norton, one of our founders, has served as Equinix's director of
business development since October 1998. During the period from October 1987 to
September 1998, Mr. Norton, an industry-recognized speaker and panelist, was
manager of Internet engineering at Merit Network, Inc., a not-for-profit
corporation in support of higher education networks, and led the North American
Network Operators Group, the Internet network operations forum for the United
States and Canada. Mr. Norton holds a B.A. in computer science from the State
University of New York, Potsdam and an M.B.A. from the University of Michigan
School of Business Administration.
Andrew S. Rachleff has served as a director of Equinix since September 1998.
Mr. Rachleff has served as a general partner of Benchmark Capital, a Menlo
Park-based venture capital firm, since its founding in May 1995. Since May
1986, Mr. Rachleff has served as a general partner of Merrill, Pickard,
Anderson & Eyre. Mr. Rachleff currently serves as a director of several
privately held companies and of NorthPoint Communications, Inc., a public
company and one of our stockholders. Mr. Rachleff holds a B.S. from the
University of Pennsylvania and an M.B.A. from the Stanford Graduate School of
Business.
Michelangelo Volpi has served as a director of Equinix since November 1999.
Mr. Volpi has served in various capacities at Cisco Systems, a data
communications equipment manufacturer, since 1994, most recently as senior vice
president, business development. Mr. Volpi holds a B.S. and an M.S. in
mechanical engineering from Stanford University and an M.B.A. from the Stanford
Graduate School of Business.
Director Compensation
Directors do not receive compensation for services provided as a director or
for participation on any committee of the board of directors. Directors are not
reimbursed for their out-of-pocket expenses in serving on the board of
directors or any committee thereof. Directors are eligible for option grants
under our 1998 Stock Plan.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship exists between any member of our board of
directors and any member of the board of directors or compensation committee of
any other company, and no such interlocking relationship has existed in the
past. Currently, we do not have a compensation committee. Instead, compensation
related decisions are made by the entire board of directors.
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Indemnification
To the fullest extent permitted by applicable law, our amended and restated
certificate of incorporation authorizes us to provide indemnification of, and
advancement of expenses to, our agents and any other persons to whom the
Delaware General Corporation Law permits us to provide indemnification, in
excess of the indemnification and advancement otherwise permitted by the
Delaware General Corporation Law. Our authorization is subject only to limits
created by the Delaware General Corporation Law relating to actions for breach
of duty to Equinix, our stockholders and others.
Our bylaws provide for mandatory indemnification of our directors to the
fullest extent permitted by Delaware law and for permissive indemnification of
any person, other than a director, made party to any action, suit or proceeding
by reason of the fact that he or she is or was our officer or employee.
We have also entered into indemnification agreements with our officers and
directors containing provisions that may require us to indemnify such officers
and directors against liabilities that may arise by reason of their status or
service as directors or officers, other than liabilities arising from willful
misconduct of a culpable nature, and to advance their expenses incurred as a
result of any proceeding against them as to which they could be indemnified.
Executive Compensation
The following table sets forth compensation information for the period from
June 1998 through December 31, 1998 paid by us for services by our chief
executive officer and our other highest-paid executive officer whose total
annualized salary and bonus for such fiscal year exceeded $100,000:
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
------------------- ------------------------------
Restricted Securities
Name and Principal Stock Underlying All Other
Position Salary($) Bonus($ ) Awards Options(#) Compensation($)
- ------------------ -------- --------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Albert M. Avery, IV..... $ 81,193(1) $ -- 1,818,000(3) 0 --
President, Chief
Executive Officer and
Director
Jay S. Adelson.......... $ 76,776(2) -- 1,818,000(3) 0 --
Vice President,
Engineering and Site
Development, Chief
Technology Officer
and Director
</TABLE>
- --------
(1) Mr. Avery has been employed by Equinix since June 1998.
(2) Mr. Adelson has been employed by Equinix since June 1998.
(3) Each of Messrs. Avery and Adelson purchased 2,020,000 shares of common
stock on June 22, 1998 pursuant to a stock purchase agreement. Each agreed
to amend their stock purchase agreement on July 30, 1998 to subject
1,818,000 of the shares to vesting restrictions. Pursuant to the amendment,
the 1,818,000 shares will vest in 48 monthly installments from June 22,
1998. The purchaser will also vest in 25% of the shares if his employment
is involuntarily terminated and will vest in all of the shares if his
employment is involuntarily terminated within 12 months following a change
in control of Equinix. As of December 31, 1998, Messrs. Avery and Adelson
had vested in none of the restricted shares and the restricted shares had a
value of $180,891, which represents 1,818,000 shares valued at $0.10 per
share less $0.0005, the price paid per share.
Option Grants in Last Fiscal Year
No stock options or stock appreciation rights were granted to our chief
executive officer and our other highest-paid executive officer during the last
fiscal year.
39
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
No stock options or stock appreciation rights were exercised by our chief
executive officer and our other highest-paid executive officer in 1998, and no
stock options or stock appreciation rights were held by such officers at the
end of that year.
Employee Benefit Plan
1998 Stock Plan
Share Reserve. Our board of directors adopted our 1998 Stock Plan on
September 10, 1998. Our stockholders have also approved this plan. We have
reserved 8,008,540 shares of our common stock for issuance under the 1998 Stock
Plan. In general, if options or shares awarded under the 1998 Stock Plan are
forfeited, then those options or shares will again become available for awards
under the 1998 Stock Plan.
Administration. Our board of directors administers the 1998 Stock Plan. The
board has the complete discretion to make all decisions relating to the
interpretation and operation of our 1998 Stock Plan. The board has the
discretion to determine who will receive an option, what type of option it will
be, how many shares will be covered by the option, what the vesting
requirements will be, if any, and what the other features and conditions of
each option will be. The board may also reprice outstanding options and modify
outstanding options in other ways.
Eligibility. The following groups of individuals are eligible to participate
in the 1998 Stock Plan:
. Employees;
. Non-employee members of our board of directors; and
. Consultants.
Types of Awards. The 1998 Stock Plan provides for the following types of
awards:
. Incentive stock options to purchase shares of our common stock;
. Nonstatutory stock options to purchase shares of our common stock; and
. Restricted stock.
Options. An optionee who exercises an incentive stock option may qualify for
favorable tax treatment under Section 422 of the Internal Revenue Code of 1986.
However, nonstatutory stock options do not qualify for such favorable tax
treatment. The exercise price for incentive stock options granted under the
1998 Stock Plan may not be less than 100% of the fair market value of our
common stock on the option grant date. In the case of nonstatutory stock
options, the minimum exercise price is 85% of the fair market value of our
common stock on the option grant date. Optionees may pay the exercise price by
using:
. Cash;
. Shares of common stock that the optionee already owns;
. An immediate sale of the option shares through a broker designated by us;
or
. A loan from a broker designated by us, secured by the option shares.
Options vest at the time or times determined by our board of directors. In
most cases, our options will vest over a four-year period following the date of
grant. Options generally expire 10 years after they are granted, however they
generally expire earlier if the optionee's service terminates earlier.
Restricted Shares. Restricted shares may be awarded under the 1998 Stock
Plan in return for:
. Cash;
. Services previously provided to us; and
40
<PAGE>
. Services to be provided to us in the future, except that the par value of
such shares, if newly issued, shall be paid in cash.
Restricted shares vest at the time or times determined by the board.
Change in Control. If a change in control of Equinix occurs, an option or
restricted stock award under the 1998 Stock Plan will generally become fully
vested. However, if the surviving corporation assumes the option stock award or
option or replaces it with a comparable option, then vesting will not
accelerate. An option or stock award will become fully exercisable and fully
vested if the holder's employment or service is involuntarily terminated within
12 months following the change in control. A change in control includes:
. A merger or consolidation of Equinix with or into another entity or any
other corporate reorganization, if persons who were not our shareholders
immediately before the transaction own immediately after the transaction
50% or more of the voting power of the outstanding securities of each of
(A) the continuing or surviving entity and (B) any direct or indirect
parent corporation of such continuing or surviving entity; after which
our own stockholders own 50% or less of the surviving corporation (or its
parent company); or
. A sale of all or substantially all of our assets.
Amendments or Termination. Our board of directors may amend or terminate the
1998 Stock Plan at any time. If our board amends the plan, stockholder approval
is not required unless such approval is otherwise required under applicable
law. The 1998 Stock Plan will continue in effect until September 9, 2008,
unless the board decides to terminate the plan earlier.
Employment Agreements and Change of Control Arrangements
The board of directors, as plan administrator of the 1998 Stock Plan, has
the authority to provide for accelerated vesting of the shares of common stock
subject to outstanding options held by our officers and any other person in
connection with certain changes in control of Equinix. In connection with our
adoption of the 1998 Stock Plan, we have provided that upon a change in control
of Equinix, each outstanding option and all shares of restricted stock will
generally become fully vested unless the surviving corporation assumes the
option or award or replaces it with a comparable award.
Except for Mr. Ferris, none of the executive officers have employment
agreements with Equinix, and their employment may be terminated at any time.
Equinix has entered into an agreement with Mr. Ferris, our Vice President of
Sales, dated June 28, 1999 which provides that his salary shall be $190,000 per
year and he is eligible for a target bonus of $60,000. The agreement provides
for the grant of an option to purchase 340,000 shares of common stock at the
fair market value on the grant date vesting over 4 years. The agreement also
provides that we will extend a loan to Mr. Ferris of up to $750,000. Should
Equinix be acquired before an initial public offering of its equity securities,
we have agreed to pay Mr. Ferris a cash bonus equal to the difference between
$1,000,000 and the amount Mr. Ferris receives for his shares of Equinix stock.
The agreement also provides for acceleration of vesting of option shares as if
Mr. Ferris remained employed for one additional year if there are certain
changes in control of Equinix. We also agreed to indemnify Mr. Ferris for any
claims brought by his former employer under an employment and non-compete
agreement he had with this employer.
41
<PAGE>
RELATED-PARTY TRANSACTIONS
Since inception, there has not been, nor is there currently proposed, any
transaction or series of similar transactions to which we were or are to be a
party in which the amount involved exceeds $60,000 and in which any director,
executive officer or holder of more than 5% of our common stock, on an as
converted basis, or an immediate family member of any of these individuals or
entities, had or will have a direct or indirect interest other than:
. compensation arrangements, which are described where required under
"Management;" and
. the transactions described below.
Sale of Common Stock. In June 1998, we issued and sold 2,020,000 shares of
our common stock to Albert M. Avery, IV, our president, chief executive officer
and director, at a per share purchase price of $0.0005 (which accounts for a
2.02 for one stock split on August 31, 1998).
In June 1998, we issued and sold 2,020,000 shares of our common stock to Jay
S. Adelson, our vice president, engineering and site development, chief
technology officer and director, at a per share purchase price of $0.0005
(which accounts for a 2.02 for one stock split on August 31, 1998).
Series A Preferred Stock Financing. In September 1998, we issued and sold
5,015,000 shares of our Series A preferred stock to Benchmark Capital Partners
II, L.P., a 5% stockholder of us, at a per share purchase price of $1.00. One
of our directors, Andrew S. Rachleff, is a general partner of Benchmark
Capital, the general partner of Benchmark Capital Partners II, L.P.
In September 1998, we issued and sold 3,850,000 shares of our Series A
preferred stock to Cisco Systems, Inc., a 5% stockholder of us, at a per share
purchase price of $1.00. One of our directors, Michelangelo Volpi, is a senior
vice president of Cisco Systems, Inc.
In January 1999, we issued and sold 2,000,000 shares of our Series A
preferred stock to Microsoft Corporation, a 5% stockholder of us, at a per
share purchase price of $1.00.
Series B Preferred Stock Financing. In August through November 1999, we
issued and sold 675,000 shares of our Series B preferred stock to Benchmark
Capital Partners II, L.P., at a per share purchase price of $8.00.
In September 1999, we issued and sold 456,250 shares of our Series B
preferred stock to Cisco Systems, Inc., at a per share purchase price of $8.00.
In September 1999, we issued and sold 237,500 shares of our Series B
preferred stock to Microsoft Corporation, at a per share purchase price of
$8.00.
In September 1999, we issued and sold 625,000 shares of our Series B
preferred stock to NorthPoint Communications, Inc. at a per share purchase
price of $8.00. One of our directors, Andrew S. Rachleff, is also a director of
NorthPoint Communications, Inc.
Lease Agreement with Entity Affiliated with 5% Stockholder. In March 1999,
we entered into an equipment lease facility with Cisco Systems Credit
Corporation, an entity affiliated with Cisco Systems, Inc., under which we
leased $137,293 of equipment for a 24-month term. See "Description of Other
Indebtedness--Cisco Systems Credit Corporation Lease Facility" for a
description of this lease facility.
Warrants to Purchase Common Stock. In August 1999, we issued warrants to
purchase 225,430 shares of our common stock, at a purchase price of $0.80 per
share, to NorthPoint Communications, Inc. in connection with a strategic
agreement.
42
<PAGE>
Loan to Executive Officer. In September 1999, we loaned an aggregate of
$750,000 to Peter Ferris, one of our executive officers, to purchase a
principal residence. The non-interest bearing note is secured by a second deed
of trust on the residence, a promissory note and a stock pledge agreement, and
has a term of five years.
Relocation Allowance to Executive Officers. In July 1999, we granted a
relocation allowance in the amount of $60,000 to Peter Ferris. The full amount
of the allowance has been paid to Peter Ferris. In November 1999, we granted a
relocation allowance in the amount of $60,000 to Marjorie Backaus. To date,
Marjorie Backaus has not received any amount under the allowance.
Founders' Registration Rights. We have entered into an investors' rights
agreement that provides for registration rights in favor of Albert M. Avery, IV
and Jay S. Adelson if there are public issuances of our common stock. See
"Description of Capital Stock--Registration Rights" for a description of these
registration rights.
Option Grants. In the past, we have granted options to our executive
officers. We may grant options to our directors and executive officers in the
future. See "Management--Option Grants in Last Fiscal Year."
Indemnification. We have entered into an indemnification agreement with each
of our officers and directors. See "Management--Indemnification" for a
description of the indemnification available to our officers and directors
under these indemnification agreements.
43
<PAGE>
PRINCIPAL STOCKHOLDERS
The table on the next page presents selected information regarding
beneficial ownership of our outstanding common stock, on an as converted basis,
as of November 30, 1999 for:
. each person known by us to own beneficially more than five percent, in
the aggregate, of the outstanding shares of our common stock on an as
converted basis;
. each of our directors, our chief executive officer and our four other
highest-paid executive officers; and
. all of our directors and executive officers as a group.
Under the rules of the Securities and Exchange Commission, beneficial
ownership includes sole or shared voting or investment power over securities
and includes the shares issuable under stock options that are exercisable
within 60 days of November 30, 1999. Shares issuable under stock options
exercisable within 60 days are considered outstanding for computing the
percentage of the person holding the options but are not considered outstanding
for computing the percentage of any other person.
Percentage ownership calculations are based on 29,981,339 shares of common
stock outstanding as of November 30, 1999, as adjusted to reflect the
conversion of all outstanding shares of preferred stock into common stock.
Unless otherwise indicated, the address for each listed stockholder is c/o
Equinix, Inc., 901 Marshall Street, Redwood City, California 94063. To our
knowledge, except as indicated in the footnotes to this table and under
applicable community property laws, the persons or entities identified in this
table have sole voting and investment power relating to all shares of stock
shown as beneficially owned by them.
<TABLE>
<CAPTION>
Number of Percentage
Beneficially Beneficially
Name of Beneficial Owner Owned Shares Owned
- ------------------------ ------------ ------------
<S> <C> <C>
Albert M. Avery, IV(1).............................. 1,720,000 5.7%
Jay S. Adelson (2).................................. 2,020,000 6.7
Philip J. Koen (3).................................. 440,000 1.5
Peter T. Ferris (4)................................. 340,000 1.1
Michelangelo Volpi (5).............................. -- --
170 West Tasman Drive
San Jose, CA 95134
Andrew S. Rachleff (6).............................. 5,690,000 19.0
2480 Sand Hill Road, Suite 200
Menlo Park, CA 94025
Entities affiliated with Benchmark Capital (7)...... 5,690,000 19.0
2480 Sand Hill Road, Suite 200
Menlo Park, CA 94025
Cisco Systems, Inc.................................. 4,306,250 14.4
170 West Tasman Drive
San Jose, CA 95134
Microsoft Corporation............................... 2,237,500 7.5
One Microsoft Way
Redmond, WA 98052
All directors and executive officers as a group (9
persons) (8)....................................... 11,035,000 36.0
</TABLE>
- --------
(1) Includes 1,174,125 shares subject to a right of repurchase by us as of
November 30, 1999.
(2) Includes 1,174,125 shares subject to a right of repurchase by us as of
November 30, 1999.
(3) Includes 385,000 shares subject to a right of repurchase by us as of
November 30, 1999.
(4) Includes 170,000 shares subject to options that are exercisable within 60
days of November 30, 1999 and 170,000 shares subject to a right of
repurchase by us as of November 30, 1999.
44
<PAGE>
(5) Mr. Volpi is a senior vice president of Cisco Systems, Inc., which holds
4,306,250 shares of Equinix.
(6) Includes shares held by Benchmark Capital Partners II, L.P., Benchmark
Founders' Fund II, L.P., Benchmark Founders' Fund II-A, L.P., and
Benchmark Members' Fund II, L.P. Mr. Rachleff is a managing member of
Benchmark Capital Management Co. II, L.L.C., which is the general partner
of Benchmark Capital Partners II, L.P., Benchmark Founders' Fund II, L.P.,
Benchmark Founders' Fund II-A, L.P., and Benchmark Members' Fund II, L.P.
Mr. Rachleff shares voting and dispositive power relating to the shares
held by each such entity and disclaims beneficial ownership of these
shares, except to the extent of his pecuniary interest in Benchmark
Capital Management Co. II, L.L.C., arising from his general partnership
interest.
(7) Includes shares held by Benchmark Capital Partners II, L.P., Benchmark
Founders' Fund II, L.P., Benchmark Founders' Fund II-A, L.P., and
Benchmark Members' Fund II, L.P.
(8) Includes the shares described in Notes 1 through 6. Also includes 825,000
shares subject to options that are exercisable within 60 days of November
30, all of which are subject to a right of repurchase by us as of November
30, 1999.
45
<PAGE>
DESCRIPTION OF OTHER INDEBTEDNESS
Venture Lending & Leasing Equipment Acquisition Loan Facility
In August 1999, we entered into a $10.0 million equipment acquisition loan
facility with Venture Lending & Leasing, Inc. II, as the agent and principal
lender. The facility lenders will make advances up to:
. 85% of the acquisition cost of the equipment and tenant improvements for
our Newark, New Jersey IBX facility; and
. 100% of the acquisition cost, to the extent that such cost does not
exceed $1.0 million, of certain customer acquisition and serving software
that we acquire for our headquarters.
Our obligations under the facility are secured by a first priority security
interest against the assets financed with the facility advances and the
customer acquisition and serving software that the facility lenders have agreed
to finance. We can request facility advances until June 2000. As of November
30, 1999 we have drawn the entire $10.0 million against this loan facility.
Interest will accrue on the facility advances at the annual rate of 8.5%,
and the advances will be repaid in 42 equal monthly installments. In connection
with the last installment we will pay a final amount equal to 15% of the
original advance amount. We will have the right to prepay the advances, in
whole or in part, provided that we pay a prepayment premium equal to the
following percentage of the principal prepaid:
<TABLE>
<CAPTION>
Month of Term of Advance Prepaid Percentage
-------------------------------- ----------
<S> <C>
1-6 ....................................................... 8%
7-12....................................................... 7%
13-18....................................................... 6%
19-24....................................................... 5%
25-30....................................................... 4%
31-36....................................................... 3%
37-42....................................................... 2%
</TABLE>
In connection with this facility, we issued to the lenders warrants to
purchase Series A preferred stock at an exercise price of $4.50 per share. In
total, 200,000 shares can be acquired under the warrants, for an aggregate
exercise price equal to 9% of the facility commitment. The fair value of these
warrants, as determined using an option pricing model, has been recorded as a
deferred debt facility cost and will be amortized to interest expense on a
straight-line basis over the term of the facility.
The facility contains customary covenants that restrict our operations
relating to, among other things, incurring debt, granting security interests,
merging or consolidating with other entities, making loans and investments,
entering into affiliate transactions and changing our business. It does not
have any financial covenants. The facility contains customary events of
default, including non-payment of amounts due under the facility, default under
certain of our other obligations, breach of covenants set forth in the
facility, the existence of certain unstayed or undischarged judgments, the
making of materially false or misleading representations or warranties, the
commencement of reorganization, bankruptcy, insolvency or similar proceedings,
the occurrence of certain ERISA events or certain change of control events.
Comdisco Equipment Lease Facility
In May 1999, we entered into a $1.0 million equipment lease finance facility
with Comdisco, Inc. In August 1999, Comdisco amended this facility and
increased its total lease financing commitment by $5 million.
Under the original $1.0 million commitment, which we can draw down through
May 2000, Comdisco will lease to us equipment, software and tenant improvements
for our corporate headquarters, on the condition that the dollar amount of the
software and tenant improvements financed does not exceed 20% of this
commitment. Each lease schedule under this commitment is for 42 months, with
monthly lease payments in the amount of
46
<PAGE>
2.698% of the acquisition cost of the leased property, for an implied annual
interest rate of 16.2%. When the term for a schedule covering equipment
expires, we will have the option of returning the leased property to Comdisco,
negotiating with Comdisco for an extension of the lease term or purchasing the
property at its then fair market value, to the extent that such value does not
exceed 15% of the equipment's original acquisition cost. When the term for a
schedule covering software and tenant improvements expires, we must make a
final payment equal to 15% of the original acquisition cost of the software and
tenant improvements. As of November 30, 1999, we have leased a total of
$661,000 in equipment under this facility.
Under the $5.0 million increased commitment, which we can draw down until
August 2000, Comdisco will lease to us equipment, software and tenant
improvements for our San Jose, California IBX facility, provided that the
dollar amount of the software and tenant improvements financed does not exceed
57% of this commitment. Each lease schedule under this commitment is for 42
months, with monthly lease payments in the amount of 2.742% of the acquisition
cost of the leased property, for an implied annual interest rate of 8.5%. Upon
executing a lease schedule, we must pay the first and last months rent in
advance. When the term for a schedule covering the San Jose IBX facility
expires, we must make a final payment equal to 15% of the original acquisition
cost of the property financed under the schedule. To date, we have not leased
any amount under this commitment.
In connection with the original $1.0 million lease commitment, we issued to
Comdisco a warrant to acquire 20,000 shares of Series A preferred stock at a
purchase price of $2.50 per share. In connection with the $5.0 million increase
in the facility commitment, we issued to Comdisco a warrant to acquire 100,000
shares of Series A preferred stock at a purchase price of $4.50 per share. The
fair value of these warrants, as determined using an option pricing model, has
been recorded as a deferred debt facility cost and will be amortized on a
straight-line basis to interest expense over the term of the facility.
The facility restricts our ability to merge or consolidate with another
entity. It does not contain any financial covenants. The facility contains
customary equipment lease events of default, including non-payment of amounts
due under the facility, breach of covenants set forth in the facility, the
making of materially false or misleading representations or warranties under
the facility, and the commencement of reorganization, bankruptcy, insolvency or
similar proceedings involving us.
Comdisco Equipment Loan Facility
In March 1999, Equinix-DC, Inc., our wholly owned subsidiary and the
operator of our Washington, D.C. IBX facility, entered into a $7.0 million
equipment acquisition loan facility with Comdisco, Inc. Until March 2000,
Comdisco will make advances up to 100% of the acquisition cost of equipment,
tenant improvements and software for our Washington, D.C. IBX facility,
provided that no more than 57% of the loan commitment may be used to finance
tenant improvements and software. Comdisco holds a first priority security
interest in all of Equinix-DC's assets as collateral for the facility
obligations.
Advances that finance equipment acquisitions will accrue interest at the
annual rate of 7.5% and will be repaid in 42 monthly installments, and in
connection with the last installment we will pay a final amount equal to 15% of
the original advance amount. Advances that finance tenant improvements and
software acquisitions will accrue interest at the annual rate of 9% and will be
repaid in 36 monthly installments. In connection with the last installment, we
will pay a final amount equal to 15% of the original advance amount. We will
have the right to prepay the advances, in whole or in part, without paying any
penalty or premium. As at November 30, 1999, we have borrowed a total of $5.5
million under this facility.
In connection with this facility, we issued to Comdisco a warrant to acquire
510,000 shares of our Series A preferred stock at a purchase price of $1.00 per
share. The fair value of these warrants, as determined using an option pricing
model, has been recorded as a deferred debt facility cost and will be amortized
on a straight-line basis to interest expense over the term of the facility.
47
<PAGE>
The facility contains covenants that restrict Equinix-DC's right to, among
other things, grant security interests, declare dividends, dispose of a
material portion of its assets, and enter into settlements with customers
relating to outstanding accounts. It does not have any financial covenants. The
facility contains customary events of default, including non-payment of amounts
due under the facility, default by Equinix-DC relating to certain of its other
obligations, breach of covenants set forth in the facility, the existence of
certain unstayed or undischarged judgments against Equinix-DC, the making of
materially false or misleading representations or warranties under the
facility, and the commencement of reorganization, bankruptcy, insolvency or
similar proceedings involving Equinix-DC.
Fore Financial Services Equipment Lease Facility
In June 1999, we entered into an equipment lease facility with Fore
Financial Services. Under the first lease schedule, we leased $197,440 in
equipment and software for our corporate headquarters. We are required to make
36 monthly lease payments of $5,943. Upon expiration of the initial lease term,
the term can be extended for another 6 months, or we can purchase the leased
property at its then fair market value. Under the second lease schedule, we
leased $208,298 in equipment and software for the Washington, D.C. IBX
facility. We are required to make 36 monthly lease payments of $6,270. Upon
expiration of the initial lease term, the term can be extended for another 6
months, or we can purchase the leased property at its then fair market value.
Under the third lease schedule, we leased $210,300 in equipment and software
for our Newark, New Jersey IBX facility, effective November 1999. We are
required to make 36 monthly lease payments of $6,379. Upon the expiration of
the initial lease term, the term can be extended for another 6 months, or we
can purchase the lease property at its then fair market value.
The facility restricts our ability to merge or consolidate with another
entity or to sell all or substantially all of our assets, by treating such
events as defaults. It does not contain any financial covenants. The facility
contains customary equipment lease events of default, including non-payment of
amounts due under the facility, breach of covenants set forth in the facility,
the making of materially false or misleading representations or warranties
under the facility, and the commencement of reorganization, bankruptcy,
insolvency or similar proceedings involving us.
Cisco Systems Credit Corporation Lease Facility
In March 1999, we entered into an equipment lease facility with Cisco
Systems Credit Corporation. Under this facility, we have leased, for a 24-month
term, $137,293 in Cisco and Cisco-related equipment for our corporate
headquarters. We paid the first and last months' rent payments upon signing the
lease schedule. Each rent payment is $5,463. When the term expires, we will
have the option to purchase the leased property at its then fair market value.
The option will terminate, however, if default occurs during the term. If we do
not purchase the leased property, we will have the right to extend the lease
term in one-year increments with the same monthly payments.
The facility contains customary equipment lease events of default, including
non-payment of amounts due under the facility, breach of covenants set forth in
the facility and the commencement of reorganization, bankruptcy, insolvency or
similar proceedings involving us.
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<PAGE>
THE EXCHANGE OFFER
Purpose of the Exchange Offer
Under the registration rights agreement, we are required to use our
reasonable best efforts to file not later than February 29, 2000 (90 days
following the date of original issuance of the initial notes (the closing
date)) the registration statement of which this prospectus is a part for a
registered exchange offer relating to an issue of new notes substantially
identical in all material respects to the initial notes except that the new
notes will be registered under the Securities Act, will not bear legends
restricting their transfer and will not be entitled to registration rights
under the registration rights agreement. The summary herein of certain
provisions of the registration rights agreement does not purport to be complete
and we refer you to the provisions of the registration rights agreement, which
has been filed as an exhibit to the registration statement of which this
prospectus is a part and a copy of which is available as set forth under the
heading "Available Information."
Under the registration rights agreement, we are required to:
. use our reasonable best efforts to cause the registration statement to be
declared effective no later than June 28, 2000 (210 days after the
closing date);
. use our reasonable best efforts to consummate the exchange offer within
30 days of the registration statement being declared effective; and
. keep the exchange offer effective for not less than 30 days (or longer if
required by applicable law) after the date that notice of the exchange
offer is mailed to holders of the initial notes.
The exchange offer being made here, if commenced and consummated within the
time periods described in this paragraph, will satisfy those requirements under
the registration rights agreement.
This prospectus, together with the letter of transmittal, is being sent to
all record holders of initial notes as of , 2000.
Based on interpretations by the staff of the Securities and Exchange
Commission, as set forth in no-action letters issued to third parties, we
believe that the exchange notes issued pursuant to the exchange offer may be
offered for resale, resold or otherwise transferred by each holder of exchange
notes (other than a broker-dealer who acquires the initial notes directly from
Equinix for resale pursuant to Rule 144A under the Securities Act or any other
available exemption under the Securities Act, and other than any holder that is
an "affiliate" (as defined in Rule 405 under the Securities Act) of Equinix)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such holder:
. is acquiring the exchange notes in the ordinary course of its business;
. is not participating in, and does not intend to participate in, a
distribution of such exchange notes within the meaning of the Securities
Act and has no arrangement or understanding with any person to
participate in a distribution of the exchange notes within the meaning of
the Securities Act; and
. is not an affiliate (as defined in Rule 405 under the Securities Act) of
Equinix.
By tendering the initial notes in exchange for exchange notes, each holder,
other than a broker-dealer, will be required to make representations to that
effect. If a holder of initial notes is participating in or intends to
participate in, a distribution of the exchange notes, or has any arrangement or
understanding with any person to participate in a distribution of the exchange
notes to be acquired pursuant to the exchange offer, such holder may be deemed
to have received restricted securities and may not rely on the applicable
interpretations of the staff of the Securities and Exchange Commission. Any
such holder will have to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction.
Each broker-dealer that receives exchange notes for its own account in
exchange for initial notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and must acknowledge that it will
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deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such exchange notes. The letter of transmittal
states that by so acknowledging 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. This prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with offers to
resell, resales and other transfers of exchange notes received in exchange for
initial notes which were acquired by such broker-dealer as a result of market
making or other trading activities. We have agreed that we will make this
prospectus available to any broker-dealer for a period of time not to exceed
180 days after the consummation of the exchange offer for use in connection
with any such offer to resell, resale or other transfer. Please refer to the
section in this prospectus entitled "Plan of Distribution."
Shelf Registration Statement
In the event that:
(i) because of any change in law or applicable interpretations thereof
by the staff of the Securities and Exchange Commission, we are not
permitted to effect the exchange offer; or
(ii) for any other reason, the exchange offer is not consummated within
210 days from the closing date; or
(iii) any holder of initial notes notifies us within 20 business days
following the consummation of the exchange offer that (x) such holder was
prohibited by law of policy of the Securities and Exchange Commission from
participating in the exchange offer, or (y) such holder may not resell the
exchange notes acquired by it in the exchange offer to the public without
delivering a prospectus and this prospectus is not appropriate or available
for such resale, or (z) such holder is a broker-dealer and holds notes
acquired directly from us or any of our affiliates (within the meaning of
the Securities Act), then in the case of clauses (i) through (iii) of this
sentence, we will be obligated, at our sole expense, to:
. use our reasonable best efforts, as promptly as practicable and in no
event more than 30 days following such request, to file with the
Securities and Exchange Commission a shelf registration statement
covering resales of the initial notes;
. use our reasonable best efforts to cause the shelf registration statement
to be declared effective under the Securities Act within 90 days after
the date we are required to file a shelf registration statement; and
. use our reasonable best efforts to keep the shelf registration statement
continuously effective, supplemented and amended as required by the
Securities Act, to permit the prospectus which is a part of such shelf
registration statement to be usable by holders for a period of two years
after the shelf registration statement is declared effective or such
shorter period of time that will terminate when all of the applicable
initial notes have been sold thereunder.
We will, in the event that a shelf registration statement is filed, provide
to each holder of the initial notes being registered copies of the prospectus
that is a part of the shelf registration statement, notify each such holder
when the shelf registration statement has become effective and take certain
other actions as are required to permit unrestricted resales of the initial
notes being registered. A holder that sells initial notes pursuant to the shelf
registration statement will be required to be named as a selling security
holder in the related prospectus and to deliver a prospectus to purchasers,
will be subject to certain of the civil liability provisions under the
Securities Act in connection with such sales and will be bound by the
provisions of the registration rights agreement that are applicable to such a
holder (including certain indemnification rights and obligations).
Liquidated Damages
In the event that:
(i) we do not file the registration statement or the shelf registration
statement, as the case may be, with the Securities and Exchange Commission
on or before the dates specified above for such filings;
(ii) the registration statement or the shelf registration statement, as
the case may be, is not declared effective on or before the dates specified
above for such effectiveness;
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(iii) the exchange offer is not consummated within 30 days of the
registration statement being declared effective; or
(iv) the shelf registration statement is filed and declared effective
but thereafter ceases to be effective or usable in connection with its
intended purpose (each such event referred to in clauses (i) through (iv),
a "Registration Default");
then we will be obligated to pay to each holder of transfer restricted
securities (as defined in the registration rights agreement) liquidated
damages. Liquidated damages will accrue and be payable semi-annually on the
initial notes and the exchange notes (in addition to the stated interest on the
initial notes and the exchange notes) in an amount equal to 0.50% per year
during the first 90-day period, which will increase by 0.50% per year for each
subsequent 90-day period, but in no event will such rate exceed 1.50% per year
in the aggregate, regardless of the number of registration defaults. Liquidated
damages will accrue from the date a registration default occurs until the date
on which:
. the registration statement is filed;
. the registration statement or shelf registration statement is declared
effective and the exchange offer is consummated;
. the shelf registration statement is declared effective; or
. the shelf registration statement again becomes effective or made usable,
as the case may be.
Following the cure of all registration defaults, the accrual of liquidated
damages will cease.
Upon consummation of the exchange offer, subject to certain exceptions,
holders of initial notes who do not exchange their initial notes for exchange
notes in the exchange offer will no longer be entitled to registration rights
and will not be able to offer or sell their initial notes, unless such initial
notes are subsequently registered under the Securities Act (which, subject to
certain limited exceptions, we will have no obligation to do), or pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. Please refer to the section in this
prospectus entitled "Risk Factors--There could be negative consequences to you
if you do not exchange your initial notes for exchange notes."
Expiration of the Exchange Offer
The exchange offer will expire at 5:00 p.m., New York City time, on ,
2000. The expiration date will be at least 30 days after the commencement of
the exchange offer in accordance with Rule 14e-1(a) under the Securities
Exchange Act of 1934 and the registration rights agreement.
Procedures for Tendering Initial Notes
To tender your initial notes in the exchange offer, you must complete, sign
and date the letter of transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the letter of transmittal, and mail or
otherwise deliver the letter of transmittal or the facsimile, or an agent's
message (as defined below), together with the certificates representing the
initial notes being tendered and any other required documents, to the exchange
agent on or before 5:00 p.m., New York City time, on the expiration date.
Alternatively, you may either:
. send a timely confirmation of a book-entry transfer of such initial
notes, if such procedure is available, into the exchange agent's account
at The Depository Trust Company, or DTC, pursuant to the procedure for
book-entry transfer described below, on or before 5:00 p.m. on the
expiration date, or
. comply with the guaranteed delivery procedures described below.
The term "agent's message" means a message, transmitted by DTC to, and
received by, the exchange agent and forming a part of a book-entry
confirmation, which states that DTC has received an express
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acknowledgment from the participant in DTC tendering initial notes which are
the subject of such book-entry confirmation that such participant has received
and agrees to be bound by the terms of the letter of transmittal, and that we
may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF THE INITIAL NOTES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT YOUR ELECTION AND RISK. INSTEAD OF DELIVERY
BY MAIL, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND-DELIVERY SERVICE. IF
SUCH DELIVERY IS BY MAIL, WE RECOMMEND THAT YOU USE REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, YOU SHOULD ALLOW
SUFFICIENT TIME TO ASSURE TIMELY DELIVERY. YOU SHOULD NOT SEND ANY LETTERS OF
TRANSMITTAL OR INITIAL NOTES TO US. You must deliver all documents to the
exchange agent at its address set forth below. You may also request your
respective brokers, dealers, commercial banks, trust companies or nominees to
effect such tender on your behalf.
Your tender of initial notes will constitute an agreement between you and us
in accordance with the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal.
Only a holder of initial notes may tender such initial notes in the exchange
offer. The term "holder" relating to the exchange offer means any person in
whose name initial notes are registered on our books or any other person who
has obtained a properly completed bond power from the registered holder.
If you are the beneficial owner of initial notes that are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
you wish to tender your initial notes, you should contact such registered
holder promptly and instruct such registered holder to tender on your behalf.
If you wish to tender on your own behalf, you must, before completing and
executing the letter of transmittal and delivering your initial notes, either
make appropriate arrangements to register ownership of the initial notes in
your name or obtain a properly completed bond power from the registered holder.
The transfer of registered ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, each, an "eligible
institution", unless the initial notes are tendered:
. by a registered holder (or by a participant in DTC whose name appears on
a security position listing as the owner) who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal if the exchange notes are
being issued directly to such registered holder (or deposited into the
participant's account at DTC), or
. for the account of an eligible institution.
If the letter of transmittal is signed by the recordholder(s) of the initial
notes tendered, the signature must correspond with the name(s) written on the
face of the initial notes without alteration, enlargement or any change
whatsoever. If the letter of transmittal is signed by a participant in DTC, the
signature must correspond with the name as it appears on the security position
listing as the holder of the initial notes.
If the letter of transmittal is signed by a person other than the registered
holder of any initial notes listed, such initial notes must be endorsed or
accompanied by bond powers and a proxy that authorize such person to tender the
initial notes on behalf of the registered holder in satisfactory form to us as
determined in our sole discretion, in each case as the name of the registered
holder or holders appears on the initial notes.
If the letter of transmittal or any initial notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or
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representative capacity, such persons should so indicate when signing. Unless
waived by us, evidence satisfactory to us of their authority to so act must
also be submitted with the letter of transmittal.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed letter of transmittal accompanied by the initial
notes tendered (or a timely confirmation received of a book-entry transfer of
initial notes into the exchange agent's account at DTC with an agent's message)
or a notice of guaranteed delivery from an eligible institution is received by
the expiration date. Issuances of exchange notes in exchange for initial notes
tendered pursuant to a notice of guaranteed delivery by an eligible institution
will be made only against delivery of the letter of transmittal (and any other
required documents) and the tendered initial notes (or a timely confirmation
received of a book-entry transfer of initial notes into the exchange agent's
account at DTC with an agent's message) with the exchange agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered initial notes 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 initial notes not
properly tendered or any initial notes which, if accepted, would, in our
opinion or our counsel's opinion, be unlawful. We also reserve the absolute
right to waive any conditions of the exchange offer or irregularities or
defects in tender as to particular initial notes. Our interpretation of the
terms and conditions of the exchange offer (including the instructions in the
letter of transmittal) will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of initial notes must
be cured within such time as we shall determine. We, the exchange agent or any
other person will be under no duty to give notification of defects or
irregularities relating to tenders of initial notes. None of us or the exchange
agent will incur any liability for failure to give such notification. Tenders
of initial notes will not be deemed to have been made until such irregularities
have been cured or waived. Any initial notes received by the expiration date
that are not properly tendered and as to which the defects or irregularities
have not been cured or waived will be returned without cost by the exchange
agent to the tendering holders of such initial notes, unless otherwise provided
in the letter of transmittal, as promptly as practicable following the
expiration date.
In addition, we reserve the right in our sole discretion, subject to the
provisions of the indenture, to:
. purchase or make offers for any initial notes that remain outstanding
after the expiration date, or, as set forth under "--Expiration Date", to
terminate the exchange offer in accordance with the terms of the
registration rights agreement; and
. to the extent permitted by applicable law, purchase initial notes in the
open market, in privately negotiated transactions or otherwise. The terms
of any such purchases or offers could differ from the terms of the
exchange offer.
Acceptance of Initial Notes for Exchange; Delivery of Exchange Notes
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept all initial notes properly tendered, promptly after the
expiration date, and will issue the exchange notes promptly after the
expiration date and acceptance of the initial notes. Please refer to the
section of this prospectus entitled "--Conditions" below. For purposes of the
exchange offer, initial notes will be deemed to have been accepted as validly
tendered for exchange when, as and if we had given oral or written notice to
the exchange agent.
In all cases, issuance of exchange notes for initial notes that are accepted
for exchange pursuant to the exchange offer will be made only after timely
receipt by the exchange agent of certificates for such initial notes or a
timely book-entry confirmation of such initial notes into the exchange agent's
account at the book-entry transfer facility, a properly completed and duly
executed letter of transmittal or an agent's message and all other required
documents, in each case, in form satisfactory to us and the exchange agent. If
any tendered initial notes are not accepted for any reason set forth in the
terms and conditions of the exchange offer or if initial notes are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or non-exchanged initial notes will be returned without expense to
the tendering holder thereof (or, in the case
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of initial notes tendered by book-entry transfer procedures described below,
such non-exchanged initial notes will be credited to an account maintained with
such book-entry transfer facility) as promptly as practicable after withdrawal,
rejection of tender, the expiration date or earlier termination of the exchange
offer.
Book-Entry Transfer
The exchange agent will make a request to establish an account relating to
the initial notes at DTC for purposes of the exchange offer. Any financial
institution that is a participant in DTC's systems may make book-entry delivery
of initial notes by causing DTC to transfer such initial notes into the
exchange agent's account at DTC in accordance with DTC's procedures for
transfer.
However, although delivery of initial notes may be effected through book-
entry transfer into the exchange agent's account at DTC, an agent's message or
the letter of transmittal or facsimile thereof with any required signature
guarantees and any other required documents must, in any case, be transmitted
to and received by the exchange agent at the address set forth below under "--
Exchange Agent" on or before the expiration date or the guaranteed delivery
procedures described below must be complied with. DELIVERY OF DOCUMENTS TO DTC
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. All references in the
prospectus to deposit of initial notes will be deemed to include DTC's book-
entry delivery method.
Guaranteed Delivery Procedure
If you are a registered holder of initial notes and desire to tender such
initial notes, and the initial notes are not immediately available, or time
will not permit your initial notes or other required documents to reach the
exchange agent before the expiration date, or the procedures for book-entry
transfer cannot be completed on a timely basis and an agent's message
delivered, you may still tender in the exchange offer if:
. you tender through an eligible institution;
. before the expiration date, the exchange agent receives from such
eligible institution a properly completed and duly executed letter of
transmittal (or facsimile thereof) and notice of guaranteed delivery,
substantially in the form provided by us (by facsimile transmission, mail
or hand delivery), setting forth your name and address as holder of the
initial notes and the amount of initial notes tendered, stating that the
tender is being made thereby and guaranteeing that within five business
days after the expiration date the certificates for all tendered initial
notes, in proper form for transfer, or a book-entry confirmation with an
agent's message, as the case may be, and any other documents required by
the letter of transmittal will be deposited by the eligible institution
with the exchange agent; and
. the certificates for all tendered initial notes, in proper form for
transfer, or a book-entry confirmation as the case may be, and all other
documents required by the letter of transmittal are received by the
exchange agent within five business days after the expiration date.
Withdrawal of Tenders
Except as otherwise provided in this prospectus, you may withdraw tenders of
initial notes at any time before 5:00 p.m., New York City time, on the
expiration date.
For a withdrawal to be effective, you must send a written or facsimile
transmission notice of withdrawal to the exchange agent before 5:00 p.m., New
York City time, on the expiration date at the address set forth below under "--
Exchange Agent" and before acceptance for exchange thereof by us. Any such
notice of withdrawal must:
. specify the name of the person having tendered the initial notes to be
withdrawn (the "depositor");
. identify the initial notes to be withdrawn (including, if applicable, the
registration number or numbers and total principal amount of such initial
notes);
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. be signed by the depositor in the same manner as the original signature
on the letter of transmittal by which such initial notes were tendered
(including any required signature guarantees) or be accompanied by
documents of transfer sufficient to permit the trustee relating to the
initial notes to register the transfer of such initial notes into the
name of the depositor withdrawing the tender;
. specify the name in which any such initial notes are to be registered, if
different from that of the depositor; and
. if applicable because the initial notes have been tendered pursuant to
the book-entry procedures, specify the name and number of the
participant's account at DTC to be credited, if different than that of
the depositor.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by us and our determination will be
final and binding on all parties. Any initial notes so withdrawn will be deemed
not to have been validly tendered for exchange for purposes of the exchange
offer. Any initial notes which have been tendered for exchange which are not
exchanged for any reason will be returned to the holder thereof without cost to
such holder (or, in the case of initial notes tendered by book-entry transfer
into the exchange agent's account at DTC pursuant to the book-entry transfer
procedures described above, such initial notes will be credited to an account
maintained with DTC for the initial notes) as promptly as practicable after
withdrawal, rejection of tender, expiration date or earlier termination of the
exchange offer. Properly withdrawn initial notes may be retendered by following
one of the procedures described under "--Procedures for Tendering" and "--Book-
Entry Transfer" above at any time on or before the expiration date.
Conditions
Notwithstanding any other term of the exchange offer, we will not be
required to accept initial notes for exchange, or issue exchange notes in
exchange for any initial notes, if:
. a change in the current interpretation of the staff of the Securities and
Exchange Commission has occurred which current interpretation permits the
exchange notes issued pursuant to the exchange offer in exchange for the
initial notes to be offered for resale, resold or otherwise transferred
by holders thereof (other than in certain circumstances); or
. a law has been adopted or enacted which, in our judgment, would
reasonably be expected to impair our ability to proceed with the exchange
offer.
These conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us, in whole or in part, at any time and from time to time, if we
determine in our reasonable discretion that any of the foregoing events or
conditions has occurred or exists or has not been satisfied, subject to
applicable law. Our failure at any time to exercise any of the foregoing rights
will not be deemed a waiver of any such right and each such right will be
deemed an ongoing right which we may assert at any time and from time to time.
If we determine that we may terminate the exchange offer, as provided above,
we may:
. refuse to accept any initial notes and return any initial notes that have
been tendered to the holders thereof;
. extend the exchange offer and retain all initial notes tendered before
the expiration date, subject to the rights of such holders of tendered
initial notes to withdraw their tendered initial notes; or
. waive such termination event relating to the exchange offer and accept
all properly tendered initial notes that have not been withdrawn or
otherwise amend the terms of the exchange offer in any respect as
provided under the section in this prospectus entitled "--Expiration
Date; Extensions; Amendments; Termination."
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The exchange offer is not conditioned upon any minimum principal amount of
initial notes being tendered for exchange.
We have no obligation to, and will not knowingly, permit acceptance of
tenders of initial notes from our affiliates (within the meaning of Rule 405
under the Securities Act) or from any other holder or holders who are not
eligible to participate in the exchange offer under applicable law or
interpretations thereof by the Securities and Exchange Commission, or if the
exchange notes to be received by such holder or holders of initial notes in the
exchange offer, upon receipt, will not be tradable by such holder without
restriction under the Securities Act and the Securities Exchange Act of 1934
and without material restrictions under the "blue sky" or securities laws of
substantially all of the states of the United States.
Accounting Treatment
We will record the exchange notes at the same carrying value as the initial
notes, as reflected in our accounting records on the date of the exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes. We
will amortize the costs of the exchange offer and the unamortized expenses
related to the issuance of the exchange notes over the term of the exchange
notes.
Exchange Agent
We have appointed State Street Bank and Trust Company of California, N.A. as
exchange agent for the exchange offer. All questions and requests for
assistance and requests for additional copies of this prospectus or the letter
of transmittal should be directed to the exchange agent as follows:
By Mail:
State Street Bank and Trust Company of California, N.A.
c/o State Street Bank and Trust Company
P.O. Box 778
Boston, MA 02101-0778
ATTN: Ralph Jones
By Hand/Overnight Delivery:
State Street Bank and Trust Company of California, N.A.
c/o State Street Bank and Trust Company
2 Avenue de Layfayette
Corporate Trust Window, 5th Floor
Boston, MA 02111-1724
ATTN: Ralph Jones
Facsimile Transmission: (617) 662-1452
Confirm by Telephone: (617) 662-1548
Fees and Expenses
We will bear the expenses of soliciting tenders pursuant to the exchange
offer. The principal solicitation for tenders pursuant to the exchange offer is
being made by mail; however, our offices and regular employees may make
additional solicitations by telegraph, telephone, telecopy or in person.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. However, we will pay the exchange
agent reasonable and customary fees for its services and will reimburse the
exchange agent for its reasonable out-of-pocket expenses in connection with the
exchange offer. We may also pay brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of the prospectus, letters of transmittal and related
documents to the beneficial owners of the initial notes, and in handling or
forwarding tenders for exchange.
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We will pay the expenses incurred in connection with the exchange offer,
including fees and expenses of the exchange agent and trustee and accounting,
legal, printing and related fees and expenses.
We will pay all transfer taxes, if any, applicable to the exchange of
initial notes pursuant to the exchange offer. However, 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:
. certificates representing exchange notes or initial notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or
are to be registered or issued in the name of, any person other than the
registered holder of the initial notes tendered; or
. tendered initial notes are registered in the name of any person other
than the person signing the letter of transmittal; or
. a transfer tax is imposed for any reason other than the exchange of
initial notes pursuant to the exchange offer.
If satisfactory evidence of payment of such taxes or exemption therefrom is
not submitted with the letter of transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
The Failures to Participate in the Exchange Offer will have Adverse
Consequences
If you do not exchange your initial notes for exchange notes pursuant to the
exchange offer, you will not be able to resell, offer to resell or otherwise
transfer the initial notes unless they are registered under the Securities Act
or unless you resell them, offer to resell or otherwise transfer them under an
exemption from the registration requirements of, or in a transaction not
subject to, the Securities Act. In addition, you will no longer be able to
obligate us to register the initial notes under the Securities Act except in
the limited circumstances provided under the registration rights agreement. The
restrictions on transfer of your initial notes arise because we issued the
initial notes pursuant to exemptions from, or in transactions not subject to,
the registration requirements of the Securities Act and applicable state
securities laws. In addition, if you want to exchange your initial notes in the
exchange offer for the purpose of participating in a distribution of the
exchange notes, you may be deemed to have received restricted securities, and,
if so, will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
To the extent the initial notes are tendered and accepted in the exchange
offer, the trading market, if any, for the initial notes would be adversely
affected. Please refer to the section in this prospectus entitled "Risk
Factors."
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DESCRIPTION OF THE EXCHANGE NOTES
General
The form and terms of the exchange notes are the same as the form and terms
of the initial notes, except that the exchange notes have been registered under
the Securities Act and therefore will not bear legends restricting the transfer
thereof. We issued the initial notes and will issue the exchange notes pursuant
to an indenture, dated as of December 1, 1999, between Equinix and State Street
Bank and Trust Company of California, N.A., as trustee. The terms of the
exchange notes will include those stated in the indenture and those made part
of the indenture by reference to the Trust Indenture Act of 1939, as amended.
The exchange notes will be subject to all such terms, and holders are referred
to the indenture and the Trust Indenture Act for a statement thereof. Except as
otherwise indicated, the following description relates both to the initial
notes and the exchange notes. The following summary of the material provisions
of the indenture does not purport to be complete and is qualified in its
entirety by reference to the indenture, including the definitions therein of
certain terms used below. We urge you to read the indenture because it, and not
this description, defines your rights as holder of the exchange notes. We have
filed copies of the indenture, escrow agreement and registration agreement as
exhibits to the registration statement which includes this prospectus. The
definitions of certain terms used in the following summary are set forth below
under "--Certain Definitions." For purposes of this summary, the term "Equinix"
refers only to Equinix, Inc. and not to any of its subsidiaries. Also, in this
description "initial notes" and "exchange notes" are collectively referred to
as the "notes."
As of the Issue Date, all of our Subsidiaries will be Restricted
Subsidiaries. Under certain circumstances, we will be able to designate
existing or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted
Subsidiaries will not be subject to many of the restrictive covenants contained
in the indenture.
Terms of Notes
Except as set forth under "--Escrow Account; Disbursement of Funds," the
notes will be our senior unsecured obligations, ranking pari passu in right of
payment with all our other existing and future senior debt and senior to all
our existing and future subordinated debt. Holders of our secured Indebtedness,
however, will have claims that are before the claims of the holders relating to
the assets securing such other debt except to the extent the notes are equally
and ratably secured by such assets. The indenture will permit us to incur
certain secured debt.
The notes will be effectively subordinated to all Indebtedness and other
liabilities and commitments (including trade payables and lease obligations) of
our subsidiaries, including any Guarantees of such subsidiaries. Any right of
ours to receive assets of any of our subsidiaries upon the latter's liquidation
or reorganization (and the consequent right of the holders to participate in
those assets) will be effectively subordinated to the claims of that
subsidiary's creditors, except to the extent that we are recognized as a
creditor of such subsidiary, in which case our claims would still be
subordinate to any secured claim to the assets of such subsidiary and any
Indebtedness of such subsidiary that is senior to that held by us.
Principal, Maturity and Interest
The notes will be limited in aggregate principal amount to $200,000,000 and
will mature on December 1, 2007. Interest on the notes will accrue at the rate
of 13% per annum and will be payable semi-annually in arrears on June 1 and
December 1, commencing on June 1, 2000, to holders as of the immediately
preceding May 15 and November 15. Interest on the notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of original issuance. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months. Principal, premium,
if any, and interest on the notes will be payable at the office or agency of
Equinix maintained for such purpose within the City and State of New York or,
at the option of Equinix, payment of interest on the notes may be made by check
mailed to the holders at their respective addresses set forth in the register
of holders. Until otherwise designated by
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Equinix, Equinix's office or agency in New York will be the office of the
trustee maintained for such purpose. The notes will be issued in denominations
of $1,000 and integral multiples thereof. The trustee initially will be paying
agent and registrar under the indenture, and we may act as paying agent or
registrar under the indenture.
Escrow Account; Disbursement of Funds
The notes will be collateralized, pending disbursement pursuant to the
escrow agreement dated as of December 1, 1999, among Equinix, the trustee and
State Street Bank and Trust Company of California, N.A., as escrow agent, by a
pledge of the escrow account referred to in the escrow agreement, which will
initially contain approximately $37.0 million of the net proceeds from the sale
of the notes to be issued pursuant to the offering, representing funds that,
together with the proceeds from the investment thereof, will be sufficient to
pay interest on the notes for three scheduled interest payments (but not any
liquidated damages described under "Exchange Offer; Registration Rights").
We will enter into the escrow agreement providing for the grant by Equinix
to the trustee, for the benefit of the holders, of a first priority security
interest in the escrow collateral. All such security interests will
collateralize the payment and performance when due of all our obligations under
the indenture and the notes, as provided in the escrow agreement. The Liens
created by the escrow agreement will be first priority security interests in
the Escrow Collateral. The ability of holders to realize upon any such funds or
securities may be subject to certain bankruptcy law limitations if there is a
bankruptcy of Equinix.
Pursuant to the escrow agreement, funds may be disbursed from the escrow
account only to pay interest on the notes. If a portion of the notes has been
retired by Equinix, funds representing the lesser of
(i) the excess of the amount sufficient to pay interest through and
including June 1, 2001 on the notes not so retired; and
(ii) the interest payments which have not previously been made on such
retired notes for each interest payment date through and including the
interest payment date to occur on June 1, 2001
shall be paid to Equinix if no Default then exists under the indenture.
Pending such disbursements, all funds contained in the escrow account will
be invested in U.S. Government Securities. Interest earned on the U.S.
Government Securities will be placed in the escrow account. Upon the
acceleration of the maturity of the notes, the escrow agreement will provide
for the foreclosure by the trustee upon the net proceeds of the escrow account.
Under the terms of the indenture, the proceeds of the escrow account shall be
applied, first, to amounts owing to the trustee in respect of fees and expenses
of the trustee and, second, to all obligations under the notes and the
indenture. Under the escrow agreement, assuming that we make the first three
scheduled interest payments on the notes in a timely manner with funds or U.S.
Government Securities held in the escrow account, any remaining U.S. Government
Securities will be released from the escrow account.
Optional Redemption
Except as set forth below, the notes will not be redeemable at our option
before December 1, 2003. Thereafter, the notes will be subject to redemption at
any time at our option, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest thereon to
the applicable redemption date (subject to the right of holders as of the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the twelve-month period beginning on December 1 of
the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003.......................................................... 106.500%
2004.......................................................... 103.250%
2005 and thereafter........................................... 100.000%
</TABLE>
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Selection and Notice
If less than all of the notes are to be redeemed at any time, selection of
notes for redemption will be made by the trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the notes are then listed, or, if the notes are not so then listed, on a pro
rata basis, by lot or by such method as we shall deem fair and appropriate. No
notes of $1,000 or less shall be redeemed in part. Notices of redemption shall
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. Notices of redemption may not be conditional. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon cancellation of the original Note. Notes called
for redemption will become due on the date fixed for redemption. On and after
the redemption date, interest will cease to accrue on notes or portions thereof
called for redemption unless we default in the payment thereof.
Mandatory Redemption
Except as provided under "--Repurchase at the Option of Holders," we will
not be required to make mandatory redemption or sinking fund payments relating
to the notes.
Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, each holder will have the right
to require us to purchase all or any part (equal to $1,000 or an integral
multiple thereof) of such holder's notes pursuant to the offer described below
at a purchase price in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest (and liquidated damages, if any)
thereon to the date of purchase (subject to the right of holders as of a record
date to receive interest due on the relevant interest payment date); provided,
that, we shall not be obligated to repurchase notes pursuant to a change of
control offer in the event that we have exercised our rights to redeem all of
the notes pursuant to the indenture. Within 30 days following any change of
control, we will mail a notice to each holder describing the transaction or
transactions that constitute the change of control and offering to purchase
notes on the date specified in such notice, which date shall be no earlier than
30 and no later than 60 days from the date such notice is mailed, in accordance
with the procedures required by the indenture and described in such notice.
We will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations to the extent such laws and
regulations are applicable in connection with the purchase of notes as a result
of a change of control. To the extent that the provisions of any securities
laws or regulations conflict with any of the provisions of this covenant, we
will comply with the applicable securities laws and regulations and will be
deemed not to have breached its obligations under this covenant by virtue
thereof.
On the change of control payment date, we will, to the extent lawful:
. accept for payment all notes or portions thereof properly tendered
pursuant to the change of control offer;
. deposit with the paying agent an amount equal to the change of control
payment plus accrued and unpaid interest thereon and liquidated damages,
if any, in respect of all notes or portions thereof so tendered; and
. deliver or cause to be delivered to the trustee notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of notes or portions thereof being purchased by us.
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The paying agent will promptly mail or deliver to each holder of notes so
tendered the change of control payment plus accrued and unpaid interest thereon
and liquidated damages, if any, for such notes, and the trustee will promptly
authenticate and mail or deliver (or cause to be transferred by book entry) to
each holder a new note equal in principal amount to any unpurchased portion of
notes surrendered, if any; provided that each such new note will be in a
principal amount of $1,000 or an integral multiple thereof. We will publicly
announce the results of the change of control offer on or as soon as
practicable after the change of control payment date.
The change of control provisions described above will be applicable whether
or not any other provisions of the indenture are applicable. Except as
described above relating to a change of control, the indenture will not contain
provisions that permit the holders to require that we purchase or redeem the
notes if there is a takeover, recapitalization or similar transaction. Our
ability to purchase notes upon a change of control may be limited by our then
existing financial resources. There can be no assurance that sufficient funds
will be available when necessary to make any such required purchases. See "Risk
Factors--We might not have sufficient funds to purchase the exchange notes as
required upon a change in control." We shall not be required to make a change
of control offer if a third party makes the change of control offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the indenture and purchases all notes validly tendered and not
withdrawn.
Asset Sales
We will not, and will not permit any of the Restricted Subsidiaries to,
directly or indirectly, consummate any Asset Sale, unless:
(i) we (or such Restricted Subsidiary, as the case may be) receive
consideration at the time of such Asset Sale at least equal to the fair
market value (as determined in good faith by the Board of Directors
(including as to the value of all noncash consideration) and set forth
in an Officer's Certificate delivered to the trustee) of the assets or
Equity Interests issued or sold or otherwise disposed of;
(ii) at least 75% of the consideration therefor is in the form of cash
and/or Cash Equivalents or Qualified Consideration; and
(iii) the Net Cash Proceeds received by Equinix (or such Restricted
Subsidiary, as the case may be) from such Asset Sale are applied
within 360 days following the receipt of such Net Cash Proceeds, to
the extent Equinix (or such Restricted Subsidiary, as the case may
be) elects:
(a) to the redemption or repurchase of outstanding Indebtedness, (I)
that is either (A) secured Indebtedness or (B) Indebtedness of
Equinix that ranks equally with the notes but has a maturity date
that is before the maturity date of the notes, in either case other
than Subordinated Indebtedness, or (II) that is Indebtedness of a
Restricted Subsidiary; and/or
(b) to reinvest such Net Cash Proceeds (or any portion thereof) in
properties or assets (including Equity Interests of a Person that
will become a Restricted Subsidiary as a result of such investment)
that will be used in a Permitted Business.
The balance of such Net Cash Proceeds, after the application of such Net Cash
Proceeds as described in the immediately preceding clauses (a) and (b), shall
constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds equals or exceeds $10 million
(taking into account income earned on such Excess Proceeds), we will be
required to make a pro rata offer to all holders and pari passu Indebtedness
with comparable provisions requiring such Indebtedness to be purchased with the
proceeds of such Asset Sale, called an Asset Sale Offer, to purchase the
maximum principal amount or accreted value in the case of Indebtedness issued
with an original issue discount of notes and pari passu Indebtedness that may
be purchased out of the Excess Proceeds, at a purchase price in cash in an
amount equal to 100% of the principal amount thereof or the accreted value
thereof, as applicable, plus accrued and unpaid interest thereon
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to the date of purchase (subject to the right of holders as of the relevant
record date to receive interest due on the relevant interest payment date), in
accordance with the procedures set forth in the indenture and the agreements
governing such pari passu Indebtedness. To the extent that any Excess Proceeds
remain after consummation of an Asset Sale Offer, Equinix may use such Excess
Proceeds for any purpose not otherwise prohibited by the indenture. If the
aggregate principal amount of notes and pari passu Indebtedness tendered into
such Asset Sale Offer surrendered by holders thereof exceeds the amount of
Excess Proceeds, the trustee shall select the notes and pari passu Indebtedness
to be purchased on a pro rata basis in proportion to the respective principal
amounts (or accreted values in the case of Indebtedness issued with an original
issue discount) of the notes and such other Indebtedness. Upon completion of
such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero for
purposes of the first sentence of this paragraph.
The amount of:
(i) any liabilities (as shown on Equinix's (or such Restricted
Subsidiary's, as the case may be) most recent balance sheet), other
than Subordinated Indebtedness, of Equinix or any Restricted
Subsidiary, that are assumed by the transferee of any such assets
pursuant to an agreement that immediately releases Equinix and all of
the Restricted Subsidiaries from all liability in respect thereof;
(ii) Indebtedness of any Restricted Subsidiary that is no longer a
Restricted Subsidiary as a result of such Asset Sale, if Equinix and
all of the Restricted Subsidiaries immediately are released from all
Guarantees of payment of such Indebtedness and such Indebtedness is no
longer the liability of Equinix or any of the Restricted Subsidiaries;
and
(iii) any securities, notes or other obligations received by Equinix (or
such Restricted Subsidiary, as the case may be) from such transferee
that are converted by Equinix (or such Restricted Subsidiary, as the
case may be) into cash and/or Cash Equivalents within 90 days of the
date of such Asset Sale (to the extent of the cash and/or Cash
Equivalents received)
will be deemed to be cash and/or Cash Equivalents for purposes of this
provision.
Notwithstanding any provision of this "Asset Sales" covenant, the provisions
of this "Asset Sales" covenant shall not apply to any transaction constituting
a Restricted Payment that is permitted by the "Restricted Payments" covenant or
that otherwise constitutes a Permitted Investment.
Certain Covenants
Restricted Payments
We will not, and will not permit any of the Restricted Subsidiaries to,
directly or indirectly:
(i) declare or pay any dividend or make any other payment or distribution
on account of Equinix's Equity Interests or to the direct or indirect
holders of Equinix's Equity Interests in their capacity as stockholders
(other than dividends or distributions payable (a) in Equity Interests
(other than Disqualified Stock) of Equinix or (b) to Equinix or a
Restricted Subsidiary of Equinix);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of Equinix or any direct or indirect parent of Equinix
(other than any such Equity Interests owned by Equinix or any
Restricted Subsidiary of Equinix);
(iii) make any payment on or relating to, or purchase, redeem, defease or
otherwise acquire or retire for value any Subordinated Indebtedness,
except a payment of interest or principal at any Stated Maturity; or
(iv) make any Restricted Investment
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(all such payments and other actions set forth in clauses (i) through (iv)
above being collectively referred to as "Restricted Payments"), unless:
(a) at the time of and after giving effect to such Restricted Payment, no
Default or Event of Default shall have occurred and be continuing;
(b) Equinix would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable period, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to clause (i) of the
first paragraph of the covenant described below under "Incurrence of
Indebtedness and Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Equinix and the Restricted
Subsidiaries on or after the Issue Date, is less than the sum, without
duplication; of
(i) the amount of Equinix's (x) Cumulative Consolidated Cash Flow
determined at the time of such Restricted Payment less (y) 150% of
the cumulative consolidated interest expense, determined for the
period commencing on the first day of the fiscal quarter which
includes the Issue Date and ending on the last day of the last
fiscal quarter preceding the date on which such Restricted Payment
is to be made for which reports have been filed with the Commission
or provided to the trustee pursuant to the "Reports" covenant; plus
(ii) 100% of the aggregate Net Cash Proceeds received by Equinix after
the Issue Date as a Capital Contribution or from the issue or sale
(other than to a Subsidiary of Equinix) of Equity Interests of
Equinix (other than Disqualified Stock) or from the issue or sale
(other than to a Subsidiary of Equinix) of Disqualified Stock or
debt securities of Equinix that have been converted or exchanged
into such Equity Interests, plus the amount of Net Cash Proceeds
received by Equinix upon such conversion or exchange (other than a
conversion or exchange by a Subsidiary of Equinix); plus
(iii) the aggregate amount equal to the net reduction in Restricted
Investments in Unrestricted Subsidiaries on or after the Issue
Date resulting from (x) dividends, distributions, interest
payments, return of capital, repayments of Restricted Investments
or other transfers of assets to Equinix or any Restricted
Subsidiary from any Unrestricted Subsidiary and not otherwise
included in the calculation of Cumulative Consolidated Cash Flow
required by clause (c)(i) above, (y) proceeds realized by Equinix
or any Restricted Subsidiary upon the sale of such Restricted
Investment to a Person other than Equinix or any Subsidiary of
Equinix, or (z) the redesignation of any Unrestricted Subsidiary
as a Restricted Subsidiary, not to exceed in the case of any of
the immediately preceding clauses (x), (y) or (z) the aggregate
amount of Restricted Investments made by Equinix or any
Restricted Subsidiary in such Unrestricted Subsidiary on or after
the Issue Date; plus
(iv) to the extent that any Restricted Investment that was made on or
after the Issue Date is sold for cash or otherwise liquidated or
repaid for cash, the lesser of, to the extent paid to Equinix or a
Restricted Subsidiary, (A) the cash return of capital relating to
such Restricted Investment (less the cost of disposition, if any)
and (B) the initial amount of such Restricted Investment; minus
(v) 50% of the cumulative aggregate principal amount of any outstanding
Indebtedness incurred pursuant to clause (ii) of the first
paragraph of the covenant described below under "Incurrence of
Indebtedness and Issuance of Preferred Stock."
So long as no Default or Event of Default shall have occurred and be
continuing, the foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the foregoing provisions;
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(ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Subordinated Indebtedness or Equity Interests of
Equinix in exchange for, or out of the Net Cash Proceeds of the
substantially concurrent sale (other than to a Subsidiary of Equinix)
of, Equity Interests of Equinix (other than any Disqualified Stock);
provided that the amount of any such Net Cash Proceeds that are
utilized for, and the Equity Interests issued or exchanged for, any
such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (c) of the preceding
paragraph and each other clause of this paragraph;
(iii) the defeasance, redemption, retirement, repurchase or other
acquisition of Subordinated Indebtedness with the Net Cash Proceeds
from, or issued in exchange for, a substantially concurrent
incurrence of Permitted Refinancing Indebtedness; provided that the
amount of any such Net Cash Proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c) of the preceding paragraph and each
other clause of this paragraph;
(iv) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Equinix held by any member of
Equinix's or a Restricted Subsidiary's management; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $3 million in any fiscal
year;
(v) Restricted Investments not to exceed the aggregate fair market value
(measured on the date each such Restricted Investment was made or
returned, as applicable), when taken together with all other Restricted
Investments made pursuant to this clause (v) that are at the time
outstanding, the sum of (x) $30 million, plus (y) the amount then
available for the making of Restricted Payments pursuant to clause (c)
of the preceding paragraph without giving effect to subclause (i)
thereof;
(vi) Restricted Investments the payment for which consists exclusively of
Equity Interests (other than Disqualified Stock) of Equinix; and
(vii) the repurchase of Equity Interests of Equinix in accordance with, and
only to the extent required by, dissenters rights of appraisal under
applicable law.
Each Restricted Payment permitted pursuant to clauses (i), (iv), (v), (vi) and
(vii) above shall be included, and each Restricted Payment permitted pursuant
to clauses (ii), (iii) and (vi) above shall be excluded (except as specifically
set forth in each such clause), for all purposes when performing the
calculation set forth in clause (c) of the first paragraph of this covenant.
The Board of Directors may not designate any Subsidiary of Equinix (other
than a newly created Subsidiary in which no Investment has previously been made
(other than any de minimus amount required to capitalize such Subsidiary in
connection with its organization)) as an Unrestricted Subsidiary, a
"designation," unless: (i) no Default or Event of Default shall have occurred
and be continuing at the time of or after giving effect to such designation and
(ii) Equinix would not be prohibited under the indenture from making a
Restricted Investment at the time of such designation (assuming the
effectiveness of such designation for purposes of this covenant) in an amount
equal to the fair market value of the net Investment of Equinix and all
Restricted Subsidiaries in such Subsidiary on such date.
If there is any such designation, all outstanding Investments owned by
Equinix and the Restricted Subsidiaries in the Subsidiary so designated will be
deemed to be a Restricted Investment made as of the time of such Designation
and will reduce the amount available for Restricted Payments under the first or
second paragraph of this covenant. All such outstanding Investments will be
deemed to constitute Restricted Payments in an amount equal to the fair market
value of such Investments at the time of such designation.
The indenture will further provide that a designation may be revoked and an
Unrestricted Subsidiary may thus be redesignated as a Restricted Subsidiary, a
"revocation," by a resolution of the Board of Directors delivered to the
trustee; provided that Equinix will not make any revocation unless: (i) no
Default or Event of Default shall have occurred and be continuing at the time
of or after giving effect to such revocation; and
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(ii) 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 at such time for all purposes under the
indenture.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by Equinix (or such Restricted
Subsidiary, as the case may be) pursuant to the Restricted Payment. The fair
market value of any asset(s) or securities that are required to be valued by
this covenant shall be determined in good faith by the Board of Directors;
provided that such determination shall be supported by the opinion or appraisal
of an accounting, appraisal or investment banking firm of national standing if
such fair market value would exceed $10 million.
Incurrence of Indebtedness and Issuance of Preferred Stock
We will not, and will not permit any of the Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable for, contingently or otherwise (including
by way of merger, consolidation or acquisition) (collectively, "incur"), any
Indebtedness and we will not issue or incur any Disqualified Stock and will not
permit any of the Restricted Subsidiaries to issue or incur any shares of
Preferred Stock; provided, however, that we may incur Indebtedness or issue or
incur shares of Disqualified Stock and the Restricted Subsidiaries may incur
Acquired Debt or Acquired Preferred Stock if either:
(i) the Consolidated Leverage Ratio at the end of Equinix's most recently
ended fiscal quarter (for which a consolidated balance sheet of Equinix
which has been filed with the Commission or provided to the trustee
pursuant to "Reports") immediately preceding the date on which such
additional Indebtedness is incurred or such Preferred Stock is issued
or incurred would have been less than 6.0 to 1.0, determined on a pro
forma basis (including a pro forma application of the net proceeds
therefrom); or
(ii) the Consolidated Capital Ratio at the end of the most recently ended
fiscal quarter (for which a consolidated balance sheet of Equinix has
been filed with the Commission or provided to the trustee pursuant to
"Reports") would have been less than 2.0 to 1.0 determined on a pro
forma basis (including a pro forma application of the net proceeds
therefrom).
Notwithstanding the foregoing, the provisions of the paragraph set forth
immediately above will not prohibit the incurrence of any of the following
items of Indebtedness (collectively, "Permitted Indebtedness"):
(i) Permitted Refinancing Indebtedness;
(ii) the incurrence by Equinix of Indebtedness represented by the notes and
the exchange notes;
(iii) the incurrence of Indebtedness by Equinix owing to any Restricted
Subsidiary or Indebtedness of any Restricted Subsidiary owing to
Equinix or any Restricted Subsidiary (but such Indebtedness shall be
deemed to be incurred upon such Indebtedness being held by any person
other than Equinix or such Restricted Subsidiary including upon
Designation and upon such Restricted Subsidiary otherwise no longer
being a Restricted Subsidiary); provided that in the case of
Indebtedness of Equinix, such obligations shall be unsecured and
subordinated in all respects to Equinix's obligations pursuant to the
notes;
(iv) the incurrence by Equinix of Indebtedness in an aggregate amount
incurred and outstanding at any time pursuant to this clause (iv) of
up to $30 million;
(v) the incurrence (A) by Equinix or any Restricted Subsidiary (other than
any Foreign Subsidiary) of Senior Debt (including under one or more
Permitted Credit Facilities) and (B) by any Foreign Subsidiary of
Indebtedness pursuant to one or more Permitted Foreign Credit
Facilities, in an aggregate amount incurred and outstanding at any time
pursuant to this clause (v) of up to the sum of (x) $125 million and
(y) 85% of the aggregate accounts receivable of Equinix and the
Restricted Subsidiaries as of the date of the most recently available
balance sheet of Equinix which has been included in a report filed with
the Commission or provided to the trustee pursuant to "Reports";
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(vi) the incurrence by Equinix or any Foreign Subsidiary of Purchase Money
Indebtedness (A) pursuant to the terms of any Purchase Money
Indebtedness facility existing and as in effect on the Issue Date or
(B) constituting not more than 75% of the cost, including shipping,
installation and importation costs and sales, use and similar taxes
(collectively "Costs") payable upon acquisition of the subject
property (determined in accordance with GAAP in good faith by the
Board of Directors of Equinix), to Equinix or any such Foreign
Subsidiary, as applicable, of the property so purchased, developed,
acquired, constructed, improved or leased; provided, that relating to
any Purchase Money Indebtedness incurred under clause (B) above, at
least 25% of the Costs payable upon acquisition of the subject
property shall be funded from Newly Raised Capital; provided, further,
that any assets acquired by a Foreign Subsidiary pursuant to this
clause (vi) are acquired for use in the ordinary course of business of
such Foreign Subsidiary;
(vii) the incurrence by Equinix or any of the Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or
hedging interest or foreign currency exchange rate risk relating to
any floating rate Indebtedness or foreign currency based
Indebtedness, respectively, that is permitted by the terms of the
indenture to be outstanding; provided that the notional amount of any
such Hedging Obligation does not exceed the amount of Indebtedness or
other liability to which such Hedging Obligation relates; and
(viii) the incurrence by Equinix and the Restricted Subsidiaries of
Indebtedness solely in respect of bankers acceptances, letters of
credit and performance bonds, all in the ordinary course of
business.
Indebtedness or Preferred Stock of any Person which is outstanding at the
time such Person becomes a Restricted Subsidiary of Equinix (including upon
designation of any Subsidiary or other Person as a Restricted Subsidiary or
upon a Revocation such that such Subsidiary becomes a Restricted Subsidiary) or
is merged with or into or consolidated with Equinix or a Restricted Subsidiary
of Equinix shall be deemed to have been incurred at the time such Person
becomes such a Restricted Subsidiary of Equinix or is merged with or into or
consolidated with Equinix or a Restricted Subsidiary of Equinix, as applicable.
Upon each incurrence, Equinix may designate pursuant to which provision of
this covenant such Indebtedness is being incurred and such Indebtedness shall
not be deemed to have been incurred by Equinix under any other provision of
this covenant, except as stated otherwise in the foregoing provisions or in the
next sentence. For purposes of determining compliance with this covenant, in
the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described in clauses (i) through (viii) above, or is
permitted under the first paragraph of this covenant and under one or more of
such clauses, Equinix, in its sole discretion, may from time to time reclassify
such item of Indebtedness.
Equinix will not, and will not permit any of the Restricted Subsidiaries
(other than Foreign Subsidiaries) to, incur any Indebtedness (including
Permitted Indebtedness) that is contractually subordinated in right of payment
to any other Indebtedness unless such Indebtedness is also contractually
subordinated in right of payment to the notes on substantially identical terms;
provided, however, that no Indebtedness shall be deemed to be contractually
subordinated in right of payment to any other Indebtedness solely by virtue of
being unsecured.
Liens
We will not, and will not permit any of the Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or otherwise cause or suffer to
exist or become effective any Lien of any kind (other than Permitted Liens) to
secure Indebtedness upon any of their property or assets, now owned or
hereafter acquired, or upon any income or profits therefrom unless all payments
due under the indenture and the notes are secured (except as provided in the
next clause) on an equal and ratable basis with the obligations so secured and
no Lien shall
be granted or be allowed to exist which secures Subordinated Indebtedness
except relating to Acquired Debt, in which case, however, such Liens must be
made junior and subordinate to the Liens granted to the holders.
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Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
We will not, and will not permit any of the Restricted Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(i) (a) pay dividends or make any other distributions to Equinix or any of
the Restricted Subsidiaries (1) on its Capital Stock or (2) relating to
any other interest or participation in, or measured by, its profits, or
(b) pay any Indebtedness owed to Equinix or any of the Restricted
Subsidiaries;
(ii) make loans or advances to Equinix or any of the Restricted
Subsidiaries; or
(iii) transfer any of its properties or assets to Equinix or any of the
Restricted Subsidiaries.
The foregoing restrictions will not apply to encumbrances or restrictions
existing under or by reason of:
(a) Existing Indebtedness as in effect on the Issue Date;
(b) any Permitted Credit Facility or Permitted Foreign Credit Facility,
provided that (i) the aggregate outstanding amount of any such
Indebtedness does not exceed the amount permitted under clause (v) of
the definition of Permitted Indebtedness, (ii) relating to any
Permitted Credit Facility, such restrictions apply only if there is a
payment default under such Permitted Credit Facility, and (iii) the
chief financial officer of Equinix determines in good faith that (A)
any such restrictions contained in any such Permitted Credit Facility
or Permitted Foreign Credit Facilities are no more restrictive, taken
as a whole, than those contained in a similar credit facility with
terms that are commercially reasonable for a borrower engaged in a
business comparable to Equinix that has substantially comparable
Indebtedness, and (B) any such restrictions will not materially affect
Equinix's ability to make principal, premium or interest payments on
the notes;
(c) applicable law;
(d) any instrument governing Indebtedness or Capital Stock of a Person or
assets acquired by Equinix or any of the Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of
such acquisition), which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired;
provided, that in the case of Indebtedness, such Indebtedness was
permitted by the terms of the indenture to be incurred;
(e) customary non-assignment provisions in leases entered into in the
ordinary course of business;
(f) purchase money obligations for property acquired in the ordinary course
of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, constructed, leased or
improved;
(g) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition, provided that the consummation
of such transaction would not result in an Event of Default or an event
that, with the passing of time or giving of notice or both, would
constitute an Event of Default, that such restriction terminates if
such transaction is not consummated and that the consummation or
abandonment of such transaction occurs within one year of the date such
agreement was entered into;
(h) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
(i) Liens securing Indebtedness otherwise permitted to be incurred pursuant
to the provisions of the covenant described above under "Liens" that
limit the right of Equinix or any of the Restricted Subsidiaries to
dispose of the assets subject to such Lien; and
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(j) provisions relating to the disposition or distribution of assets or
property in joint venture agreements and other similar agreements
entered into in the ordinary course of business.
Merger, Consolidation, or Sale of Assets
We may not, directly or indirectly, (1) consolidate or merge with or into
(whether or not we are the surviving corporation), or sell, assign, transfer,
convey or otherwise dispose of all or substantially all of our properties or
assets, in one or more related transactions, to another Person or (2) permit
any of the Restricted Subsidiaries to enter into any such transaction or series
of transactions if it would result in such disposition of all or substantially
all of the assets of Equinix and the Restricted Subsidiaries on a consolidated
basis, unless:
(i) Equinix is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than Equinix) or
to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District
of Columbia;
(ii) the Person formed by or surviving any such consolidation or merger (if
other than Equinix) or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes
all the obligations of Equinix under the registration agreement, the
notes, the exchange notes and the indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the trustee;
(iii) no Default or Event of Default (or an event that, with the passing of
time or giving of notice or both, would constitute an Event of
Default) shall exist or shall occur immediately after giving effect
on a pro forma basis to such transaction;
(iv) except in the case of a merger of Equinix with or into a Wholly Owned
Restricted Subsidiary of Equinix, Equinix or the Person formed by or
surviving any such consolidation or merger (if other than Equinix), or
to which such sale, assignment, transfer, conveyance or other
disposition shall have been made will immediately after such
transaction and after giving pro forma effect thereto and any related
financing transactions as if the same had occurred at the beginning of
the applicable period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the first paragraph of the
"Incurrence of Indebtedness and Issuance of Preferred Stock" covenant;
(v) if, as a result of any such transaction, property or assets of Equinix
would become subject to a Lien subject to the provisions of the
indenture described under the "Liens" covenant, Equinix or the
successor entity to Equinix shall have secured the notes as required by
said covenant; and
(vi) Equinix shall have delivered to the trustee an Officers' Certificate
and an opinion of counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply
with the indenture.
The indenture also provides that Equinix may not, directly or indirectly,
lease all or substantially all of its properties or assets, in one or more
related transactions, to any other Person.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of Equinix in accordance with the foregoing, the successor
corporation formed by such consolidation or into which Equinix is merged or to
which such transfer is made shall succeed to and (except in the case of a
lease) be substituted for, and may exercise every right and power of, Equinix
under the indenture with the same effect as if such successor corporation had
been named therein as Equinix, and (except in the case of a lease) Equinix
shall be released from the obligations under the notes and the indenture except
relating to any obligations that arise from, or are related to, such
transaction.
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Transactions with Affiliates
We will not, and will not permit any of the Restricted Subsidiaries to, make
any payment to, or sell, lease, transfer or otherwise dispose of any of our
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms that are not materially less
favorable to Equinix or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by Equinix or
such Restricted Subsidiary with an unrelated Person; and
(ii) relating to any Affiliate Transaction or series of related Affiliate
Transactions
(A) involving aggregate consideration in excess of $5 million, Equinix
delivers to the trustee a resolution of the Board of Directors set
forth in an Officers' Certificate that such Affiliate Transaction
is approved by a majority of the disinterested members of the Board
of Directors and that such Affiliate Transaction complies with
clause (i) above and is in the best interests of Equinix or such
Restricted Subsidiary; and
(B) if involving aggregate consideration in excess of $10 million, a
favorable written opinion as to the fairness to Equinix of such
Affiliate Transaction from a financial point of view is also
obtained by Equinix from an accounting, appraisal or investment
banking firm of national standing.
Notwithstanding the foregoing, the following items shall not be deemed to be
Affiliate Transactions:
(i) (a) the entering into, maintaining or performance of any employment
contract, collective bargaining agreement, benefit plan, program or
arrangement, related trust agreement or any other similar arrangement
for or with any employee, officer or director heretofore or hereafter
entered into in the ordinary course of business, including vacation,
health, insurance, deferred compensation, retirement, savings or other
similar plans or (b) the payment of compensation, performance of
indemnification or contribution obligations, or an issuance, grant or
award of stock, options, or other equity-related interests or other
securities, to employees, officers or directors in the ordinary course
of business;
(ii) transactions between or among Equinix and/or the Restricted
Subsidiaries;
(iii) payment of reasonable directors fees;
(iv) any sale or other issuance of Equity Interests (other than
Disqualified Stock) of Equinix;
(v) Affiliate Transactions in effect or approved by the Board of Directors
on the Issue Date, including any amendments thereto (provided that the
terms of such amendments are not materially less favorable to Equinix
than the terms of such agreement before such amendment); and
(vi) Restricted Payments that are permitted under "Restricted Payments" and
Permitted Investments described under clause (d) of the definition
thereof.
Business Activities
We will not, and will not permit any of the Restricted Subsidiaries to,
engage, to more than a de minimus extent, in any business other than a
Permitted Business.
Status as Investment Company
The indenture provides that Equinix will not, and will not permit any of its
Subsidiaries or controlled affiliates to, conduct its business in a fashion
that would cause Equinix to be required to register as an "investment company"
(as that term is defined in the Investment Company Act of 1940, as amended), or
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otherwise to become subject to regulation under the Investment Company Act. For
purposes of establishing Equinix'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.
Reports
The indenture provides that at all times from and after the date of the
commencement of an exchange offer or the effectiveness of a shelf registration
statement relating to the notes (the "Registration"), whether or not Equinix is
then required to file reports with the Commission, Equinix shall file with the
Commission all such reports and other information as it would be required to
file with the Commission by Sections 13(a) or 15(d) under the Exchange Act if
it were subject thereto. Equinix shall supply the applicable trustee and each
applicable holder or shall supply to the applicable trustee for forwarding to
each such applicable holder, without cost to such holder, copies of such
reports and other information. At all times before the date of the
Registration, Equinix shall, at its cost, deliver to the trustee and each
holder of the notes quarterly and annual reports substantially equivalent to
those which would be required by the Exchange Act if Equinix were subject
thereto. In addition, at all times before the Registration, upon the request of
any holder or any prospective purchaser of the notes designated by a holder,
Equinix shall supply to such holder or such prospective purchaser the
information required under Rule 144A under the Securities Act.
Events of Default and Remedies
The indenture provides that each of the following will constitute an Event
of Default:
(i) default for 30 days in the payment when due of interest on the notes;
or
(ii) default in the payment when due of the principal of, or premium, if
any, on, the notes; or
(iii) failure by Equinix or any of the Restricted Subsidiaries to comply
with the provisions described above under the captions "--Change of
Control," or "--Asset Sales"; or
(iv) failure by Equinix or any of the Restricted Subsidiaries for 60 days
after notice to comply with any of its other agreements in the
indenture, the notes or the escrow agreement; or
(v) the default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness of Equinix or any of the Restricted Subsidiaries (or the
payment of which is Guaranteed by Equinix or any of the Restricted
Subsidiaries) whether such Indebtedness or Guarantee now exists or is
created after the Issue Date, and either such Indebtedness is already
due and payable or such default results in the acceleration of such
Indebtedness before its express maturity and, in each case, the amount
of any such Indebtedness, together with the amount of any other such
Indebtedness the maturity of which has been so accelerated or which is
already due and payable, aggregates $10 million or more; or
(vi) one or more judgments, orders or decrees for the payment of money in
excess of $10 million, individually or in the aggregate (net of
applicable insurance coverage which is acknowledged in writing by the
insurer), shall be entered against Equinix or any 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
(vii) Equinix shall assert or acknowledge in writing that the escrow
agreement is invalid or unenforceable; or
(viii)certain events of bankruptcy or insolvency relating to Equinix or any
of its Significant Subsidiaries.
If any Event of Default occurs and is continuing, the trustee or the holders
of at least 25% in principal amount of the then outstanding notes may declare
all principal of, premium (if any) on and interest on the notes
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to be due and payable immediately. Notwithstanding the foregoing, in the case
of an Event of Default arising from certain events of bankruptcy or insolvency
relating to Equinix or a Significant Subsidiary, all outstanding notes will
become due and payable without further action or notice.
Holders may not directly enforce the indenture or the notes except as
provided in the indenture. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding notes may direct the
trustee in its exercise of any trust or power.
Holders of a majority in aggregate principal amount of the then outstanding
notes by notice to the trustee may on behalf of all holders waive any existing
Default or Event of Default and its consequences under the indenture, except a
continuing Default or Event of Default in the payment of principal of, premium,
if any, or interest on the notes.
We will be required to deliver to the trustee annually a statement regarding
compliance with the indenture, and we will be required upon becoming aware of
any Default or Event of Default to deliver to the trustee a statement
specifying such Default or Event of Default. The trustee may withhold from
holders notice of any continuing Default or Event of Default (except a Default
or Event of Default relating to the payment of principal of, premium, if any,
or interest on, the notes) if it determines that withholding notice is in their
interest.
No Personal Liability of Directors, Officers, Employees, Incorporators or
Shareholders
No director, officer, employee, incorporator or shareholder of Equinix, as
such, will have any liability for any obligations of Equinix relating to the
notes or the indenture, or for any claim based on, or in respect or by reason
of, such obligations or their creation. Each holder of notes by accepting a
note will waive and release any and all such liability. Such waiver and release
are part of the consideration for issuance of the notes. Such waiver may not be
effective to waive liabilities under federal securities laws and it is the view
of the Commission that such a waiver is against public policy.
Legal Defeasance and Covenant Defeasance
The indenture provides that Equinix may, at its option and at any time,
elect to have all of its obligations discharged relating to the outstanding
notes, called legal defeasance, except for:
(i) the rights of holders to receive payments in respect of the principal
of, premium, if any, and interest on such notes when such payments are
due from the trust referred to below;
(ii) Equinix's obligations relating to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost or
stolen notes and the maintenance of an office or agency for payment
and money for security payments held in trust;
(iii) the rights, powers, trusts, duties and immunities of the trustee, and
Equinix's obligations in connection therewith; and
(iv) the legal defeasance provisions of the indenture.
In addition, Equinix may, at its option and at any time, elect to have its
obligations released relating to certain covenants that are contained in the
indenture, called covenant defeasance, and, thereafter, any omission to comply
with such obligations will not constitute a Default or Event of Default. In the
event covenant defeasance occurs, certain events, but not including non-
payment, bankruptcy, receivership, rehabilitation or insolvency events,
described under "--Events of Default and Remedies" will no longer constitute an
Event of Default.
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To exercise either legal defeasance or covenant defeasance:
(i) Equinix must irrevocably deposit, or cause to be deposited, with the
trustee, in trust, for the benefit of the holders, cash in U.S.
dollars, non-callable Government Securities, or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal
of, premium, if any, and interest on the outstanding notes on the
stated maturity thereof or on the applicable redemption date, as the
case may be, and Equinix must specify whether the notes are being
defeased to maturity or to a particular redemption date;
(ii) in the case of legal defeasance, Equinix must deliver to the trustee
an opinion of counsel in the United States reasonably acceptable to
the trustee confirming that, since the Issue Date, Equinix has
received from, or there has been published by, the Internal Revenue
Service a ruling, or there has been a change in the applicable United
States federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the holders
will not recognize income, gain or loss for United States federal
income tax purposes as a result of such legal defeasance, and will be
subject to United States federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if
such legal defeasance had not occurred;
(iii) in the case of covenant defeasance, Equinix must deliver to the
trustee an opinion of counsel in the United States reasonably
acceptable to the trustee confirming that the holders will not
recognize income, gain or loss for United States federal income tax
purposes as a result of such covenant defeasance, and such holders
will be subject to United States 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;
(iv) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit, other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit;
(v) such legal defeasance or covenant defeasance will not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument, other than the indenture, to which Equinix or
any of the Restricted Subsidiaries is a party or by which Equinix or
any of the Restricted Subsidiaries is bound;
(vi) Equinix must deliver to the trustee an Officers' Certificate stating
that the deposit was not made by Equinix with the intent of preferring
the holders over other creditors of Equinix, or with the intent of
defeating, hindering, delaying or defrauding creditors of Equinix or
others; and
(vii) Equinix must deliver to the trustee an Officers' Certificate and an
opinion of counsel in the United States reasonably acceptable to the
trustee, each stating that the conditions precedent provided for or
relating to legal defeasance or covenant defeasance, as applicable,
in the case of the Officers' Certificate, in clauses (i) through (vi)
and, in the case of the opinion of counsel, in clauses (i), relating
to the validity and perfection of the security interest, and clauses
(ii) and (iii) of this paragraph, have been complied with.
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:
(i) all such notes theretofore authenticated and delivered, except lost,
stolen or destroyed notes that have been replaced or paid and notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by Equinix and thereafter repaid to
Equinix or discharged from such trust, have been delivered to the
trustee for cancellation; or
(ii) (a) all such notes not theretofore delivered to the trustee for
cancellation have become due and payable and Equinix has irrevocably
deposited or caused to be deposited with the trustee as trust
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funds in trust for the purpose an amount of money sufficient to pay and
discharge the entire indebtedness on the notes not theretofore delivered
to the trustee for cancellation, for principal amount, premium, if any,
and accrued interest to the date of such deposit; (b) Equinix has paid
all sums payable by it under the indenture; and (c) Equinix has
delivered irrevocable instructions to the trustee to apply the deposited
money toward the payment of the notes at Stated Maturity or on the
redemption date, as the case may be.
In addition, Equinix must deliver an Officers' Certificate and an opinion of
counsel stating that all conditions precedent to satisfaction and discharge
have been complied with.
Transfer and Exchange
A holder may transfer or exchange notes in accordance with the procedures
set forth in the indenture. The registrar and the trustee may require a holder,
among other things, to furnish appropriate endorsements and transfer documents,
and Equinix may require a holder to pay any taxes and fees required by law or
permitted by the indenture. Equinix will not be required to transfer or
exchange any note selected for redemption. Also, Equinix will not be required
to transfer or exchange any note for a period of 15 days before (i) a selection
of notes to be redeemed (ii) an interest payment date or (iii) the mailing of
notice of a Change of Control Offer or Asset Sale Offer. The registered holder
of a note will be treated as the owner of it for all purposes under the
indenture.
Amendment, Supplement and Waiver
With the consent of the holders of not less than a majority in aggregate
principal amount of the notes at the time outstanding, Equinix and the trustee
are permitted to amend or supplement the indenture or any supplemental
indenture or modify the rights of the holders; provided that no such
modification may, without the consent of each holder affected thereby:
(i) reduce the principal amount of, change the fixed maturity of, or alter
the redemption provisions of, the notes;
(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 the indenture or the notes;
(iv) impair the right to institute suit for the enforcement of any payment
on or relating to the notes;
(v) waive a default in payment relating 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 Equinix's obligation to purchase the notes as a result of such
Change of Control or Asset Sale in accordance with the 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 Liens created by the escrow agreement except in accordance
with the terms of the escrow agreement.
Notwithstanding the foregoing, without the consent of any holder of notes,
Equinix and the trustee may amend or supplement the indenture or the notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated
notes in addition to or in place of certificated notes, to provide for the
assumption of Equinix's obligations to holders in the case of a merger or
consolidation or sale of all or substantially all of Equinix's assets in
accordance with the terms of the indenture, to make any change that would
provide any additional rights or benefits to the holders or that does not
adversely affect the legal rights under the indenture of any such
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holder, or to comply with the requirements of the Commission to effect or
maintain the qualification of the indenture under the Trust Indenture Act.
Concerning the Trustee
The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of Equinix, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest, it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue, or resign.
Holders of a majority in principal amount of the then outstanding notes will
have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. In case an Event of Default shall occur (which shall not be
cured), the trustee will be required, in the exercise of its power, to use the
degree of care of a prudent person in the conduct of their own affairs. Subject
to such provisions, the trustee will be under no obligation to exercise any of
its rights or powers under the indenture at the request of any holder, unless
such holder shall have offered to the trustee security and indemnity
satisfactory to it against any loss, liability or expense.
Governing Law
The indenture and the notes will be governed by and construed in accordance
with the laws of the State of New York.
Equinix will submit to the jurisdiction of the U.S. federal and New York
state courts located in the Borough of Manhattan, City and State of New York
for purposes of all legal actions and proceedings instituted in connection with
the notes and the indenture.
Certain Definitions
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Debt" or "Acquired Preferred Stock" means, relating to any
specified Person, Indebtedness or Preferred Stock of any other Person existing
at the time such other Person is merged with or into or became a Subsidiary of
such specified Person (including by Designation or Revocation), provided such
Indebtedness or Preferred Stock is not incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used relating to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"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 Equinix or any
Restricted Subsidiary in any other person, or any acquisition or purchase of
Capital Stock of any other person by Equinix 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 Equinix or any Restricted
Subsidiary or (ii) any
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acquisition by Equinix 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 (i) the sale, lease, transfer, conveyance or other
disposition of any property, asset or right (including, without limitation, by
way of a sale and leaseback), other than leases of space in an Exchange
Facility entered into in the ordinary course of business, of Equinix or any
Restricted Subsidiary, and (ii) the issue or sale by Equinix or any of the
Restricted Subsidiaries of Equity Interests of any Subsidiary. Notwithstanding
the foregoing, the following items shall not be deemed to be Asset Sales: (i)
any disposition of properties and assets of Equinix subject to the "Merger,
Consolidation or Sale of Assets" covenant, provided that any properties, assets
or rights that are not included in any such dispositions shall be deemed to
have been sold in a transaction constituting an Asset Sale, (ii) a transfer of
properties, assets or rights by Equinix to a Restricted Subsidiary or by a
Subsidiary to Equinix or to a Restricted Subsidiary, (iii) a disposition of
obsolete or worn out equipment or equipment that is no longer useful in the
conduct of a Permitted Business of Equinix and the Restricted Subsidiaries,
(iv) the surrender or waiver by Equinix or any of the Restricted Subsidiaries
of contract rights or the settlement, release or surrender of contract, tort or
other claims of any kind by Equinix or any of the Restricted Subsidiaries or
the grant by Equinix or any of the Restricted Subsidiaries of a Lien not
prohibited by the indenture, and (v) sales, transfers, assignments and other
dispositions of assets (or related assets in related transactions) (x) in the
ordinary course of business (y) with an aggregate fair market value of less
than $500,000 in any fiscal year or (z) constituting the incurrence of a
Capital Lease Obligation.
"Board of Directors" means the board of directors or other governing body of
Equinix or, if Equinix is owned or managed by a single entity, the board of
directors or other governing body of such entity, or, in either case, any
committee thereof duly authorized to act on behalf of such board or governing
body.
"Board Resolution" means a duly authorized resolution of the Board of
Directors.
"Capital Contribution" means any contribution to the common equity of
Equinix from a direct or indirect parent of Equinix for which no consideration
other than the issuance of common stock with no redemption rights and no
special preferences, privileges or voting rights is given.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less from
the date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any domestic commercial
bank having capital and surplus in excess of $500 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clause
(ii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Ratings Group and in each case maturing within six months after the date
of acquisition and (vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i)-(v) of this
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definition, provided that relating to any Foreign Subsidiary, Cash Equivalents
shall also mean those investments that are comparable to clauses (i) through
(vi) above in such Foreign Subsidiary's country of organization or country
where it conducts business operations.
"Change of Control" means the occurrence of any of the following: (i) any
"person" or "group," other than a Permitted Holder, is or becomes the
"beneficial owner" (as such terms are used in Section 13(d)(3) of 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 35% or more of the Voting Stock (measured by voting power rather
than number of shares) of Equinix and the Permitted Holders own, in the
aggregate, a lesser percentage of the total Voting Stock (measured by voting
power rather than by number of shares) of Equinix than such person and do not
have the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of Equinix, (ii)
during any period of two consecutive years, Continuing Directors cease for any
reason to constitute a majority of the Board of Directors of Equinix,
(iii) Equinix consolidates or merges with or into any other Person or Equinix
and/or any Restricted Subsidiaries sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of the assets and properties of
Equinix and the Restricted Subsidiaries on a consolidated basis to any other
Person, other than a Permitted Holder, other than a consolidation or merger or
disposition of assets (a) of or by Equinix into or to a Wholly Owned Restricted
Subsidiary of Equinix or (b) subject to clause (i) above, pursuant to a
transaction in which the outstanding Voting Stock of Equinix is changed into or
exchanged for securities or other property with the effect that the beneficial
owners of the outstanding Voting Stock of Equinix immediately before such
transaction, beneficially own, directly or indirectly, at least a majority of
the Voting Stock (measured by voting power rather than number of shares) of the
surviving corporation or the Person to whom Equinix's assets are transferred
immediately following such transaction, or (iv) the adoption of a plan relating
to the liquidation or dissolution of Equinix.
"Commission", means the Securities and Exchange Commission.
"Consolidated Capital Ratio" means, relating to Equinix as of any date, the
ratio of (i) the aggregate amount of Indebtedness of Equinix and the Restricted
Subsidiaries then outstanding to (ii) the Consolidated Equity Capital of
Equinix and the Restricted Subsidiaries as of such date. For the purposes of
calculating the "Consolidated Capital Ratio" (i) any Subsidiary of Equinix that
is a Restricted Subsidiary on the Transaction Date shall be deemed to have been
a Restricted Subsidiary at the end of the most recently ended fiscal quarter
(the "Reference Date") and (ii) any Subsidiary of Equinix that is not a
Restricted Subsidiary on the Transaction Date shall be deemed not to have been
a Restricted Subsidiary on the Reference Date. In addition to, and without
limiting the foregoing, for the purposes of the foregoing, "Consolidated Equity
Capital" shall be calculated after giving effect on a pro forma basis as of the
Reference Date for, without duplication, (i) 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 Equinix or one of the
Restricted Subsidiaries (including any Person who becomes a Restricted
Subsidiary as the result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Debt) occurring during the period
commencing on the Reference Date to and including the Transaction Date, as if
such Asset Sale or Asset Acquisition occurred on the Reference Date, (ii) any
issue or sale of Equity Interests (other than Disqualified Stock but including
Equity Interests (other than Disqualified Stock) issued upon the exercise of
options, warrants or rights to purchase such Equity Interests) of Equinix or
any conversion of Disqualified Stock or debt securities of Equinix into Equity
Interests (other than Disqualified Stock) occurring during the period
commencing on the Reference Date to and including the Transaction Date, as if
such issue, sale or conversion occurred on the Reference Date, and (iii) any
Restricted Payments made by Equinix, and any sale, disposition or repayment of
any Restricted Investment constituting a Restricted Payment, since the
Reference Date to and including the Transaction Date, as if such Restricted
Payment occurred on the Reference Date.
"Consolidated Cash Flow" means, relating to Equinix for any period, the
Consolidated Net Income of Equinix and the Restricted Subsidiaries for such
period plus (A) to the extent that any of the following items
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were deducted in computing such Consolidated Net Income, but without
duplication, (i) provision for taxes based on income or profits of Equinix and
the Restricted Subsidiaries for such period, plus (ii) consolidated interest
expense of Equinix and the Restricted Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), plus (iii) depreciation,
amortization (including amortization of goodwill and other intangibles, but
excluding amortization of prepaid cash expenses that were paid in a prior
period), and other non-cash expenses (excluding any such non-cash expense to
the extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a
prior period) of Equinix and the Restricted Subsidiaries for such period, minus
(B) non-cash items increasing such Consolidated Net Income for such period
(other than items that were accrued in the ordinary course of business), in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or profits
of, and the depreciation and amortization and other non-cash expenses of, a
Restricted Subsidiary of Equinix shall be added to Consolidated Net Income to
compute Consolidated Cash Flow of Equinix only to the extent that a
corresponding amount would be permitted at the date of determination to be
dividended or otherwise distributed to Equinix by such Restricted Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
shareholders.
"Consolidated Equity Capital" means, relating to Equinix as of any date, the
sum (without duplication) of (i) the additional paid-in capital of the common
shareholders reflected on the consolidated balance sheet of Equinix and the
Restricted Subsidiaries as of such date plus (ii) the respective amounts
reported on Equinix's balance sheet as of such date relating to any series of
Capital Stock (other than Disqualified Stock) not included in clause (i) above,
less (iii) (x) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of such business) after
the Issue Date in the book value of any asset owned by Equinix or a Restricted
Subsidiary, (y) all outstanding net Investments as of such date in persons that
are not Restricted Subsidiaries (without giving effect to any write-down or
write-off thereof), and (z) the aggregate amount of all Restricted Payments
declared or made on or after the Issue Date other than (I) Investments in
persons that are not Restricted Subsidiaries and (II) Restricted Payments made
pursuant to clause (iii) of the second paragraph of the "Restricted Payments"
covenant.
"Consolidated Leverage Ratio" means, relating to Equinix, as of any date,
the ratio of (i) the aggregate consolidated amount of Indebtedness of Equinix
and the Restricted Subsidiaries then outstanding to (ii) the annualized
Consolidated Cash Flow of Equinix and the Restricted Subsidiaries for the most
recently ended fiscal quarter. For purposes of calculating "Consolidated Cash
Flow" for any fiscal quarter for purposes of this definition, (i) any
Subsidiary of Equinix that is a Restricted Subsidiary on the Transaction Date
shall be deemed to have been a Restricted Subsidiary at all times during such
fiscal quarter and (ii) any Subsidiary of Equinix 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 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
Equinix 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 Debt) 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 Net Income" means, relating to Equinix for any period, the
aggregate of the Net Income of Equinix and the Restricted Subsidiaries for such
period, on a consolidated basis, determined in accordance with
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GAAP; provided that (i) the Net Income (but not loss) of any Person that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash to Equinix or a
Restricted Subsidiary thereof by such Person but not in excess of Equinix's
Equity Interests in such Person, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its shareholders, except that Equinix's equity in
the net income of any such Restricted Subsidiary for such period may be
included in such Consolidated Net Income (A) up to the aggregate amount of cash
that could have been distributed by such Restricted Subsidiary during such
period to Equinix as a dividend and (B) if the only restriction on the
declaration or payment of dividends or similar distributions by such Restricted
Subsidiary is a restriction of the type described in clause (b) of the second
paragraph of the "Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries" covenant, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period before the date of such
acquisition shall be excluded, (iv) the equity of Equinix or any Restricted
Subsidiary in the net income (if positive) of any Unrestricted Subsidiary shall
be included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Unrestricted Subsidiary during such period to
Equinix or a Restricted Subsidiary as a dividend or other distribution (but not
in excess of the amount of the Net Income of such Unrestricted Subsidiary for
such period), (v) the cumulative effect of a change in accounting principles
shall be excluded, (vi) all extraordinary, unusual or nonrecurring gains or
losses (net of fees and expenses relating to the transaction giving rise
thereto) shall be excluded, (vii) any gain or loss, net of taxes, realized upon
the termination of any employee pension benefit plan shall be excluded, and
(viii) gains or losses in respect of any Asset Sales (net of fees and expenses
relating to the transaction giving rise thereto) shall be excluded.
"Consolidated Tangible Assets" of Equinix as of any date means the total
amount of assets of Equinix and the Restricted Subsidiaries (less applicable
reserves) on a consolidated basis at the end of the fiscal quarter immediately
preceding such date, as determined in accordance with GAAP, less: (i)
unamortized debt and debt issuance expenses, deferred charges, goodwill,
patents, trademarks, copyrights, and all other items which would be treated as
intangibles on the consolidated balance sheet of Equinix and the Restricted
Subsidiaries prepared in accordance with GAAP and (ii) appropriate adjustments
on account of minority interests of other Persons holding equity investments in
Restricted Subsidiaries, in the case of each of clauses (i) and (ii) above, as
reflected on the consolidated balance sheet of Equinix and the Restricted
Subsidiaries.
"Continuing Directors" means individuals who at the beginning of the period
of determination constituted the Board of Directors of Equinix, together with
any new directors whose election by the Board of Directors or whose nomination
for election by the shareholders of Equinix was approved by a vote of a
majority of the directors of Equinix then still in office who were either
directors at the beginning of the period or whose election or nomination for
election was previously so approved or is the designee of any one of the
Permitted Holders or any combination thereof or was nominated or elected by any
such Permitted Holder(s) or any of their designees.
"Cumulative Consolidated Cash Flow" means, as of any date of determination,
the cumulative Consolidated Cash Flow realized during the period commencing on
the first day of the fiscal quarter which includes the Issue Date and ending on
the last day of the last fiscal quarter for which reports have been filed with
the Commission or provided to the trustee pursuant to the "Reports" covenant
preceding the date of the event requiring such calculation to be made.
"Currency Agreement" means, relating to any Person, any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or beneficiary.
"Default" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
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"Disqualified Stock" means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or before the date that is 91 days after the
date on which the notes mature; provided, however, that any Equity Interest
that would constitute Disqualified Stock solely because the holders thereof
have the right to require Equinix to repurchase such Equity Interest upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Equity Interest provide that Equinix
may not repurchase or redeem any such Equity Interest pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the "Restricted Payments" covenant.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Exchange Facility" means a facility providing equipment colocation, direct
high-speed connections, switched interconnections and related services to third
party internet related businesses and operations.
"Existing Indebtedness" means Indebtedness of Equinix and the Restricted
Subsidiaries in existence on the Issue Date, until such amounts are repaid.
"Foreign Subsidiary" means any Restricted Subsidiary of Equinix which (i) is
not organized under the laws of the United States, any state thereof or the
District of Columbia, and (ii) conducts substantially all of its business
operations outside the United States of America.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.
"Government Securities" means securities that are (a) direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentally thereof) the
payment of which the full faith and credit of the United States of America is
pledged, (b) obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation by
the United States of America or (c) obligations of a Person the payment of
which is unconditionally guaranteed as a full faith and credit obligation by
the United States of America.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" means, relating to any Person, the obligations of such
Person under any Interest Rate Agreement or Currency Agreement.
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"Indebtedness" means, relating to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance of the deferred and
unpaid purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing (other than letters of credit (or
reimbursement agreements in respect thereof), banker's acceptances and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person), Disqualified Stock of such Person and Preferred Stock
of such Person's Restricted Subsidiaries and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness issued with original
issue discount, but the accretion of original issue discount in accordance with
the original terms of Indebtedness issued with an original issue discount will
not be deemed to be an incurrence, or (ii) the principal amount thereof,
together with any interest thereon that is more than 30 days past due, in the
case of any other Indebtedness. Notwithstanding the foregoing, money borrowed
and set aside at the time of the incurrence of any Indebtedness to prefund the
payment of interest on such Indebtedness shall not be deemed to be
"Indebtedness" so long as such money is held to secure the payment of such
interest.
"Interest Rate Agreement" means, relating to any Person, any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement to which such Person is a party or beneficiary.
"Investments" means, relating to any Person, all investments by such Person
in other Persons (including affiliates) in the forms of direct or indirect
loans (including Guarantees of Indebtedness or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
directors, officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If Equinix or any of the Restricted Subsidiaries sells or otherwise disposes of
any Equity Interests of any direct or indirect Restricted Subsidiary such that,
after giving effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary, Equinix shall be deemed to have made an Investment on
the date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Restricted Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the "Restricted
Payments" covenant.
"Issue Date" means the date of first issuance of the notes under the
indenture.
"Lien" means, relating to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in, and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Net Cash Proceeds" means the aggregate amount of cash or Cash Equivalents
received by Equinix in the case of a sale, or Capital Contribution in respect,
of Capital Stock and by Equinix and the Restricted Subsidiaries in respect of
an Asset Sale plus, in the case of an issuance of Capital Stock upon any
exercise, exchange or conversion of securities (including options, warrants,
rights and convertible or exchangeable debt) of Equinix that were issued for
cash on or after the Issue Date, the amount of cash originally received by
Equinix upon the issuance of such securities (including options, warrants,
rights and convertible or exchangeable debt) less, in each case, the sum of all
payments, fees, commissions and reasonable and customary expenses (including,
without limitation, the fees and expenses of legal counsel and investment
banking fees and expenses) incurred in connection with such Asset Sale or sale
of Capital Stock, and, in the
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case of an Asset Sale only, less the amount (estimated reasonably and in good
faith by Equinix) of income, franchise, sales and other applicable federal,
state, provincial, foreign and local taxes required to be paid or accrued as a
liability by Equinix or any of its respective Restricted Subsidiaries in
connection with such Asset Sale in the taxable year that such sale is
consummated or in the immediately succeeding taxable year, the computation of
which shall take into account the reduction in tax liability resulting from any
available operating losses and net operating loss carryovers, tax credits and
tax credit carryforwards, and similar tax attributes.
"Net Income" means, relating to any Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of preferred stock dividends, excluding, however, (i) any gain (but not loss),
together with any related provision for taxes on such gain (but not loss),
realized in connection with (a) any Asset Sale or (b) the disposition of any
securities by such Person or any of the Restricted Subsidiaries and (ii) any
extraordinary gain or loss, together with any related provision for taxes on
such extraordinary gain or loss.
"Newly Raised Capital" means funds raised by Equinix and the Restricted
Subsidiaries after the Issue Date.
"Non-Recourse Debt" means Indebtedness (i) as to which neither Equinix nor
an Restricted Subsidiary (a) provides any Guarantee or credit support of any
kind (including any undertaking, guarantee, indemnity, agreement or instrument
that would constitute Indebtedness) or (b) is directly or indirectly liable (as
a guarantor or otherwise) and (ii) no default relating to which (including any
rights that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of Equinix or any Restricted Subsidiary to
declare a default under such other Indebtedness or cause the payment thereof to
be accelerated or payable before its Stated Maturity.
"Officer" means the President, the Chief Executive Officer, the Chief
Financial Officer and any vice president of Equinix.
"Officers' Certificate" means a certificate signed by two Officers.
"pari passu Indebtedness" means Indebtedness of Equinix ranking pari passu
in right of payment with the notes.
"Permitted Business" means the business of designing, constructing, owning,
operating and leasing space within Exchange Facilities together with any other
activity reasonably related thereto.
"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 persons typically party to
commercial loan agreements.
"Permitted Foreign 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 persons typically
party to commercial loan agreements having only Foreign Subsidiaries as
obligors thereunder; provided that Equinix may be a guarantor of any such
Permitted Foreign Credit Facility.
"Permitted Holder" means Benchmark Capital Partners II, L.P., Cisco Systems,
Inc., Microsoft Corporation, News Corp., Albert M. Avery, IV, Jay S. Adelson
and their respective Related Persons.
"Permitted Investments" means (a) any Investment in Equinix or in a
Restricted Subsidiary of Equinix that is engaged entirely or substantially
entirely in a Permitted Business; (b) any Investment in Cash Equivalents; (c)
any Investment by Equinix or any of the Restricted Subsidiaries in a Person, if
as a result of such Investment (i) such Person becomes a Restricted Subsidiary
of Equinix that is engaged entirely or substantially entirely in a Permitted
Business or (ii) such Person is merged, consolidated or amalgamated with
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or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, Equinix or a Restricted Subsidiary of Equinix that is engaged
entirely or substantially entirely in a Permitted Business; (d) loans or
advances to employees of Equinix or any Restricted Subsidiary in an amount not
to exceed $5 million at any time outstanding; (e) any Investment made as a
result of the receipt of non-cash consideration from an Asset Sale made in
compliance with the "Asset Sales" covenant; and (f) Investments in securities
of trade creditors or customers received pursuant to any plan of reorganization
or similar arrangement arising out of the bankruptcy or insolvency of such
trade creditors or customers.
"Permitted Liens" means (i) Liens to secure Indebtedness (x) permitted by
clauses (vi) and (vii) of the second paragraph of the "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, provided that relating
to Liens to secure Indebtedness permitted by clause (vi) thereof or any
Permitted Refinancing Indebtedness of such Indebtedness, such Lien must cover
only the assets acquired with such Indebtedness, and (y) incurred under a
Permitted Credit Facility or a Permitted Foreign Credit Facility and permitted
by clause (v) of the second paragraph of the "Incurrence of Indebtedness and
Issuance of Preferred Stock" covenant; (ii) Liens in favor of Equinix or any
Restricted Subsidiary; (iii) Liens on property of a Person existing at the time
such Person is merged with or into or consolidated with Equinix or any of the
Restricted Subsidiaries, provided that such Liens were in existence before the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with Equinix or such
Restricted Subsidiary; (iv) Liens on property existing at the time of
acquisition thereof by Equinix or any of the Restricted Subsidiaries, provided
that such Liens were in existence before the contemplation of such acquisition;
(v) 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; (vi) Liens existing on the Issue Date; (vii) 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 concluded, provided that any reserve or
other appropriate provision as shall be required in conformity with GAAP shall
have been made therefor; (viii) zoning restrictions, rights-of-way, easements
and similar charges or encumbrances incurred in the ordinary course which in
the aggregate do not detract from the value of the property thereof; (ix) Liens
securing the notes; (x) Liens incurred in the ordinary course of business of
Equinix or any of the Restricted Subsidiaries relating to obligations that do
not exceed 5% of Equinix's Consolidated Tangible Assets at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by Equinix or such Restricted Subsidiary; and (xi) Liens
securing money borrowed (or any securities purchased therewith) which is (or
are, in the case of securities) set aside at the time of the incurrence of any
Indebtedness permitted to be incurred under the "Incurrence of Indebtedness and
Issuance of Preferred Stock" covenant to prefund the payment of interest on
such Indebtedness.
"Permitted Recourse Debt" means Indebtedness as to which Equinix is
contingently liable as a guarantor or indemnitor or as to which Equinix has
agreed to otherwise provide credit support, in any such case to the extent that
the maximum possible liability of Equinix in respect of any such Indebtedness,
at the time of its incurrence by Equinix is permitted to be incurred as
Permitted Indebtedness pursuant to clause (iv) of the definition thereof.
"Permitted Refinancing Indebtedness" means any Indebtedness of Equinix or
any of the Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of Equinix or any of the Restricted Subsidiaries (other than
Indebtedness incurred pursuant to clauses (iii), (iv), (v), (vii) or (viii) of
the definition of Permitted Indebtedness); provided that: (i) the principal
amount (or accreted value, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount of (or accreted value, if
applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of any
premium required to be paid in connection with such refinancing pursuant to the
terms of such Indebtedness or otherwise reasonably determined by Equinix to be
necessary and reasonable expenses incurred in connection therewith); (ii) such
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Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the notes, such Permitted
Refinancing Indebtedness is expressly subordinated in right of payment to, the
notes on terms at least as favorable to the holders as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iv) if such Permitted Refinancing Indebtedness
refinances Indebtedness of a Restricted Subsidiary, such Permitted Refinancing
Indebtedness is incurred either by Equinix or by the Restricted Subsidiary who
is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (v) such Permitted Refinancing Indebtedness
is secured only by the assets, if any, that secured the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, incorporated or unincorporated association, joint-
stock company, trust, unincorporated organization or government or other agency
or political subdivision thereof or other entity of any kind.
"Preferred Stock" means any Equity Interest of any class or classes of a
Person (however designated) which is preferred as to payments of dividends, or
as to distributions upon any liquidation or dissolution, over Equity Interests
of any other class of such Person.
"Purchase Money Indebtedness" means Indebtedness (including Acquired Debt,
in the case of Capital Lease Obligations, mortgage financings and purchase
money obligations) incurred for the purpose of financing all or any part of the
cost of the engineering, construction, installation, importation, acquisition,
lease, development or improvement of any assets used by Equinix or any
Restricted Subsidiary in a Permitted Business, including any related notes,
Guarantees, collateral documents, instruments and agreements executed in
connection therewith, as the same may be amended, supplemented, modified or
restated from time to time. Equinix in its sole discretion shall determine
whether any item of Indebtedness or portion thereof meeting the foregoing
criteria shall be classified as Purchase Money Indebtedness for the purposes of
the covenant "Incurrence of Indebtedness and Issuance of Preferred Stock."
"Qualified Consideration" means all assets, rights (contractual or
otherwise) and properties, whether tangible or intangible, used or intended for
use in a Permitted Business and the Equity Interests of a Person engaged
entirely or substantially entirely in a Permitted Business.
"Related Person" means any Person who controls, is controlled by or is under
common control with a Permitted Holder; provided, that for purposes of this
definition "control" means the beneficial ownership of more than 50% of the
total voting power of a Person normally entitled to vote in the election of
directors managers or trustees, as applicable, of a Person; provided, further,
that relating to any natural Person, each member of such person's immediate
family shall be deemed to be a Related Person of such Person.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary. Unless the context specifically
requires otherwise, Restricted Subsidiary includes a direct or indirect
Restricted Subsidiary of Equinix.
"Senior Debt" means all Indebtedness of Equinix which is not expressly by
its terms, subordinate or junior in right of payment to the notes.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the Issue
Date.
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"Stated Maturity" means, relating to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal before the date
originally scheduled for the payment thereof.
"Subordinated Indebtedness" means Indebtedness of Equinix that is
subordinated in right of payment by its terms or the terms of any document or
instrument or instrument relating thereto to the notes, in any respect.
"Subsidiary" means, relating to any Person, (i) any corporation, association
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person (or a combination thereof)
and (ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or one or more Subsidiaries of such
Person (or any combination thereof).
"Transaction Date" means the date of the transaction giving rise to the need
to calculate the Consolidated Leverage Ratio or the Consolidated Capital Ratio,
as the case may be.
"Unrestricted Subsidiary" means (i) any Subsidiary of Equinix that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to
a Board Resolution; but only to the extent that such Subsidiary at the time of
such designation: (a) has no Indebtedness other than Non Recourse Debt and
Permitted Recourse Debt; (b) is a Person relating to which neither Equinix nor
any of the Restricted Subsidiaries has any direct or indirect obligation to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; and (c) has not
Guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of Equinix or any of the Restricted Subsidiaries. Any such
designation by the Board of Directors shall be evidenced by filing with the
trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by the "Restricted
Payments" covenant. The Board of Directors of Equinix may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of Equinix of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under the "Incurrence of Indebtedness and Issuance of
Preferred Stock" covenant, calculated on a pro forma basis as if such
designation had occurred at the beginning of the applicable reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
"U.S. Government Securities" means securities that are direct obligations of
the United States of America for the payment of which its full faith and credit
is pledged.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly-Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person.
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BOOK-ENTRY; DELIVERY AND FORM
Except as described below, we will initially issue the exchange notes in the
form of one or more registered exchange notes in global form without coupons.
We will deposit each global note on the date of the closing of the exchange
offer with, or one behalf of, DTC in New York, New York, and register the
exchange notes in the name of DTC or its nominee, or will leave such notes in
the custody of the trustee.
Depository Procedures
The descriptions of the operations and procedures of DTC, Euroclear and
Cedel set forth below are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. Equinix
takes no responsibility for these operations or procedures, and you are urged
to contact the relevant system or its participants directly to discuss these
matters.
DTC has advised us that it is (1) a limited purpose trust company organized
under the laws of the State of New York; (2) a "banking organization" within
the meaning of the New York Banking Law; (3) a member of the Federal Reserve
System; (4) a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended; and (5) a "clearing agency" registered pursuant to
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants and facilitates the clearance and settlement of securities
transactions between participants through electronic book-entry changes to the
accounts of its participants, thereby eliminating the need for physical
transfer and delivery of certificates. DTC's participants include securities
brokers and dealers, including the initial purchasers, banks and trust
companies, clearing corporations and various other organizations. Indirect
access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies, as indirect participants, that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly. Investors who are not participants may beneficially own
securities held by or on behalf of DTC only through participants or indirect
participants.
Equinix expects that pursuant to procedures established by DTC (1) upon
deposit of each global note, DTC will credit the accounts of participants
designated by the initial purchasers with an interest in such global note and
(2) ownership of the notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC, relating to
the interests of participants, and the records of participants and the indirect
participants, relating to the interests of persons other than participants.
The laws of some jurisdictions may require that purchasers of securities
take physical delivery of such securities in definitive form. Accordingly, the
ability to transfer interests in the notes represented by a global note to such
persons may be limited. In addition, because DTC can act only on behalf of its
participants, who in turn act on behalf of persons who hold interests through
participants, the ability of a person having an interest in notes represented
by a global note to pledge or transfer such interest to persons or entities
that do not participate in DTC's system, or to otherwise take actions in
respect of such interest, may be affected by the lack of a physical definitive
security in respect of such interest.
So long as DTC or its nominee is the registered owner of a global note, DTC
or such nominee, as the case may be, will be considered the sole owner or
holder of the notes represented by such global note for all purposes under the
indenture. Except as provided below, owners of beneficial interests in a global
note will not be entitled to have notes represented by such global note
registered in their names, will not receive or be entitled to receive physical
delivery of certificated notes, and will not be considered the owners or
holders thereof under the indenture for any purpose, including relating to the
giving of any direction, instruction or approval to the trustee thereunder.
Accordingly, each holder owning a beneficial interest in a global note must
rely on the procedures of DTC and, if such holder is not a participant or an
indirect participant, on the procedures of the participant through which such
holder owns its interest, to exercise any rights of a holder of notes under the
indenture or such global note. Equinix understands that under existing industry
practice, in the event that Equinix requests any action of holders of notes, or
a holder that is an owner of a beneficial interest in a global note desires to
take any action that DTC, as the holder of such global note, is entitled to
take, DTC
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would authorize the participants to take such action and the participants would
authorize holders owning through such participants to take such action or would
otherwise act upon the instruction of such holders. Neither Equinix nor the
trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of notes by DTC, or for maintaining,
supervising or reviewing any records of DTC relating to such notes.
Payments relating to any notes (including relating to the principal of, and
premium, if any, liquidated damages, if any, and interest on, any notes)
represented by a global note registered in the name of DTC or its nominee on
the applicable record date will be payable by the trustee, as applicable, to or
at the direction of DTC or its nominee in its capacity as the registered holder
of the global note representing such notes under the indenture. Under the terms
of the indenture, Equinix and the trustee may treat the persons in whose names
the notes, including the global notes representing such notes, are registered
as the owners thereof for the purpose of receiving payment thereon and for any
and all other purposes whatsoever. Accordingly, neither Equinix nor the trustee
has or will have any responsibility or liability for the payment of such
amounts to owners of beneficial interests in a global note (including
principal, premium, if any, liquidated damages, if any, and interest on any
notes). Payments by the participants and the indirect participants to the
owners of beneficial interests in a global note will be governed by standing
instructions and customary industry practice and will be the responsibility of
the participants or the indirect participants and DTC.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Cedel will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
notes, cross-market transfers between the participants in DTC, on the one hand,
and Euroclear or Cedel participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or Cedel, as
the case may be, by its respective depositary; however, such crossmarket
transactions will require delivery of instructions to Euroclear or Cedel, as
the case may be, by the counterparty in such system in accordance with the
rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or Cedel, as the case may be, will, if the transaction
meets its settlement requirements, deliver instructions to its respective
depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant global notes in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear participants and Cedel
participants may not deliver instructions directly to the depositories for
Euroclear or Cedel.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a global note from a participant in
DTC will be credited, and any such crediting will be reported to the relevant
Euroclear or Cedel participant, during the securities settlement processing day
(which must be a business day for Euroclear and Cedel) immediately following
the settlement date of DTC. Cash received in Euroclear or Cedel as a result of
sales of interest in a global note by or through a Euroclear or Cedel
participant to a participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant Euroclear or Cedel
cash account only as of the business day for Euroclear or Cedel following DTC's
settlement date.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to
facilitate transfers of interests in the global notes among participants in
DTC, Euroclear and Cedel, they are under no obligation to perform or to
continue to perform such procedures, and such procedures may be discontinued at
any time. Neither Equinix nor the trustee will have any responsibility for the
performance by DTC, Euroclear or Cedel or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
DTC and Year 2000 Problems. DTC's management is aware that some computer
applications, systems, and the like for processing data that are dependent upon
calendar dates, including dates before, on or after
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January 1, 2000, may encounter "Year 2000 problems." DTC has informed
participants and other members of the financial community that it has developed
and is implementing a program so that its systems, as the same relate to the
timely payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries, and settlement of trades within DTC,
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC's plan includes a testing phase, which is expected to be completed within
appropriate time frames. However, DTC's ability to perform its services
properly is also dependent upon other parties, including but not limited to
Equinix and its agents, as well as third party vendors from whom DTC licenses
software and hardware, and third party vendors on whom DTC relies for
information or the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
financial community that it is contacting, and will continue to contact, third
party vendors from whom DTC acquires services to impress upon them the
importance of such services being Year 2000 compliant, and to determine the
extent of their efforts for Year 2000 remediation and, as appropriate, testing
of their services. In addition, DTC is in the process of developing such
contingency plans as it deems appropriate.
According to DTC, the foregoing information relating to DTC has been
provided to the financial community for informational purposes only and is not
intended to serve as a representation, warranty or contract modification of any
kind.
Certificated Notes
If (1) Equinix notifies the trustee in writing that DTC is no longer willing
or able to act as a depositary or DTC ceases to be registered as a clearing
agency under the Exchange Act and a successor depositary is not appointed
within 90 days of such notice or cessation; (2) Equinix, at its option,
notifies the trustee in writing that they elect to cause the issuance of the
notes in certificated form under the indenture; or (3) upon the occurrence of
other events as provided in the indenture, then, upon surrender by DTC of such
global notes, Certificated Securities will be issued to each person that DTC
identifies as the beneficial owner of the notes represented by such global
notes. Upon any such issuance, the trustee is required to register such
certificated securities in the name of such person or persons, or the nominee
of any person or persons, and cause the same to be delivered to such person or
persons.
Neither the Equinix nor the trustee shall be liable for any delay by DTC or
any participant or indirect participant in identifying the beneficial owners of
the related notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from DTC for all purposes, including
relating to the registration and delivery, and the respective principal
amounts, of the notes to be issued.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of the material United States federal
income tax considerations relevant to the exchange of the initial notes for
exchange notes pursuant to the exchange offer and to the ownership and
disposition of the exchange notes, but does not purport to be a complete
analysis of all potential tax effects. The discussion is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), U.S. Treasury
Regulations, Internal Revenue Service ("IRS") rulings and pronouncements and
judicial decisions all in effect as of the date hereof, all of which are
subject to change at any time, and any such change may be applied retroactively
in a manner that could adversely affect a holder of the initial notes or the
exchange notes. The discussion does not address all of the U.S. federal income
tax consequences that may be relevant to a holder in light of such holder's
particular circumstances or to holders subject to special tax rules, such as
certain financial institutions, insurance companies, dealers in securities or
currencies, tax-exempt organizations and persons holding the initial notes or
exchange notes as part of a "straddle," "hedge" or "conversion transaction."
Moreover, the effect of any applicable state, local or foreign tax laws is not
discussed. The discussion below assumes that the initial notes and exchange
notes are held as "capital assets" within the meaning of Section 1221 of the
Code. For purposes of this summary, the term "Equinix" refers only to Equinix,
Inc. and not to any of its subsidiaries. Also, in this description the term
"notes" refers to the "initial notes" and "exchange notes" collectively.
As used herein, "U.S. holder" means a beneficial owner of an exchange note
who or that (i) is a citizen or resident of the United States, (ii) is a
corporation, partnership or other entity created or organized in or under the
laws of the United States or political subdivision thereof, (iii) is an estate
the income of which is subject to U.S. federal income taxation regardless of
its source, (iv) is a trust if (A) a U.S. court is able to exercise primary
supervision over the administration of the trust and (B) one or more U.S.
fiduciaries have authority to control all substantial decisions of the trust,
or (v) is otherwise subject to U.S. federal income tax on a net income basis in
respect of the exchange notes. As used herein, a "non-U.S. holder" means a
holder who or that is not a U.S. holder.
PERSONS CONSIDERING EXCHANGING THEIR INITIAL NOTES FOR EXCHANGE NOTES SHOULD
CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO THE APPLICATION OF THE UNITED
STATES FEDERAL INCOME TAX CONSIDERATIONS DISCUSSED BELOW TO THEIR PARTICULAR
SITUATIONS AS WELL AS THE APPLICATION OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX
LAWS, INCLUDING GIFT AND ESTATE TAX LAWS ANY APPLICABLE TAX TREATY.
Federal Income Tax Consequences of the Exchange Offer
The exchange of the initial notes for the exchange notes pursuant to the
exchange offer should not be treated as an exchange for federal income tax
purposes because the exchange notes should not be considered to differ
materially in kind or in extent from the initial notes. Rather, the exchange
notes received by a holder should be treated as a continuation of the initial
notes in the hands of such holder. As a result, there should be no federal
income tax consequences to holders exchanging the initial notes for exchange
notes pursuant to the exchange offer, and the federal income tax consequences
of holding and disposing of the exchange notes should be the same as the
federal income tax consequences of holding and disposing of the initial notes.
Accordingly, the holder must, among other things, continue to include original
issue discount ("OID") in income as if the exchange had not occurred. See
below, "--The Exchange Notes--Original Issue Discount", for a description of
the OID rules applicable to the exchange notes.
U.S. Holders
The Exchange Notes
Interest. The stated interest on the exchange notes generally will be
taxable to a U.S. holder as ordinary income at the time that it is paid or
accrued, in accordance with the U.S. holder's method of accounting for
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federal income tax purposes. Failure of Equinix to continue to cause the
registration statement of which this prospectus is a part to continue to be
effective or useable in connection with its intended purpose under the
registration rights agreement as described under "The Exchange Offer; Purpose
of the Exchange Offer" may result in the payment of predetermined liquidated
damages in the manner described therein, which payments will be treated as
additional interest on the notes. According to Treasury Regulations, the
possibility of a change in the interest rate will not affect the amount of
interest income recognized by a U.S. holder (or the timing of such recognition)
if the likelihood of the change, as of the date the initial notes were issued,
was remote. Equinix believes that as of the date the initial notes were issued,
the likelihood of a change in the interest rate on such notes was remote and
has not and does not intend to treat the possibility of a change in the
interest rate as affecting the yield to maturity of any initial notes or
exchange notes. There can be no assurance that the IRS will agree with such
position.
Original Issue Discount. The initial notes were issued as part of an
investment unit comprised of $1,000 principal amount of initial notes and one
warrant to purchase shares of the common stock of Equinix. Equinix and the
initial purchasers of the initial notes (the "Initial Purchasers") allocated in
the purchase agreement for the initial notes a purchase price of $949.35 to
each $1,000 principal amount at maturity of initial notes. This allocation
reflected Equinix's and the Initial Purchasers' judgement as to the relative
values of the initial notes and warrants at the time of issuance but is not
binding on the IRS.
Equinix's and the Initial Purchaser's allocation of the issue price of the
units will be binding on U.S. holders of exchange notes who acquire such notes
in the exchange offer in exchange for initial notes that were in turn acquired
by such holder directly from Equinix, unless the U.S. holder discloses the use
of a different allocation in a statement attached to its timely federal income
tax return for the year in which the unit was acquired. If a U.S. holder
acquired a unit at a price different from that on which Equinix's and the
Initial Purchaser's allocation is based, such holder may be treated as having
acquired the initial notes for an amount greater or less than the amount
allocated to such notes as set forth above thereby resulting in market discount
or bond premium, as discussed below. U.S. holders considering the use of an
issue price allocation different from that described above should consult their
tax advisors as to the consequences thereof.
The initial notes will have OID in an amount equal to the excess of the
stated redemption price at maturity over the issue price of such initial notes
(as discussed above) and the exchange notes that are acquired in the exchange
offer will have the same amount of OID. U.S. holders will be required to
include OID in ordinary income over the period that they hold the exchange
notes in advance of the receipt of cash attributable thereto. The amount of OID
to be included in income will be an amount equal to the sum of the daily
portions of OID for each day during the taxable year in which the exchange
notes are held.
The daily portions of OID are determined by allocating to each day in an
accrual period (which may be of any length and may vary over the term of the
exchange notes, at the option of the holder, provided that each accrual period
is no longer than one year and each scheduled payment of principal or interest
on the exchange notes occurs on the first or last day of an accrual period) the
pro rata portion of the OID allocable to the accrual period. The amount of OID
that is allocable to an accrual period generally will be the excess of the
product of the adjusted issue price of the exchange note at the beginning of
the accrual period (the issue price of the exchange note determined as
described above, generally increased by all prior accruals of OID) and the
yield to maturity of the exchange note (calculated on a constant yield basis
appropriately adjusted for the length of the accrual period) over the stated
interest paid during the accrual period or on the first day of the succeeding
accrual period. In general, the constant yield method will result in a greater
portion of such discount being included in income in the later part of the term
of the exchange note. Any amount of OID included in income will increase a U.S.
holder's tax basis in the exchange notes.
Equinix is required to furnish certain information to the IRS, and will
furnish annually to record holders of exchange notes, information relating to
OID accruing during the calendar year. That information will be based upon the
adjusted issue price of the initial notes that were exchanged for the exchange
notes as if the holder were the original holder of the initial notes.
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A U.S. holder who purchases an exchange note for an amount other than the
adjusted issue price of the initial notes and/or on a date other than the end
of an accrual period will be required to determine for itself the amount of
OID, if any, it is required to include in gross income for U.S. federal income
tax purposes.
Optional Redemption. Under the Treasury Regulations, for purposes of
computing OID, Equinix will be presumed to exercise its option to redeem the
exchange notes if, by utilizing the date of exercise of the call option as the
maturity date and the redemption price as the stated redemption price at
maturity, the yield on the exchange notes would be lower than such yield would
be if the option were not exercised. See "Description of the Exchange Notes--
Optional Redemption."
If Equinix's option to redeem the exchange notes were presumed exercised on
a given date (the "Presumed Exercise Date"), the exchange notes would bear
additional OID in an amount equal to the amount for which the exchange notes
could be redeemed (the "Redemption Amount") over their issue price. For
purposes of calculating the current inclusion of such discount, the yield on
the exchange notes would be computed on their issue date by treating the
Presumed Exercise Date as the maturity date of the exchange notes and the
Redemption Amount as their stated principal amount due at maturity. If
Equinix's option to redeem the exchange notes were presumed exercised but were
not exercised in fact on the Presumed Exercise Date, the exchange notes would
be treated, for certain purposes, as if the option were exercised and new debt
instruments were issued on the Presumed Exercise Date for an amount of cash
equal to the Redemption Amount. In such case, it appears that any payment of
stated interest due under the exchange notes after the Presumed Exercise Date
would constitute qualified stated interest (rather than OID) and would be
taxable as ordinary interest income at the time such interest was accrued or
was received, in accordance with such U.S. holder's regular method of
accounting for tax purposes.
Market Discount and Bond Premium. If a U.S. holder purchases exchange notes
or has purchased initial notes for an amount that is less than the adjusted
issue price of such exchange notes or initial notes, as the case may be, the
amount of difference will generally be treated as market discount for U.S.
Federal income tax purposes. In such case, any principal payment on and gain
realized on the sale, exchange or retirement of the exchange notes and
unrealized appreciation on certain nontaxable dispositions of the exchange
notes will be treated as ordinary income to the extent of any market discount
that has not previously been included in gross income and that is treated as
having accrued on such exchange notes or initial notes that were exchanged for
such exchange notes, by the time of such payment or disposition. If a U.S.
holder makes a gift of exchange notes, accrued market discount, if any, will be
recognized as if such holder has sold such exchange notes for a price equal to
their fair market value. In addition, the U.S. holder may be required to defer,
until the maturity of the exchange notes or their earlier disposition in a
taxable transaction, the deduction of a portion of the interest expense on any
indebtedness incurred or continued to purchase or carry such exchange notes or
initial notes that were exchanged for such exchange notes.
Unless the U.S. holder elects to treat market discount as accruing on a
constant yield method, market discount will be treated as accruing on a
straight-line basis over the remaining term of the exchange notes. An election
made to include market discount in income as it accrues will apply to all debt
instruments acquired by the U.S. holder on or after the first day of the first
taxable year to which such election applies and may be revoked only with the
consent of the IRS.
If a U.S. holder purchases an exchange note for an amount in excess of all
amounts payable on the exchange note after the purchase date, other than
payments of stated interest, such excess will be treated as bond premium. In
general, a U.S. holder may elect to amortize bond premium over the remaining
term of the exchange note on a constant yield method. The amount of bond
premium allocable to any accrual period is offset against the stated interest
allocable to such accrual period (any excess may be deducted, subject to
certain limitations). An election to amortize bond premium applies to all
taxable debt instruments held at the beginning of the first taxable year to
which such election applies and thereafter acquired by the U.S. holder and may
be revoked only with the consent of the IRS.
90
<PAGE>
Sale or Retirement of Exchange Notes. Upon the sale, retirement, redemption
or other taxable disposition of exchange notes, a U.S. holder will generally
recognize gain or loss in an amount equal to the difference between (a) the
amount of cash and the fair market value of other property received in exchange
therefor (other than amounts attributable to accrued but unpaid stated
interest) and (b) the U.S. holder's adjusted tax basis in such exchange notes.
Any gain or loss recognized will generally be capital gain or loss, and such
capital gain or loss will generally be long-term capital gain or loss if the
exchange notes have been held by the U.S. holder for more than one year
(including, in the case of a U.S. holder who acquired the exchange notes in
exchange for initial notes, the period of time the initial notes were held by
such U.S. holder) and otherwise will be a short-term capital gain or loss.
A U.S. holder's tax basis in an exchange note that was acquired in exchange
for an initial note that was in turn acquired in the initial issuance from
Equinix will generally be equal to the issue price allocated to such initial
note as described above under "--The Exchange Notes--Original Issue Discount",
increased by the amount of OID, if any, included in gross income before the
date of the disposition, and decreased by the amount of any payment, other than
stated interest, on such note before disposition.
U.S. holders should be aware that the resale of the exchange notes may be
affected by the market discount rules of the Code as described above under "--
The Exchange Notes--Market Discount and Bond Premium" under which a purchaser
of an initial note or an exchange note acquiring such note at a market discount
generally would be required to include as ordinary income a portion of the gain
realized upon the disposition or retirement of such note, to the extent of the
market discount that has accrued but not been included in income while such
note was held by such purchaser.
Non-U.S. Holders
Interest or redemption proceeds paid to non-U.S. holders of the exchange
notes generally will not be subject to U.S. Federal withholding tax provided
that (a) the non-U.S. holder does not actually or constructively own 10 percent
or more of a total combined voting power of all classes of stock of Equinix
entitled to vote, (b) the non-U.S. holder is not a "controlled foreign
corporation" (within the meaning of the Code) that is related to Equinix
through stock ownership, (c) either (1) the beneficial owner of the exchange
notes provides Equinix or its agent with a statement signed under penalties of
perjury that includes its name and address and certifies that it is not a
United States person or (2) a securities clearing organization, bank, or other
financial institution that holds customers' securities in the ordinary course
of its business (a "financial institution") certifies to Equinix or its agent,
under penalties of perjury, that such a statement has been received from the
beneficial owner by it or another financial institution and furnished to
Equinix or its agent a copy thereof and (d) the exchange notes are in
registered form. If these requirements cannot be met, a non-U.S. holder will be
subject to U.S. withholding tax at a rate of 30 percent (or lower treaty rate,
if applicable) on interest payments. Although U.S. tax will also be imposed
against OID on the exchange notes before payment, such tax will only be
withheld from stated interest payments on the exchange notes. However, such
additional withholding may result in U.S. withholding tax on stated interest
payments exceeding 30 percent.
In general, any gain realized by any non-U.S. Holder upon the sale, exchange
or redemption of an exchange note will not be subject to Federal income or
withholding tax unless (i) a non-U.S. holder is an individual and is present in
the U.S. for a total of 183 days or more during the taxable year in which the
gain is realized, (ii) the gain is effectively connected with the conduct of a
trade or business of the holder in the U.S., or in the case of certain
residents of countries which have an income tax treaty in force with the U.S.,
attributable to a permanent establishment (or in the case of an individual a
fixed base) in the U.S. as such terms are defined in the applicable tax treaty,
(iii) the holder is subject to tax pursuant to the provisions of U.S. tax law
applicable to certain U.S. expatriates (including certain former citizens or
residents of the U.S.) or (iv) Equinix is or has been a "United States real
property holding corporation" at any time within the shorter of the five-year
period preceding such disposition or such holder's holding period. Equinix does
not believe that is its currently a "United States real property holding
corporation", or that it will become one in the future.
91
<PAGE>
Deductibility of Interest and Original Issue Discount
The Code contains various limitations and restrictions on the deductibility
of interest and/or OID. Some of these limitations and restrictions may be
applicable to the interest and/or the OID associated with the notes. In such
event, some or all of the interest or OID associated with the notes may not be
deductible by Equinix.
Information Reporting and Backup Withholding
In general information reporting requirements will apply to OID, payments of
principal, premium, if any, and interest on the exchange notes and payments of
the proceeds of the sale of the exchange notes, and a 31% backup withholding
tax may apply to such payments if the holder either (i) fails to demonstrate
that the holder comes within certain exempt categories of holders or (ii) fails
to furnish or certify his correct taxpayer identification number to the payer
in the manner required, is notified by the IRS that he has failed to report
payments of interest and dividends properly, or under certain circumstances,
fails to certify that he has not been notified by the IRS that he is subject to
backup withholding for failure to report interest and dividend payments. Any
amounts withheld under the backup withholding rules from a payment to a holder
will be allowed as a credit against such holder's United States federal income
tax and may entitle the holder to a refund, provided that the required
information is furnished to the IRS.
92
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of those exchange 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 exchange notes received in the exchange offer where the
outstanding exchange notes were acquired as a result of market-making
activities or other trading activities. We have agreed that, for a period of
180 days after the consummation of the exchange offer, we will make this
prospectus, as amended and supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 2000, all dealers
effecting transactions in the exchange notes issued in the exchange offer may
be required to deliver a prospectus.
We will not receive any proceeds from any sale of exchange notes by broker-
dealers. exchange 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 exchange notes or a combination of such methods of resale, at
market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or though brokers or dealers who may receive
compensation in the form of commissions or concessions from any such broker-
dealer or the purchasers of any such exchange notes. Any broker-dealer that
resells exchange 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 exchange notes may be deemed to be an "underwriter" within the meaning of
the Securities Act, and profit on any such resale of exchange notes issued in
the exchange and any commission or concessions received by any such persons may
be deemed to be underwriting compensation under the Securities Act. The letter
of transmittal states that, by acknowledging that it will 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 consummation of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all expenses incident to
the exchange offer, including the expenses of one counsel for the holders of
the exchange notes, other than the commissions or concessions of any broker-
dealers and will indemnify the holders of the exchange notes, including any
broker-dealers, against certain liabilities, including liabilities under the
Securities Act. We note, however, that, in the opinion of the SEC,
indemnification against liabilities arising under federal securities laws is
against public policy and may be unenforceable.
LEGAL MATTERS
Legal matters as to the validity of the exchange notes offered by this
prospectus will be passed on for us by Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP, Menlo Park, California. As of the date of this
prospectus, some members and employees of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP beneficially owned an aggregate of 50,000 shares of
our Series A preferred stock and 6,250 shares of our Series B preferred stock.
EXPERTS
The consolidated financial statements of Equinix, Inc. and subsidiary as of
December 31, 1998 and for the period from June 22, 1998 (inception) to December
31, 1998, have been included herein and in the registration statement in
reliance on the report of KPMG LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of that firm as experts in
accounting and auditing.
93
<PAGE>
AVAILABLE INFORMATION
We have filed a registration statement on Form S-4 with the Securities and
Exchange Commission covering the exchange notes, and this prospectus is part of
our registration statement. For further information on Equinix and the exchange
notes, you should refer to our registration statement and its exhibits. This
prospectus summarizes material provisions of contracts and other documents that
we refer to you. Since the prospectus may not contain all the information that
you may find important, you should review the full text of these documents. We
have included copies of these documents as exhibits to our registration
statement.
In addition, the indenture requires that we file reports under the
Securities Exchange Act of 1934 with the Securities and Exchange Commission and
provide those reports to the trustee and holders of the notes. You can inspect
and copy at prescribed rates the reports and other information that we file
with the Securities and Exchange Commission at the public reference facilities
maintained by the Securities and Exchange Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also at the regional
offices of the Securities and Exchange Commission located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and the Citicorp Center at 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may obtain
information on the operation of the public reference facilities by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission also maintains an internet web site at http://www.sec.gov
that contains reports, proxy and information statements and other information.
You can also obtain copies of such materials from us upon request.
We have agreed that, whether or not we are required to do so by the rules
and regulations of the Securities and Exchange Commission, for so long as any
of the exchange notes remain outstanding, we will furnish you as a holder of
the exchange notes and will, if permitted, file with the Securities and
Exchange Commission (1) all quarterly and annual financial information that
would be required to be contained in a filing with the Securities and Exchange
Commission on Forms 10-Q and 10-K if we were required to file such forms,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, relating to the annual information only, a report
thereon by our certified independent accountants, and (2) all reports that
would be required to be filed with the Securities and Exchange Commission on
Form 8-K if we were required to file such reports. In addition, for so long as
any of the exchange notes remain outstanding, we have agreed to make available
to any prospective purchaser of the exchange notes or beneficial owner of the
notes in connection with any sale of these notes the information required by
Rule 144A under the Securities Act.
94
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditors' Report................................................ F-2
Consolidated Balance Sheets................................................. F-3
Consolidated Statements of Operations....................................... F-4
Consolidated Statements of Stockholders' Equity............................. F-5
Consolidated Statements of Cash Flows....................................... F-6
Notes to Consolidated Financial Statements.................................. F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Equinix, Inc.:
We have audited the accompanying consolidated balance sheet of Equinix, Inc.
and subsidiary (Equinix), a development stage enterprise, as of December 31,
1998, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the period from June 22, 1998 (inception) to
December 31, 1998. These consolidated financial statements are the
responsibility of Equinix's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Equinix,
Inc. and subsidiary, a development stage enterprise, as of December 31, 1998,
and the results of their operations and their cash flows for the period from
June 22, 1998 (inception) to December 31, 1998, in conformity with generally
accepted accounting principles.
KPMG LLP
Mountain View, California
July 31, 1999, except as to Note 9,
which is as of December 18, 1999.
F-2
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents.......................... $ 4,164,500 $ 3,582,100
Short-term investments............................. 5,000,000 42,907,100
Prepaids and other current assets.................. 167,600 1,204,900
----------- -----------
Total current assets.............................. 9,332,100 47,694,100
Property and equipment, net......................... 482,000 2,879,100
Construction in progress............................ 30,700 22,589,600
Other assets........................................ 156,400 2,190,200
----------- -----------
Total assets...................................... $10,001,200 $75,353,000
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses.............. $ 159,200 $ 864,400
Accrued construction costs......................... 252,300 8,938,800
Current portion of long-term debt and capital lease
obligations....................................... -- 1,705,800
----------- -----------
Total current liabilities......................... 411,500 11,509,000
Long-term debt and capital lease obligations, less
current portion................................... -- 3,734,100
Other liabilities.................................. -- 255,100
----------- -----------
Total liabilities................................. 411,500 15,498,200
----------- -----------
Commitments
Stockholders' equity:
Series A convertible preferred stock, $0.001 per
value per share; 11,000,000 and 14,000,000 shares
authorized in 1998 and 1999, respectively;
10,465,000 and 12,455,000 shares issued and
outstanding in 1998 and 1999, respectively........ 10,400 12,400
Series B convertible preferred stock, $0.001 par
value per share; none and 16,000,000 shares
authorized in 1998 and 1999, respectively; none
and 6,731,290 shares issued and outstanding in
1998 and 1999, respectively; liquidation value of
none and $53,850,320 in 1998 and 1999,
respectively...................................... -- 6,700
Common stock, $0.001 par value per share;
29,000,000 and 75,000,000 shares authorized in
1998 and 1999, respectively; 4,100,000 and
6,987,464 shares issued and outstanding in 1998
and 1999, respectively............................ 4,100 7,000
Additional paid-in capital......................... 10,431,000 69,056,100
Deferred stock-based compensation.................. -- (1,233,500)
Accumulated other comprehensive income............. -- 147,300
Deficit accumulated during the development stage... (855,800) (8,141,200)
----------- -----------
Total stockholders' equity........................ 9,589,700 59,854,800
----------- -----------
Total liabilities and stockholders' equity........ $10,001,200 $75,353,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
Period from June 22, 1998
June 22, 1998 Nine months (inception)
(inception) to ended to
December 31, September 30, September 30,
1998 1999 1999
-------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Selling, general, and
administrative expenses........... $ 785,700 $7,108,000 $7,893,700
Stock-based compensation expense... -- 305,700 305,700
--------- ---------- ----------
Loss from operations............... 785,700 7,413,700 8,199,400
Interest income.................... (149,900) (266,900) (416,800)
Interest expense................... -- 138,600 138,600
Interest charge on beneficial
conversion of convertible debt.... 220,000 -- 220,000
--------- ---------- ----------
Net loss.......................... $ 855,800 $7,285,400 $8,141,200
========= ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Period from June 22, 1998 (inception) to September 30, 1999
(Information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
<TABLE>
<CAPTION>
Series A Series B Deficit
convertible convertible Accumulated accumulated
preferred stock preferred stock Common stock Additional Deferred other during the
------------------- ---------------- ---------------- paid-in stock-based comprehensive development
Shares Amount Shares Amount Shares Amount capital compensation income stage
---------- ------- --------- ------ --------- ------ ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of
common stock for
cash in June
1998............. -- $ -- -- $ -- 4,040,000 $4,000 $ -- $ -- $ -- $ --
Issuance of
common stock upon
exercise of
common stock
options.......... -- -- -- -- 60,000 100 5,900 -- -- --
Issuance of
Series A
preferred stock
in September
1998............. 10,025,000 10,000 -- -- -- -- 9,985,500 -- -- --
Conversion of
debt to Series A
preferred stock
in September
1998............. 440,000 400 -- -- -- -- 439,600 -- -- --
Net loss......... -- -- -- -- -- -- -- -- -- (855,800)
---------- ------- --------- ------ --------- ------ ----------- ----------- -------- -----------
Balance as of
December 30,
1998............. 10,465,000 10,400 -- -- 4,100,000 4,100 10,431,000 -- -- (855,800)
Issuance of
Series A
preferred stock
in January 1999
(unaudited)...... 2,000,000 2,000 -- -- -- -- 1,998,000 -- -- --
Repurchase of
Series A
preferred stock
in August 1999
(unaudited)...... (10,000) -- -- -- -- -- (10,000) -- -- --
Issuance of
Series B
preferred stock
in August and
September 1999
(unaudited)...... -- -- 6,731,290 6,700 -- -- 53,843,600 -- -- --
Issuance of
common stock upon
exercise of
common stock
options
(unaudited)...... -- -- -- -- 2,887,464 2,900 287,200 -- -- --
Issuance of
Series A
preferred stock
warrants
(unaudited)...... -- -- -- -- -- -- 600,600 -- -- --
Issuance of
common stock
warrants
(unaudited)...... -- -- -- -- -- -- 366,500 -- -- --
Deferred stock-
based
compensation
(unaudited)...... -- -- -- -- -- -- 1,539,200 (1,539,200) -- --
Amortization of
stock-based
compensation
(unaudited)...... -- -- -- -- -- -- -- 305,700 -- --
Comprehensive
income (loss)
(unaudited):
Net loss
(unaudited)..... -- -- -- -- -- -- -- -- -- (7,285,400)
Unrealized
appreciation on
short-term
investments
(unaudited)..... -- -- -- -- -- -- -- -- 147,300 --
---------- ------- --------- ------ --------- ------ ----------- ----------- -------- -----------
Net
comprehensive
loss
(unaudited)..... -- -- -- -- -- -- -- -- 147,300 (7,285,400)
---------- ------- --------- ------ --------- ------ ----------- ----------- -------- -----------
Balances as of
September 30,
1999
(unaudited)...... 12,455,000 $12,400 6,731,290 $6,700 6,987,464 $7,000 $69,056,100 $(1,233,500) $147,300 $(8,141,200)
========== ======= ========= ====== ========= ====== =========== =========== ======== ===========
<CAPTION>
Total
stockholders'
equity
-------------
<S> <C>
Issuance of
common stock for
cash in June
1998............. $ 4,000
Issuance of
common stock upon
exercise of
common stock
options.......... 6,000
Issuance of
Series A
preferred stock
in September
1998............. 9,995,500
Conversion of
debt to Series A
preferred stock
in September
1998............. 440,000
Net loss......... (855,800)
-------------
Balance as of
December 30,
1998............. 9,589,700
Issuance of
Series A
preferred stock
in January 1999
(unaudited)...... 2,000,000
Repurchase of
Series A
preferred stock
in August 1999
(unaudited)...... (10,000)
Issuance of
Series B
preferred stock
in August and
September 1999
(unaudited)...... 53,850,300
Issuance of
common stock upon
exercise of
common stock
options
(unaudited)...... 290,100
Issuance of
Series A
preferred stock
warrants
(unaudited)...... 600,600
Issuance of
common stock
warrants
(unaudited)...... 366,500
Deferred stock-
based
compensation
(unaudited)...... --
Amortization of
stock-based
compensation
(unaudited)...... 305,700
Comprehensive
income (loss)
(unaudited):
Net loss
(unaudited)..... (7,285,400)
Unrealized
appreciation on
short-term
investments
(unaudited)..... 147,300
-------------
Net
comprehensive
loss
(unaudited)..... (7,138,100)
-------------
Balances as of
September 30,
1999
(unaudited)...... $59,854,800
=============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
EQUINIX, INC. AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from Period from
June 22, 1998 Nine months June 22, 1998
(Inception) to ended (Inception) to
December 31, September 30, September 30,
1998 1999 1999
-------------- ------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash flows from operating
activities:
Net loss.......................... $ (855,800) $(7,285,400) $(8,141,200)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation...................... 4,200 248,100 252,300
Interest charge on beneficial
conversion of convertible debt... 220,000 -- 220,000
Amortization of deferred stock-
based compensation............... -- 305,700 305,700
Amortization of deferred debt fa-
cility costs..................... -- 138,600 138,600
Expense for warrants issued for
strategic agreement.............. -- 366,500 366,500
Changes in operating assets and
liabilities:
Prepaids and other current as-
sets............................ (167,600) (1,037,300) (1,204,900)
Accrued construction costs....... 252,300 8,686,500 8,938,800
Accounts payable, accrued ex-
penses and other liabilities.... 159,200 960,300 1,119,500
Other assets..................... (156,400) (2,033,800) (2,190,200)
----------- ----------- -----------
Net cash provided by (used in)
operating activities.......... (544,100) 349,200 (194,900)
----------- ----------- -----------
Cash flows from investing
activities:
Purchases of property and equip-
ment............................. (486,200) (2,645,200) (3,131,400)
Additions to construction in pro-
gress............................ (30,700) (22,558,900) (22,589,600)
Purchase, sales and maturities of
short-term investments........... (5,000,000) (37,756,500) (42,756,500)
----------- ----------- -----------
Net cash used in investing ac-
tivities...................... (5,516,900) (62,960,600) (68,477,500)
----------- ----------- -----------
Cash flows from financing
activities:
Proceeds from issuance of common
stock............................ 4,000 -- 4,000
Proceeds from exercise of stock
options.......................... 6,000 290,100 296,100
Proceeds from issuance of long-
term debt........................ -- 5,453,800 5,453,800
Repayment of long-term debt....... -- (157,600) (157,600)
Proceeds from sale-leaseback
transaction...................... -- 660,700 660,700
Debt issuance costs............... -- (68,300) (68,300)
Proceeds from issuance of promis-
sory notes....................... 220,000 -- 220,000
Proceeds from issuance of convert-
ible preferred stock............. 9,995,500 55,850,300 65,845,800
----------- ----------- -----------
Net cash provided by financing
activities.................... 10,225,500 62,029,000 72,254,500
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents.................. 4,164,500 (582,400) 3,582,100
Cash and cash equivalents at begin-
ning of period.................... -- 4,164,500 --
----------- ----------- -----------
Cash and cash equivalents at end of
period............................ $ 4,164,500 $ 3,582,100 $ 3,582,100
=========== =========== ===========
Supplemental disclosure of cash
flow information:
Cash paid for taxes............... $ -- $ 67,500 $ 67,500
=========== =========== ===========
Cash paid for interest............ $ -- $ 53,500 $ 53,500
=========== =========== ===========
Noncash financing and investing
activities:
Preferred stock warrants issued
for financing commitments........ $ -- $ 600,600 $ 600,600
=========== =========== ===========
Common stock warrants issued for
strategic agreement.............. $ -- $ 366,500 $ 366,500
=========== =========== ===========
Conversion of notes payable to
convertible preferred stock...... $ 440,000 $ -- $ 440,000
=========== =========== ===========
Unrealized appreciation on in-
vestments........................ $ -- $ 147,300 $ 147,300
=========== =========== ===========
Assets recorded under capital
lease............................ $ -- $ 660,700 $ 660,700
=========== =========== ===========
Deferred compensation on grants
of stock options................. $ -- $ 1,539,200 $ 1,539,200
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
(1)Nature of Business and Summary of Significant Accounting Policies
(a) Nature of Business
Equinix, Inc. (Equinix or the Company) was incorporated as Quark
Communications, Inc. in Delaware on June 22, 1998. The Company changed its
name to Equinix, Inc. on October 13, 1998. Equinix designs, builds, and
operates neutral Internet Business Exchange (IBX) facilities.
Equinix is in the development stage, and its primary activities to date
have included raising capital necessary for infrastructure buildout and
acquiring property and equipment.
(b) Basis of Presentation
The accompanying consolidated financial statements include the accounts
of Equinix and its wholly owned subsidiary, Equinix-DC, Inc. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
(c) Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from these estimates.
(d) Unaudited Interim Consolidated Financial Statements
The accompanying unaudited interim consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information. In the opinion of management,
the accompanying unaudited interim consolidated financial statements have
been prepared on the same basis as the audited consolidated financial
statements, and include all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the Company's
financial position as of September 30, 1999 and the results of their
operations and cash flows for the nine months ended September 30, 1999. The
results for the nine months ended September 30, 1999 are not necessarily
indicative of results that may be expected for the fiscal year ended
December 31, 1999.
(e) Cash, Cash Equivalents and Short-Term Investments
The Company considers all highly liquid instruments with a maturity from
the date of purchase of three months or less to be cash equivalents. Cash
equivalents consist of money market mutual funds and certificates of
deposit with financial institutions with original maturities of between 7
and 60 days.
Short-term investments generally consist of certificates of deposits
with maturities of between 90 and 180 days and highly liquid debt and
equity securities of corporations, municipalities and the U.S. government.
Short-term investments are classified as "available-for-sale" and are
carried at fair value based on quoted market prices, with unrealized gains
and losses reported in stockholders' equity. The cost of securities sold is
based on the specific identification method. Realized gains and losses were
not material during all periods presented. As of September 30, 1999, an
unrealized gain of approximately
F-7
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
$147,300 has been recorded as a separate component of other comprehensive
income in stockholders' equity. The following is a summary of cash and cash
equivalents and short-term investments:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents:
Cash............................................. $ 42,800 $ 3,062,800
Certificates of deposit.......................... 3,792,900 --
Money market mutual funds........................ 328,800 519,300
---------- -----------
4,164,500 3,582,100
---------- -----------
Short-term investments:
Certificates of deposit.......................... 5,000,000 --
Corporate debt................................... -- 42,907,100
---------- -----------
5,000,000 42,907,100
---------- -----------
$9,164,500 $46,489,200
========== ===========
</TABLE>
(f) Financial Instruments and Concentration of Credit Risk
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist of cash, cash equivalents and short-
term investments. Management believes that the financial risks associated
with such financial instruments are minimal.
(g) Property and Equipment
Property and equipment are stated at original cost. Depreciation is
computed using the straight-line method over the estimated useful lives of
the respective assets, generally 2 to 5 years for non-IBX facility
equipment and seven to ten years for IBX facility equipment. Leasehold
improvements and assets acquired under capital lease are amortized over the
shorter of the lease term or the estimated useful life of the asset or
improvement.
(h) Construction in Progress
Construction in progress includes direct expenditures for the
construction of IBX facilities and is stated at original cost. Capitalized
costs include costs incurred under the construction contract, interest and
amortized finance costs during the construction phase. Once an IBX facility
has become operational, capitalized costs are depreciated at the
appropriate rate based on company policy.
Interest incurred is capitalized in accordance with Statement of
Financial Accounting Standards (SFAS) No. 34, Capitalization of Interest
Costs. Total interest capitalized to construction in progress during all
periods presented is not material.
(i) Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of
In accordance with SFAS No. 121, Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of, the Company
considers the impairment of long-lived assets and certain identifiable
intangibles whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying
amount of an asset to future net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the
F-8
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. No impairment of long-
lived assets has been recorded as of December 31, 1998 and September 30,
1999.
(j) Revenue Recognition
Revenues are expected to consist of monthly fees from customer use of
the IBX facilities and related services and installation. Revenues from
customer use of the IBX facilities are expected to be billed monthly and
recognized ratably over the term of the contract, generally one year.
Installation and service fees are expected to be recognized as the services
are performed.
(k) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. Valuation allowances are
established when necessary to reduce tax assets to the amounts expected to
be realized.
(l) Stock-Based Compensation
The Company accounts for its stock-based compensation plans in
accordance with SFAS No. 123, Accounting for Stock-Based Compensation. As
permitted under SFAS No. 123, the Company uses the intrinsic value-based
method of Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees, to account for its employee stock-based
compensation plans.
The Company accounts for stock-based compensation arrangements with
nonemployees in accordance with the Emerging Issues Task Force Abstract
(EITF) No. 96-18, Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling Goods or
Services. Accordingly, unvested options held by nonemployees are subject to
revaluation at each balance sheet date based on the then current fair
market value.
Unearned deferred compensation resulting from employee and nonemployee
option grants is amortized on an accelerated basis over the vesting period
of the individual options, generally in accordance with FASB Interpretation
No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock
Option or Award Plans.
(m) Segment Reporting
The Company has adopted the provisions of SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information. SFAS No. 131
establishes annual and interim reporting standards for operating segments
of a company. The statement requires disclosures of selected segment-
related financial information about products, major customers and
geographic areas.
(n) Comprehensive Income
The Company has adopted the provisions of SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes standards for the reporting
and display of comprehensive income and its components; however, the
adoption of this statement had no impact on the Company's net loss or
stockholders' equity.
F-9
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
SFAS No. 130 requires unrealized gains or losses on the Company's
available-for-sale securities to be included in other comprehensive income
(loss). Comprehensive income (loss) consists of net loss and other
comprehensive income.
(o) Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No.
133 establishes accounting and reporting standards for derivative
instruments, including derivative instruments embedded in other contracts,
and for hedging activities. SFAS No. 133, as amended by SFAS No. 137,
Deferral of the Effective Date of FASB Statement No. 133, is effective for
all fiscal quarters of fiscal years beginning after September 15, 2000.
This statement does not currently apply to the Company as the Company does
not have any derivative instruments or hedging activities.
(2)Balance Sheet Components
(a) Property and Equipment
Property and equipment is comprised of the following:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
(Unaudited)
<S> <C> <C>
Leasehold improvements............................ $240,600 $ 414,800
Computer equipment and software................... 77,000 2,084,500
IBX equipment..................................... -- 308,000
Furniture and fixtures............................ 168,600 324,100
-------- ----------
Total........................................... 486,200 3,131,400
Less accumulated depreciation..................... 4,200 252,300
-------- ----------
$482,000 $2,879,100
======== ==========
</TABLE>
(b) Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
(Unaudited)
<S> <C> <C>
Accounts payable.................................. $ 33,800 $523,800
Accrued compensation.............................. 23,200 118,500
Deferred rent..................................... 42,400 24,100
Income taxes payable.............................. 39,800 --
Other............................................. 20,000 198,000
-------- --------
$159,200 $864,400
======== ========
</TABLE>
Leasehold improvements and certain computer equipment and software and
furniture and fixtures, recorded under capital leases, aggregated none and
$660,700 as of December 31, 1998 and September 30, 1999, respectively.
Amortization on the assets recorded under capital leases is included in
depreciation expense.
(3)Long-Term Debt and Capital Lease Obligations
In March 1999, Equinix-DC entered into a $7,000,000 Loan and Security
Agreement with Comdisco, Inc. (the Comdisco Loan and Security Agreement). Under
the terms of the Comdisco Loan and Security Agreement,
F-10
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
Comdisco may lend the Company up to $3,000,000 for equipment (referred to as
the "hard loan") and up to $4,000,000 for software and tenant improvements
("soft loan") for the Ashburn, Virginia IBX facility buildout. The loans are
available in minimum advances of $1,000,000 and each loan is evidenced by a
secured promissory note. The hard and soft loans outstanding bear interest at
rates of 7.5% and 9% per annum, respectively, and are repayable in 36 and 42
equal monthly installments, respectively, plus a final payment equal to 15% of
the advance amount due at maturity. As of September 30, 1999, $5,296,200 was
outstanding under the Comdisco Loan and Security Agreement.
In May 1999, the Company entered into a Master Lease Agreement with
Comdisco, Inc. (the Comdisco Master Lease Agreement). Under the terms of the
Comdisco Master Lease Agreement, the Company sells equipment to Comdisco, which
it will then lease back. The amount of financing to be provided is up to
$1,000,000. Repayments are made monthly over 42 months with a final payment
equal to 15% of the balance amount due at maturity and interest accrues at
7.5%. As of September 30, 1999, $660,700 was outstanding under the Comdisco
Master Lease Agreement.
In August 1999, the Company amended the Comdisco Master Lease Agreement.
Under the terms of the Comdisco Master Lease Agreement Addendum, the Company
sells equipment (hard items) and software and tenant improvements (soft items)
in its San Jose IBX facility to Comdisco, which it then leases back. The amount
of additional financing to be provided is up to $2,150,000 for hard items and
up to $2,850,000 for soft items. Repayments are made monthly over the course of
42 months with a final payment equal to 15% of the advance and interest accrues
at 8.5%. As of September 30, 1999, no amount was outstanding under the Comdisco
Master Lease Agreement Addendum.
In August 1999, the Company entered into a Loan Agreement with Venture
Lending & Leasing II, Inc. and other lenders ("VLL" and the "Venture Leasing
Loan Agreement"). The Venture Leasing Loan Agreement provides financing for
equipment and tenant improvements at the Newark, New Jersey IBX facility and a
secured term loan facility for general working capital purposes. The amount of
financing to be provided is up to $10,000,000, which may be used to finance up
to 85% of the projected cost of tenant improvements and equipment for the
Newark IBX facility. Notes issued bear interest at a rate of 8.5% per annum and
are repayable in 42 equal monthly installments plus a final payment equal to
15% of the advance amount due at maturity. As of September 30, 1999, no amount
was outstanding under the Venture Leasing Loan Agreement.
(4)Stockholders' Equity
(a) Preferred Stock
On September 10, 1998, 10,025,000 shares of Series A preferred stock
were issued at a price of $1.00 per share. Concurrent with the issuance of
the Series A preferred stock, promissory notes of $220,000 were converted
into 440,000 shares of Series A preferred stock. During July 1998, the
Company had borrowed $220,000 in the aggregate under a convertible loan
arrangement with a number of individual investors. The loans accrued
interest of 5.83% per annum while outstanding, which amount was paid in
cash. During the period ended December 31, 1998, the Company recorded a
charge of $220,000 to account for the "in the money" conversion right of
the convertible loan arrangement. On January 27, 1999, 2,000,000 shares of
Series A preferred stock were issued, at a price of $1.00 per share in the
second closing of the Series A financing.
In August 1999, the Company amended and restated its Certificate of
Incorporation to increase the authorized share capital to 75,000,000 shares
of common stock and 30,000,000 shares of preferred stock, of which
14,000,000 has been designated as Series A and 16,000,000 as Series B.
F-11
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
During August and September 1999, the Company issued 6,731,290 shares of
Series B preferred stock, at a price of $8.00 per share.
The rights, preferences, and privileges of the Series A and Series B
preferred stock are as follows:
. Dividends are noncumulative and are payable only upon declaration by
the Board of Directors at a rate of $0.08 and $0.64 per share for
Series A and B, respectively.
. Holders of Series A and B preferred stock have a liquidation
preference of $1.00 and $8.00 per share, respectively, plus all
declared but unpaid dividends.
. Each share of Series A and B preferred stock is convertible, at the
option of the holder, into common stock at a conversion price equal
to the respective original preferred stock issue price. The
conversion price is subject to adjustment for stock splits and
combinations and will automatically convert into common stock in the
event of either (i) an underwritten public offering with an aggregate
gross offering price of at least $25,000,000 or (ii) upon a vote of
the holders of a majority of the then outstanding shares of preferred
stock.
. Each share of Series A and Series B preferred stock has voting rights
equal to that of common stock on an "as if converted" basis.
. The holders of Series A and B preferred stock are entitled to elect
two and one directors, respectively, to the Company's Board of
Directors so long as 25% of the shares of Series A and B preferred
stock originally issued remain outstanding.
. Series A and B preferred stock is not redeemable at any time.
(b)Warrants
In March 1999, in connection with the Comdisco Loan and Security
Agreement, the Company granted Comdisco warrants to purchase 510,000 shares
of the Company's Series A preferred stock at $1.00 per share. The warrants
are immediately exercisable and expire in ten years from date of grant.
In May 1999, in connection with the Comdisco Master Lease Agreement, the
Company granted Comdisco warrants to purchase 20,000 shares of the
Company's Series A preferred stock at $2.50 per share. The warrants are
immediately exercisable and expire in ten years from date of grant.
In August 1999, in connection with the Comdisco Master Lease Agreement
Addendum, the Company granted Comdisco warrants to purchase 100,000 shares
of the Company's Series A preferred stock at an exercise price of $4.50 per
share. The warrants are exercisable for seven years from the grant date or
three years from the effective date of the Company's initial public
offering, whichever is shorter.
In August 1999, in connection with the Venture Leasing Loan Agreement,
the Company granted VLL warrants to purchase 200,000 shares of the
Company's Series A preferred stock at an exercise price of $4.50 per share.
The warrants are exercisable from date of grant until June 30, 2006.
In August 1999, the Company entered into a strategic alliance with
NorthPoint Communications, Inc. (NorthPoint). As part of the agreement, the
Company granted NorthPoint warrants to purchase 225,430 shares of the
Company's common stock at $0.80 per share. The NorthPoint warrants are
immediately exercisable and expire in five years from date of grant.
F-12
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
The fair value of all warrants was calculated using an option pricing
model with the following assumptions: dividends yield of 0%; contractual
life of five, seven or ten years, as applicable; risk-free interest rate of
5%; and expected volatility of 80%. The fair value of the warrants issued
in connection with the Comdisco Loan and Security Agreement, the Comdisco
Master Lease Agreement and the Comdisco Master Lease Agreement Addendum was
determined to be $428,800, $15,000 and $52,300, respectively. The fair
value of the warrants issued in connection with the Venture Leasing Loan
Agreement was determined to be $104,500. These deferred debt facility costs
which are recorded as an offset to the long-term debt are being amortized
as interest expense on a straight-line basis over the term of the
respective agreements. The fair market value of the warrants issued to
NorthPoint was determined to be $366,500 and was immediately expensed to
selling, general, and administrative expenses.
(c)Common Stock
The Company's founders purchased 4,040,000 shares of stock.
Approximately 3,636,000 shares are subject to restricted stock purchase
agreements whereby the Company has the right to repurchase the stock upon
voluntary or involuntary termination of the founder's employment with the
Company at $0.0005 per share. The Company's repurchase right lapses at a
rate of 25% per year. As of December 31, 1998 and September 30, 1999,
3,257,250 and 2,348,250 shares are subject to repurchase at a price of
$0.0005 per share.
Certain option holders have exercised unvested options to purchase
2,947,464 shares of common stock. Such shares are unvested and the Company
has the right to repurchase all unvested shares at the original exercise
price in the event of employee termination. As of December 31, 1998 and
September 30, 1999, there were 30,000 and 2,686,631 shares, respectively,
subject to repurchase at $0.10 per share.
(d)Stock Plan
In September 1998, the Company adopted the 1998 Stock Plan (the Plan)
under which nonstatutory stock options and restricted stock may be granted
to employees, outside directors, and consultants, and incentive stock
options may be granted to employees. Accordingly, the Company has reserved
a total of 5,508,540 shares of the Company's common stock for issuance upon
the grant of restricted stock or exercise of options granted pursuant to
the Plan. Options granted under the Plan generally expire 10 years
following the date of grant and are subject to limitations on transfer. The
Plan is administered by the Board of Directors.
The Plan provides for the granting of incentive stock options at not
less than 100% of the fair market value of the underlying stock at the
grant date. Nonstatutory options may be granted at not less than 85% of the
fair market value of the underlying stock at the date of grant.
Option grants under the Plan are subject to various vesting provisions,
all of which are contingent upon the continuous service of the optionee and
may not impose vesting criterion more restrictive than 20% per year.
Options and restricted stock generally become fully vested upon a change in
control of the Company unless the surviving company assumes the options or
restricted stock or replaces it with a comparable award. Stock options may
be exercised at anytime subsequent to grant. Stock obtained through
exercise of unvested options is subject to repurchase at the original
purchase price. The Company's repurchase right decreases as the shares vest
under the original option terms.
Options granted to stockholders who own greater than 10% of the
outstanding stock are for periods not to exceed five years and must be
issued at prices not less than 110% of the fair market value of the stock
on the date of grant as determined by the Board of Directors. Upon a change
of control, all shares granted under the Plan shall immediately vest.
Unless otherwise terminated by the Board of Directors, the Plan
automatically terminates in September 2008.
F-13
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
(e)Stock Based Compensation
The Company uses the intrinsic-value method prescribed in APB No. 25 in
accounting for its stock-based compensation arrangements with employees.
Stock-based compensation expense is recognized for employee stock option
grants in those instances in which the fair value of the underlying common
stock exceeds the exercise price of the stock options at the date of grant.
The Company recorded deferred stock-
based compensation expense of $1,539,200 during the nine months ended
September 30, 1999.
This amount is being amortized consistent with the method described in
FASB Interpretation No. 28 over the vesting period of the individual
options.
In connection with its grant of options, the Company has recognized
stock-based compensation expense of $305,700 for the nine months ended
September 30, 1999. Of this amount, $167,700 related to options granted to
employees. The remaining $138,000 relates to the fair value of option
grants to nonemployees determined using an option pricing model.
A summary of the Company's stock option plan is as follows:
<TABLE>
<CAPTION>
December 31, 1998 September 30, 1999
--------------------------- ----------------------------
Weighted-average Weighted-average
Shares exercise price Shares exercise price
--------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C>
Outstanding at beginning
of period.............. -- $-- 1,382,700 $0.10
Granted................. 1,442,700 0.10 2,894,360 0.10
Forfeited............... -- (212,000) 0.10
Exercised............... (60,000) 0.10 (2,887,464) 0.10
========= ==========
Outstanding at end of
period................. 1,382,700 0.10 1,177,596 0.10
========= ==========
Shares available for
future grant........... 4,065,840 0.10 1,383,480 0.10
========= ==========
Exercisable at end of
period................. 13,334 0
========= ==========
Weighted-average grant
date fair value of
options granted during
the period at fair
value.................. 0.02 0.02
Weighted-average grant
date fair value of
options granted during
the period at below
fair value............. -- 1.18
</TABLE>
The following table summarizes information about stock options
outstanding as of September 30, 1999:
<TABLE>
<CAPTION>
Outstanding
------------------------------------------------------------
Weighted-
Weighted-average average
Number of Remaining Exercise
Exercise Price Shares Contractual Life Price
-------------- --------- ---------------- ---------
<S> <C> <C> <C>
$0.10 1,137,596 9.47 $0.10
$0.20 40,000 9.40 0.20
---------
1,177,596 9.47 0.10
=========
</TABLE>
The weighted-average remaining contractual life of options outstanding at
December 31, 1998 was 9.81 years.
F-14
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
Had compensation costs been determined using the fair value method for
the Company's stock-based compensation plans, net loss attributable to
common stockholders would have been changed to the amounts indicated below:
<TABLE>
<CAPTION>
Period from
June 22, 1998 Nine Months
(inception) to ended
December 31, September 30,
1998 1999
-------------- -------------
<S> <C> <C>
Net loss:
As reported.................................... $855,800 $7,285,400
Pro forma...................................... $857,500 $7,297,900
</TABLE>
The Company's calculations for employee grants were made using the
minimum value method with the following weighted average assumptions for
the period from June 22, 1998 (inception) to December 31, 1998 and the nine
months ended September 30, 1999: dividend yield of 0%; expected volatility
of 0%; risk-free interest rates of 5.77% in the period from June 22, 1998
(inception) to December 31, 1998 and 5.44% in the nine months ended
September 30, 1999; and expected lives of 2.67 years in the period from
June 22, 1998 (inception) to December 31, 1998 and 2.53 years in the nine
months ended September 30, 1999. The Company's calculations for non-
employee grants were made using the Black-Scholes option pricing model with
the following weighted average assumptions for the nine months ended
September 30, 1999: dividend yield of 0%; expected volatility of 80%; risk-
free interest rate of 5.44%; and contractual life of 10 years.
(5)Income Taxes
The components of the provision for income taxes (benefit) are as follows:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
(Unaudited)
<S> <C> <C>
Current:
Federal......................................... $ 29,300 $ 18,800
State........................................... 10,500 2,800
-------- --------
Total current................................. 39,800 21,600
-------- --------
Deferred:
Federal......................................... (29,300) (12,400)
State........................................... (10,500) 10,500
-------- --------
Total deferred................................ (39,800) (1,900)
-------- --------
Total......................................... $ -- $ 19,700
======== ========
</TABLE>
Income tax expense is included in selling, general and administrative
expenses for the nine months ended September 30, 1999.
F-15
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
Actual income tax expense differs from the expected tax benefit computed by
applying the statutory federal income tax rate of approximately 24.8% and 35.0%
for the periods ended December 31, 1998 and September 30, 1999, respectively,
as a result of the following:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
(Unaudited)
<S> <C> <C>
Computed tax benefit at statutory rate.......... $(212,300) $(2,599,700)
State taxes, net of federal benefit............. -- 13,300
Start up expenses and temporary differences for
which no tax benefit is recognized............. 211,900 2,561,700
Other........................................... 400 4,400
--------- -----------
Total......................................... $ -- $ 19,700
========= ===========
</TABLE>
The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets as of December 31, 1998 and September 30,
1999 is presented as follows:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
(Unaudited)
<S> <C> <C>
Deferred tax assets:
Other assets.................................... $ 1,100 $ --
Start-up expenses............................... 326,000 2,899,200
--------- ----------
Total deferred tax assets..................... 327,100 2,899,200
Less valuation allowance........................ (287,300) (2,857,500)
--------- ----------
Net deferred tax assets....................... $ 39,800 $ 41,700
========= ==========
</TABLE>
Net deferred tax assets are included in prepaids and other current assets at
December 31, 1998 and September 30, 1999.
The net change in the total valuation allowance for the period from June 22,
1998 (inception) to December 31, 1998 and the nine month period ended September
30, 1999, was an increase of $287,300 and $2,570,200, respectively.
Deferred tax assets arise primarily as a result of start-up expenses that
are expensed for financial reporting purposes but not deductible for income tax
purposes while the Company is in the development stage. Once the Company
commences its principal operations, the start-up expenses will be deductible
for income tax purposes and the resulting net operating loss will be carried
back to recapture the taxes paid while the Company was in the development
stage. The Company expects to commence its principal operations during the year
ending December 31, 1999.
(6) Lease Commitments
The Company leases its facilities and certain equipment under noncancelable
operating lease agreements expiring through 2014. The facilities lease
agreements typically provide for base rental rates which increase at defined
intervals during the term of the lease. In addition, the Company has negotiated
rent expense abatement periods to better match the phased build-out of its
facilities. The Company also leases certain leasehold improvements, computer
equipment and software and furniture and fixtures under capital leases under
the
F-16
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
Comdisco Master Lease Agreement. These leases were entered into as sale-
leaseback transactions. The Company has deferred a gain of $77,700 related to
the sale-leaseback in July 1999, which is being amortized in proportion to the
amortization of the leased assets.
Minimum future lease payments as of September 30, 1999 are summarized as
follows:
<TABLE>
<CAPTION>
Capital Operating
Year Ending Leases Leases
----------- -------- ------------
<S> <C> <C>
2000.................................................. $199,200 $ 5,268,000
2001.................................................. 185,300 7,940,000
2002.................................................. 172,400 7,710,400
2003.................................................. 120,700 7,495,100
2004.................................................. -- 7,728,000
Thereafter............................................ -- 83,350,400
-------- ------------
Total minimum lease payments........................ $677,600 $119,491,900
============
Less amount representing imputed interest........... 144,900
--------
Present value of minimum lease payments............. 532,600
Less current portion................................ 173,600
--------
Capital lease obligations, less current portion..... $359,000
========
</TABLE>
Total rent expense was approximately $165,000 and $746,000 for the period
from June 22, 1998 (inception) to December 31, 1998 and for the nine months
ended September 30, 1999, respectively.
Deferred rent included in accounts payable and accrued expenses was $42,400
and $180,300 as of December 31, 1998 and September 30, 1999, respectively.
(7) Pretax Savings Plan
During the nine months ended September 30, 1999, the Company adopted the
Equinix 401(k) Plan (the 401(k) Plan). All employees are eligible to
participate on the first day of the month following their first day of
employment. Under the 401(k) Plan, eligible employees are entitled to make tax-
deferred contributions and the Company may, at its discretion, make matching or
discretionary contributions to the 401(k) Plan. During the nine months ended
September 30, 1999, the Company made no matching or discretionary
contributions.
(8) Segment Information
During the nine months ended September 30, 1999, the Company adopted the
provisions of SFAS No. 131, Disclosures about Segments of an Enterprise and
Related Information. SFAS No. 131 requires disclosures of selected segment-
related financial information about products, major customers and geographic
areas.
The Company's chief operating decision-maker (CODM) is considered to be the
Company's CEO. The CODM evaluates performance, makes operating decisions and
allocates resources based on financial data consistent with the presentation in
the accompanying consolidated financial statements. Therefore, the Company
operates in a single segment for purposes of disclosure under SFAS No. 131.
F-17
<PAGE>
EQUINIX, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(information as of September 30, 1999 and for the nine-month period then ended
is unaudited)
As of December 31, 1998 and September 30, 1999, all of the Company's
operations and assets are based in the United States.
(9) Subsequent Events
In October 1999, the Company completed subsequent closings of the Series B
preferred stock financing. The Company raised $26,149,700 and issued 3,268,710
shares of Series B preferred stock.
In November 1999, the Company entered into a definitive agreement with MCI
Worldcom ("MCI") whereby MCI agreed to install high-bandwidth Internet
connectivity to the Company's first seven IBX facilities in exchange for
warrants to purchase 450,000 shares of common stock of the Company at $1.00 per
share. The warrants are immediately exercisable and expire five years from the
date of issuance. Warrants for 350,000 shares are subject to repurchase at the
original exercise price, if certain performance criteria are not met by MCI.
In November 1999, the Company borrowed $10,000,000 under the Venture Leasing
Loan Agreement.
In November 1999, the Company increased the number of shares reserved for
issuance under the Plan by 2,500,000 shares. Accordingly, the Company has
reserved a total of 8,008,540 shares of the Company's common stock for issuance
under the plan.
In December 1999, the Company issued 200,000 units, each consisting of a
$1,000 principal amount 13% Senior Note due 2007 and one warrant to purchase
11.255 shares (for an aggregate of 2,251,000 shares) of common stock, $0.001
par value, for aggregate net proceeds of $192,700,000 (net of offering
expenses). Of this amount $37,011,500 has been deposited with an escrow agent
to be used to pay the first three interest payments. Interest is payable semi-
annually in arrears on June 1and December 1 of each year, commencing on June 1,
2000. Subject to certain exceptions, the indenture restricts, among other
things, the Company's ability to incur additional indebtedness and the use of
proceeds therefrom, pay dividends, incur certain liens to secure indebtedness
or engage in merger transactions.
In December 1999, the Company received $2,800,000 from its lead underwriter
in the offering of its Senior Notes and issued 350,000 shares of Series B
preferred stock.
In December 1999, the Company entered into a definitive agreement with
Bechtel Corporation ("Bechtel") whereby Bechtel has agreed to act as the
exclusive contractor for the Company's IBX facilities. In conjunction with the
agreement, the Company issued a warrant to purchase 235,000 shares of the
Company's common stock at $1.50 per share.
F-18
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Equinix, Inc.
Exchange Offer for
$200,000,000 13% Senior Notes due 2007
LOGO
, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
Information Not Required in Prospectus
Item 20. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's board of directors to grant indemnification to
directors and officers in terms sufficiently broad to permit indemnification
under limited circumstances for liabilities, including reimbursement for
expenses incurred, arising under the Securities Act of 1933, as amended (the
"Securities Act"). Article VII, Section 7.6 of our bylaws provides for
mandatory indemnification of our directors and permissive indemnification of
our officers and employees to the maximum extent permitted by the Delaware
General Corporation Law. Our Certificate of Incorporation provides that our
directors shall not be liable for monetary damages for breach of the directors'
fiduciary duty as directors to our stockholders and us to the fullest extent
permitted by the Delaware General Corporation Law. This provision in the
Certificate of Incorporation does not eliminate the directors' fiduciary duty,
and in appropriate circumstances, equitable remedies like injunctive or other
forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to us for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for actions
leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision also does not affect a director's
responsibilities under any other law, like the federal securities laws or state
or federal environmental laws. We have entered into indemnification agreements
with our officers and directors, a form of which is attached as Exhibit 10.5
and incorporated herein by reference. The indemnification agreements provide
our officers and directors with further indemnification to the maximum extent
permitted by the Delaware General Corporation Law.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
3.2 Bylaws of the Registrant.
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2* Form of Old Note.
4.3* Form of New Note.
4.4 Escrow agreement, dated as of December 1, 1999, by and among the
Registrant and State Street Bank
and Trust Company of California, N.A. (as escrow agent and trustee).
4.5 Indenture (See Exhibit 10.1).
4.6 Common Stock Registration Rights Agreement (See Exhibit 10.3).
4.7 Registration Rights Agreement (See Exhibit 10.4).
4.8 Purchase Agreement, dated as of November 24, 1999, by and among the
Registrant and Salomon Smith Barney Inc., Morgan Stanley & Co.
Incorporated and Goldman, Sachs & Co. (collectively, the "Initial
Purchasers").
4.9 Amended and Restated Investors' Rights Agreement (See Exhibits 10.6
and 10.7).
5.1* Opinion of Counsel.
10.1 Indenture, dated as of December 1, 1999, by and among the Registrant
and State Street Bank and Trust Company of California, N.A. (as
trustee).
10.2 Warrant Agreement, dated as of December 1, 1999, by and among the
Registrant and State Street Bank and Trust Company of California,
N.A. (as warrant agent).
10.3 Common Stock Registration Rights Agreement, dated as of December 1,
1999, by and among the Registrant, Benchmark Capital Partners II,
L.P., Cisco Systems, Inc., Microsoft Corporation, ePartners, Albert
M. Avery, IV and Jay S. Adelson (as investors), and the Initial
Purchasers.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.4 Registration Rights Agreement, dated as of December 1, 1999, by and
among the Registrant and the Initial Purchasers.
10.5 Form of Indemnification Agreement between the Registrant and each of
its officers and directors.
10.6 Amended and Restated Investors' Rights Agreement, dated as of August
26, 1999, by and between the Registrant, the Series A Purchasers, the
Series B Purchasers and members of the Registrant's management.
10.7 Amendment No.1 to the Amended and Restated Investors' Rights Agreement
and Amended and Restated Voting Agreement, dated as of August 26,
1999, by and between the Registrant, the Series A Purchasers, the
Series B Purchasers and members of the Registrant's management,
effective as of November 30, 1999.
10.8 The Registrant's 1998 Stock Option Plan.
10.9* Lease Agreement with Carlyle-Core Chicago LLC, dated as of September
1, 1999.
10.10* Lease Agreement with Market Halsey Urban Renewal, LLC, dated as of May
3, 1999.
10.11* Lease Agreement with Laing Beaumeade, dated as of November 18, 1998.
10.12* Lease Agreement with Rose Ventures II, Inc., dated as of June 10,
1999.
10.13* Lease Agreement with 600 Seventh Street Associates, Inc., dated as of
August 6, 1999.
10.14* Lease Agreement with Trizechahn Centers, Inc. (dba Trizechahn
Beaumeade Corporate Management), dated as of October 28, 1999.
21.1 List of Subsidiaries of the Registrant.
23.1 Consent of KPMG LLP, independent auditors.
23.2* Consent of Counsel. Reference is made to Exhibit 5.1.
24.1 Power of Attorney (See page II-5).
25.1* Form of T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of State Street Bank and Trust Company of
California, N.A.
27.1 Financial Data Schedule.
99.1* Form of Letter of Transmittal relating to the Exchange Offer.
99.2* Form of Notice of Guaranteed Delivery.
</TABLE>
- --------
* To be filed by amendment.
(b) Financial Statement Schedules
All schedules have been omitted because the information required to be
presented in them is not applicable or is shown in the consolidated financial
statements or related notes.
II-2
<PAGE>
Item 22. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, 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 Securities and Exchange Commission this indemnification is against public
policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of this issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
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 us under Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
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 these securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) It will respond to requests for information that is incorporated
by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of
this form, within one 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 after the
effective date of the registration statement through the date of responding
to the request.
(4) It will 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.
(5) It will file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) 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;
(c) 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.
II-3
<PAGE>
(6) 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.
(7) It will 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.
(8) Prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c) the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form.
(9) Every prospectus (i) that is filed pursuant to the paragraph
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Redwood
City, State of California, on this 29th day of December, 1999.
Equinix, Inc.
/s/ Albert M. Avery, IV
By:__________________________________
Albert M. Avery, IV
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Albert M. Avery, IV and Philip J. Koen,
and each of them, his or her true and lawful attorneys-in-fact and agents with
full power of substitution, for him or her and in his or her name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to sign any
registration statement for the same offering covered by this registration
statement that is to be effective on filing pursuant to Rule 462(b) promulgated
under the Securities Act of 1933, and all post-effective amendments thereto,
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, 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 to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or his or her or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Albert M. Avery, IV President, Chief Executive December 29, 1999
______________________________________ Officer (Principal
Albert M. Avery, IV Executive Officer) and
Director
/s/ Jay S. Adelson Vice President, December 29, 1999
______________________________________ Engineering and Site
Jay S. Adelson Development, Chief
Technology Officer and
Director
/s/ Philip J. Koen Chief Financial Officer December 29, 1999
______________________________________ (Principal Financial and
Philip J. Koen Accounting Officer)
/s/ Andrew S. Rachleff Director December 29, 1999
______________________________________
Andrew S. Rachleff
/s/ Michelangelo Volpi Director December 29, 1999
______________________________________
Michelangelo Volpi
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
3.2 Bylaws of the Registrant.
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2* Form of Old Note.
4.3* Form of New Note.
4.4 Escrow agreement, dated as of December 1, 1999, by and among the
Registrant and State Street Bank
and Trust Company of California, N.A. (as escrow agent and trustee).
4.5 Indenture (See Exhibit 10.1).
4.6 Common Stock Registration Rights Agreement (See Exhibit 10.3).
4.7 Registration Rights Agreement (See Exhibit 10.4).
4.8 Purchase Agreement, dated as of November 24, 1999, by and among the
Registrant and Salomon Smith Barney Inc., Morgan Stanley & Co.
Incorporated and Goldman, Sachs & Co. (collectively, the "Initial
Purchasers").
4.9 Amended and Restated Investors' Rights Agreement (See Exhibits 10.6
and 10.7).
5.1* Opinion of Counsel.
10.1 Indenture, dated as of December 1, 1999, by and among the Registrant
and State Street Bank and Trust Company of California, N.A. (as
trustee).
10.2 Warrant Agreement, dated as of December 1, 1999, by and among the
Registrant and State Street Bank and Trust Company of California,
N.A. (as warrant agent).
10.3 Common Stock Registration Rights Agreement, dated as of December 1,
1999, by and among the Registrant, Benchmark Capital Partners II,
L.P., Cisco Systems, Inc., Microsoft Corporation, ePartners, Albert
M. Avery, IV and Jay S. Adelson (as investors), and the Initial
Purchasers.
10.4 Registration Rights Agreement, dated as of December 1, 1999, by and
among the Registrant and the Initial Purchasers.
10.5 Form of Indemnification Agreement between the Registrant and each of
its officers and directors.
10.6 Amended and Restated Investors' Rights Agreement, dated as of August
26, 1999, by and between the Registrant, the Series A Purchasers, the
Series B Purchasers and members of the Registrant's management.
10.7 Amendment No.1 to the Amended and Restated Investors' Rights Agreement
and Amended and Restated Voting Agreement, dated as of August 26,
1999, by and between the Registrant, the Series A Purchasers, the
Series B Purchasers and members of the Registrant's management,
effective as of November 30, 1999.
10.8 The Registrant's 1998 Stock Option Plan.
10.9* Lease Agreement with Carlyle-Core Chicago LLC, dated as of September
1, 1999.
10.10* Lease Agreement with Market Halsey Urban Renewal, LLC, dated as of May
3, 1999.
10.11* Lease Agreement with Laing Beaumeade, dated as of November 18, 1998.
10.12* Lease Agreement with Rose Ventures II, Inc., dated as of June 10,
1999.
10.13* Lease Agreement with 600 Seventh Street Associates, Inc., dated as of
August 6, 1999.
10.14* Lease Agreement with Trizechahn Centers, Inc. (dba Trizechahn
Beaumeade Corporate Management), dated as of October 28, 1999.
21.1 List of Subsidiaries of the Registrant.
23.1 Consent of KPMG LLP, independent auditors.
23.2* Consent of Counsel. Reference is made to Exhibit 5.1.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
24.1 Power of Attorney (See page II-5).
25.1* Form of T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of State Street Bank and Trust Company of
California, N.A.
27.1 Financial Data Schedule.
99.1* Form of Letter of Transmittal relating to the Exchange Offer.
99.2* Form of Notice of Guaranteed Delivery.
</TABLE>
- --------
* To be filed by amendment.
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
EQUINIX, INC.
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
Equinix, Inc., a corporation organized and existing under and by
virtue of the provisions of the General Corporation Law of the State of Delaware
(the "General Corporation Law"),
DOES HEREBY CERTIFY:
FIRST: That the name of this corporation is Equinix, Inc.
SECOND: That the Board of Directors duly adopted resolutions
proposing to amend and restate the Certificate of Incorporation of this
corporation, declaring said amendment and restatement to be advisable and in the
best interests of this corporation and its stockholders, and authorizing the
appropriate officers of this corporation to solicit the consent of the
stockholders therefor, which resolution setting forth the proposed amendment and
restatement is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended and restated in its entirety as follows:
ARTICLE I
The name of this corporation is Equinix, Inc.
ARTICLE II
The address of the registered office of this corporation in the State
of Delaware is 15 E. North St., P.O. Box 899, in the City of Dover, County of
Kent. The name of its registered agent at such address is Incorporating
Services, Ltd.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
A. Classes of Stock. This corporation is authorized to issue two
----------------
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares that this corporation is authorized to issue
is one hundred and five million (105,000,000) shares. Seventy-five million
(75,000,000) shares shall be Common Stock and
<PAGE>
thirty million (30,000,000) shares shall be Preferred Stock, each with a par
value of $0.001 per share.
B. Rights, Preferences and Restrictions of Preferred Stock. The
-------------------------------------------------------
Preferred Stock authorized by this Restated Certificate of Incorporation may be
issued from time to time in one or more series. The rights, preferences,
privileges, and restrictions granted to and imposed on the Series A Preferred
Stock, which series shall consist of fourteen million (14,000,000) shares (the
"Series A Preferred Stock") and the Series B Preferred Stock, which series shall
consist of sixteen million (16,000,000) shares (the "Series B Preferred Stock")
are as set forth below in this Article IV(B).
1. Dividend Provisions.
-------------------
(a) The holders of the Series A Preferred Stock and Series B
Preferred Stock shall be entitled to receive dividends at the rate of $0.08 per
share and $0.64 per share (as adjusted for any stock dividends, combinations or
splits with respect to such shares) per annum, respectively, payable out of
funds legally available therefor. Such dividends shall be payable only when, as,
and if declared by the Board of Directors and shall be noncumulative.
(b) No dividends (other than those payable solely in the Common Stock
of the corporation) shall be paid on any Common Stock of the corporation during
any fiscal year of the corporation until dividends in the total amount of $0.08
per share and $0.64 per share (as adjusted for any stock dividends, combinations
or splits with respect to such shares) on the Series A Preferred Stock and
Series B Preferred Stock, respectively, shall have been paid or declared and set
apart during that fiscal year and no dividends shall be paid on any share of
Common Stock unless a dividend (including the amount of any dividends paid
pursuant to the provisions of subsection (a) above) is paid with respect to all
outstanding shares of Series A Preferred Stock and Series B Preferred Stock in
an amount for each such share of Series A Preferred Stock and Series B Preferred
Stock equal to or greater than the aggregate amount of such dividends for all
shares of Common Stock into which each such share of Series A Preferred Stock or
Series B Preferred Stock could then be converted.
(c) In the event of a conversion of the Series A Preferred Stock or
Series B Preferred Stock pursuant to Section 4 hereof, any accrued and unpaid
dividends shall be paid at the election of the holder in cash or Common Stock at
its then fair market value, as determined by the Board of Directors.
2. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution or winding up of
this corporation, either voluntary or involuntary, the holders of Preferred
Stock shall be entitled to receive, prior and in preference to any distribution
of any of the assets of this corporation to the holders of Common Stock by
reason of their ownership thereof, (A) in the case of the Series A Preferred
Stock an amount per share equal to the sum of (i) $1.00 for each outstanding
share of Series A Preferred Stock (the "Original Series A Issue Price"), and
(ii) an amount equal to declared but unpaid dividends on such share (subject to
adjustment of such fixed dollar amounts for any stock splits, stock dividends,
combinations, recapitalizations or the like), and (B) in the
2
<PAGE>
case of the Series B Preferred Stock, an amount per share equal to the sum of
(i) $8.00 for each outstanding share of Series B Preferred Stock (the "Original
Series B Issue Price"), and (ii) an amount equal to declared but unpaid
dividends on such share (subject to adjustments of such fixed dollar amounts for
any stock splits, stock dividends, combinations, recapitalizations or the like).
If upon the occurrence of such event, the assets and funds thus distributed
among the holders of the Series A Preferred Stock and Series B Preferred Stock
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then, the entire assets and funds of this
corporation legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock and Series B Preferred Stock
in proportion to the full preferential amount each such holder is otherwise
entitled to receive under this subsection (a).
(b) Upon the completion of the distribution required by subsection
(a) of this Section 2 all of the remaining assets of this corporation available
for distribution to stockholders shall be distributed among the holders of
Common Stock pro rata based on the number of shares of Common Stock held by
each.
(c)
(i) For purposes of this Section 2, a liquidation, dissolution
or winding up of this corporation shall be deemed to be occasioned by, or to
include (unless the holders of at least a majority of the Preferred Stock then
outstanding shall determine otherwise), (A) the acquisition of this corporation
by another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation)
that results in the transfer of fifty percent (50%) or more of the outstanding
voting power of this corporation; or (B) a sale of all or substantially all of
the assets of this corporation.
(ii) In any of such foregoing events, if the consideration
received by this corporation is other than cash, its value will be deemed its
fair market value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or
other similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or through
the Nasdaq National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange or system over the thirty (30)
day period ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the thirty (30) day period ending three (3) days prior to
the closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as mutually determined by this
corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Preferred Stock.
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<PAGE>
(B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a stockholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as mutually determined by this corporation and the holders
of at least a majority of the voting power of all then outstanding shares of
such Preferred Stock.
(iii) In the event the requirements of this subsection 2(c) are
not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such time
as the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the holders of the Preferred Stock shall revert to
and be the same as such rights, preferences and privileges existing immediately
prior to the date of the first notice referred to in subsection 2(c)(iv) hereof.
(iv) This corporation shall give each holder of record of
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the stockholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and this corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after this corporation has given the first notice
provided for herein or sooner than ten (10) days after this corporation has
given notice of any material changes provided for herein; provided, however,
that such periods may be shortened upon the written consent of the holders of
Preferred Stock that are entitled to such notice rights or similar notice rights
and that represent at least a majority of the voting power of all then
outstanding shares of such Preferred Stock.
3. Redemption. The Preferred Stock is not redeemable.
----------
4. Conversion. The holders of the Preferred Stock shall have
----------
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock and
----------------
Series B Preferred Stock shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share, at the office of
this corporation or any transfer agent for such stock, into such number of fully
paid and nonassessable shares of Common Stock as is determined by dividing the
Original Issue Price for such series by the Conversion Price applicable to such
share, determined as hereafter provided, in effect on the date the certificate
is surrendered for conversion. The initial Conversion Price for shares of
Series A Preferred Stock shall be the Original Series A Issue Price and the
initial Conversion Price for shares of Series B Preferred Stock shall be the
Original Series B Issue Price, subject to adjustment as set forth in Section
4(d) hereof.
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<PAGE>
(b) Automatic Conversion. Each share of Series A Preferred Stock and
--------------------
Series B Preferred Stock shall automatically be converted into shares of Common
Stock at the Conversion Price at the time in effect for such Series A Preferred
Stock immediately upon the earlier of (i) this corporation's sale of its Common
Stock in a firm commitment underwritten public offering pursuant to a
registration statement on Form S-1 or Form SB-2 under the Securities Act of
1933, as amended, provided that the aggregate gross offering price is at least
$25,000,000 or (ii) upon vote of the holders of a majority of the then
outstanding shares of Preferred Stock (which provision may be amended only by a
majority vote of the holders of the Preferred Stock).
(c) Mechanics of Conversion. Before any holder of Preferred Stock
-----------------------
shall be entitled to convert the same into shares of Common Stock, he or she
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of this corporation or of any transfer agent for the Preferred Stock, and
shall give written notice to this corporation at its principal corporate office,
of the election to convert the same and shall state therein the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued. This corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Preferred Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date. If the
conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, the conversion may, at the
option of any holder tendering Preferred Stock for conversion, be conditioned
upon the closing with the underwriters of the sale of securities pursuant to
such offering, in which event the persons entitled to receive the Common Stock
upon conversion of the Preferred Stock shall not be deemed to have converted
such Preferred Stock until immediately prior to the closing of such sale of
securities.
(d) Conversion Price Adjustments of Preferred Stock for Certain
-----------------------------------------------------------
Splits and Combinations. The Conversion Price of the Series A Preferred Stock
- -----------------------
and Series B Preferred Stock shall be subject to adjustment from time to time as
follows:
(i) (A) If this corporation shall issue, after the date upon
which any shares of Series A Preferred Stock or Series B Preferred Stock were
first issued (the "Purchase Date" with respect to such series, any Additional
Stock (as defined below) without consideration or for a consideration per share
less than the Conversion Price for such series in effect immediately prior to
the issuance of such Additional Stock, the Conversion Price for such series in
effect immediately prior to each such issuance shall forthwith (except as
otherwise provided in this clause (i)) be adjusted to a price determined by
multiplying such Conversion Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance (including shares of Common Stock deemed to be issued pursuant to
subsection 4(d)(i)(E)(1) or (2)) plus the number of shares of Common Stock that
the aggregate consideration received by this corporation for such issuance would
purchase at such Conversion Price; and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issuance
(including shares of Common Stock deemed to
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<PAGE>
be issued pursuant to subsection 4(d)(i)(E)(1) or (2)) plus the number of shares
of Additional Stock.
(B) No adjustment of the Conversion Price for the Series A
Preferred Stock or Series B Preferred Stock shall be made in an amount less than
one cent per share, provided that any adjustments that are not required to be
made by reason of this sentence shall be carried forward and shall be either
taken into account in any subsequent adjustment made prior to three (3) years
from the date of the event giving rise to the adjustment being carried forward,
or shall be made at the end of three (3) years from the date of the event giving
rise to the adjustment being carried forward. Except to the limited extent
provided for in subsections (E)(3) and (E)(4), no adjustment of such Conversion
Price pursuant to this subsection 4(d)(i) shall have the effect of increasing
the Conversion Price above the Conversion Price in effect immediately prior to
such adjustment.
(C) In the case of the issuance of Common Stock for cash,
the consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by this corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.
(D) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined by the Board of
Directors as determined in good faith irrespective of any accounting treatment.
(E) In the case of the issuance (whether before, on or
after the applicable Purchase Date) of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock or options to purchase or rights to subscribe for
such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 4(d)(i) and subsection 4(d)(ii):
(1) The aggregate maximum number of shares of Common
Stock deliverable upon exercise (assuming the satisfaction of any conditions to
exercisability, including without limitation, the passage of time, but without
taking into account potential antidilution adjustments) of such options to
purchase or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in subsections
4(d)(i)(C) and (d)(i)(D)), if any, received by this corporation upon the
issuance of such options or rights plus the minimum exercise price provided in
such options or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of, or in exchange (assuming the satisfaction
of any conditions to convertibility or exchangeability, including, without
limitation, the passage of time, but without taking into account potential
antidilution adjustments) for, any such convertible or exchangeable securities
or upon the exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such securities were
issued or such options or rights
6
<PAGE>
were issued and for a consideration equal to the consideration, if any, received
by this corporation for any such securities and related options or rights
(excluding any cash received on account of accrued interest or accrued
dividends), plus the minimum additional consideration, if any, to be received by
this corporation (without taking into account potential antidilution
adjustments) upon the conversion or exchange of such securities or the exercise
of any related options or rights (the consideration in each case to be
determined in the manner provided in subsections 4(d)(i)(C) and (d)(i)(D)).
(3) In the event of any change in the number of shares
of Common Stock deliverable or in the consideration payable to this corporation
upon exercise of such options or rights or upon conversion of or in exchange for
such convertible or exchangeable securities, including, but not limited to, a
change resulting from the antidilution provisions thereof (unless such options
or rights or convertible or exchangeable securities were merely deemed to be
included in the numerator and denominator for purposes of determining the number
of shares of Common Stock outstanding for purposes of subsection 4(d)(i)(A)),
the Conversion Price of the Series A Preferred Stock, to the extent in any way
affected by or computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such consideration upon
the exercise of any such options or rights or the conversion or exchange of such
securities.
(4) Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Conversion Price of the Series A Preferred Stock, to the extent in any way
affected by or computed using such options, rights or securities or options or
rights related to such securities (unless such options or rights were merely
deemed to be included in the numerator and denominator for purposes of
determining the number of shares of Common Stock outstanding for purposes of
subsection 4(d)(i)(A)), shall be recomputed to reflect the issuance of only the
number of shares of Common Stock (and convertible or exchangeable securities
that remain in effect) actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such securities or upon the exercise
of the options or rights related to such securities.
(5) The number of shares of Common Stock deemed issued
and the consideration deemed paid therefor pursuant to subsections 4(d)(i)(E)(1)
and (2) shall be appropriately adjusted to reflect any change, termination or
expiration of the type described in either subsection 4(d)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to subsection 4(d)(i)(E)) by this
corporation after the Purchase Date other than:
(A) Common Stock issued pursuant to a transaction described
in subsection 4(d)(iii) hereof;
(B) Shares of Common Stock issuable or issued to employees,
consultants, directors or vendors (if in transactions with primarily non-
financing purposes) of
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<PAGE>
this corporation directly or pursuant to a stock option plan or restricted stock
plan approved by the Board of Directors of this corporation;
(C) The issuance of stock, warrants or other securities
or rights upon approval by the Company's Board of Directors (including the
Series B Director) to persons or entities with which the Company has business
relationships provided such issuances are for other than primarily equity
financing purposes;
(D) The issuance of securities pursuant to a bona fide,
firmly underwritten public offering of shares of Common Stock, registered under
the Act resulting in proceeds to the Company of at least $25,000,000 in the
aggregate;
(E) The issuance of securities pursuant to the conversion
or exercise of convertible or exercisable securities; or
(F) The issuance of securities in connection with a bona
fide business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise.
(iii) In the event this corporation should at any time or
from time to time after the Purchase Date fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price of the Series A Preferred Stock and Series B Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be increased in proportion to such
increase of the aggregate of shares of Common Stock outstanding and those
issuable with respect to such Common Stock Equivalents.
(iv) If the number of shares of Common Stock outstanding at any
time after the Purchase Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
Conversion Price for the Series A Preferred Stock and Series B Preferred Stock
shall be appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased in
proportion to such decrease in outstanding shares.
(e) Other Distributions. In the event this corporation shall declare
-------------------
a distribution payable in securities of other persons, evidences of indebtedness
issued by this corporation or other persons, assets (excluding cash dividends)
or options or rights not referred to in subsection 4(d)(i), then, in each such
case for the purpose of this subsection 4(e), the holders of the Series A
Preferred Stock and Series B Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of
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<PAGE>
shares of Common Stock of this corporation into which their shares of Series A
Preferred Stock and/or Series B Preferred Stock are convertible as of the record
date fixed for the determination of the holders of Common Stock of this
corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time there
-----------------
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4 or Section 2) provision shall be made so that the holders of the
Series A Preferred Stock and Series B Preferred Stock shall thereafter be
entitled to receive upon conversion of the Series A Preferred Stock and/or
Series B Preferred Stock the number of shares of stock or other securities or
property of the Corporation or otherwise, to which a holder of Common Stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the holders of the
Series A Preferred Stock and Series B Preferred Stock after the recapitalization
to the end that the provisions of this Section 4 (including adjustment of the
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock and Series B Preferred Stock) shall
be applicable after that event as nearly equivalent as may be practicable.
(g) No Impairment. This corporation will not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by this
corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Preferred Stock and Series B Preferred Stock against
impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
------------------------------------------------------
(i) No fractional shares shall be issued upon the conversion of
any share or shares of the Series A Preferred Stock or Series B Preferred Stock,
and the number of shares of Common Stock to be issued shall be rounded to the
nearest whole share. Whether or not fractional shares are issuable upon such
conversion shall be determined on the basis of the total number of shares of
Series A Preferred Stock and/or Series B Preferred Stock the holder is at the
time converting into Common Stock and the number of shares of Common Stock
issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series A Preferred Stock or Series B Preferred Stock
pursuant to this Section 4, this corporation, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Series A Preferred Stock and Series B
Preferred Stock a certificate executed by the Corporation's President or Chief
Financial Officer setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. This
corporation shall, upon the written request at any time of any holder of Series
A Preferred Stock or Series B Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price for such series of Preferred
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<PAGE>
Stock at the time in effect, and (C) the number of shares of Common Stock and
the amount, if any, of other property that at the time would be received upon
the conversion of a share of Series A Preferred Stock or Series B Preferred
Stock.
(i) Notices of Record Date. In the event of any taking by this
----------------------
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Series A Preferred Stock and Series B
Preferred Stock, at least twenty (20) days prior to the date specified therein,
a notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. This corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Preferred Stock and Series B Preferred Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A Preferred Stock
and Series B Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Series A Preferred Stock and Series B
Preferred Stock, in addition to such other remedies as shall be available to the
holder of such Preferred Stock, this corporation will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purposes, including, without limitation, engaging in best
efforts to obtain the requisite shareholder approval of any necessary amendment
to this Restated Certificate of Incorporation.
(k) Notices. Any notice required by the provisions of this Section 4
-------
to be given to the holders of shares of Series A Preferred Stock and Series B
Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of this corporation.
5. Voting Rights.
-------------
(a) General Voting Rights. Subject to the provisions of Section 5(b)
---------------------
hereof, the holder of each share of Preferred Stock shall have the right to one
vote for each share of Common Stock into which such Preferred Stock could then
be converted, and with respect to such vote, such holder shall have full voting
rights and powers equal to the voting rights and powers of the holders of Common
Stock, and shall be entitled, notwithstanding any provision hereof, to notice of
any stockholders' meeting in accordance with the bylaws of this corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote.
Fractional votes shall not, however, be permitted and any fractional voting
rights available on an as-converted basis (after aggregating all shares into
which shares of Preferred Stock held by each holder could be converted) shall be
rounded to the nearest whole number (with one-half being rounded upward).
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<PAGE>
(b) Voting for the Election of Directors. As long as at least twenty-
------------------------------------
five percent (25%) of the shares of Series A Preferred Stock originally issued
remain outstanding, the holders of such shares of Series A Preferred Stock shall
be entitled to elect two (2) directors of this corporation at each annual
election of directors. The holders of outstanding Common Stock shall be
entitled to elect two (2) directors of this corporation at each annual election
of directors. As long as at least twenty-five percent (25%) of the shares of
Series B Preferred Stock originally issued remain outstanding, the holders of
such shares of Series B Preferred Stock shall be entitled to elect one (1)
director of this corporation at each annual election of directors acceptable to
the other directors. The holders of Series A Preferred Stock and Common Stock
(voting together as a single class and not as separate series, and on an as-
converted basis) shall be entitled to elect any remaining directors of this
corporation, provided such directors are approved by the directors elected by
the holders of Common Stock and the directors elected by the holders of
Preferred Stock.
In the case of any vacancy (other than a vacancy caused by removal) in
the office of a director occurring among the directors elected by the holders of
a class or series of stock pursuant to this Section 5(b), the remaining
directors so elected by that class or series may by affirmative vote of a
majority thereof (or the remaining director so elected if there be but one, or
if there are no such directors remaining, by the affirmative vote of the holders
of a majority of the shares of that class or series), elect a successor or
successors to hold office for the unexpired term of the director or directors
whose place or places shall be vacant. Any director who shall have been elected
by the holders of a class or series of stock or by any directors so elected as
provided in the immediately preceding sentence hereof may be removed during the
aforesaid term of office, either with or without cause, by, and only by, the
affirmative vote of the holders of the shares of the class or series of stock
entitled to elect such director or directors, given either at a special meeting
of such stockholders duly called for that purpose or pursuant to a written
consent of stockholders, and any vacancy thereby created may be filled by the
holders of that class or series of stock represented at the meeting or pursuant
to unanimous written consent.
6. Protective Provisions. So long as 3,000,000 shares of Preferred
---------------------
Stock are outstanding, this corporation shall not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least a majority of the then outstanding shares of Series A Preferred Stock and
Series B Preferred Stock (voting together as a single class and not as a
separate series, and on an as-converted basis; provided, however that such
majority vote shall include the vote of at least 1,250,000 shares of the holders
of Series B Preferred Stock):
(a) sell, convey, or otherwise dispose of all or substantially all of
its property or business or merge into or consolidate with any other corporation
(other than a wholly-owned subsidiary corporation) or effect any transaction or
series of related transactions in which more than fifty percent (50%) of the
voting power of this corporation is disposed of;
(b) increase the total number of authorized shares of Series A
Preferred Stock or Series B Preferred Stock;
(c) authorize or issue, or obligate itself to issue, any equity
security other than that authorized herein, including any other security
convertible into or exercisable for any equity
11
<PAGE>
security having a preference over or greater rights than the Series A Preferred
Stock or Series B Preferred Stock with respect to dividends, liquidation,
redemption, conversion or voting;
(d) redeem, purchase or otherwise acquire (or pay into or set aside
for a sinking fund for such purpose) any share or shares of Preferred Stock or
Common Stock; provided, however, that this restriction shall not apply to the
repurchase of shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for this corporation or any
subsidiary pursuant to agreements under which this corporation has the option to
repurchase such shares at cost upon the occurrence of certain events, such as
the termination of employment;
(e) alter or change the rights, preferences or privileges of the
shares of Series A Preferred Stock or Series B Preferred Stock so as to affect
adversely the shares;
(f) pay any dividends on this corporation's Common Stock; or
(g) increase the authorized number of directors of this corporation.
7. Status of Converted Stock. In the event any shares of Series A
-------------------------
Preferred Stock or Series B Preferred Stock shall be converted pursuant to
Section 4 hereof, the shares so converted shall be cancelled and shall not be
issuable by this corporation. The Restated Certificate of Incorporation of this
corporation shall be appropriately amended to effect the corresponding reduction
in this corporation's authorized capital stock.
C. Common Stock. The rights, preferences, privileges and
------------
restrictions granted to and imposed on the Common Stock are as set forth below
in this Article IV(C).
1. Dividend Rights. Subject to the prior rights of holders of all
---------------
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of this corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding
------------------
up of this corporation, the assets of this corporation shall be distributed as
provided in Section 2 of Division (B) of Article IV hereof.
3. Redemption. The Common Stock is not redeemable.
----------
4. Voting Rights. The holder of each share of Common Stock shall
-------------
have the right to one vote for each such share, and shall be entitled to notice
of any stockholders' meeting in accordance with the bylaws of this corporation,
and shall be entitled to vote upon such matters and in such manner as may be
provided by law.
12
<PAGE>
ARTICLE V
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors is expressly authorized to make, repeal, alter, amend and rescind
any or all of the Bylaws of this corporation.
ARTICLE VI
The number of directors of this corporation shall be fixed from time
to time by a bylaw or amendment thereof duly adopted by the Board of Directors
or by the stockholders.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws
of this corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of this corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this corporation.
ARTICLE IX
A director of this corporation shall, to the fullest extent permitted
by the General Corporation Law as it now exists or as it may hereafter be
amended, not be personally liable to this corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to this
corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law, or (iv) for any transaction from
which the director derived any improper personal benefit. If the General
Corporation Law is amended, after approval by the stockholders of this Article,
to authorize corporation action further eliminating or limiting the personal
liability of directors, then the liability of a director of this corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law, as so amended.
Any amendment, repeal or modification of this Article IX, or the
adoption of any provision of this Amended and Restated Certificate of
Incorporation inconsistent with this Article IX, by the stockholders of this
corporation shall not apply to or adversely affect any right or protection of a
director of this corporation existing at the time of such amendment, repeal,
modification or adoption.
13
<PAGE>
ARTICLE X
This corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
ARTICLE XI
To the fullest extent permitted by applicable law, this corporation is
authorized to provide indemnification of (and advancement of expenses to) agents
of this corporation (and any other persons to which General Corporation Law
permits this corporation to provide indemnification) through bylaw provisions,
agreements with such agents or other persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the General Corporation Law,
subject only to limits created by applicable General Corporation Law (statutory
or non-statutory), with respect to actions for breach of duty to this
corporation, its stockholders, and others.
Any amendment, repeal or modification of the foregoing provisions of
this Article XI shall not adversely affect any right or protection of a
director, officer, agent, or other person existing at the time of, or increase
the liability of any director of this corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to, such amendment,
repeal or modification.
* * *
THIRD: The foregoing amendment and restatement was approved by the
holders of the requisite number of shares of said corporation in accordance with
Section 228 of the General Corporation Law.
FOURTH: That said amendment and restatement was duly adopted in
accordance with the provisions of Section 242 and 245 of the General Corporation
Law.
14
<PAGE>
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been executed by the President of this corporation on this
24th day of August, 1999.
/s/ Albert M. Avery, IV
---------------------------------------------
Albert M. Avery, IV
President and Chief Executive Officer
<PAGE>
EXHIBIT 3.2
BYLAWS OF
Equinix, Inc.
A DELAWARE CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. OFFICES................................................. 1
ARTICLE II. MEETINGS OF STOCKHOLDERS................................ 1
ARTICLE III. DIRECTORS............................................... 3
ARTICLE IV. NOTICES................................................. 5
ARTICLE V. OFFICERS................................................ 6
ARTICLE VI. CERTIFICATE OF STOCK.................................... 8
ARTICLE VII. GENERAL PROVISIONS...................................... 10
ARTICLE VIII. AMENDMENTS.............................................. 12
ARTICLE IX. RIGHT OF FIRST REFUSAL.................................. 12
ARTICLE X. LOANS TO OFFICERS....................................... 15
</TABLE>
<PAGE>
BYLAWS
OF
EQUINIX, INC.
ARTICLE I
OFFICES
-------
1.1 The registered office shall be in the City of Dover, County of
Kent, State of Delaware.
1.2 The corporation may also have offices at such other places both
within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
2.1 All meetings of the stockholders for the election of directors
shall be held in the City of San Jose State of California, at such place as may
be fixed from time to time by the Board of Directors, or at such other place
either within or without the State of Delaware as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
2.2 Annual meetings of stockholders, commencing with the year 1998,
shall be held at such date and time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which they
shall elect by a plurality vote a Board of Directors, and transact such other
business as may properly be brought before the meeting.
2.3 Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not fewer than ten (10) nor more than sixty (60) days before the date of
the meeting.
2.4 The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
<PAGE>
2.5 Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning at least fifty
percent 50%) in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
2.6 Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not fewer than ten (10) nor more than sixty (60) days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
2.7 Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
2.8 The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted that might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.9 When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required, in which case such
express provision shall govern and control the decision of such question.
2.10 Unless otherwise provided in the certificate of incorporation,
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.
2.11 Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting
2
<PAGE>
at which all shares entitled to vote thereon were present and voted. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
ARTICLE III
DIRECTORS
---------
3.1 The number of directors that shall constitute the whole Board of
Directors shall be determined by resolution of the Board of Directors or by the
stockholders at the annual meeting of the stockholders, except as provided in
Section 3.2 of this Article, and each director elected shall hold office until
his successor is elected and qualified. Directors need not be stockholders.
3.2 Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole Board of Directors (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten
percent (10%) of the total number of the shares at the time outstanding having
the right to vote for such directors, summarily order an election to be held to
fill any such vacancies or newly created directorships, or to replace the
directors chosen by the directors then in office.
3.3 The business of the corporation shall be managed by or under the
direction of its Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these bylaws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------
3.4 The Board of Directors of the corporation may hold meetings, both
regular and special, either within or without the State of Delaware.
3.5 The first meeting of each newly elected Board of Directors shall
be held at such time and place as shall be fixed by the vote of the stockholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the stockholders to fix
the time or place of such first meeting of the newly elected Board of Directors,
or in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver signed by all
of the directors.
3
<PAGE>
3.6 Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board of Directors.
3.7 Special meetings of the Board of Directors may be called by the
president on two (2) days' notice to each director by mail or forty-eight (48)
hours notice to each director either personally or by telegram; special meetings
shall be called by the president or secretary in like manner and on like notice
on the written request of two (2) directors unless the Board of Directors
consists of only one director, in which case special meetings shall be called by
the president or secretary in like manner and on like notice on the written
request of the sole director.
3.8 At all meetings of the Board of Directors a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
3.9 Unless otherwise restricted by the certificate of incorporation
or these bylaws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if all members of the Board of Directors or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee.
3.10 Unless otherwise restricted by the certificate of incorporation
or these bylaws, members of the Board of Directors, or any committee designated
by the Board of Directors, may participate in a meeting of the Board of
Directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
-----------------------
3.11 The Board of Directors may designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the
4
<PAGE>
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to the following
matters: (i) approving or adopting, or recommending to the stockholders, any
action or matter expressly required by the General Corporation Law of Delaware
to be submitted to stockholders for approval or (ii) adopting, amending or
repealing any provision of these bylaws.
3.12 Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
-------------------------
3.13 Unless otherwise restricted by the certificate of incorporation
or these bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
--------------------
3.14 Unless otherwise restricted by the certificate of incorporation
or these bylaws, any director or the entire Board of Directors may be removed,
with or without cause, by the holders of a majority of shares entitled to vote
at an election of directors.
ARTICLE IV
NOTICES
-------
4.1 Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
4.2 Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
--------
5.1 The officers of the corporation shall be chosen by the Board of
Directors and shall be a president, treasurer and a secretary. The Board of
Directors may elect from among
5
<PAGE>
its members a Chairman of the Board and a Vice Chairman of the Board. The Board
of Directors may also choose one or more vice-presidents, assistant secretaries
and assistant treasurers. Any number of offices may be held by the same person,
unless the certificate of incorporation or these bylaws otherwise provide.
5.2 The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a president, a treasurer, and a secretary
and may choose vice-presidents.
5.3 The Board of Directors may appoint such other officers and agents
as it shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.
5.4 The salaries of all officers and agents of the corporation shall
be fixed by the Board of Directors.
5.5 The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the
Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
corporation shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
-------------------------
5.6 The Chairman of the Board, if any, shall preside at all meetings
of the Board of Directors and of the stockholders at which he shall be present.
He shall have and may exercise such powers as are, from time to time, assigned
to him by the Board of Directors and as may be provided by law.
5.7 In the absence of the Chairman of the Board, the Vice Chairman of
the Board, if any, shall preside at all meetings of the Board of Directors and
of the stockholders at which he shall be present. He shall have and may
exercise such powers as are, from time to time, assigned to him by the Board of
Directors and as may be provided by law.
THE PRESIDENT AND VICE-PRESIDENTS
---------------------------------
5.8 The president shall be the chief executive officer of the
corporation; and in the absence of the Chairman and Vice Chairman of the Board
he shall preside at all meetings of the stockholders and the Board of Directors;
he shall have general and active management of the business of the corporation
and shall see that all orders and resolutions of the Board of Directors are
carried into effect.
5.9 He shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
6
<PAGE>
5.10 In the absence of the president or in the event of his inability
or refusal to act, the vice-president, if any, (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
-------------------------------------
5.11 The secretary shall attend all meetings of the Board of Directors
and all meetings of the stockholders and record all the proceedings of the
meetings of the corporation and of the Board of Directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or president,
under whose supervision he shall be. He shall have custody of the corporate
seal of the corporation and he, or an assistant secretary, shall have authority
to affix the same to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant secretary. The
Board of Directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.
5.12 The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
--------------------------------------
5.13 The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
5.14 He shall disburse the funds of the corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the president and the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all his
transactions as treasurer and of the financial condition of the corporation.
5.15 If required by the Board of Directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or
7
<PAGE>
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
5.16 The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the treasurer or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
--------------------
6.1 Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
Chairman or Vice Chairman of the Board of Directors, or the president or a
vice-president and the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the corporation, certifying the number of shares owned
by him in the corporation.
Certificates may be issued for partly paid shares and in such case
upon the face or back of the certificates issued to represent any such partly
paid shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
6.2 Any of or all the signatures on the certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
-----------------
6.3 The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to
8
<PAGE>
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
TRANSFER OF STOCK
-----------------
6.4 Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
------------------
6.5 In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholder or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
-----------------------
6.6 The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
---------
7.1 Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the Board of Directors at
9
<PAGE>
any regular or special meeting, pursuant to law. Dividends may be paid in cash,
in property, or in shares of the capital stock, subject to the provisions of the
certificate of incorporation.
7.2 Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
------
7.3 All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
FISCAL YEAR
-----------
7.4 The fiscal year of the corporation shall be fixed by resolution
of the Board of Directors.
SEAL
----
7.5 The Board of Directors may adopt a corporate seal having
inscribed thereon the name of the corporation, the year of its organization and
the words "Corporate Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
---------------
7.6 The corporation shall, to the fullest extent authorized under the
laws of the State of Delaware, as those laws may be amended and supplemented
from time to time, indemnify any director made, or threatened to be made, a
party to an action or proceeding, whether criminal, civil, administrative or
investigative, by reason of being a director of the corporation or a predecessor
corporation or, at the corporation's request, a director or officer of another
corporation; provided, however, that the corporation shall indemnify any such
agent in connection with a proceeding initiated by such agent only if such
proceeding was authorized by the Board of Directors of the corporation. The
indemnification provided for in this Section 7.6 shall: (i) not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaw, agreement or vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
another capacity while holding such office, (ii) continue as to a person who has
ceased to be a director, and (iii) inure to the benefit of the heirs, executors
and administrators of such a person. The corporation's obligation to provide
indemnification under this Section 7.6 shall be offset to the extent of any
other source of indemnification or any otherwise applicable insurance coverage
under a policy maintained by the corporation or any other person.
10
<PAGE>
Expenses incurred by a director of the corporation in defending a
civil or criminal action, suit or proceeding by reason of the fact that he is or
was a director of the corporation (or was serving at the corporation's request
as a director or officer of another corporation) shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation as authorized by relevant sections of the
General Corporation Law of Delaware. Notwithstanding the foregoing, the
corporation shall not be required to advance such expenses to an agent who is a
party to an action, suit or proceeding brought by the corporation and approved
by a majority of the Board of Directors of the corporation that alleges willful
misappropriation of corporate assets by such agent, disclosure of confidential
information in violation of such agent's fiduciary or contractual obligations to
the corporation or any other willful and deliberate breach in bad faith of such
agent's duty to the corporation or its stockholders.
The foregoing provisions of this Section 7.6 shall be deemed to be a
contract between the corporation and each director who serves in such capacity
at any time while this bylaw is in effect, and any repeal or modification
thereof shall not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought based in whole or in part upon any
such state of facts.
The Board of Directors in its discretion shall have power on behalf of
the corporation to indemnify any person, other than a director, made a party to
any action, suit or proceeding by reason of the fact that he, his testator or
intestate, is or was an officer or employee of the corporation.
To assure indemnification under this Section 7.6 of all directors,
officers and employees who are determined by the corporation or otherwise to be
or to have been "fiduciaries" of any employee benefit plan of the corporation
that may exist from time to time, Section 145 of the General Corporation Law of
Delaware shall, for the purposes of this Section 7.6, be interpreted as follows:
an "other enterprise" shall be deemed to include such an employee benefit plan,
including without limitation, any plan of the corporation that is governed by
the Act of Congress entitled "Employee Retirement Income Security Act of 1974,"
as amended from time to time; the corporation shall be deemed to have requested
a person to serve an employee benefit plan where the performance by such person
of his duties to the corporation also imposes duties on, or otherwise involves
services by, such person to the plan or participants or beneficiaries of the
plan; excise taxes assessed on a person with respect to an employee benefit plan
pursuant to such Act of Congress shall be deemed "fines."
ARTICLE VIII
AMENDMENTS
----------
8.1 These bylaws may be altered, amended or repealed or new bylaws
may be adopted by the stockholders or by the Board of Directors, when such power
is conferred upon the Board of Directors by the certificate of incorporation at
any regular meeting of the stockholders
11
<PAGE>
or of the Board of Directors or at any special meeting of the stockholders or of
the Board of Directors if notice of such alteration, amendment, repeal or
adoption of new bylaws be contained in the notice of such special meeting. If
the power to adopt, amend or repeal bylaws is conferred upon the Board of
Directors by the certificate or incorporation it shall not divest or limit the
power of the stockholders to adopt, amend or repeal bylaws.
ARTICLE IX
RIGHT OF FIRST REFUSAL
----------------------
9.1 No stockholder shall sell, assign, pledge, or in any manner
transfer any of the shares of Common Stock of the corporation or any right or
interest therein, whether voluntarily or by operation of law, or by gift or
otherwise, except by a transfer which meets the requirements hereinafter set
forth in this bylaw:
(a) If the stockholder desires to sell or otherwise transfer any
of his shares of Common Stock, then the stockholder shall first give written
notice thereof to the corporation. The notice shall name the proposed transferee
and state the number of shares to be transferred, the proposed consideration,
and all other terms and conditions of the proposed transfer.
(b) For fifteen (15) days following receipt of such notice, the
corporation shall have the option to purchase all or any lesser part of the
shares specified in the notice at the price and upon the terms set forth in such
notice. In the event the corporation elects to purchase all the shares, it
shall give written notice to the selling stockholder of its election and
settlement for said shares shall be made as provided below in paragraph (d).
(c) In the event the corporation does not elect to acquire all
of the shares specified in the selling stockholder's notice, the Secretary of
the corporation shall, within fifteen (15) days of receipt of said selling
stockholder's notice, give written notice thereof to the stockholders of the
corporation other than the selling stockholder. Said written notice shall state
the number of shares that the corporation has elected to purchase and the number
of shares remaining available for purchase (which shall be the same as the
number contained in said selling stockholder's notice, less any such shares that
the corporation has elected to purchase). Each of the other stockholders shall
have the option to purchase that proportion of the shares available for purchase
as the number of shares owned by each of said other stockholders (calculated on
an as-converted basis) bears to the total issued and outstanding shares of the
corporation (calculated on an as-converted basis), excepting those shares owned
by the selling stockholder. A stockholder electing to exercise such option
shall, within ten (10) days after receipt of the corporation's notice, give
notice to the corporation specifying the number of shares such stockholder will
purchase. Within such ten (10) day period, each of said other stockholders shall
give written notice stating how many additional shares such stockholder will
purchase if additional shares are made available. Failure to respond in writing
to the notice given by the Secretary of the corporation within said ten (10) day
period shall be deemed a rejection of such stockholder's right to acquire a
proportionate part of the shares of the selling stockholder. In the event one or
more stockholders do not elect to acquire the shares available to them, said
shares
12
<PAGE>
shall be allocated on a pro rata basis to the stockholders who requested shares
in addition to their pro rata allotment.
(d) In the event the corporation and/or stockholders, other than
the selling stockholder, elect to acquire any of the shares of the selling
stockholder as specified in said selling stockholder's notice, the Secretary of
the corporation shall so notify the selling stockholder and settlement thereof
shall be made in cash within thirty (30) days after the Secretary of the
corporation receives said selling stockholder's notice; provided that if the
terms of payment set forth in said selling stockholder's notice were other than
cash against delivery, the corporation and/or its other stockholders shall pay
for said shares on the same terms and conditions set forth in said selling
stockholder's notice.
(e) In the event the corporation and/or its other stockholders
do not elect to acquire all of the shares specified in the selling stockholder's
notice, said selling stockholder may, within the sixty (60) day period following
the expiration of the option rights granted to the corporation and other
stockholders herein, sell elsewhere the shares specified in said selling
stockholder's notice which were not acquired by the corporation and/or its other
stockholders, in accordance with the provisions of paragraph (d) of this bylaw,
provided that said sale shall not be on terms and conditions more favorable to
the purchaser than those contained in the bona fide offer set forth in said
selling stockholder's notice. All shares so sold by said selling stockholder
shall continue to be subject to the provisions of this bylaw in the same manner
as before said transfer.
(f) Anything to the contrary contained herein notwithstanding,
the following transactions shall be exempt from the provisions of this bylaw:
(1) A stockholder's transfer of any or all shares held
either during such stockholder's lifetime or on death by will or intestacy to
such stockholder's immediate family or to any custodian or trustee for the
account of such stockholder or such stockholder's immediate family. "Immediate
family" as used herein shall mean spouse, lineal descendant, father, mother,
brother, or sister of the stockholder making such transfer.
(2) A stockholder's bona fide pledge or mortgage of any
shares with a commercial lending institution, provided that any subsequent
transfer of said shares by said institution shall be conducted in the manner set
forth in this bylaw.
(3) A stockholder's transfer of any or all of such
stockholder's shares to the corporation or to any other stockholder of the
corporation.
(4) A stockholder's transfer of any or all of such
stockholder's shares to a person who, at the time of such transfer, is an
officer or director of the corporation.
(5) A corporate stockholder's transfer of any or all of its
shares pursuant to and in accordance with the terms of any merger,
consolidation, reclassification of shares or capital reorganization of the
corporate stockholder, or pursuant to a sale of all or substantially all of the
stock or assets of a corporate stockholder.
13
<PAGE>
(6) A corporate stockholder's transfer of any or all of its
shares to any or all of its stockholders.
(7) A transfer by a stockholder which is a limited or
general partnership to any or all of its partners or former partners.
(8) A transfer by a stockholder who obtained his or her
stock through the exercise of a warrant obtained in connection with the sale by
the Company of notes and warrants pursuant to the Purchase Agreement dated
November 24, 1999 by and between the Company and Salomon Smith Barney Inc.,
Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated.
In any such case, the transferee, assignee, or other recipient shall
receive and hold such stock subject to the provisions of this bylaw, and there
shall be no further transfer of such stock except in accord with this bylaw.
(g) The provisions of this Bylaw may be waived with respect to
any transfer either by the corporation, upon duly authorized action of the Board
of Directors, or by the stockholders, upon the express written consent of the
owners of a majority of the voting power of the corporation (excluding the votes
represented by those shares to be transferred by the transferring stockholder).
This bylaw may be amended or repealed either by a duly authorized action of the
Board of Directors or by the stockholders, upon the express written consent of
the owners of a majority of the voting power of the corporation.
(h) Any sale or transfer, or purported sale or transfer, of
securities of the corporation shall be null and void unless the terms,
conditions, and provisions of this bylaw are strictly observed and followed.
(i) The foregoing right of first refusal shall terminate on
either of the following dates, whichever shall first occur:
(1) On June 30, 2008 or
(2) Upon the date of consummation of the corporation's
first firm commitment underwritten public offering of its common stock
registered under the Securities Act of 1933, as amended.
(j) The certificates representing shares of stock of the
corporation shall bear on their face the following legend so long as the
foregoing right of first refusal remains in effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF
FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION AND/OR ITS ASSIGNEE(S), AS
PROVIDED IN THE BYLAWS OF THE CORPORATION."
14
<PAGE>
ARTICLE X
LOANS TO OFFICERS
-----------------
10.1 The corporation may lend money to, or guarantee any obligation
of, or otherwise assist any officer or other employee of the corporation or of
its subsidiaries, including any officer or employee who is a Director of the
corporation or its subsidiaries, whenever, in the judgment of the Board of
Directors, such loan, guarantee or assistance may reasonably be expected to
benefit the corporation. The loan, guarantee or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in these bylaws shall be deemed to deny,
limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
15
<PAGE>
EXHIBIT 4.4
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement"), dated as of December 1,
---------
1999, by and among STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., a
national banking association, as escrow agent and securities intermediary (in
such capacities, "Escrow Agent"), STATE STREET BANK AND TRUST COMPANY OF
------------
CALIFORNIA, N.A., as Trustee (in such capacity, "Trustee") under the Indenture
-------
(as defined herein), and EQUINIX, INC., a Delaware corporation ("Company").
-------
R E C I T A L S :
A. Pursuant to the Indenture, dated as of December 1, 1999 (the
"Indenture"), by and between the Company and Trustee, the Company is issuing
---------
$200,000,000 principal amount of its 13% Senior Notes due 2007 (the
"Securities") as part of the offering of 200,000 units (the "Units") consisting
---------- -----
of the Securities and warrants to purchase 2,251,000 shares of Common Stock, par
value $.001 per share, of the Company.
B. As security for its obligations under the Securities and the
Indenture, the Company hereby grants to Trustee, for the benefit of the holders
of the Securities, a Lien upon the Escrow Account (as defined herein) on the
terms and conditions set forth herein.
C. The parties have entered into this Agreement in order to set forth
their security agreement with respect to the Lien described above and the
conditions upon which, and the manner in which, funds will be disbursed from the
Escrow Account and released from such Lien.
A G R E E M E N T :
- - - - - - - - -
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. All terms used but not defined herein shall have
-------------
the respective meanings ascribed to them in the Indenture. In addition to any
other defined terms used herein, the following terms shall constitute defined
terms for purposes of this Agreement and shall have the meanings set forth
below:
"Affiliate" of any specified person means any other Person which,
---------
directly or indirectly, controls, is controlled by or is under 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.
"Agreement" means this Escrow Agreement, as amended from time to time.
---------
<PAGE>
"Applied" means that disbursed funds have been applied (i) to the
-------
payment of interest on the Securities, (ii) pursuant to Section 3(c), or (iii)
pursuant to Section 6(b)(iii) hereof.
"Available Funds" means, at any date, (A) the sum of (i) the Pledged
---------------
Securities and any funds and (ii) interest earned or dividends paid on the
Pledged Securities and any funds, less (B) the aggregate disbursements made
----
prior to such date pursuant to this Agreement.
"Beneficiaries" see Section 2(b).
-------------
"Book-Entry Securities" means Securities maintained in the form of
---------------------
entries (including, without limitation, the Securities Entitlements in such
Securities) in the commercial book-entry system of the Federal Reserve Bank of
Boston.
"Business Day" means any day that is not a Saturday, a Sunday or a day
------------
on which banking institutions in California, Boston or Los Angeles are required
by law, regulation or executive order to remain closed.
"Company" see the introductory paragraph hereto.
-------
"Company Funds" see Section 3(c).
-------------
"Entitlement Holder" means an "Entitlement Holder" as defined (i) in
------------------
Section 8 102(a)(7) of the Revised UCC and (ii) with respect to Book-Entry
Securities governed by the Federal Book-Entry Regulations, in 31 C.F.R. (S)
357.2.
"Escrow Account" means the escrow account established pursuant to
--------------
Section 2.
"Escrow Account Statement" see Section 2(f).
------------------------
"Escrow Agent" see the introductory paragraph hereto.
------------
"Escrow Collateral" see Section 6(a).
-----------------
"Escrow Funds" see Section 6(c).
------------
"Fed Member Securities Account" means, in respect of any Person, an
-----------------------------
account in the name of such Person in the commercial book-entry system of the
Federal Reserve Bank of Boston.
"Federal Book-Entry Regulations" means (i) the federal regulations
------------------------------
contained in Subpart B ("Treasury/Reserve Automated Debt Entry System (TRADES)
governing Book-Entry Securities consisting of U.S. Treasury bonds, notes and
bills and Subpart D ("Additional Provisions")) of 31 C.F.R. Part 357, 31 C.F.R.
---------------------
(S) 357.10 through (S) 357.41 and (S) 357.41 through (S) 357.44, including
related defined terms in 31 C.F.R. (S) 357.27; and (ii) to the extent
substantially identical to the Federal Book-Entry Regulations referred to in
clause (i) above, the federal regulations governing other Book-Entry Securities.
2
<PAGE>
"Financial Asset" has the meaning set forth in Section 8-102(a) of the
---------------
Revised UCC.
"Government Securities" means direct obligations of, or obligations
---------------------
guaranteed by, the United States of America for the payment of which obligations
the full faith and credit of the United States is pledged.
"Indenture" see the recitals hereto.
---------
"Initial Escrow Amount" shall mean $37,011,520.
---------------------
"Interest Payment Date" means June 1 and December 1 of each year,
---------------------
commencing on June 1, 2000 until the Securities are paid in full.
"Payment Notice and Disbursement Request" means a notice sent by the
---------------------------------------
Company to Escrow Agent requesting a disbursement of funds from the Escrow
Account, in substantially the form of Exhibit A hereto. Each Payment Notice and
---------
Disbursement Request shall be signed by an officer of the Company.
"Pledged Securities" means the Government Securities, as more fully
------------------
described on Schedule I attached hereto, purchased by the Company (or by Salomon
Smith Barney Inc. at the direction of the Company), deposited with the Escrow
Agent with a portion of the net proceeds from the offering of the Units and
deposited into the Escrow Account.
"Revised UCC" means the Uniform Commercial Code as in effect in the
-----------
State of California.
"Secured Obligations" see Section 6(a).
-------------------
"Securities" see the recitals hereto.
----------
"Securities Intermediary" has the meaning specified (i) in Section 8
-----------------------
102(a)(14) of the Revised UCC and (ii) with respect to Book-Entry Securities
governed by the Federal Book-Entry Regulations, in 31 C.F.R. (S) 357.2.
"Securities Intermediary's Jurisdiction" has the meaning specified (i)
--------------------------------------
in Section 8 110(e) of the Revised UCC and (ii) with respect to Book-Entry
Securities in, 31 C.F.R. (S) 357.11(b).
"Securities Account" has the meaning set forth in Revised UCC Section
------------------
8 501(a).
"Security Control" means "Control" as defined in Section 9115(e) of
----------------
the Revised UCC.
"Security Entitlement" has the meaning specified in (i) Sections 8
--------------------
102(a)(17) of the Revised UCC and (ii) with respect to Book-Entry Securities
governed by the Federal Book-Entry Regulations, 31 C.F.R. (S) 357.2.
3
<PAGE>
"Trustee" see the introductory paragraph hereto.
-------
2. Escrow Account; Escrow Agent
----------------------------
(a) Appointment of Escrow Agent. The Company and Trustee hereby
---------------------------
appoint Escrow Agent, and Escrow Agent hereby accepts appointment, as escrow
agent, under the terms and conditions of this Agreement.
(b) Establishment of Escrow Account.
-------------------------------
(i) On the Issue Date, Escrow Agent shall establish an escrow
account in the name of the Trustee entitled the "Escrow Account by Equinix, Inc.
to State Street Bank and Trust Company of California, N.A., Trustee" (the
"Escrow Account") at its corporate trust office located at 633 West 5th Street,
--------------
12th Floor, Los Angeles, CA 90071. The Escrow Account shall be maintained by
Escrow Agent as a Securities Account. All funds, including the Initial Escrow
Amount and the Pledged Securities shall be held by the Escrow Agent for the
exclusive benefit of Trustee, any predecessor Trustee under the Indenture and
holders of the Securities, as secured parties hereunder (collectively, the
"Beneficiaries") and shall be treated as Financial Assets. The Trustee will be
-------------
entitled to all rights and remedies to which a Person in control of Financial
Assets is entitled pursuant to Chapter 5 of Article 8 and Article 9 of the
Revised UCC. All such funds shall be held in the Escrow Account until disbursed
or paid in accordance with the terms hereof. Without limiting the foregoing, if
at any time Escrow Agent shall receive an "entitlement order" (as such term is
defined in Section 8 102(a)(8) of the Revised UCC) issued by Trustee and
relating to the Escrow Account, Escrow Agent shall comply with such entitlement
order without further consent of the Company or any other Person and will accept
"entitlement orders" from no other party. The Trustee has and will have
exclusive (and no other Person has or will have any) Security Control over the
Escrow Account and all assets, properties and items from time to time deposited
or credited thereto.
(ii) On the Issue Date, the Company shall purchase, or cause
the purchase of, the Pledged Securities with all of the Initial Escrow Amount,
and deliver, or cause the delivery of, the Pledged Securities to Escrow Agent
for deposit into the Escrow Account against Escrow Agent's written
acknowledgment and receipt of the Initial Escrow Amount. The Pledged Securities
shall be held by Escrow Agent and deposited into the Escrow Account for the
exclusive benefit of the Beneficiaries. All payments of interest and principal
on the Pledged Securities shall be deposited into the Escrow Account to be paid
or disbursed in accordance with the terms hereof.
(c) Escrow Agent Compensation. The Company shall pay to
-------------------------
Escrow Agent such compensation for services to be performed by it under this
Agreement as the Company and Escrow Agent may agree in writing from time to
time. Escrow Agent shall be paid any compensation owed to it directly by the
Company and shall not disburse from the Escrow Account any such amounts nor
shall Escrow Agent have any interest in the Escrow Account with respect to such
amounts.
The Company shall reimburse Escrow Agent upon request for all
reasonable expenses, disbursements, and advances incurred or made by Escrow
Agent in implementing any
4
<PAGE>
of the provisions of this Agreement, including compensation and the reasonable
expenses and disbursements of its counsel. Escrow Agent shall be paid any such
expenses owed to it directly by the Company and shall not disburse from the
Escrow Account any such amounts nor shall Escrow Agent have any interest in the
Escrow Account with respect to such amounts.
(d) Investment of Funds in Escrow Account. Any funds on deposit in
-------------------------------------
the Escrow Account which are not invested may be reinvested, at the Company's
option, only upon the following terms and conditions:
(i) Acceptable Investments. All funds deposited or held in the
----------------------
Escrow Account at any time shall be invested by Escrow Agent in Government
Securities in accordance with the Company's written instructions from time to
time to Escrow Agent; provided, however, that (1) the Company shall only
-------- -------
designate investment of funds in Government Securities maturing in an amount
sufficient to and/or generating interest income sufficient to, when added to the
balance of funds held in the Escrow Account, provide for the payment of interest
on the outstanding Securities on each Interest Payment Date beginning on and
including June 1, 2000 and through and including the Interest Payment Date on
June 1, 2001, and, and the Company shall designate, and hereby designates, that
all cash which may from time to time be placed or deposited in or credited,
transferred or delivered to such Escrow Account, be invested as promptly as and
to the fullest extent practicable in Government Securities and (2) any such
written instruction shall specify the particular investment to be made, shall
state that such investment is authorized to be made hereby and in particular
satisfies the requirements of the preceding clause (1) of this proviso, shall
contain the certification referred to in Section 2(d)(ii), if required, and
shall be executed by an Officer of the Company. Escrow Agent shall have no
responsibility for determining whether funds held in the Escrow Account shall
have been invested in such a manner so as to comply with the requirements of
this clause (i). All Government Securities shall be assigned to and held in the
possession of, or, in the case of Government Securities maintained in book entry
form with the Federal Reserve Bank (i.e., TRADES), transferred to a book entry
account in the name of Escrow Agent for the benefit of the Beneficiaries, with
such guarantees as are customary, except that Government Securities maintained
in book entry form with the Federal Reserve Bank shall be transferred to a book
entry account in the name of Escrow Agent at the Federal Reserve Bank that
includes only Government Securities held by Escrow Agent for its customers and
segregated by separate recordation in the books and records of Escrow Agent.
Escrow Agent shall not be liable for losses on any investments made by it
pursuant to and in compliance with such written instructions. In the absence of
instructions from the Company that meet the requirements of this Section
2(d)(i), Escrow Agent shall have no obligation to invest funds held in the
Escrow Account.
(ii) Security Interest in Investments. No investment of funds in
--------------------------------
the Escrow Account shall be made unless the Company has certified to Escrow
Agent and Trustee that, upon such investment, Trustee will have a first priority
perfected security interest in the applicable investment. If a certificate as to
a class of investments has been provided to Escrow Agent, a certificate need not
be issued with respect to individual investments in securities in that class if
the certificate applicable to the class remains accurate with respect to such
individual investments, which continued accuracy Escrow Agent may conclusively
assume. On the date of this Agreement, and on each anniversary thereof, until
the date upon which the
5
<PAGE>
balance of the Available Funds shall have been reduced to zero, each of Trustee
and Escrow Agent shall receive an Opinion of Counsel to the Company, dated each
such date as applicable, which opinion shall meet the requirements of Section
314(b) of the United States Trust Indenture Act of 1939, as amended and shall
comply with Section 11.01(d) of the Indenture.
(iii) Interest and Dividends. All interest earned and dividends
----------------------
paid on the Pledged Securities or any funds invested in Government Securities
shall be deposited in the Escrow Account as additional Escrow Collateral for the
exclusive benefit of the Beneficiaries and, if not required to be disbursed in
accordance with the terms hereof, subject to subsections 6(b)(iii), 6(e) and
6(f), shall be reinvested in accordance with the terms hereof at the Company's
written instruction unless a Default or Event of Default has occurred or Trustee
has notified Escrow Agent that it should only take direction from Trustee or
should no longer take direction from the Company. For tax reporting purposes,
all interest earned and dividends received shall be allocable to the Company.
(iv) Limitation on Escrow Agent's Responsibilities. Escrow
---------------------------------------------
Agent's sole responsibilities under this Section 2 shall be (A) to retain
possession of funds and to be the registered or designated owner of the Pledged
Securities, (B) to follow the Company's written instructions given in accordance
with Section 2(d)(i), and (C) to invest and reinvest funds pursuant to this
Section 2(d). In connection with clause (A) above, Escrow Agent will maintain
continuous possession in the jurisdiction of its principal place of business of
funds included in the Escrow Collateral and will cause the Pledged Securities to
be registered in the book-entry system of, and transferred to an account of
Escrow Agent or a sub-agent of Escrow Agent at, any Federal Reserve Bank. Except
as provided in Section 6, Escrow Agent shall have no other responsibilities with
respect to perfecting or maintaining the perfection of the security interest in
the Escrow Collateral and shall not be required to file any instrument, document
or notice in any public office at any time or times. The provisions of this
Section 2(d)(iv) shall be without prejudice to the Escrow Agent's obligations as
Securities Intermediary under this Agreement.
(e) Substitution of Escrow Agent. Escrow Agent may resign by giving
----------------------------
no less than 25 days' prior written notice to the Company and Trustee. Such
resignation shall take effect upon the later to occur of (i) delivery of all
funds and the Pledged Securities maintained by Escrow Agent hereunder and copies
of all books, records, plans and other documents in Escrow Agent's possession
relating to such funds, the Pledged Securities or this Agreement to a successor
escrow agent mutually approved by the Company and Trustee (which approvals shall
not be unreasonably withheld or delayed) and the taking of such other steps as
may be necessary to give the successor escrow agent a first priority security
interest in the Pledged Securities and (ii) the Company, Trustee and such
successor escrow agent entering into this Agreement or any written successor
agreement no less favorable to the interests of the Company, holders of the
Securities and Trustee than this Agreement; and Escrow Agent shall thereupon be
discharged of all obligations under this Agreement and shall have no further
duties, obligations or responsibilities in connection herewith, except as set
forth in Section 4. If a successor escrow agent has not been appointed or has
not accepted such appointment within 30 days after notice of resignation is
given to the Company, Escrow Agent may at the sole cost of the Company apply to
a court of competent jurisdiction for the appointment of a successor escrow
agent.
6
<PAGE>
(f) Escrow Account Statement. At least 30 days prior to each Interest
------------------------
Payment Date, Escrow Agent shall deliver to the Company and Trustee a statement
setting forth with reasonable particularity the balance of funds then in the
Escrow Account and the manner in which such funds are invested ("Escrow Account
--------------
Statement"). The parties hereto irrevocably instruct Escrow Agent that on the
- ---------
first date upon which the balance in the Escrow Account is reduced to zero,
Escrow Agent shall deliver to the Company and to Trustee a notice that the
balance in the Escrow Account has been reduced to zero.
3. Disbursements.
-------------
(a) Payment Notice and Disbursement Request; Disbursements. At least
------------------------------------------------------
five Business Days prior to an Interest Payment Date, the Company may submit to
Escrow Agent, with a copy to Trustee, a completed Payment Notice and
Disbursement Request.
Escrow Agent's disbursement pursuant to any Payment Notice and Disbursement
Request shall be subject to the satisfaction of the applicable conditions set
forth in Section 3(b). Provided such Payment Notice and Disbursement Request is
not rejected by it as a result of the nonsatisfaction of the conditions set
forth in Section 3(b), Escrow Agent, as soon as reasonably practicable on the
Interest Payment Date, but in no event later than 12:00 Noon (New York City
time) on the Interest Payment Date, shall disburse the funds requested in such
Payment Notice and Disbursement Request by wire or book-entry transfer of
immediately available funds to the account of Trustee for the benefit of the
Beneficiaries or the Company in accordance with Section 3(c), as applicable.
Escrow Agent shall notify the Company and Trustee as soon as reasonably possible
(but not later than two (2) Business Days from the date of receipt of the
Payment Notice and Disbursement Request) if any Payment Notice and Disbursement
Request is rejected and the reason(s) therefor. In the event such rejection is
based upon nonsatisfaction of the condition in Section 3(b)(I), the Company
shall thereupon resubmit the Payment Notice and Disbursement Request with
appropriate changes.
(b) Conditions Precedent to Disbursement. Escrow Agent's payment of
------------------------------------
any disbursement shall be made only if: (I) the Company shall have submitted,
in accordance with the provisions of Section 3(a), a completed Payment Notice
and Disbursement Request to Escrow Agent with blanks appropriately filled in,
and (II) Escrow Agent shall not have received any notice from Trustee that as a
result of an Event of Default the indebtedness represented by the Securities has
been accelerated and has become due and payable in accordance with the terms of
the Indenture (in which event Escrow Agent shall apply all Available Funds as
required by Section 6(b)(iii)).
(c) Company Payments. If the Company makes any interest payment or
----------------
portion of an interest payment on the Securities from a source of funds other
than the Escrow Account ("Company Funds"), the Company may, after payment in
-------------
full of such interest payment, direct Escrow Agent to release to the Company or
at the direction of the Company an amount of funds from the Escrow Account less
than or equal to the amount of the Company Funds so expended. Upon receipt of a
request from the Company (including the certificate described in the following
sentence and with a copy to the Trustee), Escrow Agent will pay over to the
Company the requested amount. Concurrently with any release of funds to the
Company pursuant to this Section 3(c), the Company will deliver to Escrow Agent
a certificate signed by
7
<PAGE>
an authorized signatory of the Company referencing this Section 3(c) and stating
that such release is permitted by this Section 3(c) and has been duly authorized
by all necessary corporate action, and does not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
Certificate of Incorporation of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or result
in the creation or imposition of any Lien on any assets of the Company.
(d) If at any time the principal of and interest on the Escrow
Collateral exceeds 100% of the amount sufficient, in the written opinion of a
nationally recognized firm of independent accountants selected by the Company
and delivered to Escrow Agent and Trustee, to provide for payment in full of the
interest on outstanding Securities on each Interest Payment Date beginning on
and including June 1, 2000, and through and including the Interest Payment Date
on June 1, 2001 (or, in the event one or more interest payments have been made
thereon, an amount sufficient to provide for the payment in full of any and all
interest payments on the Securities then remaining, up to and including the
sixth scheduled interest payment), the Company may direct Escrow Agent and
Trustee to release any such overfunded amount to the Company or to such other
party as the Company may direct. Upon receipt of written instructions executed
by the Company in the form of an Officers' Certificate, Trustee shall pay, or
shall cause the payment, over to the Company or the Company's designee, as the
case may be, any such overfunded amount.
4. Escrow Agent.
------------
(a) Limitation of Escrow Agent's Liability; Responsibilities of
-----------------------------------------------------------
Escrow Agent. Escrow Agent's responsibility and liability under this Agreement
- ------------
shall be limited as follows: (i) Escrow Agent does not represent, warrant or
guaranty to the holders of the Securities from time to time the performance of
the Company; (ii) Escrow Agent shall have no responsibility to the Company or
the holders of the Securities or Trustee from time to time as a consequence of
performance or non-performance by Escrow Agent hereunder, except for any gross
negligence or willful misconduct of Escrow Agent; (iii) the Company shall remain
solely responsible for all aspects of the Company's business and conduct; and
(iv) Escrow Agent is not obligated to supervise, inspect or inform the Company
or any third party of any matter referred to above. In no event shall Escrow
Agent be liable (A) for acting in accordance with or relying upon any
instruction, notice, demand, certificate or document from the Company or any
entity acting on behalf of the Company, (B) for any consequential, punitive or
special damages, (C) for the acts or omissions of its nominees, correspondents,
designees, subagents or subcustodians or (D) for an amount in excess of the
value of the Escrow Account, valued as of the date of deposit.
No implied covenants or obligations shall be inferred from this
Agreement against Escrow Agent, nor shall Escrow Agent be bound by the
provisions of any agreement beyond the specific terms hereof. Specifically and
without limiting the foregoing, Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any funds or the Pledged
Securities, including without limitation any liability for any delay not
resulting from gross negligence or willful misconduct in such investment,
reinvestment or liquidation, or for any loss of principal or income incident to
any such delay.
8
<PAGE>
Escrow Agent shall be entitled to rely upon any judicial or
administrative order or judgment, upon any opinion of counsel or upon any
certification, instruction, notice, or other writing delivered to it by the
Company or Trustee in compliance with the provisions of this Agreement without
being required to determine the authenticity or the correctness of any fact
stated therein or the propriety or validity of service thereof. Escrow Agent
may act in reliance upon any instrument comporting with the provisions of this
Agreement or signature believed by it to be genuine and may assume that any
person purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
At any time Escrow Agent may request in writing an instruction in
writing from the Company (other than any disbursement pursuant to Section
6(b)(iii)), and may at its own option include in such request the course of
action it proposes to take and the date on which it proposes to act, regarding
any matter arising in connection with its duties and obligations hereunder;
provided, however, that Escrow Agent shall state in such request that it
- -------- -------
believes in good faith that such proposed course of action is consistent with
another identified provision of this Agreement. Escrow Agent shall not be
liable to the Company for acting without the Company's consent in accordance
with such a proposal on or after the date specified therein if (i) the specified
date is at least five Business Days after the Company receives Escrow Agent's
request for instructions and its proposed course of action, and (ii) prior to so
acting, Escrow Agent has not received the written instructions requested from
the Company.
At the expense of the Company, Escrow Agent may act pursuant to the
advice of counsel chosen by it with respect to any matter relating to this
Agreement and (subject to clause (ii) of the first paragraph of this Section
4(a)) shall not be liable for any action taken or omitted in good faith in
accordance with such advice.
Escrow Agent shall not be called upon to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to any funds securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this Agreement with
respect to any funds, securities or property deposited hereunder, Escrow Agent
shall be entitled to refuse to comply with any and all claims, demands or
instructions with respect to such funds, securities or property, and Escrow
Agent shall not be or become liable for its failure or refusal to comply with
conflicting claims, demands or instructions. Escrow Agent shall be entitled to
refuse to act until either any conflicting or adverse claims or demands shall
have been finally determined by a court of competent jurisdiction or settled by
agreement between the conflicting claimants as evidenced in a writing,
reasonably satisfactory to Escrow Agent, or Escrow Agent shall have received
security or an indemnity satisfactory to Escrow Agent sufficient to save Escrow
Agent harmless from and against all loss, liability or expense which Escrow
Agent may incur by reason of its acting. Escrow Agent may in addition elect in
its sole option to commence an interpleader action or seek other judicial relief
or orders as Escrow Agent may deem necessary. The reasonable out-of-pocket
costs and expenses (including reasonable attorney's fees and expenses) incurred
in connection with such proceedings shall be paid by, and shall be deemed an
obligation of the Company.
9
<PAGE>
No provision of this Agreement shall require Escrow Agent to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder.
Escrow Agent shall not incur any liability for not performing any act
or fulfilling any duty, obligation or responsibility hereunder by reason of any
occurrence beyond the control of Escrow Agent (including but not limited to any
act or provision of any present or future law or regulation or governmental
authority, any act of God or war, or the unavailability of the Federal Reserve
Bank wire or telex or other wire or communication facility).
5. Indemnity.
---------
The Company shall indemnify, hold harmless and defend Trustee and
Escrow Agent and their respective directors, officers, agents, employees and
controlling persons, from and against any and all claims, actions, obligations,
liabilities and expenses, including reasonable defense costs, reasonable
investigative fees and costs, reasonable legal fees, and claims for damages,
arising from Trustee's or Escrow Agent's performance or non-performance, or in
connection with Escrow Agent's acceptance of appointment as Escrow Agent under
this Agreement, except to the extent that such liability, expense or claim is
attributable to the gross negligence or willful misconduct of any of the
foregoing persons. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, the Company shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all indemnified liabilities incurred by any
of the Persons to be indemnified hereunder. The provisions of this Section 5
shall survive any termination, satisfaction or discharge of this Agreement as
well as the resignation or removal of Escrow Agent.
6. Grant of Security Interest; Instructions to Escrow Agent.
--------------------------------------------------------
(a) The Company hereby irrevocably grants a first priority
security interest in and Lien on, and pledges, assigns, transfers and sets over
to Trustee for the ratable benefit of the Beneficiaries, all of the Company's
right, title and interest in the Escrow Account, and all Financial Assets,
property or other assets now or hereafter placed or deposited in or credited to,
or delivered to Escrow Agent for placement or deposit in or credit to, the
Escrow Account (whether consisting of certificated securities, uncertificated
securities, accounts, chattel paper, documents, Financial Assets, Security
Entitlements, general intangibles, instruments, deposit accounts, bank accounts,
securities accounts or other collateral accounts, money, proceeds or other items
comprising such property, whether now owned by the Company or hereafter acquired
and whether now existing or hereafter coming into existence, or other investment
property), including, without limitation, the Pledged Securities and all funds
held therein by (or otherwise maintained in the name of) Escrow Agent pursuant
to Section 2, and all proceeds thereof (including, without limitation, all
interest, dividends or other earnings, income, collections and distributions
from or in respect of, or from or in respect of investments or reinvestments of
the Escrow Collateral), whether now existing or hereafter arising or acquired,
as well as all rights of the Company under this Agreement (collectively, the
"Escrow Collateral"), in order to secure all obligations and indebtedness of the
-----------------
Company under the Indenture, the
10
<PAGE>
Securities and any other obligation, now or hereafter arising, of every kind and
nature, owed by the Company under the Indenture or the Securities to the Holders
of the Securities or to Trustee or any predecessor Trustee (the "Secured
-------
Obligations"). Escrow Agent hereby acknowledges Trustee's security interest and
- -----------
Lien as set forth above. The Company shall take all actions necessary on its
part to insure the continuance of a first priority security interest in the
Escrow Collateral in favor of Trustee in order to secure all the Secured
Obligations.
(b) The Company and Trustee hereby irrevocably instruct Escrow Agent
to, and Escrow Agent shall:
(i) (A) maintain the Escrow Account for the sole dominion
and control of the Trustee in the name of and on behalf of the Beneficiaries
over the Pledged Securities and funds in the Escrow Account for the benefit of
Trustee to the extent specifically required herein, (B) maintain, or cause its
agent within the State of California to maintain, possession of all Government
Securities pledged hereunder that are physically possessed by Escrow Agent in
order for Trustee to enjoy a continuous perfected first priority security
interest therein under the law of the State of California, (C) maintain the
Escrow Collateral free and clear of all Liens, security interests, safekeeping
or other charges, demands and claims against Escrow Agent of any nature now or
hereafter existing in favor of anyone other than Trustee, (D) be and remain a
Securities Intermediary and act as such with respect to the Escrow Account, the
Escrow Collateral and the Trustee, which is the Entitlement Holder and has (and
which the Escrow Agent shall treat as the Person with) sole dominion and control
(including, without limitation, Security Control) over the Escrow Account and
the Escrow Collateral, (E) maintain and continue to maintain, on behalf of its
customers, (I) at least one customer Securities Account with (or at least one
Securities Intermediary that maintains, on behalf of its customers, customer
Securities Accounts with) the Depository Trust Company and (II) a Securities
Account with at least one Person that is and will be eligible to have, and in
fact has and will continue to have, a Fed Member Securities Account for its
customers, (F) as Securities Intermediary, credit to the Escrow Account any and
all assets and properties required to be transferred, placed, delivered or
created therein or thereto, and (G) maintain the Escrow Account and the Escrow
Collateral in the State of California;
(ii) promptly notify Trustee and the Company if Escrow Agent
receives written notice that any Person other than Escrow Agent has a Lien or
upon any portion of the Escrow Collateral; and
(iii) in addition to disbursing amounts held in escrow
pursuant to any Payment Notice and Disbursement Request given to it pursuant to
Section 3, upon receipt of written notice from Trustee of the acceleration of
the maturity of the Securities in accordance with the Indenture, and direction
from Trustee to disburse all Available Funds to Trustee, as promptly as
practicable, disburse all funds held in the Escrow Account to Trustee and
transfer title to all Government Securities held by Escrow Agent hereunder to
Trustee and notify the Company of such disbursement. In addition, upon an Event
of Default and for so long as such Event of Default continues, Trustee may, and
Escrow Agent shall on behalf of Trustee when instructed by Trustee, exercise in
respect of the Escrow Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and remedies of
a secured party under the Revised UCC or other applicable law, and Trustee may,
and Escrow Agent shall
11
<PAGE>
on behalf of Trustee when instructed by Trustee, also upon obtaining possession
of the Escrow Collateral as set forth herein, without notice to the Company
except as specified below, sell the Escrow Collateral or any part thereof in one
or more parcels at public or private sale, at any exchange, broker's board or at
any of Trustee's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as Trustee may deem commercially reasonable.
The Company acknowledges and agrees that any such private sale may result in
prices and other terms less favorable to the seller than if such sale were a
public sale. The Company agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' notice to the Company of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute commercially reasonable notification. Trustee shall not be
obligated to make any sale regardless of notice of sale having been given.
Trustee may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. At any time during
which this Agreement shall not have been terminated in accordance with its
terms, any Beneficiary or any of their respective affiliates may be the
purchaser of any or all of the Escrow Collateral at any such sale and shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Escrow Collateral sold at such
sale, to use and apply any of the Secured Obligations owed to such Person as a
credit on account of the purchase price of any Escrow Collateral payable by such
Person at such sale. Each purchaser at any such sale shall acquire the property
sold absolutely free from any claim or right on the part of the Company, and the
Company hereby waives, to the fullest extent permitted by law, all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Escrow Agent shall not be obligated to make any sale of Escrow Collateral
regardless of notice of sale having been given. Escrow Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. The Company hereby waives, to the
fullest extent permitted by law, any claims against Escrow Agent arising by
reason of the fact that the price at which any Escrow Collateral may have been
sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Escrow Agent accepts the first offer received
and does not offer such Escrow Collateral to more than one offeree.
The Lien provided for by this Section 6 shall automatically terminate
and cease as to, and shall not extend or apply to, and Trustee and Escrow Agent
shall have no security interest in, any funds disbursed by Escrow Agent whether
for payment of interest or to the Company pursuant to this Agreement to the
extent not inconsistent with the terms hereof. Notwithstanding any other
provision contained in this Agreement, Escrow Agent shall act solely as
Trustee's agent in connection with its duties under this Section 6 or any other
duties herein relating to the Escrow Account or the Pledged Securities or any
funds held thereunder. Escrow Agent shall not have any right to receive
compensation from Trustee and shall have no authority to obligate Trustee or to
compromise or pledge its security interest hereunder. Accordingly, Escrow Agent
is hereby directed to cooperate with Trustee in the exercise of its rights in
the Escrow Collateral provided for herein.
(c) Any money collected by Trustee pursuant to Section 6(b)(iii) shall
be applied as provided in Article 11 of the Indenture. Any surplus of such cash
or cash proceeds held by Trustee and remaining after payment in full of all the
obligations under the Indenture
12
<PAGE>
(the "Escrow Funds") shall be paid over to the Company upon the Company request
------------
or as a court of competent jurisdiction may direct.
(d) The Company hereby waives, to the fullest extent permitted by
applicable law, notice or judicial hearing in connection with Escrow Agent's
taking possession or Escrow Agent's disposition of any of the Escrow Collateral,
including, without limitation, any and all prior notice and hearing for any
prejudgment remedy or remedies and any such right which the Company would
otherwise have under law, and the Company hereby further waives, to the full
extent permitted by applicable law: (i) all damages occasioned by such taking
of possession; (ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of Escrow Agent's
rights hereunder; and (iii) all rights of redemption, appraisal, valuation,
stay, extension or moratorium now or hereafter in force under any applicable
law. To the fullest extent permitted by law, any sale of, or the grant of
options to purchase, or any other realization upon, any Escrow Collateral shall
operate to divest all right, title, interest, claim and demand, either at law or
in equity, of the Company therein and thereto, and shall be a perpetual bar both
at law and in equity against the Company and against any and all Persons
claiming or attempting to claim the Escrow Collateral so sold, optioned or
realized upon, or any part thereof, from, through or under the Company.
(e) Notwithstanding any other provision of this Agreement to the
contrary, if, after giving effect to any sale, transfer or other disposition of
any or all of the Escrow Collateral pursuant hereto and after the application of
the proceeds hereunder, any Secured Obligations remain unpaid or unsatisfied,
the Company shall remain liable for the unpaid and unsatisfied amount of such
Secured Obligations for which the Company is otherwise liable pursuant to the
Indenture or otherwise.
(f) The Company will execute and deliver or cause to be executed and
delivered, or use its best efforts to procure, all stock powers, proxies,
assignments, instruments and other documents, deliver any instruments to Trustee
and take any other actions that are necessary or desirable to perfect, continue
the perfection of, or protect the first priority of Trustee's Lien in and to the
Escrow Collateral, to protect the Escrow Collateral against the rights, claims,
or interests of third Persons or to effect the purposes of this Agreement. The
Company also hereby authorizes Trustee to file any financing or continuation
statements with respect to the Escrow Collateral without the signature of the
Company (to the extent permitted by applicable law). The Company will pay all
reasonable costs incurred in connection with any of the foregoing. It is
understood that Trustee has no duty to determine whether to file or record any
document or instrument relating to Escrow Collateral.
(g) The Company hereby appoints Trustee as its attorney-in-fact with
full power of substitution to do any act which the Company is obligated hereto
to do, and Trustee may, but shall not be obligated to, exercise such rights as
the Company might exercise with respect to the Escrow Collateral and take any
action in the Company's name to protect Trustee's security interest hereunder.
7. Termination. This Agreement and the security interest in the
-----------
Escrow Collateral evidenced by this Agreement and the Power of Attorney
described in Section 10 shall terminate automatically and be of no further force
or effect upon the payment in full in cash of
13
<PAGE>
all interest (including any Additional Amounts) due through the Interest Payment
Date occurring on June 1, 2001 and the Escrow Collateral shall promptly be paid
over and transferred to the Company; provided, however, that the obligations of
-------- -------
the Company under Section 2(c) and Section 5 (and any existing claims
thereunder) shall survive termination of this Agreement and the resignation of
Escrow Agent. At such time, Escrow Agent shall, pursuant to a certificate of an
officer of the Company, reassign and redeliver to the Company all of the Escrow
Collateral hereunder that has not been sold, disposed of, retained or applied by
Escrow Agent in accordance with the terms of this Agreement and the Indenture.
Such reassignment and delivery shall be without warranty by or recourse to
Escrow Agent in its capacity as such, except as to the absence of any liens on
the Escrow Collateral created by or arising through Escrow Agent, and shall be
at the sole expense of the Company.
8. Representations and Warranties.
------------------------------
The Company hereby represents and warrants to the Escrow Agent and the
Trustee that:
(a) The execution, delivery and performance by the Company of
this Agreement are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the Certificates of Incorporation of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or result
in the creation or imposition of any Lien on any assets of the Company, except
for the security interests granted under this Agreement.
(b) The Company is the beneficial owner of the Escrow
Collateral, free and clear of any Lien or claims of any Person (except for the
Lien granted under this Agreement). No financing statement covering the Escrow
Collateral is on file in any public office other than the financing statements,
if any, filed pursuant to this Agreement.
(c) This Agreement has been duly executed and delivered by the
Company and assuming the due authorization and valid execution and delivery of
this Agreement by Trustee and Escrow Agent and enforceability of this Agreement
against Escrow Agent and Trustee in accordance with its terms, constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally, (ii) general
principles of equity and commercial reasonableness, (iii) with respect to the
exculpation provisions and rights to indemnification hereunder, U.S. federal and
state securities laws and public policy considerations and (iv) the waiver of
rights and defenses contained in Sections 15(j) and 15(o).
(d) Upon the delivery to Escrow Agent of the certificates or
instruments, if any, representing the Escrow Collateral and the filing of
financing statements, if any, required by the Revised UCC, and the transfer and
pledge to Escrow Agent of the Escrow Collateral, the acquisition by Escrow Agent
of a Security Entitlement thereto in accordance with Section 6 and continuous
possession of the Escrow Collateral by the Escrow Agent, the pledge of
14
<PAGE>
the Escrow Collateral pursuant to this Agreement creates a valid and perfected
first priority Lien in and to the Escrow Collateral, securing the payment of the
Secured Obligations for the benefit of the Beneficiaries, enforceable as such
against all creditors of the Company and any Persons purporting to purchase any
of the Escrow Collateral from the Company other than as permitted by the
Indenture.
(e) No consent of any other Person and no consent, authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required either (i) for the pledge by the
Company of the Escrow Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by the Company (except for
any filings necessary to perfect Liens on the Escrow Collateral) or (ii) for the
exercise by Trustee of the rights provided for in this Agreement or the remedies
in respect of the Escrow Collateral pursuant to this Agreement, except, in each
case, as may be required in connection with such disposition by laws affecting
the offering and sale of securities.
(f) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of the
Company, threatened by or against the Company with respect to this Agreement or
any of the transactions contemplated hereby.
(g) The pledge of the Escrow Collateral pursuant to this Agreement is
not prohibited by any applicable law or governmental regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations T,
U and X of the Board of Governors of the Federal Reserve System).
(h) The scheduled payments of principal and interest on the Pledged
Securities will be sufficient to provide for the payment in full of the interest
due on the Securities on the first three scheduled Interest Payment Dates
commencing June 1, 2000 and ending June 1, 2001.
9. Covenants.
---------
The Company covenants and agrees with the Beneficiaries from and after
the date of this Agreement until the earlier of payment in full in cash of (A)
all interest due through the Interest Payment Date occurring on June 1, 2001 or
(B) all obligations due and owing under the Indenture and the Securities in the
event such obligations become due and payable prior to the payment of the first
three scheduled interest payments on the Securities:
(a) The Company agrees that it will not (i) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the Escrow
Collateral or (ii) create or permit to exist any Lien upon or with respect to
any of the Escrow Collateral (except for the Lien created pursuant to this
Agreement) and at all times will be the sole beneficial owner of the Escrow
Collateral.
(b) The Company agrees that it will not (i) enter into any
agreement or understanding that purports to or may restrict or inhibit Trustee's
rights or remedies hereunder, including, without limitation, Trustee's right to
sell or otherwise dispose of the Escrow Collateral
15
<PAGE>
or (ii) fail to pay or discharge any tax, assessment or levy of any nature not
later than five days prior to the date of any proposed sale under any judgment,
writ or warrant of attachment with regard to the Escrow Collateral.
10. Power of Attorney.
-----------------
In addition to all of the powers granted to Trustee pursuant to
Article 7 of the Indenture, the Company hereby appoints and constitutes Trustee
as the Company's attorney-in-fact to exercise to the fullest extent permitted by
law all of the following powers upon and at any time after the occurrence and
during the continuance of an Event of Default: (i) collection of proceeds of
any Escrow Collateral; (ii) conveyance of any item of Escrow Collateral to any
purchaser thereof; (iii) giving of any notices or recording of any Liens under
Section 6; (iv) making of any payments or taking any acts under Section 11; and
(v) paying or discharging taxes or Liens levied or placed upon the Escrow
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by Trustee in its sole discretion, and such
payments made by Trustee to become the obligations of the Company to Trustee,
due and payable immediately upon demand. Trustee's authority hereunder shall
include, without limitation, the authority to endorse and negotiate any checks
or instruments representing proceeds of Escrow Collateral in the name of the
Company, execute and give receipt for any certificate of ownership or any
document constituting Escrow Collateral, transfer title to any item of Escrow
Collateral, sign the Company's name on all financing statements (to the extent
permitted by applicable law) or any other documents deemed necessary or
appropriate by Trustee to preserve, protect or perfect this security interest in
the Escrow Collateral and to file the same, prepare, file and sign the Company's
name on any notice of Lien, to take any other actions arising from or incident
to the powers granted to Trustee in this Agreement; provided that this Section
--------
10 does not create any obligation on the part of the Trustee to perform any of
the acts authorized hereby. This power of attorney is coupled with an interest
and is irrevocable by the Company.
11. Trustee May Perform.
-------------------
If the Company fails to perform any agreement required to be performed
by it herein, Trustee may itself perform, but shall not be obligated to perform,
or cause performance of, such agreement, and the reasonable expenses of Trustee
incurred in connection therewith shall be payable by the Company under Section
13 hereof.
12. No Assumption of Duties; Reasonable Care.
----------------------------------------
The rights and powers granted to Trustee hereunder are being granted
in order to preserve and protect Trustee's and the Holders' of Securities Lien
in and to the Escrow Collateral granted hereby and shall not be interpreted to,
and shall not, impose any duties on Trustee in connection therewith other than
those imposed under applicable law. Except as provided by applicable law or by
the Indenture, Trustee shall be deemed to have exercised reasonable care in the
custody and preservation of the Escrow Collateral in its possession if the
Escrow Collateral is accorded treatment substantially equal to that which
Trustee accords similar property in similar situations, it being understood that
Trustee shall not have any responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities,
16
<PAGE>
tenders or other matters relative to any Escrow Collateral, whether or not
Trustee has or is deemed to have knowledge of such matters or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Escrow Collateral; provided, however, that nothing contained in this Agreement
-------- -------
shall relieve Trustee of any responsibilities as a Securities Intermediary under
applicable law.
13. Expenses.
--------
The Company will upon demand pay to Trustee the amount of all
reasonable out-of-pocket expenses, including, without limitation, the reasonable
fees, expenses and disbursements of its counsel, experts and agents retained by
Trustee that Trustee may actually incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Escrow
Collateral, (iii) the exercise or enforcement of any of the rights of the
Beneficiaries hereunder, or (iv) the failure by the Company to perform or
observe any of the provisions hereof.
14. Security Interest Absolute.
--------------------------
All rights of the Beneficiaries and security interests hereunder, and
all obligations of the Company hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other amendment
or waiver of or any consent to any departure from the Indenture;
(c) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar event of the Company or any of
its Subsidiaries;
(d) any exercise or non-exercise, or any waiver of any right,
remedy, power or privilege under or in respect of this Agreement or the
Indenture except as specifically set forth in a waiver granted pursuant to the
provisions of Section 15(a) hereof;
(e) any exchange, surrender, release or non-perfection of any
Liens on any other Escrow Collateral for all or any of the Secured Obligations;
or
(f) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Company in respect of the Secured Obligations or of this
Agreement.
15. Miscellaneous.
-------------
(a) Waiver. Any party hereto may specifically waive any breach
------
of this Agreement by any other party, but no such waiver shall be deemed to have
been given unless
17
<PAGE>
such waiver is in writing, signed by the waiving party and specifically
designating the breach waived, nor shall any such waiver constitute a continuing
waiver of similar or other breaches.
(b) Invalidity. If for any reason whatsoever any one or more of
----------
the provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
(c) Assignment. This Agreement is personal to the parties
----------
hereto, and the rights and duties of any party hereunder shall not be assignable
except with the prior written consent of the other parties. Notwithstanding the
foregoing, this Agreement shall inure to and be binding upon the parties and
their successors and permitted assigns.
(d) Benefit. The parties hereto and their successors and
-------
permitted assigns, but no others, shall be bound hereby and entitled to the
benefits hereof; provided, however, that the Beneficiaries (including holders of
-------- -------
the Securities) and their assigns shall be entitled to the benefits hereof and
to enforce this Agreement.
(e) Time. Time is of the essence with respect to each
----
provision of this Agreement.
(f) Entire Agreement; Amendments. This Agreement and the
----------------------------
Indenture contain the entire agreement among the parties with respect to the
subject matter hereof and supersede any and all prior agreements, understandings
and commitments, whether oral or written. Any amendment or waiver of any
provision of this Agreement and any consent to any departure by the Company from
any provision of this Agreement shall be effective only if made or duly given in
compliance with all of the terms and provisions of the Indenture, and none of
the Company, Escrow Agent, Trustee or any Holder of Securities shall be deemed,
by any act, delay, indulgence, omission or otherwise, to have waived any right
or remedy hereunder or to have acquiesced in any Default or Event of Default or
in any breach of any of the terms and conditions hereof. Failure of the Company,
Escrow Agent, Trustee or any Holder of Securities to exercise, or delay in
exercising, any right, power or privilege hereunder shall not operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Company, Escrow Agent, Trustee or any Holder of Securities of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy that the Company, Escrow Agent, Trustee or such Holder of
Securities would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
(g) Notices. All notices and other communications required or
-------
permitted to be given or made under this Agreement shall be in writing and shall
be deemed to have been duly given and received when actually received,
including: (a) on the day of hand
18
<PAGE>
delivery; (b) three Business Days following the day sent, when sent by United
States certified mail, postage and certification fee prepaid, return receipt
requested, addressed as set forth below; (c) when transmitted by telecopy with
verbal confirmation of receipt by the telecopy operator to the telecopy number
set forth below; or (d) one Business Day following the day timely delivered to a
next-day air courier addressed as set forth below:
To Escrow Agent:
State Street Bank and Trust Company
of California, N.A.
633 West 5th Street, 12th Floor
Los Angeles, CA 90071
Attention: Corporate Trust Administration (Equinix, Inc. 1999 Escrow)
Telecopy: (213) 362-7357
Telephone: (213) 362-7369
To Trustee:
State Street Bank and Trust Company
of California, N.A.
633 West 5th Street, 12th Floor
Los Angeles, CA 90071
Attention: Corporate Trust Administration (Equinix, Inc. 1999 Escrow)
Telecopy: (213) 362-7357
Telephone: (213) 362-7369
To the Company:
Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
Attention: Chief Executive Officer
Telecopy: (650) 298-0427
Telephone: (650) 298-0400
With a copy to:
Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, CA 94025
Attention: Scott C. Dettmer
Telecopy: (650) 321-2800
Telephone: (650) 321-2400
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section.
Notwithstanding the foregoing, any notice addressed to the Escrow
Agent or the Trustee shall be effective only when an officer in its corporate
trust administration department
19
<PAGE>
has received it. If any notice or other document is required to be delivered to
Escrow Agent or the Trustee and any other person, the Escrow Agent or Trustee
may assume that such notice or other document was received on the date on which
it was received by the Escrow Agent or the Trustee, but the Escrow Agent or the
Trustee need not inquire into or verify such receipt.
(h) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) Captions. Captions in this Agreement are for convenience only
--------
and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
(j) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
----------------------------------------------------------------
WAIVER OF DAMAGES.
- -----------------
(i) THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, THE
CREATION, PERFECTION, EFFECTS OF PERFECTION AND PRIORITY OF THE LIENS AND
SECURITY INTERESTS GRANTED HEREIN) SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF CALIFORNIA, AND ANY DISPUTE ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
COMPANY, ESCROW AGENT, TRUSTEE AND THE HOLDERS OF SECURITIES IN CONNECTION WITH
THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA,
EXCLUDING (TO THE GREATEST EXTENT PERMITTED BY LAW) ANY RULE OF LAW THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA. THE "SECURITIES INTERMEDIARY'S JURISDICTION" OF THE ESCROW AGENT IS
AND WILL CONTINUE TO BE THE STATE OF CALIFORNIA.
(ii) THE COMPANY AGREES THAT TRUSTEE SHALL, IN ITS CAPACITY AS
TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SECURITIES, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE COMPANY
OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH
(AND HAVING PERSONAL OR IN REM JURISIDICTION OVER THE COMPANY OR ITS PROPERTY,
AS THE CASE MAY BE) TO ENABLE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF TRUSTEE. THE COMPANY AGREES
THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS IN ANY
PROCEEDING BROUGHT BY TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE COMPANY WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH TRUSTEE HAS
COMMENCED A PROCEEDING DESCRIBED IN
20
<PAGE>
THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) THE COMPANY, ESCROW AGENT AND TRUSTEE EACH WAIVE ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NONE OF ESCROW AGENT, TRUSTEE OR
ANY HOLDER OF SECURITIES SHALL HAVE ANY LIABILITY TO THE COMPANY (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE COMPANY IN
CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS
CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY
A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON ESCROW AGENT,
TRUSTEE OR SUCH HOLDER OF SECURITIES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE
THE RESULT OF ACTS OR OMISSIONS ON THE PART OF ESCROW AGENT, TRUSTEE OR SUCH
HOLDER OF SECURITIES, AS THE CASE MAY BE, CONSTITUTING GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.
(v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY WAIVES ALL RIGHTS OF NOTICE
AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY HOLDER OF
SECURITIES OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO
REPOSSESS THE ESCROW COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR
LEVY UPON THE ESCROW COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY WAIVES THE POSTING OF ANY
BOND OTHERWISE REQUIRED OF ESCROW AGENT, TRUSTEE OR ANY HOLDER OF SECURITIES IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON THE ESCROW COLLATERAL OR OTHER SECURITY FOR THE
SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF ESCROW AGENT, TRUSTEE OR ANY HOLDER OF SECURITIES, OR TO ENFORCE BY
SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION, THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE
COMPANY ON THE ONE HAND AND ESCROW AGENT, TRUSTEE AND/OR THE HOLDERS OF
SECURITIES ON THE OTHER HAND.
(k) No Adverse Interpretation of Other Agreements. This Agreement
---------------------------------------------
may not be used to interpret another pledge, security or debt agreement of the
Company or any
21
<PAGE>
Subsidiary thereof. No such pledge, security or debt agreement may be used to
interpret this Agreement.
(l) Benefits of Agreement. Nothing in this Agreement, express or
---------------------
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Holders of Securities (in accordance with the
terms of the Indenture), any benefit or any legal or equitable right, remedy or
claim under this Agreement.
(m) Interpretation of Agreement. All terms not defined herein or
---------------------------
in the Indenture shall have the meaning set forth in the Revised UCC, except
where the context otherwise requires. To the extent a term or provision of this
Agreement conflicts with the Indenture, the Indenture shall control with respect
to the subject matter of such term or provision. Acceptance of or acquiescence
in a course of performance rendered under this Agreement shall not be relevant
to determine the meaning of this Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
(n) Survival of Provisions. All representations, warranties and
----------------------
covenants of the Company contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the termination of
this Agreement.
(o) Waivers. The Company waives presentment and demand for
-------
payment of any of the Secured Obligations, protest and notice of dishonor or
default with respect to any of the Secured Obligations, and all other notices to
which the Company might otherwise be entitled, except as otherwise expressly
provided herein or in the Indenture.
[Signature Page Follows]
22
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Escrow Agreement as of the day first above written.
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., as
Escrow Agent and Securities Intermediary
By: /s/ Scott C. Emmons
---------------------------------------
Name: Scott C. Emmons
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., as
Trustee
By: /s/ Scott C. Emmons
---------------------------------------
Name: Scott C. Emmons
Title: Vice President
EQUINIX, INC.
By: /s/ Jay S. Adelson
---------------------------------------
Name: Jay S. Adelson
Title: Secretary
<PAGE>
EXHIBIT A
---------
Form of Payment Notice and Disbursement Request
[Letterhead of Equinix, Inc.]
[Date]
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., as Escrow Agent
633 West 5th Street, 12th Floor
Los Angeles, CA 90071
Attention: Corporate Trust Administration (Equinix, Inc. 1999 Escrow)
Re: Disbursement Request No. ____
[indicate whether revised]
Ladies and Gentlemen:
We refer to the Escrow Agreement, dated as of December 1, 1999 (the
"Escrow Agreement") among you (the "Escrow Agent"), State Street Bank and Trust
Company of California, N.A., as Trustee, and Equinix, Inc., a Delaware
corporation (the "Company"). Capitalized terms used herein shall have the
meaning given in the Escrow Agreement.
This letter constitutes a Payment Notice and Disbursement Request
under the Escrow Agreement.
[choose one of the following, as applicable]
[The undersigned hereby notifies you that a scheduled interest payment
in the amount of $__________ is due and payable on ____________, ____ and
requests a disbursement of funds contained in the Escrow Account in such amount
to Trustee.]
[The undersigned hereby notifies you and certifies to you that the
release of $________ funds in the Escrow Account to the Company (to an account
designated by the Company in writing), is currently permitted to be released in
accordance with Section 3(c) of the Escrow Agreement and such amount shall be so
remitted to the Company.]
[The undersigned hereby notifies you that the Escrow Agreement has
been terminated in accordance with Section 7 thereof and requests that you
release the Escrow Account to the Company.]
[The undersigned hereby notifies you that there has been an
acceleration of the maturity of the Securities under the Indenture.
Accordingly, you are hereby requested to
<PAGE>
disburse all remaining funds contained in the Escrow Account to Trustee such
that the balance in the Escrow Account is reduced to zero.]
In connection with the requested disbursement, the undersigned hereby
notifies you that:
(i) [The Securities have not, as a result of an Event of Default
(as defined in the Indenture), been accelerated and become due and
payable.]
(ii) All prior disbursements from the Escrow Account have been
Applied.
(iii) [add wire instructions]
Escrow Agent is entitled to rely on the foregoing in disbursing funds
relating to this Payment Notice and Disbursement Request.
EQUINIX, INC.
By: _________________________________
Name:________________________________
Title:_______________________________
<PAGE>
Schedule A
----------
Transaction Summary:
Trade Date: 11/30/99
Settlement Date: 12/1/99
State Street Bank (Escrow Agent) purchased the Treasury Strips noted below on
behalf of The Company as specified in the Escrow Agreement between the Escrow
Agent and The Company
Coupon Collateral
Face Amount Payment Date Maturity Cost CUSIP
=============================================================================
1 $13,000,000 1-Jun-00 15-May-00 $12,699,440.00 912833FL9
2 $13,000,000 1-Dec-00 15-Nov-00 $12,342,850.00 912833FM7
3 $13,000,000 1-Jun-01 15-May-01 $11,969,230.00 912833FN5
=============================================================================
$39,000,000 $37,011,520.00
<PAGE>
EXHIBIT 4.8
================================================================================
Equinix, Inc.
200,000 Units Consisting of
$200,000,000 of
13% Senior Notes due 2007
and
Warrants to Purchase 2,251,000
Shares of Common Stock
PURCHASE AGREEMENT
------------------
Dated as of November 24, 1999
================================================================================
<PAGE>
Equinix, Inc.
200,000 Units Consisting of
$200,000,000 of
13% Senior Notes due 2007
and
Warrants to Purchase 2,251,000
Shares of Common Stock
PURCHASE AGREEMENT
November 24, 1999
Salomon Smith Barney Inc.
Morgan Stanley & Co. Incorporated
Goldman, Sachs & Co.
c/o Salomon Smith Barney Inc.
as Representative of the Initial Purchasers
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Equinix, Inc., a corporation organized under the laws of the State of
Delaware (the "Company"), proposes to issue and sell to the several parties
named on Schedule I hereto (the "Initial Purchasers"), for whom Salomon Smith
Barney Inc. (the "Representative") is acting as representative, 200,000,000
units (the "Units"), consisting of $200,000,000 aggregate principal amount of
the Company's 13% Senior Notes due 2007 (the "Notes") and an aggregate of
200,000 Warrants (each, a "Warrant") each entitling the holder to purchase
11.255 shares of the Company's Common Stock (the "Common Shares"). Each Unit
will consist of $1,000 principal amount of Notes and one Warrant. The Units,
Notes and Warrants are hereinafter referred to collectively as the "Securities."
The Notes are to be issued under an indenture (the "Indenture") dated
as of December 1, 1999 between the Company and State Street Bank and Trust
Company, as trustee (the "Trustee"). The Warrants are to be issued under a
warrant agreement (the "Warrant Agreement") dated as of December 1, 1999 between
the Company and State Street Bank and Trust Company, as warrant agent (the
"Warrant Agent"). State Street Bank and Trust Company will serve as the unit
agent (the "Unit Agent") for the Units.
On the Closing Date (as defined herein) and simultaneously with
delivery and payment pursuant to Section 3 hereof, the Company will place
approximately $36,837,000 (representing that portion of the proceeds from the
sale of the Securities by the Company to the Initial Purchasers that will be
sufficient to pay when due the first 3 interest payments on the Notes) (the
"Escrow Amount") into a collateral account and will pledge such account to the
Trustee, for the benefit of the holders of the Notes and the Trustee (in its
capacity as such under the Indenture) pursuant to the Escrow Agreement, dated as
of December 1, 1999 (the "Escrow Agreement") among the Company, State Street
Bank and Trust Company, as escrow agent (the
<PAGE>
"Escrow Agent"), and the Trustee, pending release in accordance with the terms
of the Escrow Agreement.
The Initial Purchasers and the direct and indirect transferees of the
Notes will be entitled to the benefits of a Registration Rights Agreement (the
"Registration Rights Agreement") dated as of December 1, 1999, between the
Company and the Initial Purchasers, pursuant to which the Company will agree to
register the Notes under the Act subject to the terms and conditions therein
specified. The Initial Purchasers and the direct and indirect transferees of
the Warrants will be entitled to the benefits of a Common Stock Registration
Rights Agreement (the "Common Stock Registration Rights Agreement"), dated as of
December 1, 1999, by and among the Company, the Investors (as defined therein)
and the Initial Purchasers, pursuant to which holders of the Warrants will have
(i) certain rights to Demand Registrations (as defined therein) or Piggy-Back
Registrations (as defined therein), (ii) a Tag-Along Right (as defined therein)
and (iii) a requirement to sell Warrants or other Registrable Securities (as
defined therein), in each case, in accordance with the provisions of the Common
Stock Registration Rights Agreement.
The sale of the Securities to the Initial Purchasers will be made
without registration of the Securities under the Act in reliance upon exemptions
from the registration requirements of the Act. In connection with the sale of
the Securities, the Company has prepared a preliminary offering memorandum,
dated November 19, 1999 (including any and all exhibits thereto and any
information incorporated by reference therein, the "Preliminary Memorandum"),
and a final offering memorandum, dated November 24, 1999 (including any and all
exhibits thereto and 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 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.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities only on the terms and in the manner set forth in the
Final Memorandum and herein as soon as the Initial Purchasers deem advisable
after this Agreement has been executed and delivered, to persons in the United
States whom the Initial Purchasers reasonably believe to be qualified
institutional buyers ("QIBs") as defined in Rule 144A under the Act, as such
rule may be amended from time to time ("Rule 144A"), in transactions under Rule
144A, and outside the United States to certain persons in reliance on Regulation
S under the Act.
The Indenture, the Warrant Agreement, the Securities, the Exchange
Securities (as defined in the Registration Rights Agreement), the Registration
Rights Agreement, the Common Stock Registration Rights Agreement and the Escrow
Agreement are referred to collectively as the "Securities Documents" and this
Agreement and the Securities Documents are collectively referred to as the
"Operative Documents." The term "you" as used herein shall mean the
Representative and the term "Initial Purchasers" as used herein shall mean the
Initial Purchasers listed on Schedule I. Certain terms used herein are defined
in Section 17 hereof and certain other terms used herein and not otherwise
defined have the meanings ascribed to such terms in the Final Memorandum.
2
<PAGE>
1. Representations and Warranties. The Company represents and
------------------------------
warrants to and agrees with each Initial Purchaser that:
(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 (as
supplemented or amended) does not, 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) Neither the Company nor any of its affiliates (as defined in
Rule 501(b) of Regulation D under the Act, an "Affiliate") has, directly or
indirectly, made offers or sales of any security, or solicited offers to buy any
security, which is or will be integrated with the sale of the Securities in a
manner that would require the registration of the Securities under the Act.
(c) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Act.
(d) Neither the Company nor any of its Affiliates or any person
(other than the Initial Purchasers, as to which the Company makes no
representation) acting on the Company's behalf has engaged, in connection with
the offering of the Securities, (A) in any form of general solicitation or
general advertising within the meaning of Regulation D under the Act, (B) in any
directed selling efforts within the meaning of Rule 902 under the Act in the
United States in connection with the Securities being offered and sold pursuant
to Regulation S under the Act, (C) in any manner involving a public offering
within the meaning of Section 4(2) of the 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 "blue sky" laws.
(e) 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 QIBs 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 Act or to qualify the Indenture under the Trust Indenture Act.
(f) The Company is not, and after giving effect to the offering
and sale of the Securities and the application of the proceeds therefrom as
described in the Final
3
<PAGE>
Memorandum will not be, an "investment company" or a company "controlled" by an
"investment company" as such terms are defined in the Investment Company Act.
(g) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any of the Securities (except as
contemplated by this Agreement).
(h) The Company has not taken, directly or indirectly, any
action designed to cause or to result in, or that has constituted or that might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities.
(i) The information provided by the Company pursuant to Section
5(g) hereof will not, at the date thereof, 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.
(j) The only subsidiaries (direct and indirect) of the Company
on the Closing Date will be those listed on Schedule II hereto (each of such
-----------
subsidiaries are referred to herein as the "Subsidiaries"). Each of the Company
and the Subsidiaries has been duly incorporated, is validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
with full requisite corporate or other power and authority to own, lease and
operate its properties and conduct its business as described in the Final
Memorandum, and is duly qualified to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction which requires such
qualification, except where the failure to be so qualified could not reasonably
be expected to have a material adverse effect on (i) the business, condition
(financial or otherwise), assets, earnings, results of operations, business
affairs or business prospects of the Company or (ii) the ability of the Company
to duly and punctually perform any of its obligations under the Operative
Documents or to consummate the transactions contemplated hereby and thereby (a
"Material Adverse Effect"); and, to the knowledge of the Company, no revocation
or limitation or variation of any such authorization or approval, is threatened.
(k) All the outstanding shares of capital stock of the Company
and the Subsidiaries have been duly and validly authorized and issued and are
fully paid and nonassessable, and were not issued in violation of preemptive or
similar rights, and all outstanding shares of capital stock of the Subsidiaries
are owned by the Company free and clear of any security interests, claims,
liens, encumbrances or restrictions on transferability (other than those imposed
by the Act, state securities or "Blue Sky" laws and other similar laws of the
relevant jurisdiction of incorporation or organization) or voting. Except as
pursuant to the Common Stock Registration Rights Agreement and except as
otherwise set forth in the Final Memorandum, no options, warrants or other
rights to purchase, agreements or other obligations to issue, or other rights to
convert any obligation into, or exchange any securities for, shares of capital
stock or equity interests of the Company or any Subsidiary are outstanding and
no holder of securities of the Company or any Subsidiary is entitled to have
such securities registered under the Act.
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(l) As of the Closing Date, the Company will have the
authorized, issued and outstanding capitalization set forth in the Final
Memorandum under the heading "Capitalization."
(m) The Company has the requisite corporate power and authority
to execute, deliver and perform its obligations under the Units. The Units have
been duly and validly authorized by the Company and, when executed and delivered
by the Company (assuming the due countersignature, execution and delivery by the
Unit Agent), will constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
that the enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws (and
judicially developed doctrines in the area such as substantive consolidation or
equitable subordination) now or hereafter in effect relating to or affecting
creditors' rights generally, or (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding at law or
in equity) (collectively, the "Enforceability Limitations").
(n) The Company has the requisite corporate power and authority
to execute, deliver and perform its obligations under the Notes and the Exchange
Securities. The Notes and the Exchange Securities have been duly and validly
authorized by the Company for issuance. The Notes, when executed, authenticated
and issued in accordance with the provisions of the Indenture, and delivered to
and paid for by the Initial Purchasers in accordance with the terms hereof, will
have been duly executed, issued and delivered and (assuming the due
authentication by the Trustee) will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, and the Exchange
Securities, when executed, authenticated, issued and delivered in the manner
contemplated by the Registration Rights Agreement and the Indenture, will have
been duly executed, issued and delivered and (assuming the due authentication by
the Trustee) will constitute valid and legally binding obligations of the
Company, entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except, in each case, that the
enforcement thereof may be limited by the Enforceability Limitations. The Notes
are in the form contemplated by the Indenture.
(o) The Company has the requisite corporate power and authority
to execute, deliver and perform its obligations under the Indenture. The
Indenture has been duly and validly authorized by the Company and, when executed
and delivered by the Company (assuming the due authorization, execution and
delivery by the Trustee), will constitute a valid and legally binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except that the enforcement thereof may be limited by the Enforceability
Limitations.
(p) The Company has the requisite corporate power and authority
to execute, deliver and perform its obligations under the Warrant Agreement. The
Warrant Agreement has been duly and validly authorized by the Company and, when
executed and delivered by the Company (assuming the due authorization, execution
and delivery by the Trustee), will constitute a valid and legally binding
agreement of the Company, enforceable
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<PAGE>
against the Company in accordance with its terms, except that the enforcement
thereof may be limited by the Enforceability Limitations.
(q) The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Warrants. The Warrants
have been duly and validly authorized by the Company and, when executed and
delivered by the Company (assuming the due countersignature, execution and
delivery by the Warrant Agent), will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except that the enforcement thereof may be limited by the
Enforceability Limitations.
(r) The Common Shares have been duly reserved for issuance by the
Company for issuance upon exercise of the Warrants in sufficient number to cover
the exercise of all of the Warrants, and the issuance of the Common Shares upon
exercise of the Warrants has been duly authorized, and the Common Shares, when
delivered upon exercise of and in accordance with the terms of the Warrant
Agreement, will be validly issued, fully paid and non-assessable, and except as
set forth in the Final Memorandum no holder of any securities of the Company has
any preemptive or other similar rights to subscribe for or to purchase any
common stock of the Company arising by operation of the General Corporation Law
of the State of Delaware, under the Certificate of Incorporation or bylaws of
the Company or pursuant to the terms of any agreement or instrument to which the
Company is a party.
(s) The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly and validly authorized, executed and delivered by the
Company and (assuming the due authorization, execution and delivery by the
Initial Purchasers) constitutes a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
that the enforcement thereof may be limited by the Enforceability Limitations
and except as rights to indemnification and contribution may be limited under
applicable law.
(t) The Company has the requisite corporate or other power and
authority to execute, deliver and perform its obligations under the Common Stock
Registration Rights Agreement. The Common Stock Registration Rights Agreement
has been duly and validly authorized by the Company and, when executed and
delivered by the Company (assuming the due authorization, execution and delivery
by the Initial Purchasers and the Investors), will constitute a valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be limited by
the Enforceability Limitations and except as rights to indemnification and
contribution may be limited under applicable law.
(u) The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Registration Rights
Agreement. The Registration Rights Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the Company
(assuming the due authorization, execution and delivery by the Initial
Purchasers), will constitute a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
that the enforcement thereof may be limited by the Enforceability Limitations.
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<PAGE>
(v) The Company has the requisite corporate power and authority
to execute, deliver and perform its obligations under the Escrow Agreement. The
Escrow Agreement has been duly and validly authorized by the Company and, when
executed and delivered by the Company (assuming the due authorization, execution
and delivery by the Escrow Agent and the Trustee), will constitute a valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be limited by
the Enforceability Limitations.
(w) The Securities Documents conform in all material respects to
the descriptions thereof in the Final Memorandum.
(x) No consent, waiver, approval, authorization, license,
qualification, registration, filing with or order of any court or governmental
agency or body (whether domestic or foreign) is required in connection with the
issuance and sale of the Securities or the Exchange Securities or the
performance by the Company of its obligations under the Operative Documents, or
for the consummation of any of the transactions contemplated hereby or thereby,
except (i) as has already been acquired or as of the Closing Date will be
acquired or (ii) such as may be required (A) in connection with the registration
under the Act of the Exchange Securities or the Warrants, pursuant to the
Registration Rights Agreement or the Common Stock Registration Rights Agreement,
as applicable, (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
Securities pursuant to the Registration Rights Agreement or the Common Stock
Registration Rights Agreement, as applicable; all consents, waivers, approvals,
authorizations, licenses, qualifications, registrations, filings or orders which
are required to be obtained by the Closing Date will be obtained by such date
and will be in full force and effect on the Closing Date.
(y) The execution, delivery or performance of the Operative
Documents by the Company will not contravene (i) the certificate of
incorporation or bylaws of the Company or any of the Subsidiaries, (ii) the
terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement, note or other agreement, obligation, condition,
covenant, license, permit or instrument to which the Company or any of the
Subsidiaries is a party or bound or to which their property is subject or (iii)
any statute, law, rule, regulation, judgment, order or decree applicable to the
Company or any of the Subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority (whether foreign or
domestic) having jurisdiction over the Company or any of the Subsidiaries or any
of their properties.
(z) At the time of deposit with the Escrow Agent of the Escrow
Amount, no Lien (as such term is defined in the Indenture) exists upon such
Collateral (as such term is defined in the Escrow Agreement) and no right or
option to acquire the same exists in favor of any other person or entity, except
for the pledge and security interest in favor of the Trustee for the benefit of
the holders of the Securities and the Trustee (in its capacity as such under the
Indenture) to be created or provided for in the Escrow Agreement, which pledge
and security interest shall constitute a first priority perfected pledge and
security interest in and to all of the Collateral.
7
<PAGE>
(aa) The consolidated historical financial statements and
schedules of the Company and its consolidated subsidiaries included in the Final
Memorandum present fairly in all material respects the financial condition,
results of operations and cash flows of the Company and its consolidated
subsidiaries as of the dates and for the periods indicated, comply as to form
with the applicable accounting requirements of the Act and have been prepared in
conformity with generally accepted accounting principles in the United States
("GAAP"), applied on a consistent basis throughout the periods involved (except
as otherwise noted therein); the selected financial data set forth under the
captions "Selected Consolidated Financial Data" and "Capitalization" in the
Final Memorandum fairly present, on the basis stated in the Final Memorandum,
the information included therein. KPMG LLP, which has examined such financial
statements as set forth in the report included in the Final Memorandum, is an
independent public accounting firm with respect to the Company and the
Subsidiaries within the meaning of Regulation S-X under the Act.
(bb) Neither the Company nor any of the Subsidiaries has
sustained since the date of the latest audited financial statements included in
the Final Memorandum any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Final Memorandum; and, since
the respective dates as of which information is given in the Final Memorandum,
there has not been any the material adverse change, or any development involving
a prospective material adverse change, in or affecting the business, condition
(financial or otherwise), assets, earnings, results of operations, business
affairs or business prospects of the Company.
(cc) No legal action, suit or proceeding, inquiry or
investigation by or before any court or governmental agency, authority or body
or any arbitrator (whether domestic or foreign) involving the Company or any of
the Subsidiaries or its or their property is pending or, to the knowledge of the
Company, threatened against the Company or any of the Subsidiaries that (i)
could reasonably be expected to have a material adverse effect on the
performance of the Operative Documents, or the consummation of any of the
transactions contemplated hereby or thereby or (ii) could reasonably be expected
to have a Material Adverse Effect.
(dd) Neither the Company nor any of the Subsidiaries is in
violation or default of (i) any provision of its articles of incorporation or
bylaws; (ii) the terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement, note or other agreement, obligation,
condition, covenant, license, permit or instrument to which it is a party or
bound or to which its property is subject; or (iii) any statute, law, rule,
regulation, judgment, order or decree (whether foreign or domestic) applicable
to the Company or any of the Subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority (whether
domestic or foreign) having jurisdiction over the Company or any of the
Subsidiaries or any of their properties.
(ee) Each of the Company and the Subsidiaries has obtained all
consents, approvals, orders, licenses, certificates, permits and other
authorizations (collectively, the "Licenses") issued by the appropriate federal,
state or foreign national governmental or regulatory authorities necessary to
own, lease, license and use its properties and assets to conduct its businesses
in the manner described in the Final Memorandum, except to the extent that the
8
<PAGE>
failure to so obtain would not have a Material Adverse Effect. None of the
Company or the Subsidiaries has received any notice of proceedings relating to
the revocation or modification of any License 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, 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.
(ff) There are no stamp or other issuance of transfer taxes or
duties or other similar fees or charges under Federal law or the laws of any
state, or any political subdivision thereof, required to be paid in connection
with the execution and delivery of this Agreement or the issuance or sale by the
Company of the Notes.
(gg) Each of the Company and the Subsidiaries has filed all
foreign, federal, state and local tax returns that are required to be filed or
has requested extensions thereof (except in any case in which the failure so to
file would not have a Material Adverse Effect) except as set forth in or
contemplated in the Final Memorandum and has paid all taxes required to be paid
by it and any other assessment, fine or penalty levied against it, to the extent
that any of the foregoing is due and payable, except for any such assessment,
fine or penalty that is currently being contested in good faith or as would not
have a Material Adverse Effect, except as contemplated in the Final Memorandum.
(hh) No labor dispute with the employees of the Company or any of
the Subsidiaries exists or, to the knowledge of the Company, is threatened or
imminent that could result in a Material Adverse Effect, and the Company is not
aware of any existing or imminent labor disturbance by the employees of any of
its or the Subsidiaries' principal suppliers, contractors or customers.
(ii) All descriptions in the Final Memorandum of contracts and
other documents to which the Company or any of the Subsidiaries is a party are
accurate in all material respects; there are no contracts, indentures,
mortgages, loan agreements, notes, leases, licenses, permits or other
instruments that (i) would be required to be described in Part I of a
registration statement on Form S-1 under the Act or (ii) if terminated,
breached, rescinded or revoked could reasonably be expected to have or result in
a Material Adverse Effect (collectively, "Material Contracts") that are not
described or referred to in the Final Memorandum and listed on Schedule III
hereto.
(jj) 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.
9
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(kk) 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.
(ll) None of the Company nor any of the Subsidiaries nor any
agent thereof acting on behalf of them has taken, and none of them will take,
any action that might cause this Agreement or the issuance or sale of the
Securities to violate Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
(mm) The Company and each of the Subsidiaries maintain 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 in the United States 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.
(nn) The Company and each of the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; and neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect except as described in or contemplated by the Final
Memorandum.
(oo) The Company and the Subsidiaries possess or have applied for
the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names (collectively, "Intellectual Property") presently employed by them
in connection with the businesses now operated by them, and neither the Company
nor any of the Subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to the foregoing except as
could not have a Material Adverse Effect. To the Company's knowledge, the use of
such Intellectual Property in connection with the business and operations of the
Company and its subsidiaries does not infringe on the rights of any person.
(pp) The Company and the Subsidiaries (i) are, to its knowledge,
in compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws") and (ii) have received and are in compliance
with all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses as described in the
Final Memorandum, except where such non-compliance with Environmental Laws,
failure to receive
10
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required permits, licenses or other approvals, or liability would not have a
Material Adverse Effect.
(qq) Except as described in the Final Memorandum, the Company and
the Subsidiaries are implementing a comprehensive, detailed program to analyze
and address the risk that the computer hardware and software used by them may be
unable to recognize and properly execute date-sensitive functions involving
certain dates prior to and any dates after December 31, 1999 (the "Year 2000
Problem"), and reasonably believe that such risk will be remedied on a timely
basis without material expense and will not have a Material Adverse Effect.
(rr) Each of the Company and its subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Section 302 of the
United States Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the regulations and published interpretations thereunder with
respect to each "plan" (as defined in Section 3(3) of ERISA and such regulations
and published interpretations) in which employees of the Company and its
subsidiaries are eligible to participate and each such plan is in compliance in
all material respects with the presently applicable provisions of ERISA and such
regulations and published interpretations; the Company and its subsidiaries have
not incurred any unpaid liability to the Pension Benefit Guaranty Corporation
(other than for the payment of premiums in the ordinary course) or to any such
plan under Title IV of ERISA.
(ss) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distributions on such Subsidiary's capital stock, from repaying to the
Company any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiary's property or assets to the Company or any
other subsidiary of the Company except as described in the Final Memorandum.
(tt) Neither the Company nor any of the Subsidiaries is a
"holding company" or a "subsidiary company" of a holding company, or an
"affiliate" thereof required to be registered under the Public Utility Holding
Company Act of 1935, as amended.
(uu) Neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any subsidiary has
made any payment of funds of the Company or any subsidiary or received or
retained any funds in violation of any provision of the Foreign Corrupt
Practices Act of 1977, as amended.
Any certificate signed by any officer or authorized signatory of the
Company and delivered to any of the Initial Purchasers or counsel for the
Initial Purchasers in connection with the offering of the Securities shall be
deemed a representation and warranty by the Company as to matters covered
thereby, to each Initial Purchaser.
2. Purchase and Sale. Subject to the terms and conditions and in
-----------------
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to the Initial Purchasers, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, at an aggregate
purchase price of $194,000,000, representing approximately $970 per
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Unit, the respective number of Units set forth on Schedule I opposite such
Initial Purchaser's name.
3. Delivery and Payment. Delivery of and payment for the Securities
--------------------
shall be made at 9:00 A.M., New York City time, on December 1, 1999, or at such
time on such later date as the Initial Purchasers shall designate, which date
and time may be postponed by agreement between 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 Representative for the respective accounts
of the several Initial Purchasers against payment by the several Initial
Purchasers of the purchase price thereof by wire transfer of immediately
available funds to the account specified by the Company and in accordance with
the Escrow Agreement, as applicable. Delivery of the Securities shall be made
through the facilities of The Depository Trust Company unless the Representative
shall otherwise instruct.
4. Offering by Initial Purchasers.
------------------------------
(a) Each Initial Purchaser, severally and not jointly,
represents and warrants that such Initial Purchaser is a QIB. Each Initial
Purchaser, severally and not jointly, agrees with the Company that (i) it will
not solicit offers for, or offer or sell, the Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Act and (ii) it will solicit offers for such Securities
only from, and will offer such Securities only to, persons that it reasonably
believes to be (A) in the case of offers in the United States, QIBs or other
institutional accredited investors (as defined in Rule 501(a)(1),(2),(3) or (7)
under the Act) ("institutional accredited investors") and (B) in the case of
offers outside the United States, to persons other than U.S. persons ("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 reliance upon Regulation S under the
Act that, in each case, in purchasing such Securities are deemed to have
represented and agreed as provided in the Final Memorandum under the caption
"Notice to Investors."
(b) Each Initial Purchaser, severally and not jointly,
represents, warrants, and agrees with respect to offers and sales outside the
United States that:
(i) such Initial Purchaser understands that no action has
been or will be taken in any jurisdiction by the Company that would permit a
public offering of the Securities, or possession or distribution of either the
Final Memorandum or any other offering or publicity material relating to the
Securities, in any country or jurisdiction where action for that purpose is
required;
(ii) such Initial Purchaser will comply with all
applicable laws and regulations in each jurisdiction in which it acquires,
offers, sells or delivers Securities or has in its possession or distributes
either the Final Memorandum or any such other material, in all cases at its own
expense;
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(iii) the Securities have not been registered under the 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 Rule 144A or
Regulation S under the Act or pursuant to another exemption from the
registration requirements of the Act; and
(iv) such Initial Purchaser has offered the Securities and
will offer and sell the Securities (A) as part of their distribution at any time
and (B) otherwise until (I) one year after the later of the commencement of the
offering and the Closing Date (in the case of the Units and the Warrants) or
(II) 40 days after the later of the commencement of the offering of the
Securities and the Closing Date (in the case of the Notes), and in either case,
only in accordance with Rule 903 of Regulation S or as otherwise permitted in
Section 4(a); accordingly, subject to the foregoing, neither such Initial
Purchaser, nor its Affiliates have engaged or will engage in any directed
selling efforts (within the meaning of Regulation S) with respect to the
Securities, and any such Initial Purchaser and its Affiliates have complied and
will comply with the offering restrictions requirement of Regulation S.
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 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 to which the
Initial Purchasers reasonably object.
(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 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 event as a result of which the Final Memorandum would include
any untrue statements of 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, or if it is necessary to amend or
supplement the Final Memorandum to comply with applicable law. 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 their 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,
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such amendment or supplement as may be necessary to correct such untrue
statement or omission or to effect such compliance, 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 will solicit
any offer to buy or offer or sell the Securities or the Exchange Securities by
means of any form of general solicitation or general advertising (as such terms
are used in Regulation D under the Act), or by means of any directed selling
efforts (as defined in Rule 902 under the 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 Act prior to the effectiveness of a registration statement with respect
to the Securities or the Exchange Securities, as applicable.
(e) Neither the Company nor any of its Affiliates will offer,
sell or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the 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 Notes are outstanding,
furnish to the Trustee and the holders of the Notes, the reports and other
information required to be furnished in accordance with the Indenture, whether
or not the Company has a class of securities registered under the Exchange Act,
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.
(g) At all times prior to the registration of the Securities
under the Act, so long as the Securities are outstanding, 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.
(h) The Company will not for a period of 180 days following the
Closing Date, without the prior written consent of Salomon Smith Barney Inc.,
offer, sell or contract to sell, grant any other option to purchase or otherwise
dispose of (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
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otherwise) by the Company or any Affiliate of the Company or any person in
privity with the company or any Affiliate of the Company), directly or
indirectly, any debt securities issued or guaranteed by the Company (other than
the Securities) except to the extent contemplated by the Registration Rights
Agreement or the Final Memorandum.
(i) The Company will cause and maintain the eligibility of the
Securities for clearance and settlement through DTC.
(j) 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 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.
(k) 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 reasonably designate in connection with the resale of the
Securities as contemplated by this Agreement and the Final Memorandum and to
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(k), (ii) file any general consent to service of
process in any jurisdiction where it is not at the Closing Date 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.
(l) Subject to the provisions of the Escrow Agreement, the
Company expects to use the proceeds received from the Offering in the manner
specified in the Final Memorandum under the heading "Use of Proceeds."
(m) During the two year period following the Closing Date, the
Company will use reasonable efforts to ensure that its Affiliates do not resell
any Securities that constitute "Restricted Securities" under Rule 144 under the
Act that have been acquired by any of them.
(n) Pursuant to the Escrow Agreement, the Company will deposit
the Escrow Amount into a collateral account and will take all actions necessary
to pledge, assign and set over to the Trustee, for the benefit of the holders of
the Securities and the Trustee (in its capacity as such under the Indenture),
and irrevocably grant to the Trustee for the benefit of the holders of the
Securities and the Trustee (in its capacity as such under the Indenture) a first
priority perfected security interest in, all of its respective right, title and
interest in such collateral account, all funds held therein and all other
Collateral (as such term is defined in the Escrow
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Agreement) held by the Escrow Agent or on its behalf, in order to secure the
obligations under the Escrow Agreement and the Securities.
(o) 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 their 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 Operative Documents, (iii) the delivery to the Initial
Purchasers of the Securities, including any stamp or other taxes in connection
with the original issuance and sale of the Securities, (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(k) hereof 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, (vii) any fees associated
with establishing or maintaining the escrow account in connection with the
Escrow Agreement, (viii) the fees and expenses of the Trustee, the Warrant
Agent, the Unit Agent, the Escrow Agent and any paying agent, including the fees
and disbursements of their counsel, (ix) all expenses (including travel
expenses) of the Company in connection with any meetings with prospective
investors in the Securities (other than expenses for meeting facilities for the
road show) and (x) all expenses and listing fees in connection with the
application for designation of the Securities as PORTAL securities and the
eligibility of the Units, the Notes, the Exchange Securities, and the Warrants
for clearance through The Depository Trust Company. Notwithstanding any of the
foregoing, it is understood that except as expressly set forth in subclause (v)
of this clause (p), the Initial Purchasers shall pay all fees and expenses of
the Initial Purchasers' legal counsel and all of the Initial Purchasers' travel
(excluding any chartered jet), stabilization and other out-of-pocket expenses,
including meeting facilities for meetings with prospective investors.
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 on the date hereof and on 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) On the Closing Date, the Initial Purchasers shall have
received the opinions of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP and Gray Cary Ware & Freidenrich LLP, counsel for the Company,
dated as of the Closing Date, in form and substance reasonably satisfactory to
the Initial Purchasers and counsel to the Initial Purchasers, collectively and
substantially to the effect that:
(i) Each of the Company and its Subsidiaries has been duly
incorporated, is validly existing and in good standing under the laws of its
jurisdiction of incorporation, with full requisite corporate or other power and
authority to own, lease and operate its properties and conduct its business as
described in the Final Memorandum, and is
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<PAGE>
duly qualified to do business as a foreign corporation and is in good standing
under the laws of California, Virginia and New Jersey.
(ii) All the outstanding shares of capital stock of the
Company and the Subsidiaries have been duly and to the knowledge of such counsel
validly authorized and issued and are fully paid and nonassessable and, except
as otherwise set forth in the Final Memorandum, all outstanding shares of
capital stock of the Subsidiaries are owned by the Company free and clear of any
security interest and, to the knowledge of such counsel, any other security
interests, claims, liens, or encumbrances.
(iii) To the knowledge of such counsel, except as set forth
in the Final Memorandum, no options (other than options granted under the 1998
Stock Plan which options are issued under the reserve described in the Final
Memorandum), warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligation into, or exchange
any securities for, shares of equity interests of the Company are outstanding.
(iv) The Company's authorized capitalization is as set
forth in the Final Memorandum under the heading "Capitalization".
(v) To the knowledge of such counsel, there is no pending
action, suit or proceeding or written threat thereof by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries or its or their property that is not adequately
disclosed in the Final Memorandum, except in each case for such proceedings
that, if the subject of an unfavorable decision, ruling or finding would not
singly or in the aggregate, have a Material Adverse Effect.
(vi) Neither the execution and delivery of the Operative
Documents nor the consummation of any of the transactions therein contemplated,
nor the fulfillment of the terms hereof or thereof, will conflict with, result
in a breach or violation of, or imposition of any lien, charge or encumbrance
upon any property or asset of the Company or its subsidiaries pursuant to, (i)
the charter or by-laws of the Company's subsidiaries; (ii) the terms of any
Material Contract; or (iii) any statute, law, rule, regulation or, to the
knowledge of such counsel, any judgment, order or decree applicable to the
Company or its subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having jurisdiction
over the Company or any of its subsidiaries or any of their properties.
(vii) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement.
This Agreement has been duly authorized executed and delivered by the Company.
(viii) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under the Units. The
Units have been duly and validly authorized by the Company and, when executed
and delivered by the Company (assuming the due countersignature, execution and
delivery by the Unit Agent), will constitute a valid and legally binding
obligations of the Company, enforceable against the Company in
17
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accordance with their terms, except that the enforcement thereof may be limited
by the Enforceability Limitations.
(ix) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under the Notes and
the Exchange Securities. The Notes and the Exchange Securities have been duly
and validly authorized by the Company for issuance. The Notes, when executed,
authenticated and issued in accordance with the provisions of the Indenture, and
delivered to and paid for by the Initial Purchasers in accordance with the terms
hereof, will have been duly executed, issued and delivered and (assuming the due
authentication by the Trustee) will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, and the Exchange
Securities, when executed, authenticated, issued and delivered in the manner
contemplated by the Registration Rights Agreement and the Indenture, will have
been duly executed, issued and delivered and (assuming the due authentication by
the Trustee) will constitute valid and legally binding obligations of the
Company, entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except, in each case, that the
enforcement thereof may be limited by the Enforceability Limitations. The Notes
are in the form contemplated by the Indenture.
(x) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under the Warrants.
The Warrants have been duly and validly authorized by the Company and, when
executed and delivered by the Company (assuming the due countersignature,
execution and delivery by the Warrant Agent), will constitute a valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their terms, except that the enforcement thereof may be limited
by the Enforceability Limitations.
(xi) The Common Shares have been duly reserved for
issuance by the Company upon exercise of the Warrants in sufficient number to
cover the exercise of all of the Warrants, and the issuance of the Common Shares
upon exercise of the Warrants has been duly authorized, and the Common Shares,
when delivered upon exercise of and in accordance with the terms of the Warrant
Agreement, will be validly issued, fully paid and non-assessable, and no holder
of any securities of the Company has any preemptive or other similar rights to
subscribe for or to purchase any common stock of the Company arising by
operation of the General Corporation Law of the State of Delaware, under the
Certificate of Incorporation or bylaws of the Company or pursuant to the terms
of any material contract listed on Schedule III hereto.
(xii) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under the Indenture.
The Indenture has been duly and validly authorized, executed and delivered by
the Company and (assuming the due authorization, execution and delivery by the
Trustee) constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be limited by the Enforceability Limitations.
(xiii) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under the Warrant
Agreement. The
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Warrant Agreement has been duly and validly authorized, executed and delivered
by the Company and (assuming the due authorization, execution and delivery by
the Trustee) constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be limited by the Enforceability Limitations.
(xiv) The Company has the requisite corporate or other
power and authority to execute, deliver and perform its obligations under the
Common Stock Registration Rights Agreement. The Common Stock Registration Rights
Agreement has been duly and validly authorized, executed and delivered by the
Company and (assuming the due authorization, execution and delivery by the
Initial Purchasers and the Investors) constitutes a valid and legally binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except that the enforcement thereof may be limited by the Enforceability
Limitations.
(xv) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under the Registration
Rights Agreement. The Registration Rights Agreement has been duly and validly
authorized, executed and delivered by the Company and (assuming the due
authorization, execution and delivery by the Initial Purchasers) constitutes a
valid and legally binding agreement of the Company, enforceable against the
Company in accordance with its terms, except that the enforcement thereof may be
limited by the Enforceability Limitations.
(xvi) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under the Escrow
Agreement. The Escrow Agreement has been duly and validly authorized, executed
and delivered by the Company and (assuming the due authorization, execution and
delivery by the Escrow Agent and the Trustee) constitutes a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except that the enforcement thereof may be limited by the
Enforceability Limitations.
(xvii) The Escrow Agreement creates a valid and perfected
security interest in favor of the Trustee in all right, title and interest of
the Company in and to the Escrow Account and the Collateral (as such term is
defined in the Escrow Agreement) (such counsel need not express an opinion as to
the priority of the security interest in the collateral created by the Escrow
Agreement).
(xviii) The Securities, the Exchange Securities, the
Indenture, the Escrow Agreement, the Common Stock Registration Rights Agreement,
the Registration Rights Agreement and the Common Shares conform in all material
respects to the descriptions thereof in the Final Memorandum.
(xix) The statements in the Final Memorandum under the
heading "Certain United States Federal Tax Considerations" provide a fair and
accurate summary of the matters therein described.
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(xx) No consent, approval, authorization, filing with or
order of any court or governmental agency or body under the Federal laws of the
United States or the laws of the State of New York or under the General
Corporation Law of the State of Delaware is required in connection with the due
authorization, execution and delivery of the Operative Documents by the Company,
or for the offering, issuance, sale or delivery of the Securities or the
Exchange Securities or for the resale by you in accordance with the terms of
this Agreement, except such as will be obtained under the Act and the Trust
Indenture Act in connection with the registration of the Exchange Securities or
the Securities, as the case may be, as contemplated by the Registration Rights
Agreement and the Common Stock Registration Rights Agreement and such as may be
required under the blue sky or securities laws of any state or foreign
jurisdiction or the NASD or and such other approvals (specified in such opinion)
as have been obtained.
(xxi) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the Final Memorandum, will not be an "investment company"
required to be registered under the Investment Company Act without taking
account of any exemption arising out of the number of holders of the Company's
securities.
(xxii) Assuming the Securities are issued and sold under the
circumstances contemplated by this Agreement and the representations and
warranties of the Company and the Initial Purchasers set forth herein are true
and correct, it is not necessary in connection with the offer, sale and delivery
of the Securities to the Initial Purchasers in the manner contemplated by this
Agreement or in connection with the initial resale of the Securities by the
Initial Purchasers in accordance with this Agreement to register the Securities
under the Act or to qualify the Indenture under the Trust Indenture Act.
In addition, such counsel shall state that in addition to rendering
legal advice and assistance to the Company in the course of the preparation of
the Final Memorandum, involving, among other things, discussions and inquiries
concerning various legal matters and the review of certain corporate records,
documents and proceedings, such counsel also participated in conferences with
certain officers and other representatives of the Company, including its
independent certified public accountants and with the Initial Purchasers and
their counsel, at which the contents of the Final Memorandum and related matters
were discussed. Such counsel may state that such counsel has not, however,
independently verified the accuracy, completeness or fairness of the information
contained in the Final Memorandum. However, based upon such participation, such
counsel shall state it believes that the Final Memorandum (except for financial
statements and schedules and other financial data derived therefrom, as to which
such counsel expresses no belief), as of its date and as of the Closing Date,
did not and does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
In rendering such opinions, such counsel may rely (A) as to matters
including 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, the
laws of the State of California and the laws of the State of New York, to the
extent they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
20
<PAGE>
satisfactory to counsel of the Initial Purchasers, (B) as to matters of fact, to
the extent such counsel deems proper, on representations or certificates of
responsible officers of the Company and certificates of public officials and (C)
on the representations, warranties, convenants and agreements of the Company and
the Initial Purchasers in this Agreement.
(b) The Initial Purchasers shall have received an opinion from
Cahill Gordon & Reindel, counsel for the Initial Purchasers, dated the Closing
Date, in form and substance reasonably satisfactory to the Initial Purchasers.
(c) The following conditions contained in clause (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 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 at or prior to the Closing Date;
and
(ii) since the date of the most recent financial statements
included in the Final Memorandum, there has been no material adverse change in
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated by the Final Memorandum.
(d) The Securities shall have been (i) designated as PORTAL-
eligible securities in accordance with the rules and regulations of the NASD and
(ii) declared eligible for clearance and settlement through The Depository Trust
Company, the Euroclear System and Cedelbank.
(e) On the date hereof and at the Closing Date, KPMG LLP shall
have furnished to the Initial Purchasers a letter or letters, dated respectively
as of the date hereof and as of the Closing Date, in form and substance
satisfactory to the Initial Purchasers and counsel to the Initial Purchasers,
confirming that they are independent accountants within the meaning of Rule 101
of the Code of Professional Conduct of the American Institute of Certified
Public Accountants 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.
(f) Subsequent to the date hereof or, if earlier, the dates as
of which information is given in the Final Memorandum (exclusive of any
amendment or supplement thereto), there shall not have been any change, or any
development involving a prospective change, in or affecting the business or
properties of the Company or the Subsidiaries the effect of which is, in the
sole judgment of the Representative, so material and adverse as to make it
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<PAGE>
impractical or inadvisable to proceed with the purchase and the delivery of the
Securities as contemplated by the Final Memorandum (exclusive of any amendment
or supplement thereto).
(g) All government authorizations required in connection with
the issue and sale of the Securities as contemplated under this Agreement and
the performance of the Company's obligations hereunder and under the Operative
Documents shall be in full force and effect and the Company shall deliver copies
of such authorizations to the Initial Purchasers.
(h) Each of the Operative Documents shall have been executed and
delivered by each of the parties thereto.
(i) 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.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects 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 Representative 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 Representative.
Notice of such cancellation shall be given to the Company in writing or by
telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the offices of Cahill Gordon & Reindel, 80 Pine Street, New York,
NY 10005, on the Closing Date.
7. Reimbursement of Expenses. 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 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, the Company will reimburse the Initial
Purchasers on demand for all 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 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 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, the Final
Memorandum (or in any supplement or amendment thereto) or any information
provided by the Company to any holder or prospective purchaser of Securities
pursuant to Section 5(g) (or in any supplement or amendment thereto), or arise
out of or are
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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
agrees 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
through the Representative specifically for inclusion therein; and provided,
--------
further, that the Company will not be liable to an Initial Purchaser with
- -------
respect to any Preliminary Memorandum to the extent that the Company shall
sustain the burden of proof of providing that any such loss, claim, damage,
liability or action resulted from the fact that such Initial Purchaser, in
contravention of a requirement of this Agreement or applicable law, sold Units
to a person to whom such Initial Purchaser failed to send or give, at or prior
to the Closing Date, a copy of the Final Memorandum as then amended or
supplemented if (i) the Company has previously furnished copies thereof to the
Initial Purchasers and the loss, claim, damage, liability or action of such
Initial Purchaser resulted from an untrue statement or omission or alleged
untrue statement or omission of a material fact contained in or omitted from the
Preliminary Memorandum which was corrected in the Final Memorandum as, if
applicable, amended or supplemented prior to the Closing Date and (ii) giving or
sending such Final Memorandum by the Closing Date to the party or parties
asserting such loss, claim, damage, liability or action would have constituted a
defense to the claim asserted by such person. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each Initial Purchaser severally, and not jointly, agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers, and each person who controls the Company within the meaning of either
the 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 through the Representative 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.
(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
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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 reasonably 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 (in addition to 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 in writing 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
(i) includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (ii) does
not include a statement as to or an admission of fault, culpability or failure
to act by or on behalf of any indemnified party.
(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 and the Initial Purchasers 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 "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 on the one hand and by the Initial Purchasers on the other from the
offering of the Securities; provided, however, that in no case shall any Initial
-------- -------
Purchaser (except as may be provided in any agreement among the Initial
Purchasers relating to the offering of the Securities) 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 on the one hand and of the Initial Purchasers on the other
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
(before deducting expenses) received by the Company, 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, among other things, whether any untrue or any
alleged untrue statement or the omission or alleged
24
<PAGE>
omission to state a material fact relates to information provided by the Company
on the one hand or the Initial Purchasers on the other, the intent of the
parties and their relative knowledge, account information and opportunity to
correct or prevent such untrue statement or omission. 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 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 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 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 of the
-------------------------------
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 number of Units set forth opposite their names in Schedule I
hereto bears to the aggregate number of Units 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 number of Units which the
- -------
defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase
shall exceed 10% of the aggregate number of Units set forth in Schedule I
hereto, the remaining Initial Purchasers shall have the right to purchase all,
but shall not be under any obligation to purchase any, of the Securities, and if
such nondefaulting Initial Purchasers do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Initial
Purchaser or the 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 five Business Days, as the Representative shall determine
in order that the required changes in the Final Memorandum or in any other
documents or arrangements that may be effected. Nothing contained in this
Agreement shall relieve any defaulting Initial Purchaser of its liability, if
any, to the Company or any nondefaulting Initial Purchaser for damages
occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
-----------
the absolute discretion of the Representative, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (i) a banking moratorium shall have been declared either by Federal or
New York State authorities or (ii) trading in securities generally on the New
York Stock Exchange or NASDAQ National Market shall have been suspended or
limited or minimum prices shall have been established on such Exchange or the
NASDAQ National Market, or (iii) there shall have occurred any material adverse
change in the financial markets in the United States or any outbreak or
escalation of hostilities, national or international emergency or war or other
calamity or crisis, or any change or development involving a change in national
or international political, financial or economic conditions, the
25
<PAGE>
effect of which on financial markets is such as to make it, in the sole judgment
of the Representative, impracticable or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the Final Memorandum (exclusive
of any amendment or supplement thereto). If this Agreement is terminated
pursuant to this Section 10, such termination shall be without liability of any
party to any other party.
11. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company and 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 should be mailed and delivered. Notices to the
Initial Purchasers shall be directed to Salomon Smith Barney Inc., Seven World
Trade Center, New York, New York 10048, Attention: General Counsel; and notices
to the Company shall be directed to Equinix, Inc., 901 Marshall Street, Redwood
City, California 94063, Attention: Chief Financial Officer, with a copy to
Gunderson Dettmer Stough Villenneuve Franklin & Hachigian, LLP, 155 Constitution
Drive, Menlo Park, CA 94025, Attention: Scott C. Dettmer.
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 controlling persons referred to in Section 8 hereof, and,
except as expressly set forth in Section 5(g) 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 applicable to contracts
made and to be performed within the State of New York.
15. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience
--------
only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
-----------
Agreement, shall have the meanings indicated.
"Affiliate" shall have the meaning specified in Rule 501(b) of
Regulation D.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
26
<PAGE>
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in The City of New York.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission thereunder.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Regulation D" shall mean Regulation D under the Act.
"Regulation S" shall mean Regulation S under the Act.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated thereunder.
27
<PAGE>
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 several Initial Purchasers.
Very truly yours,
EQUINIX, INC.
By: /s/ Philip J. Koen
----------------------------------
Name: Philip J. Koen
Title: Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
SALOMON SMITH BARNEY INC.
MORGAN STANLEY & CO. INCORPORATED
GOLDMAN, SACHS & CO.
By: SALOMON SMITH BARNEY INC.
By: /s/ W. Mark Barber
-----------------------------
Name: W. Mark Barber
Title: Vice President
28
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Aggregate
Number of
Initial Purchasers Units
- ----------------------------------------------------------------------- -------------
<S> <C>
Salomon Smith Barney Inc. ........................................... 100,000
Morgan Stanley & Co. Incorporated.................................... 50,000
Goldman, Sachs & Co. ................................................ 50,000
-------------
Total...................................................... 200,000
=============
</TABLE>
<PAGE>
SCHEDULE II
-----------
Subsidiaries of Equinix, Inc.
----------------------------
Equinix-DC, Inc.
<PAGE>
SCHEDULE III
------------
Material Contracts
------------------
The Company's wholly-owned subsidiary, Equinix-DC, Inc., has entered
into a Loan and Security Agreement with Comdisco, Inc., dated March 10, 1999, in
the amount of $7,000,000.
The Company has entered into a Master Lease Agreement with Comdisco,
Inc., dated May 27, 1999, in the amount of $1,000,000.
The Company has entered into a Master Lease Agreement with Comdisco,
Inc., dated August 16, 1999, in the amount of $5,000,000.
The Company has entered into a Loan Agreement with Venture Lending &
Leasing II, Inc., as Agent, and other Lenders, dated August 16, 1999, in the
amount of $10,000,000.
The Company has entered into an agreement with MCI WorldCom, dated
November 16, 1999, to install high-bandwidth connectivity at the Company's first
seven U.S. IBX facilities.
The Company has entered into a lease agreement with Carlyle-Core
Chicago LLC, dated as of September 1, 1999.
The Company has entered into a lease agreement with Market Halsey
Urban Renewal, LLC, dated as of May 3, 1999.
The Company has entered into a lease agreement with Laing Beaumeade,
dated as of November 18, 1998.
The Company has entered into a lease agreement with Rose Ventures II,
Inc., dated as of June 10, 1999.
The Company has entered into a lease agreement with 600 Seventh Street
Associates, Inc., dated as of August 6, 1999.
The Company has entered into a lease agreement with Trizechahn
Centers, Inc. (dba Trizechahn Beaumeade Corporate Management), dated as of
October 28, 1999.
The Company entered into an equipment lease facility with Cisco
Systems Credit Corporation in March 1999.
The Company entered into an equipment lease facility with Fore
Financial Services in June 1999.
<PAGE>
The Company has entered into a strategic agreement with Northpoint
Communications, Inc., effective as of August 31, 1999.
The Company has entered into a term sheet for a master agreement with
Bechtel Corporation on October 29, 1999.
2
<PAGE>
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 one year 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 one year after the later of the commencement of the
offering and [ ], 1999, 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.
(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
<PAGE>
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>
EXHIBIT 10.1
EQUINIX, INC.
$200,000,000
13% SENIOR NOTES DUE 2007
INDENTURE
Dated as of December 1, 1999
State Street Bank and Trust Company of California, N.A.,
as Trustee
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions..................................................................... 1
SECTION 1.02. Other Definitions............................................................... 19
SECTION 1.03. Trust Indenture Act Definitions................................................. 20
SECTION 1.04. Rules of Construction........................................................... 20
ARTICLE 2 THE NOTES
SECTION 2.01. Form and Dating................................................................. 21
SECTION 2.02. Execution and Authentication.................................................... 22
SECTION 2.03. Registrar and Paying Agent...................................................... 23
SECTION 2.04. Paying Agent to Hold Money in Trust............................................. 23
SECTION 2.05. Holder Lists.................................................................... 23
SECTION 2.06. Transfer and Exchange........................................................... 24
SECTION 2.07. Replacement Notes............................................................... 36
SECTION 2.08. Outstanding Notes.............................................................. 37
SECTION 2.09. Treasury Notes.................................................................. 37
SECTION 2.10. Temporary Notes................................................................. 38
SECTION 2.11. Cancellation.................................................................... 38
SECTION 2.12. Defaulted Interest.............................................................. 38
SECTION 2.13. Cusip Numbers................................................................... 39
ARTICLE 3 REDEMPTION AND PREPAYMENT
SECTION 3.01. Notices to Trustee.............................................................. 39
SECTION 3.02. Selection of Notes to Be Redeemed............................................... 39
SECTION 3.03. Notice of Redemption............................................................ 39
SECTION 3.04. Effect of Notice of Redemption.................................................. 40
SECTION 3.05. Deposit of Redemption Price..................................................... 40
SECTION 3.06. Notes Redeemed in Part.......................................................... 41
SECTION 3.07. Optional Redemption............................................................. 41
SECTION 3.08. Mandatory Redemption............................................................ 41
SECTION 3.09. Offer to Purchase by Application of Excess Proceeds............................. 41
ARTICLE 4 COVENANTS
SECTION 4.01. Payment of Notes................................................................ 43
SECTION 4.02. Maintenance of Office or Agency................................................. 44
SECTION 4.03. Reports......................................................................... 44
SECTION 4.04. Compliance Certificate.......................................................... 44
SECTION 4.05. Taxes........................................................................... 45
SECTION 4.06. Stay, Extension and Usury Laws.................................................. 46
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.07. Restricted Payments........................................................................... 46
SECTION 4.08. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries..................... 49
SECTION 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.................................... 51
SECTION 4.10. Asset Sales................................................................................... 53
SECTION 4.11. Transactions with Affiliates.................................................................. 54
SECTION 4.12. Liens......................................................................................... 56
SECTION 4.13. Corporate Existence........................................................................... 56
SECTION 4.14. Change of Control............................................................................. 56
SECTION 4.15. Business Activities........................................................................... 57
SECTION 4.16. Payments for Consent.......................................................................... 57
SECTION 4.17. Money for Payments to Be Held in Trust........................................................ 57
SECTION 4.18. Status as Investment Company.................................................................. 59
ARTICLE 5 SUCCESSORS
SECTION 5.01. Merger, Consolidation or Sale of Assets....................................................... 59
SECTION 5.02. Successor Corporation Substituted............................................................. 60
ARTICLE 6 DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default............................................................................. 60
SECTION 6.02. Acceleration.................................................................................. 62
SECTION 6.03. Other Remedies................................................................................ 62
SECTION 6.04. Waiver of Past Defaults....................................................................... 62
SECTION 6.05. Control by Majority........................................................................... 63
SECTION 6.06. Limitation on Suits........................................................................... 63
SECTION 6.07. Rights of Holders of Notes to Receive Payment................................................. 63
SECTION 6.08. Collection Suit by Trustee.................................................................... 64
SECTION 6.09. Trustee May File Proofs of Claim.............................................................. 64
SECTION 6.10. Priorities.................................................................................... 64
SECTION 6.11. Undertaking for Costs......................................................................... 65
ARTICLE 7 TRUSTEE
SECTION 7.01. Duties of Trustee............................................................................. 65
SECTION 7.02. Rights of Trustee............................................................................. 66
SECTION 7.03. Individual Rights of Trustee.................................................................. 67
SECTION 7.04. Trustee's Disclaimer.......................................................................... 67
SECTION 7.05. Notice of Defaults............................................................................ 68
SECTION 7.06. Reports by Trustee to Holders of the Notes.................................................... 68
SECTION 7.07. Compensation and Indemnity.................................................................... 68
SECTION 7.08. Replacement of Trustee........................................................................ 69
SECTION 7.09. Successor Trustee by Merger, Etc.............................................................. 70
SECTION 7.10. Eligibility; Disqualification................................................................. 70
SECTION 7.11. Preferential Collection of Claims Against Company............................................. 70
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance...................................... 71
SECTION 8.02. Legal Defeasance and Discharge................................................................ 71
SECTION 8.03. Covenant Defeasance........................................................................... 71
SECTION 8.04. Conditions to Legal or Covenant Defeasance.................................................... 72
SECTION 8.05. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions. 73
SECTION 8.06. Repayment to Company.......................................................................... 73
SECTION 8.07. Reinstatement................................................................................. 74
SECTION 8.08. Survival...................................................................................... 74
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. Without Consent of Holders.................................................................... 74
SECTION 9.02. With Consent of Holders....................................................................... 75
SECTION 9.03. Compliance with Trust Indenture Act........................................................... 76
SECTION 9.04. Revocation and Effect of Consents............................................................. 76
SECTION 9.05. Notation on or Exchange of Notes.............................................................. 77
SECTION 9.06. Trustee to Sign Amendments, Etc............................................................... 77
ARTICLE 10 SATISFACTION AND DISCHARGE
SECTION 10.01. Satisfaction and Discharge of Indenture....................................................... 77
SECTION 10.02. Application of Trust Money.................................................................... 78
ARTICLE 11 SECURITY
SECTION 11.01. Security...................................................................................... 78
ARTICLE 12 MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls.................................................................. 80
SECTION 12.02. Notices....................................................................................... 80
SECTION 12.03. Communication by Holders with Other Holders................................................... 82
SECTION 12.04. Certificate and Opinion as to Conditions Precedent............................................ 82
SECTION 12.05. Statements Required in Certificate or Opinion................................................. 82
SECTION 12.06. Rules by Trustee and Agents................................................................... 83
SECTION 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders...................... 83
SECTION 12.08. GOVERNING LAW................................................................................. 83
SECTION 12.09. Consent to Jurisdiction and Service........................................................... 83
SECTION 12.10. No Adverse Interpretation of Other Agreements................................................. 84
SECTION 12.11. Successors.................................................................................... 84
SECTION 12.12. Severability.................................................................................. 84
SECTION 12.13. Counterpart Originals......................................................................... 84
SECTION 12.14. Table of Contents, Headings, Etc.............................................................. 84
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
EXHIBIT A-1 FORM OF NOTE.................................................................................. A-1-1
EXHIBIT A-2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE.................................................... A-2-1
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER............................................................... B-1
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE............................................................... C-1
</TABLE>
iv
<PAGE>
INDENTURE, dated as of December 1, 1999 by and between Equinix, Inc.,
a Delaware corporation (the "Company"), and State Street Bank and Trust Company
of California, N.A., a national banking association, as trustee (the "Trustee").
RECITALS
The Company has duly authorized the creation of an issue of 13% Senior
Notes due 2007 (the "Notes"; such term to include the Exchange Notes, the
Private Exchange Notes, if any, and the Unrestricted Definitive and Global
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 thereof, it is mutually covenanted and agreed, for the equal and
ratable benefit of the Holders, as follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
SECTION 1.1 Definitions.
"144A Global Note" means a global note in the form of Exhibit A-1
----------------
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
aggregate principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" or "Acquired Preferred Stock" means, with respect to
------------- ------------------------
any specified Person, Indebtedness or Preferred Stock of any other Person
existing at the time such other Person is merged with or into or became a
Subsidiary of such specified Person (including by Designation or Revocation),
provided such Indebtedness or Preferred Stock is not incurred in connection
with, or in contemplation of, such other Person merging with or into or becoming
a Subsidiary of such specified Person.
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling, controlled by or under direct or indirect common control
with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting
<PAGE>
securities, by agreement or otherwise; provided that beneficial ownership of 10%
or more of the Voting Stock of a Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
-----
"Applicable Procedures" means, with respect to any transfer or
---------------------
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear or CEDEL Bank that apply to such
transfer or exchange.
"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 to 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) 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 (i) the sale, lease, transfer, conveyance or other
----------
disposition of any property, asset or right (including, without limitation, by
way of a sale and leaseback), other than leases of space in an Exchange Facility
entered into in the ordinary course of business, of the Company or any
Restricted Subsidiary, and (ii) the issue or sale by the Company or any of the
Restricted Subsidiaries of Equity Interests of any Subsidiary. Notwithstanding
the foregoing, the following items shall not be deemed to be Asset Sales: (i)
any disposition of properties and assets of the Company subject to Section 5.01,
provided that any properties, assets or rights that are not included in any such
dispositions shall be deemed to have been sold in a transaction constituting an
Asset Sale, (ii) a transfer of properties, assets or rights by the Company to a
Restricted Subsidiary or by a Subsidiary to the Company or to a Restricted
Subsidiary, (iii) a disposition of obsolete or worn out equipment or equipment
that is no longer useful in the conduct of a Permitted Business of the Company
and the Restricted Subsidiaries, (iv) the surrender or waiver by the Company or
any of the Restricted Subsidiaries of contract rights or the settlement, release
or surrender of contract, tort or other claims of any kind by the Company or any
of the Restricted Subsidiaries or the grant by the Company or any of the
Restricted Subsidiaries of a Lien not prohibited by this Indenture, and (v)
sales, transfers, assignments and other dispositions of assets (or related
assets in related transactions) (x) in the ordinary course of business, (y) with
an aggregate fair market value of less than $500,000 in any fiscal year or (z)
constituting the incurrence of a Capital Lease Obligation.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
--------------
state law for the relief of debtors.
"Board of Directors" means the board of directors or other governing
------------------
body of the Company or, if the Company is owned or managed by a single entity,
the board of directors or other governing body of such entity, or, in either
case, any committee thereof duly authorized to act on behalf of such board or
governing body.
2
<PAGE>
"Board Resolution" means a duly authorized resolution of the Board of
----------------
Directors.
"Business Day" means any day other than a Legal Holiday.
------------
"Capital Contribution" means any contribution to the common equity of
--------------------
the Company from a direct or indirect parent of the Company for which no
consideration other than the issuance of common stock with no redemption rights
and no special preferences, privileges or voting rights is given.
"Capital Lease Obligation" means, at the time any determination
------------------------
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
-------------
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
----------------
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any domestic commercial bank having capital and surplus in excess of $500
million and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (ii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group and in each case maturing
within six months after the date of acquisition and (vi) money market funds at
least 95% of the assets of which constitute Cash Equivalents of the kinds
described in clauses (i)-(v) of this definition, provided that with respect to
any Foreign Subsidiary, Cash Equivalents shall also mean those investments that
are comparable to clauses (i) through (vi) above in such Foreign Subsidiary's
country of organization or country where it conducts business operations.
"CEDEL Bank" means CEDEL Bank, SA.
----------
"Change of Control" means the occurrence of any of the following: (i)
-----------------
any "person" or "group," other than a Permitted Holder, is or becomes the
"beneficial owner" (as such terms are used in Section 13(d)(3) of 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 35% or more of the Voting Stock (measured by voting power rather
than number of shares) of the Company and the Permitted Holders own, in the
aggregate, a lesser percentage of
3
<PAGE>
the total Voting Stock (measured by voting power rather than by number of
shares) of the Company than such Person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors, (ii) during any period of two consecutive
years, Continuing Directors cease for any reason to constitute a majority of the
Board of Directors, (iii) the Company consolidates or merges with or into any
other Person or the Company and/or any Restricted Subsidiaries sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of the
assets and properties of the Company and the Restricted Subsidiaries on a
consolidated basis to any other Person, other than a Permitted Holder, other
than a consolidation or merger or disposition of assets (a) of or by the Company
into or to a Wholly Owned Restricted Subsidiary of the Company or (b) subject to
clause (i) above, pursuant to a transaction in which the outstanding Voting
Stock of the Company is changed into or exchanged for securities or other
property with the effect that the beneficial owners of the outstanding Voting
Stock of the Company immediately prior to such transaction, beneficially own,
directly or indirectly, at least a majority of the Voting Stock (measured by
voting power rather than number of shares) of the surviving corporation or the
Person to whom the Company's assets are transferred immediately following such
transaction, or (iv) the adoption of a plan relating to the liquidation or
dissolution of the Company.
"Commission" means the Securities and Exchange Commission.
----------
"Company" means Equinix, Inc., a Delaware corporation, and all
-------
successors thereto.
"Consolidated Capital Ratio" means, with respect to the Company as of
--------------------------
any date, the ratio of (i) the aggregate amount of Indebtedness of the Company
and the Restricted Subsidiaries then outstanding to (ii) the Consolidated Equity
Capital of the Company and the Restricted Subsidiaries as of such date. For the
purposes of calculating the "Consolidated Capital Ratio" (i) any Subsidiary of
the Company that is a Restricted Subsidiary on the Transaction Date shall be
deemed to have been a Restricted Subsidiary at the end of the most recently
ended fiscal quarter (the "Reference Date") 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 on the Reference Date. In
addition to, and without limiting, the foregoing, for the purposes of the
foregoing, "Consolidated Equity Capital" shall be calculated after giving effect
on a pro forma basis as of the Reference Date to, without duplication, (i) 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 the result of the Asset Acquisition) incurring,
assuming or otherwise being liable for Acquired Debt) occurring during the
period commencing on the Reference Date to and including the Transaction Date,
as if such Asset Sale or Asset Acquisition occurred on the Reference Date, (ii)
any issue or sale of Equity Interests (other than Disqualified Stock but
including Equity Interests (other than Disqualified Stock) issued upon the
exercise of options, warrants or rights to purchase such Equity Interests) of
the Company or any conversion of Disqualified Stock or debt securities of the
Company into Equity Interests (other than Disqualified Stock) occurring during
the period commencing on the Reference Date to and including the Transaction
Date, as if such issue, sale or conversion occurred on the Reference Date, and
(iii) any Restricted Payments made by the Company, and any sale, disposition or
repayment of any Restricted Investment constituting a Restricted
4
<PAGE>
Payment, since the Reference Date to and including the Transaction Date, as if
such Restricted Payment occurred on the Reference Date.
"Consolidated Cash Flow" means, with respect to the Company for any
----------------------
period, the Consolidated Net Income of the Company and the Restricted
Subsidiaries for such period plus (A) to the extent that any of the following
items were deducted in computing such Consolidated Net Income, but without
duplication, (i) provision for taxes based on income or profits of the Company
and the Restricted Subsidiaries for such period, plus (ii) consolidated interest
expense of the Company and the Restricted Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), plus (iii) depreciation, amortization
(including amortization of goodwill and other intangibles, but excluding
amortization of prepaid cash expenses that were paid in a prior period), and
other non-cash expenses (excluding any such non-cash expense to the extent that
it represents an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of the
Company and the Restricted Subsidiaries for such period, minus (B) non-cash
items increasing such Consolidated Net Income for such period (other than items
that were accrued in the ordinary course of business), in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash expenses of, a Restricted
Subsidiary of the Company shall be added to Consolidated Net Income to compute
Consolidated Cash Flow of the Company only to the extent that a corresponding
amount would be permitted at the date of determination to be dividended or
otherwise distributed to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its stockholders.
"Consolidated Equity Capital" means, with respect to the Company as of
---------------------------
any date, the sum (without duplication) of (i) the additional paid-in capital of
the common stockholders reflected on the consolidated balance sheet of the
Company and the Restricted Subsidiaries as of such date plus (ii) the respective
amounts reported on the Company's balance sheet as of such date with respect to
any series of Capital Stock (other than Disqualified Stock) not included in
clause (i) above, less (iii) (x) all write-ups (other than write-ups resulting
from foreign currency translations and write-ups of tangible assets of a going
concern business made within 12 months after the acquisition of such business)
subsequent to the Issue Date in the book value of any asset owned by the Company
or a Restricted Subsidiary, (y) all outstanding net Investments as of such date
in Persons that are not Restricted Subsidiaries (without giving effect to any
write-down or write-off thereof) and (z) the aggregate amount of all Restricted
Payments declared or made on or after the Issue Date other than (I) Investments
in Persons that are not Restricted Subsidiaries and (II) Restricted Payments
made pursuant to Section 4.07(B)(iii).
5
<PAGE>
"Consolidated Leverage Ratio" means, with respect to the Company, as
---------------------------
of any date, the ratio of (i) the aggregate consolidated amount of Indebtedness
of the Company and the Restricted Subsidiaries then outstanding to (ii) the
annualized Consolidated Cash Flow of the Company and the Restricted Subsidiaries
for the most recently ended fiscal quarter. For purposes of calculating
"Consolidated Cash Flow" for any fiscal quarter for purposes of this definition
(i) any Subsidiary of the Company that is a Restricted Subsidiary on the
Transaction Date 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 of the foregoing, for purposes of this
definition, "Consolidated 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 Debt) 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 Net Income" means, with respect to the Company for any
-----------------------
period, the aggregate of the Net Income of the Company and the Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash to the Company
or a Restricted Subsidiary thereof by such Person but not in excess of the
Company's Equity Interests in such Person, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, except that the Company's equity in
the net income of any such Restricted Subsidiary for such period may be included
in such Consolidated Net Income (A) up to the aggregate amount of cash that
could have been distributed by such Restricted Subsidiary during such period to
the Company as a dividend and (B) if the only restriction on the declaration or
payment of dividends or similar distributions by such Restricted Subsidiary is a
restriction of the type described in Section 4.08(B)(b), (iii) the Net Income of
any Person acquired in a pooling of interests transaction for any period prior
to the date of such acquisition shall be excluded, (iv) the equity of the
Company or any Restricted Subsidiary in the Net Income (if positive) of any
Unrestricted Subsidiary shall be included in such Consolidated Net Income up to
the aggregate amount of cash actually distributed by such Unrestricted
Subsidiary during such period to the Company or such Restricted Subsidiary as a
dividend or other distribution (but not in excess of the amount of the Net
Income of such Unrestricted Subsidiary for such period), (v) the cumulative
effect of a change in accounting principles shall be excluded, (vi) all
extraordinary, unusual or nonrecurring gains or losses (net of fees and expenses
relating to the transaction giving rise thereto) shall be excluded, (vii) any
gain or loss, net of taxes, realized upon the termination of any employee
pension benefit plan shall be excluded, and (viii) gains or losses in
6
<PAGE>
respect of any Asset Sales (net of fees and expenses relating to the transaction
giving rise thereto) shall be excluded.
"Consolidated Tangible Assets" of the Company as of any date means the
----------------------------
total amount of assets of the Company and the Restricted Subsidiaries (less
applicable reserves) on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less:
(i) unamortized debt and debt issuance expenses, deferred charges, goodwill,
patents, trademarks, copyrights, and all other items which would be treated as
intangibles on the consolidated balance sheet of the Company and the Restricted
Subsidiaries prepared in accordance with GAAP and (ii) appropriate adjustments
on account of minority interests of other Persons holding equity investments in
Restricted Subsidiaries, in the case of each of clauses (i) and (ii) above, as
reflected on the consolidated balance sheet of the Company and the Restricted
Subsidiaries.
"Continuing Directors" means individuals who at the beginning of the
--------------------
period of determination constituted the Board of Directors, together with any
new directors whose election by such Board of Directors or whose nomination for
election by the stockholders of the Company was approved by a vote of a majority
of the directors of the Company 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 or is the designee of any one of the Permitted Holders or
any combination thereof or was nominated or elected by any such Permitted
Holder(s) or any of their designees.
"Corporate Trust Office of the Trustee" shall be at the address of the
-------------------------------------
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Cumulative Consolidated Cash Flow" means, as of any date of
---------------------------------
determination, the cumulative Consolidated Cash Flow realized during the period
commencing on the first day of the fiscal quarter which includes the Issue Date
and ending on the last day of the last fiscal quarter for which reports have
been filed with the Commission or provided to the Trustee pursuant to Section
4.03 preceding the date of the event requiring such calculation to be made.
"Currency Agreement" means, with respect to any Person, any foreign
------------------
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or beneficiary.
"Default" means any event that is, or with the passage of time or the
-------
giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
---------------
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A-1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto, but may bear the Private Placement Legend, if
applicable.
"Depositary" means, with respect to the Notes issuable or issued in
----------
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to
7
<PAGE>
the Notes, and all successors thereto appointed as depositary hereunder and
having become such pursuant to the applicable provision of this Indenture.
"Disqualified Stock" means any Equity Interest that, by its terms (or
------------------
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature; provided, however, that any Equity Interest that
would constitute Disqualified Stock solely because the holders thereof have the
right to require the Company to repurchase such Equity Interest upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Equity Interest provide that the Company
may not repurchase or redeem such Equity Interest pursuant to such provisions
unless such repurchase or redemption complies with Section 4.07.
"Equity Interests" means Capital Stock and all warrants, options or
----------------
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Escrow Account" means an account established with the Escrow Agent by
--------------
the Trustee pursuant to the terms of the Escrow Agreement.
"Escrow Agent" means State Street Bank and Trust Company of
------------
California, N.A., in its capacity as escrow agent pursuant to the Escrow
Agreement.
"Escrow Agreement" means the Escrow Agreement, dated as of the Issue
----------------
Date, by and among the Company, the Trustee and the Escrow Agent, governing the
disbursement of funds from the Escrow Account, as the same may be amended,
modified or supplemented from time to time.
"Escrow Collateral" means the Escrow Account and assets held therein
-----------------
pledged pursuant to the Escrow Agreement.
"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 Facility" means a facility providing equipment colocation,
-----------------
direct high-speed connections, switched interconnections and related services to
third party internet related businesses and operations.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
--------------
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
--------------
Agreement.
8
<PAGE>
"Exchange Offer Registration Statement" has the meaning set forth in
-------------------------------------
the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and the
---------------------
Restricted Subsidiaries in existence on the Issue Date, until such amounts are
repaid.
"Foreign Subsidiary" means any Restricted Subsidiary of the Company
------------------
which (i) is not organized under the laws of the United States, any state
thereof or the District of Columbia, and (ii) conducts substantially all of its
business operations outside the United States of America.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.
"Global Note Legend" means the legend set forth in Section
------------------
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Global Notes" means, individually and collectively, each of the
------------
Restricted Global Notes and the unrestricted Global Notes, in the form of
Exhibit A-1 or A-2 hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof and bearing the Global Note Legend.
"Government Securities" means securities that are (a) direct
---------------------
obligations (or certificates representing an ownership interest in such
obligations) of the United States of America (including any agency or
instrumentally thereof) the payment of which the full faith and credit of the
United States of America is pledged, (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America or (c) obligations of a Person
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America.
"Guarantee" means any obligation, contingent or otherwise, of any
---------
Person directly or indirectly guaranteeing any Indebtedness of any other Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hedging Obligations" means, with respect to any Person, the
-------------------
obligations of such Person under any Interest Rate Agreement or Currency
Agreement.
9
<PAGE>
"Holder" means a Person in whose name a Note is registered on the
------
Registrar's or any co-registrar's books.
"Indebtedness" means, with respect to any Person, any indebtedness of
------------
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance of the deferred and
unpaid purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit (or
reimbursement agreements in respect thereof), banker's acceptances and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person), Disqualified Stock of such Person and Preferred Stock
of such Person's Restricted Subsidiaries and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness issued with original
issue discount, but the accretion of original issue discount in accordance with
the original terms of Indebtedness issued with an original issue discount will
not be deemed to be an incurrence, or (ii) the principal amount thereof,
together with any interest thereon that is more than 30 days past due, in the
case of any other Indebtedness. Notwithstanding the foregoing, money borrowed
and set aside at the time of the incurrence of any Indebtedness in order to
prefund the payment of interest on such Indebtedness shall not be deemed to be
"Indebtedness" so long as such money is held to secure the payment of such
interest.
"Indenture" means this Indenture, as amended or supplemented from time
---------
to time.
"Indirect Participant" means a Person who holds a beneficial interest
--------------------
in a Global Note through a Participant.
"Initial Purchaser" shall have the meaning assigned to such term in
-----------------
the Offering Memorandum.
"interest," when used with respect to any Note, means the amount of
--------
all interest accruing on such Note, including Liquidated Damages payable on the
Notes pursuant to the Registration Rights Agreement and all interest accruing
subsequent to the occurrence of any events specified in Sections 6.01(viii) and
(ix) hereof or which would have accrued but for any such event, whether or not
such claims are allowable under applicable law.
"Interest Payment Date" shall have the meaning assigned to such term
---------------------
in the Notes.
"Interest Rate Agreement" means, with respect to any Person, any
-----------------------
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement to which such Person is a party or
beneficiary.
10
<PAGE>
"Investments" means, with respect to any Person, all investments by
-----------
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to directors, officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Company or any of the Restricted Subsidiaries sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Restricted Subsidiary not sold or disposed
of in an amount determined as provided in Section 4.07(E).
"Issue Date" means the date of first issuance of the Notes under the
----------
Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
-------------
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
---------------------
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in, and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" shall have the meaning specified in the Notes.
------------------
"Net Cash Proceeds" means the aggregate amount of cash or Cash
-----------------
Equivalents received by the Company in the case of a sale, or Capital
Contribution in respect, of Capital Stock and by the Company and the Restricted
Subsidiaries in respect of an Asset Sale plus, in the case of an issuance of
Capital Stock upon any exercise, exchange or conversion of securities (including
options, warrants, rights and convertible or exchangeable debt) of the Company
that were issued for cash on or after the Issue Date, the amount of cash
originally received by the Company upon the issuance of such securities
(including options, warrants, rights and convertible or exchangeable debt) less,
in each case, the sum of all payments, fees, commissions and reasonable and
customary expenses (including, without limitation, the fees and expenses of
legal counsel and investment banking fees and expenses) incurred in connection
with such Asset Sale or sale of Capital Stock, and, in the case of an Asset Sale
only, less the amount (estimated reasonably and in good faith by the Company) of
income, franchise, sales and other applicable
11
<PAGE>
federal, state, provincial, foreign and local taxes required to be paid or
accrued as a liability by the Company or any of its respective Restricted
Subsidiaries in connection with such Asset Sale in the taxable year that such
sale is consummated or in the immediately succeeding taxable year, the
computation of which shall take into account the reduction in tax liability
resulting from any available operating losses and net operating loss carryovers,
tax credits and tax credit carryforwards, and similar tax attributes.
"Net Income" means, with respect to any Person, the net income (loss)
----------
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale or (b) the disposition of
any securities by such Person or any of the Restricted Subsidiaries and (ii) any
extraordinary gain or loss, together with any related provision for taxes on
such extraordinary gain or loss.
"Newly Raised Capital" means funds raised by the Company and the
--------------------
Restricted Subsidiaries after the Issue Date.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
-----------------
Company nor an Restricted Subsidiary (a) provides any Guarantee or credit
support of any kind (including any undertaking, guarantee, indemnity, agreement
or instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as a guarantor or otherwise) and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"Non-U.S. Person" means a Person who is not a U.S. Person.
---------------
"Note Custodian" means the Person specified in Section 2.03 hereof as
--------------
the Note Custodian with respect to the Global Notes or any successor entity
thereto appointed as Note Custodian hereunder and having become such pursuant to
the applicable provision of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this
-----
Indenture.
"Offering Memorandum" means the offering memorandum of the Company,
-------------------
dated November 24, 1999, relating to the units consisting of the Notes and the
warrants.
"Officer" means the President, the Chief Executive Officer, the Chief
-------
Financial Officer and any vice president of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
---------------------
"Opinion of Counsel" means an opinion from legal counsel who is
------------------
reasonably acceptable to the Trustee and that meets the requirements of Section
12.05 hereof. The counsel
12
<PAGE>
may be an employee of or counsel to the Company, any Subsidiary of the Company,
any Affiliate of the Company or the Trustee.
"pari passu Indebtedness" means Indebtedness of the Company ranking
-----------------------
pari passu in right of payment with the Notes.
"Participant" means members of, or participants in, the Depositary.
-----------
"Participating Broker-Dealer" has the meaning set forth in the
---------------------------
Registration Rights Agreement.
"Permitted Business" means the business of designing, constructing,
------------------
owning, operating and leasing space within Exchange Facilities together with any
other activity reasonably related thereto.
"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 Persons typically
party to commercial loan agreements.
"Permitted Foreign 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 Persons
typically party to commercial loan agreements having only Foreign Subsidiaries
as obligors thereunder; provided that the Company may be a guarantor of any such
Permitted Foreign Credit Facility.
"Permitted Holder" means Benchmark Capital Partners II, L.P., Cisco
----------------
Systems, Inc., Microsoft Corporation, News Corp., Albert M. Avery, IV, Jay S.
Adelson and their respective Related Persons.
"Permitted Investments" means (a) any Investment in the Company or in
---------------------
a Restricted Subsidiary of the Company that is engaged entirely or substantially
entirely in a Permitted Business; (b) any Investment in Cash Equivalents; (c)
any Investment by the Company or any of the Restricted Subsidiaries in a Person,
if as a result of such Investment (i) such Person becomes a Restricted
Subsidiary of the Company that is engaged entirely or substantially entirely in
a Permitted Business or (ii) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company that is
engaged entirely or substantially entirely in a Permitted Business; (d) loans or
advances to employees of the Company or any Restricted Subsidiary in an amount
not to exceed $5 million at any time outstanding; (e) any Investment made as a
result of the receipt of non-cash consideration from an Asset Sale made in
compliance with Section 4.10; and (f) Investments in securities of trade
creditors or customers received pursuant to any plan of reorganization or
similar arrangement arising out of the bankruptcy or insolvency of such trade
creditors or customers.
"Permitted Liens" means (i) Liens to secure Indebtedness (x) permitted
---------------
by Sections 4.09(b)(vi) and (vii), provided that with respect to Liens to secure
Indebtedness permitted by Section 4.09(b)(vi) or any Permitted Refinancing
Indebtedness of such Indebtedness, such Lien must cover only the assets acquired
with such Indebtedness, and (y)
13
<PAGE>
incurred under a Permitted Credit Facility or a Permitted Foreign Credit
Facility and permitted by Section 4.09(b)(v); (ii) Liens in favor of the Company
or any Restricted Subsidiary; (iii) Liens on property of a Person existing at
the time such Person is merged with or into or consolidated with the Company or
any of the Restricted Subsidiaries, provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with the
Company or such Restricted Subsidiary; (iv) Liens on property existing at the
time of acquisition thereof by the Company or any of the Restricted
Subsidiaries, provided that such Liens were in existence prior to the
contemplation of such acquisition; (v) 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; (vi)
Liens existing on the Issue Date; (vii) 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 concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(viii) zoning restrictions, rights-of-way, easements and similar charges or
encumbrances incurred in the ordinary course which in the aggregate do not
detract from the value of the property thereof; (ix) Liens securing the Notes;
(x) Liens incurred in the ordinary course of business of the Company or any of
the Restricted Subsidiaries with respect to obligations that do not exceed 5% of
the Company's Consolidated Tangible Assets at any one time outstanding and that
(a) are not incurred in connection with the borrowing of money or the obtaining
of advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value of
the property or materially impair the use thereof in the operation of business
by the Company or such Restricted Subsidiary; and (xi) Liens securing money
borrowed (or any securities purchased therewith) which is (or are, in the case
of securities) set aside at the time of the incurrence of any Indebtedness
permitted to be incurred under Section 4.09 in order to prefund the payment of
interest on such Indebtedness.
"Permitted Recourse Debt" means Indebtedness as to which the Company
-----------------------
is contingently liable as a guarantor or indemnitor or as to which the Company
has agreed to otherwise provide credit support, in any such case to the extent
that the maximum possible liability of the Company in respect of any such
Indebtedness, at the time of its incurrence by the Company is permitted to be
incurred as Permitted Indebtedness pursuant to clause (iv) of the definition
thereof.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
----------------------------------
Company or any of the Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, other Indebtedness of the Company or any of the Restricted Subsidiaries
(other than Indebtedness incurred pursuant to clause (iii), (iv), (vii) or
(viii) of the definition of Permitted Indebtedness); provided that: (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of any
premium required to be paid in connection with such refinancing pursuant to the
terms of such Indebtedness or otherwise reasonably determined by the Company to
be necessary and reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted
14
<PAGE>
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness is expressly subordinated in
right of payment to, the Notes on terms at least as favorable to the Holders as
those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iv) if such Permitted
Refinancing Indebtedness refinances Indebtedness of a Restricted Subsidiary,
such Permitted Refinancing Indebtedness is incurred either by the Company or by
the Restricted Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (v) such Permitted
Refinancing Indebtedness is secured only by the assets, if any, that secured the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, joint
------
venture, limited liability company, incorporated or unincorporated association,
joint-stock company, trust, unincorporated organization or government or other
agency or political subdivision thereof or other entity of any kind.
"Preferred Stock" means any Equity Interest of any class or classes of
---------------
a Person (however designated) which is preferred as to payments of dividends, or
as to distributions upon any liquidation or dissolution, over Equity Interests
of any other class of such Person.
"Private Exchange Notes" shall have the meaning specified in the
----------------------
Registration Rights Agreement.
"Private Placement Legend" means the legend set forth in Section
------------------------
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Purchase Money Indebtedness" means Indebtedness (including Acquired
---------------------------
Debt, in the case of Capital Lease Obligations, mortgage financings and purchase
money obligations) incurred for the purpose of financing all or any part of the
cost of the engineering, construction, installation, importation, acquisition,
lease, development or improvement of any assets used by the Company or any
Restricted Subsidiary in a Permitted Business, including any related notes,
Guarantees, collateral documents, instruments and agreements executed in
connection therewith, as the same may be amended, supplemented, modified or
restated from time to time. The Company in its sole discretion shall determine
whether any item of Indebtedness or portion thereof meeting the foregoing
criteria shall be classified as Purchase Money Indebtedness for the purposes of
Secton 4.09.
"Qualified Consideration" means all assets, rights (contractual or
-----------------------
otherwise) and properties, whether tangible or intangible, used or intended for
use in a Permitted Business and the Equity Interests of a Person engaged
entirely or substantially entirely in a Permitted Business.
"QIB" means a "qualified institutional buyer," as defined in Rule
---
144A.
15
<PAGE>
"Record Date" for the interest payable on any Interest Payment Date
-----------
means the May 15 or November 15 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement, dated as of the date hereof, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Registration Statement" means either the Exchange Offer Registration
----------------------
Statement or the Shelf Registration Statement.
"Regulation S" means Regulation S promulgated under the Securities
------------
Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
------------------------
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent Global Note in
----------------------------------
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding aggregate principal amount of the Regulation S Temporary Global Note
upon expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary Global Note in
----------------------------------
the form of Exhibit A-2 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding aggregate principal amount of the Notes initially sold in reliance
on Rule 903 of Regulation S.
"Related Person" means any Person who controls, is controlled by or is
--------------
under common control with a Permitted Holder; provided, that for purposes of
this definition "control" means the beneficial ownership of more than 50% of the
total voting power of a Person normally entitled to vote in the election of
directors, managers or trustees, as applicable, of a Person; provided, further,
that with respect to any natural Person, each member of such Person's immediate
family shall be deemed to be a Related Person of such Person.
"Responsible Officer," when used with respect to the Trustee, means
--------------------
any officer within the Corporate Trust Department of the Trustee (or any
successor group of the Trustee) 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 to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
--------------------------
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
----------------------
Placement Legend and includes 144A Global Notes and Regulation S Global Notes.
16
<PAGE>
"Restricted Investment" means any Investment other than a Permitted
---------------------
Investment.
"Restricted Note" means either a Restricted Definitive Note or a
---------------
Restricted Global Note.
"Restricted Period" means the 40-day distribution compliance period as
-----------------
defined in Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
---------------------
referent Person that is not an Unrestricted Subsidiary. Unless the context
specifically requires otherwise, Restricted Subsidiary includes a direct or
indirect Restricted Subsidiary of the Company.
"Rule 144" means Rule 144 promulgated under the Securities Act.
--------
"Rule 144A" means Rule 144A promulgated under the Securities Act.
---------
"Rule 903" means Rule 903 promulgated under the Securities Act.
--------
"Rule 904" means Rule 904 promulgated under the Securities Act.
--------
"Securities Act" means the Securities Act of 1933, as amended (or any
--------------
successor Act), and the rules and regulations promulgated thereunder (or
respective successor thereto).
"Senior Debt" means all Indebtedness of the Company which is not
-----------
expressly by its terms, subordinate or junior in right of payment to the Notes.
"Shelf Registration Statement" means the Shelf Registration Statement
----------------------------
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would be
----------------------
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the Issue Date.
"Special Record Date" for the payment of any defaulted interest means
-------------------
a date fixed by the Trustee pursuant to Section 2.12 hereof.
"Stated Maturity" means, with respect to any installment of interest
---------------
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Indebtedness" means Indebtedness of the Company that is
-------------------------
subordinated in right of payment by its terms or the terms of any document or
instrument or instrument relating thereto to the Notes, in any respect.
"Subsidiary" means, with respect to any Person, (i) any corporation,
----------
association or other business entity of which more than 50% of the total voting
power of shares of Capital
17
<PAGE>
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof) and (ii) any partnership
(a) the sole general partner or the managing general partner of which is such
Person or a Subsidiary of such Person or (b) the only general partners of which
are such Person or one or more Subsidiaries of such Person (or any combination
thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-
---
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA, except as set forth in Section 9.03.
"Transaction Date" means the date of the transaction giving rise to
----------------
the need to calculate the Consolidated Leverage Ratio or the Consolidated
Capital Ratio, as the case may be.
"Trustee" means the party named as such above until a successor
-------
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that
----------------------------
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent Global Note in the form
------------------------
of Exhibit A-1 attached hereto that bears the Global Note Legend and that has
the "Schedule of Exchanges of Interests in the Global Note" attached thereto,
and that is deposited with or on behalf of and registered in the name of the
Depositary, representing Notes that do not bear the Private Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
-----------------------
is designated by the Board of Directors as an Unrestricted Subsidiary pursuant
to a Board Resolution, but only to the extent that such Subsidiary at the time
of such designation: (a) has no Indebtedness other than Non-Recourse Debt and
Permitted Recourse Debt; (b) is a Person with respect to which neither the
Company nor any of the Restricted Subsidiaries has any direct or indirect
obligation to maintain or preserve such Person's financial condition or to cause
such Person to achieve any specified levels of operating results; and (c) has
not Guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of the Restricted Subsidiaries. Any such
designation by the Board of Directors shall be evidenced by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by Section 4.07. The
Board of Directors may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under Section
4.09, calculated on a pro forma basis as if such designation had occurred at the
beginning of the applicable reference period, and (ii) no Default or Event of
Default would be in existence following such designation.
18
<PAGE>
"U.S. Government Securities" means securities that are direct
--------------------------
obligations of the United States of America for the payment of which its full
faith and credit is pledged.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
-----------
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
------------
such Person that is at the time entitled to vote in the election of the board of
directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly-Owned Restricted Subsidiary" of any Person means a Restricted
----------------------------------
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.2 Other Definitions.
-----------------
Defined
Term in Section
---- ----------
"Affiliate Transaction"........................................... 4.11
"Asset Sale Offer"................................................ 4.10
"Authentication Order"............................................ 2.02
"Change of Control Offer"......................................... 4.14
"Change of Control Payment"....................................... 4.14
"Change of Control Payment Date".................................. 4.14
"Costs"........................................................... 4.09
"Covenant Defeasance"............................................. 8.03
"Designation"..................................................... 4.07
"Events of Default"............................................... 6.01
"Excess Proceeds"................................................. 4.10
"incur"........................................................... 4.09
"Investment Company Act".......................................... 4.18
"Legal Defeasance"................................................ 8.02
"Offer Amount".................................................... 3.09
"Offer Period".................................................... 3.09
"Paying Agent".................................................... 2.03
"Permitted Indebtedness".......................................... 4.09
"Purchase Date"................................................... 3.09
19
<PAGE>
"Reference Date".................................................. 1.01
"Registrar"....................................................... 2.03
"Registration".................................................... 4.03
"Restricted Payments"............................................. 4.07
"Revocation"...................................................... 4.07
SECTION 1.3 Trust Indenture Act Definitions
-------------------------------
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used but not otherwise defined in this Indenture that
are defined by the TIA, defined by TIA reference to another statute or defined
by Commission rule under the TIA have the meanings so assigned to them.
SECTION 1.4 Rules of Construction
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement or successor sections or
rules adopted by the Commission from time to time;
20
<PAGE>
(7) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or
other subdivision; and
(8) the words "including," "includes" and similar words
shall be deemed to be followed by "without limitation."
ARTICLE 2
THE NOTES
---------
SECTION 2.1 Form and Dating.
---------------
(a) General.
-------
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibits A-1 and A-2 hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or usage
or agreements to which the Company is subject. Each Note shall be dated the
date of its authentication. The Notes shall be in denominations of $1,000 and
integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and 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. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
(b) Global Notes.
------------
Notes issued in global form shall be substantially in the form of
Exhibits A-1 or A-2 attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A-1 attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the aggregate principal
amount of the outstanding Notes as shall be specified therein and each shall
provide that it shall represent the aggregate principal amount of outstanding
Notes from time to time endorsed thereon and that the aggregate principal amount
of outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, repurchases and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Notes represented
thereby shall be made by the Trustee or the Note Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
(c) Temporary Global Notes.
----------------------
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Notes, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at the Corporate Trust Office of the
21
<PAGE>
Trustee, as custodian for the Depositary, registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or CEDEL Bank, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. Upon
termination of the Restricted Period and the receipt by the Trustee of (i) a
written certificate from the Depositary, together with copies of certificates
from Euroclear and CEDEL Bank certifying that they have received certification
of non-United States beneficial ownership of 100% of the aggregate principal
amount of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Note bearing a Private Placement Legend, all as contemplated by Section
2.06(b)(iii) hereof), and (ii) an Officers' Certificate from the Company,
beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in Regulation S Permanent Global Notes
pursuant to the Applicable Procedures. Simultaneously with the authentication of
Regulation S Permanent Global Notes, the Trustee shall, upon direction of the
Company, cancel the Regulation S Temporary Global Note. The aggregate principal
amount of the Regulation S Temporary Global Note and the Regulation S Permanent
Global Notes may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary or its nominee, as the case may
be, in connection with transfers of interest as hereinafter provided.
(d) Euroclear and CEDEL Bank Procedures Applicable.
----------------------------------------------
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of CEDEL Bank" and "Customer Handbook" of CEDEL Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes that are held by
Participants through Euroclear or CEDEL Bank.
SECTION 2.2 Execution and Authentication.
----------------------------
Two Officers or one Officer and the Secretary or an Assistant
Secretary of the Company shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer, Secretary or Assistant Secretary whose signature is on
a Note no longer holds that office at the time a Note is authenticated, the Note
shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers or one Officer and the Secretary or an Assistant Secretary of the
Company (an "Authentication Order"), authenticate Notes for original issue up to
the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may
22
<PAGE>
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 Holders or an Affiliate of the Company.
SECTION 2.3 Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar," which term
shall also include any co-registrar) and an office or agency where Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Company may appoint one or
more co-registrars and one or more additional paying agents. The term
"Registrar" includes any co-registrar and the term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company shall notify the Trustee in writing
of the name and address of any Paying Agent not a party to this Indenture. If
the Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries
may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
The Trustee is authorized to enter into a letter of representations
with DTC in the form provided to the Trustee by the Company and to act in
accordance with such letter.
SECTION 2.4 Paying Agent to Hold Money in Trust.
-----------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all such money held by it to the Trustee. The Company at any time
may require a Paying Agent to pay all such money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than the Company or
a Subsidiary) shall have no further liability for the money. If the Company or
a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.5 Holder Lists.
------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each Interest Payment Date and at such other
23
<PAGE>
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
Holders and the Company shall otherwise comply with TIA Section 312(a).
SECTION 2.6 Transfer and Exchange.
---------------------
(a) Transfer and Exchange of Global Notes.
-------------------------------------
A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Notes will be exchanged by the Company for Definitive
Notes if (i) the Company delivers to the Trustee a notice from the Depositary
that it is unwilling or unable to continue to act as Depositary or that it is no
longer a clearing agency registered under the Exchange Act and, in either case,
a successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Notes (in whole but not in part) should be
exchanged for Definitive Notes and delivers a written notice to such effect to
the Trustee; provided that in no event shall the Regulation S Temporary Global
Note be exchanged by the Company for Definitive Notes prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of any
certificates determined by the Company to be required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a); however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
-----------------------------------------------------------------
The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein and therein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
--------------------------------------------------------
Beneficial interests in any Restricted Global Note may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in the same
Restricted Global Note in accordance with the transfer restrictions set forth in
the Private Placement Legend; provided, however, that prior to the expiration of
the Restricted Period transfers of beneficial interests in the Temporary
Regulation S Global Note may not be made to a U.S. Person or for the account or
24
<PAGE>
benefit of a U.S. Person (other than an Initial Purchaser or to a transferee who
will take delivery of a beneficial ownership interest in a 144A Global Note
bearing a Private Placement Legend in accordance with Section 2.06(b)(iii)
hereof). Beneficial interests in any Unrestricted Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note. No written orders or instructions
shall be required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
------------------------------------------------------------
Global Notes. In connection with all transfers and exchanges of beneficial
- ------------
interests that are not subject to Section 2.06(b)(i) above, the transferor of
such beneficial interest must deliver to the Depositary either (A) (1) a written
order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to credit or
cause to be credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such increase
or (B) (1) a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given by
the Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above, provided that in no event shall Definitive
Notes be issued upon the transfer or exchange of beneficial interests in the
Regulation S Temporary Global Note prior to (x) the expiration of the Restricted
Period and (y) the receipt by the Registrar of any certificates determined by
the Company to be required pursuant to Rule 903 under the Securities Act. Upon
consummation of an Exchange Offer by the Company in accordance with Section
2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to
have been satisfied upon receipt by the Registrar of the instructions contained
in the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global Notes
contained in this Indenture and the Notes or otherwise applicable under the
Securities Act, the Trustee shall adjust the principal amount of the relevant
Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
------------------------------------------------------
Global Note. A beneficial interest in any Restricted Global Note may be
- -----------
transferred to a Person who takes delivery thereof in the form of a beneficial
interest in another Restricted Global Note if the transfer complies with the
requirements of Section 2.06(b)(ii) above and the Registrar receives the
following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications in
item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the Regulation
S Global Note, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof.
25
<PAGE>
(iv) Transfer and Exchange of Beneficial Interests in a
--------------------------------------------------
Restricted Global Note for Beneficial Interests in the Unrestricted Global
- --------------------------------------------------------------------------
Note. A beneficial interest in any Restricted Global Note may be exchanged by
- ----
any holder thereof for a beneficial interest in an Unrestricted Global Note
transferred to a Person who takes delivery thereof in the form of a beneficial
interest in a Unrestricted Global Note if the exchange or transfer complies with
the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and the
holder of the beneficial interest to be transferred, in the case of an exchange,
or the transferee, in the case of a transfer, makes the certification required
by Section 5 of the Registration Rights Agreement in the applicable Letter of
Transmittal or via the Depositary's book-entry system;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit C hereto, including the certifications in item
(1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of Exhibit
B hereto, including the certifications in item (3)(c) or (4) thereof; and, in
each such case set forth in this subparagraph (D), if the Company or the
Registrar so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Company or the Registrar, as
applicable, to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
26
<PAGE>
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
-----------------------------------------------------------------
(i) Beneficial Interests in Restricted Global Notes to Restricted
--- -------------------------------------------------------------
Definitive Notes. If any holder of a beneficial interest in a Restricted Global
- ----------------
Note proposes to exchange such beneficial interest for a Restricted Definitive
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule
904, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a) thereof; or
(E) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall make available for delivery such
Definitive Notes to the Persons in whose names such Notes are so registered.
Any Definitive Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement
Legend and shall be subject to all restrictions on transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes delivery
thereof in the form of a Definitive Note prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
determined by the Company to be required pursuant to Rule 903(c)(3)(ii)(B) under
the Securities
27
<PAGE>
Act, except in the case of a transfer pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to
--------------------------------------------------
Unrestricted Definitive Notes. A holder of a beneficial interest in a
- -----------------------------
Restricted Global Note may exchange such beneficial interest for an Unrestricted
Definitive Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and the
holder of such beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, makes the certifications required by
Section 5 of the Registration Rights Agreement in the applicable Letter of
Transmittal;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for an
Unrestricted Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of an Unrestricted Definitive Note
that does not bear the Private Placement Legend, a certificate from such holder
in the form of Exhibit B hereto, including the certifications in item (3)(c) or
(4) thereof;
and, in each such case set forth in this subparagraph (D), if the Company or the
Registrar so requests or if the Applicable Procedures so require, an opinion of
counsel in form reasonably acceptable to the Company or the Registrar, as
applicable, to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
----------------------------------------------------
Unrestricted Definitive Notes. If any holder of a beneficial interest in an
- -----------------------------
Unrestricted Global Note proposes to exchange such beneficial interest for a
Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon satisfaction of
the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section
28
<PAGE>
2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate
and make available for delivery to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall
be registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall make available for delivery such
Definitive Notes to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
--------------------------------------------------------
Interests.
- ---------
(i) Restricted Definitive Notes to Beneficial Interests in
------------------------------------------------------
Restricted Global Notes. If any Holder of a Restricted Definitive Note
- -----------------------
proposes to exchange such Note for a beneficial interest in a Restricted Global
Note or to transfer such Restricted Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in a Restricted Global
Note, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred
to a QIB in accordance with Rule 144A, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1) thereof; or
(C) if such Restricted Definitive Note is being transferred
to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904, a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (2) thereof, upon confirmation of such receipt, the
Trustee shall cancel the Restricted Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of clause (B) above, the
144A Global Note, and in the case of clause (C) above, the Regulation S Global
Note, in each case, bearing the Private Placement Legend.
(ii) Restricted Definitive Notes to Beneficial Interests in
------------------------------------------------------
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
- -------------------------
exchange such Note for a beneficial interest in an Unrestricted Global Note or
transfer such Restricted Definitive Note to a Person who takes delivery thereof
in the form of a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, makes the certification required under Section 5 of the Registration
Rights Agreement in the applicable Letter of Transmittal;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights Agreement;
29
<PAGE>
(C) such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note, a certificate from such
Holder in the form of Exhibit B hereto, including the certifications in item
(3)(c) or (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Company or
Registrar so requests or if the Applicable Procedures so require, an opinion of
counsel in form reasonably acceptable to the Company or Registrar, as
applicable, to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon confirmation by the Registrar of satisfaction of the conditions
of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall
cancel the Definitive Notes and increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note or
transfer such Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note at any time. Upon
receipt of a request for such an exchange or transfer, the Trustee shall cancel
the applicable Unrestricted Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the Unrestricted Global
Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest in a Global Note is effected pursuant to subparagraph
(ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has
not yet been issued, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate principal
amount equal to the aggregate principal amount of Definitive Notes so
transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
--------------------------------------------------------------
Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder
30
<PAGE>
or by his attorney, duly authorized in writing. In addition, the requesting
Holder shall provide any additional certifications, documents and information,
as applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes.
----------------------------------------------------------
Any Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive Note
if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A, then
the transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the form of Exhibit
B hereto, including the certifications in item (2) thereof;
(C) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a) thereof; or
(D) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b) thereof.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
------------------------------------------------------------
Any Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, makes the certification required by Section 5 of the Registration
Rights Agreement in the applicable Letter of Transmittal;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
31
<PAGE>
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery thereof in
the form of an Unrestricted Definitive Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in item (3)(c) or (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the Company or
Registrar so requests, an opinion of counsel in form reasonably acceptable to
the Company or Registrar, as applicable, to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
--------------------------------------------------------
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a
- -----
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note. Upon receipt of a request to register such a transfer, the Registrar shall
register the Unrestricted Definitive Notes pursuant to the instructions from the
Holder thereof.
(f) Exchange Offer.
--------------
Upon the consummation of the Exchange Offer in accordance with the
Registration Rights Agreement, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate principal
amount equal to the aggregate principal amount of the beneficial interests in
the Restricted Global Notes tendered for acceptance by Persons that make the
certifications required by Section 5 of the Registration Rights Agreement in the
applicable Letters of Transmittal or via the Depositary's book-entry system, and
accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the aggregate principal amount of the
Restricted Definitive Notes tendered for acceptance by Persons that make the
certifications required by Section 5 of the Registration Rights Agreement in the
applicable Letters of Transmittal, and accepted for exchange in the Exchange
Offer. Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Persons designated by the
Holders of Definitive Notes so accepted Definitive Notes in the appropriate
principal amount.
(g) Legends. The following legends shall appear on the face of all
-------
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
------------------------
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT").
32
<PAGE>
THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF
THE ISSUER THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE AND THE LAST DATE ON WHICH THE ISSUER OR AN AFFILIATE
OF THE ISSUER WAS THE OWNER OF THE SECURITY, IN EITHER CASE OTHER THAN (1)
TO THE ISSUER, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
REVERSE OF THIS SECURITY), AND, IF SUCH TRANSFER IS BEING EFFECTED BY
CERTAIN TRANSFERORS SPECIFIED IN THE INDENTURE (AS DEFINED BELOW) PRIOR TO
THE EXPIRATION OF THE APPLICABLE "DISTRIBUTION COMPLIANCE PERIOD" (WITHIN
THE MEANING OF RULE 903(c)(3) OF REGULATION S UNDER THE SECURITIES ACT), A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE ISSUER OR THE TRUSTEE OR
TRANSFER AGENT IS DELIVERED BY THE TRANSFEREE TO THE ISSUER AND THE TRUSTEE
AND/OR TRANSFER AGENT, (4) TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING
THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A
CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE
TRANSFEREE TO THE ISSUER AND THE TRUSTEE AND/OR TRANSFER AGENT, (5)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR (6)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
IN EACH CASE IN ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS. AN
"INSTITUTIONAL ACCREDITED INVESTOR" HOLDING THIS SECURITY AGREES IT WILL
FURNISH TO THE ISSUER AND THE TRUSTEE AND/OR TRANSFER AGENT SUCH
CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO
CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
33
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WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE ISSUER THAT IT IS
(1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2)
AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS HOLDING
THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A
NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN
ACCOUNT SATISFYING THE REQUIREMENTS OF) RULE 902 UNDER REGULATION S UNDER
THE SECURITIES ACT."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(iii), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) of this Section 2.06 (and all Notes issued in
exchange therefor or substitution thereof) shall not bear the Private Placement
Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
------------------
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06
OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT
OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
-----------------------------------------
Temporary Global Note shall bear a legend in substantially the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, PRIOR TO THE
EXPIRATION OF A DISTRIBUTION COMPLIANCE PERIOD (DEFINED AS 40 DAYS
AFTER THE ISSUE DATE WITH RESPECT TO THE NOTES), MAY NOT BE: OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S,
AS DEFINED IN THE SECURITIES ACT, OR (2) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE
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144A UNDER THE SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144, AND (B) IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER
THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY
GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes.
----------------------------------------------
At such time as all beneficial interests in a particular Global Note
have been exchanged for Definitive Notes or a particular Global Note has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Note shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be
made on such Global Note by the Trustee or by the Depositary at the direction of
the Trustee to reflect such reduction, and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
------------------------------------------------------
(ii) To permit registrations of transfers and exchanges, the
Company shall, subject to the other provisions of this Section 2.06, execute and
the Trustee shall authenticate Global Notes and Definitive Notes upon the
Company's order or at the Registrar's request.
(iii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections 2.10,
3.06, 3.09, 4.10, 4.14 and 9.05 hereof).
(iv) The Registrar shall not be required to register the transfer
of or exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
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(v) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes shall
be the valid obligations of the Company, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Global Notes or Definitive
Notes surrendered upon such registration of transfer or exchange.
(vi) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period beginning at
the opening of business 15 Business Days before the day of the mailing of a
notice of redemption or repurchase under Section 3.02 or 4.14 hereof, as
applicable, and ending at the close of business on such day, (B) to register the
transfer of or to exchange any Note so selected for redemption or repurchase in
whole or in part, except the unredeemed portion of any Note being redeemed or
repurchased in part or (c) to register the transfer of or to exchange a Note
between a Record Date and the next succeeding Interest Payment Date.
(vii) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and treat
the Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on such
Notes and for all other purposes, and none of the Trustee, any Agent or the
Company shall be affected by notice to the contrary.
(viii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(ix) All certifications, certificates and opinions of counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by facsimile.
(x) Each Holder agrees to indemnify the Trustee and the
Registrar against any liability that may result from the transfer, exchange or
assignment of such Holder's Note in violation of any provision of this Indenture
and/or applicable United States federal or state securities law.
(xi) Neither the Trustee nor the Registrar shall have any
obligation or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under applicable law
with respect to any transfer of any interest in any Note (including any
transfers between or among Participants or beneficial owners of interests in any
Global Note) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by the terms of, this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
SECTION 2.7 Replacement Notes.
-----------------
If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of
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<PAGE>
the Trustee and the Company to protect the Company, the Trustee, any Agent and
any authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto, and
may charge for its expenses (including the fees and expenses of the Trustee and
reasonable attorney's fees and expenses) in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
If any mutilated, lost, stolen or destroyed Note has become or is
about to become due and payable, the Company, in its sole discretion, may,
instead of issuing a new Note, pay such Note.
SECTION 2.8 Outstanding Notes.
-----------------
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser or protected purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.9 Treasury Notes.
--------------
In determining whether the Holders of the required aggregate principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person that is an Affiliate of the Company, shall be
considered as though 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 that the Trustee knows are so owned
shall be so disregarded.
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SECTION 2.10 Temporary Notes.
---------------
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11 Cancellation.
------------
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirements of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12 Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent Special Record Date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. 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. The Company shall fix or cause to be fixed
each such Special Record Date and payment date, provided that no such Special
Record Date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the Special Record Date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the company) shall mail or cause to be mailed to Holders a
notice that states the Special Record Date, the related payment date and the
amount of such interest to be paid. The defaulted interest shall be considered
paid upon deposit with the Trustee or the Paying Agent of an amount of money
equal to the aggregate amount proposed to be paid in respect of such defaulted
interest, and interest on such defaulted interest shall thereafter cease to
accrue from that date. The Company may make payment of any defaulted interest in
any other lawful manner not inconsistent with the requirements of any securities
exchange or other trading market on which the securities of the company are
listed or traded, and upon such notice as may be required by such exchange or
trading market, if, after written notice given by the Company to the Trustee of
the proposed payment, such manner of payment shall be deemed practicable by the
Trustee.
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<PAGE>
SECTION 2.13 Cusip Numbers.
-------------
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use CUSIP numbers in notice of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or the
omission of such numbers. The Company shall promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
-------------------------
SECTION 3.1 Notices to Trustee.
------------------
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 35 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed, (iv) the redemption price and (v) the CUSIP
numbers of the Notes to be redeemed.
SECTION 3.2 Selection of Notes to Be Redeemed.
---------------------------------
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed or purchased among the Holders of
the Notes in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not so listed, on a pro rata basis, by lot or in accordance with any other
method the Company considers fair and appropriate. In the event of partial
redemption by lot, the particular Notes to be redeemed shall be selected, unless
otherwise provided herein, not less than 30 nor more than 60 days prior to the
redemption date by the Trustee from the outstanding Notes not previously called
for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.3 Notice of Redemption.
--------------------
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address. The notice shall identify
the Notes to be redeemed and shall state:
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(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.4 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.5 Deposit of Redemption Price.
---------------------------
Prior to 12:00 noon New York City time on the redemption date, the
Company shall deposit with the Trustee or with the Paying Agent money sufficient
to pay the redemption price of and accrued interest on all Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after a Record Date but on or prior to the related Interest Payment Date,
then any accrued and unpaid interest shall be paid to the Person in
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whose name such Note was registered at the close of business on such Record
Date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.6 Notes Redeemed in Part.
----------------------
Upon surrender and cancellation of a Note that is redeemed in part,
the Company shall issue and, upon the Company's written, request, the Trustee
shall authenticate, for the Holder at the expense of the Company a new Note
equal in principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.7 Optional Redemption.
--------------------
(a) The Notes will not be redeemable at the Company's option prior
to December 1, 2003. Thereafter, the Notes will be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest thereon to the applicable redemption date (subject to the right of
Holders as of the relevant record date to receive interest due on the relevant
interest payment date), if redeemed during the twelve-month period beginning on
December 1 of the years indicated below:
Percentage
of Principal
Year Amount
---- ------------
2003........................................... 106.500%
2004........................................... 103.250%
2005 and thereafter............................ 100.000%
(b) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.8 Mandatory Redemption.
---------------------
Except as provided in Sections 4.10 and 4.14 hereof, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
SECTION 3.9 Offer to Purchase by Application of Excess Proceeds.
---------------------------------------------------
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an Asset Sale Offer, it shall follow the procedures
specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required
41
<PAGE>
by applicable law (the "Offer Period"). No later than five Business Days after
the termination of the Offer Period (the "Purchase Date"), the Company shall
purchase the principal amount of Notes required to be purchased pursuant to
Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has
been tendered, all Notes tendered in response to the Asset Sale Offer. Payment
for any Notes so purchased shall be made in the same manner as interest payments
are made.
If the Purchase Date is on or after a Record Date and on or before the
related Interest Payment Date, any accrued and unpaid interest shall be paid to
the Person in whose name a Note is registered at the close of business on such
Record Date, and no additional interest shall be payable to Holders who tender
Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if
the Company, the depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the aggregate
principal amount of the Note the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata
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basis (with such adjustments as may be deemed appropriate by the Company so that
only Notes in denominations of $1,000, or integral multiples thereof, shall be
purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before 12:00 noon New York City time on the Purchase Date, the
Company shall, to the extent lawful, accept for payment, on a pro rata basis to
the extent necessary, the Offer Amount or portions thereof tendered pursuant to
the Asset Sale offer, or if less than the Offer Amount has been tendered, all
Notes tendered, and shall deliver to the Trustee an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 3.09. The Company, the
Depositary or the Paying Agent, as the case may be, shall promptly (but in any
case not later than five days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Notes tendered by
such Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Note, and the Trustee, upon written request from the
Company, shall authenticate and mail or deliver such new Note to such Holder, in
a principal amount equal to any unpurchased portion of the Note surrendered. Any
Note not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company shall publicly announce the results of the Asset
Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
---------
SECTION 4.1 Payment of Notes.
----------------
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest and Liquidated Damages, if any, on the Notes on the dates
and in the manner provided in the Notes. Principal, premium, if any, and
interest and Liquidated Damages, if any, shall be considered paid on the date
due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 12:00 noon New York City time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest and Liquidated Damages, if any,
then due.
Notwithstanding anything to the contrary in this Indenture, the
Company may, to the extent it is required to do so by law, deduct or withhold
income or other similar taxes imposed by the United States of America from
principal or interest payments hereunder.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of
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interest and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.
SECTION 4.2 Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of 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.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; 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 Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 hereof.
SECTION 4.3 Reports.
-------
At all times from and after the date of the commencement of an
Exchange Offer or the effectiveness of a shelf registration statement with
respect to the Notes (the "Registration"), whether or not the Company is then
required to file reports with the Commission, the Company shall file with the
Commission all such reports and other information as it would be required to
file with the Commission by Sections 13(a) or 15(d) under the Exchange Act if it
were subject thereto. The Company shall supply the applicable Trustee and each
applicable Holder or shall supply to the applicable Trustee for forwarding to
each such applicable Holder, without cost to such Holder, copies of such reports
and other information. At all times prior to the date of the Registration, the
Company shall, at its cost, deliver to the Trustee and each Holder of the Notes
quarterly and annual reports substantially equivalent to those which would be
required by the Exchange Act if the Company were subject thereto. In addition,
at all times prior to the Registration, upon the request of any Holder or any
prospective purchaser of the Notes designated by a Holder, the Company shall
supply to such Holder or such prospective purchaser the information required
under Rule 144A under the Securities Act.
SECTION 4.4 Compliance Certificate.
----------------------
(a) The Company shall deliver to the Trustee within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the
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signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Company is taking
or proposes to take with respect thereto. For purposes of this paragraph, such
compliance shall be determined without regard to any period of grace or
requirement of notice provided under this Indenture.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) hereof shall be accompanied by
a written statement of the Company's independent public accountants (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
(d) If Liquidated Damages are payable under the Registration Rights
Agreement, the Company shall deliver to the Trustee a certificate to that effect
stating (i) the amount of Liquidated Damages that is payable and (ii) the date
on which Liquidated Damages is payable. Unless and until a Responsible Officer
of the Trustee receives at the Corporate Trust Office such a certificate, the
Trustee may assume without inquiry that no Liquidated Damages are payable. If
Liquidated Damages have been paid by the Company directly to the persons
entitled to them, the Company shall deliver to the Trustee a certificate setting
forth the particulars of such payment.
SECTION 4.5 Taxes.
-----
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
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SECTION 4.6 Stay, Extension and Usury Laws.
------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that 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 shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as through no such law has
been enacted.
SECTION 4.7 Restricted Payments.
-------------------
(A) The Company shall not, and shall not permit any of
the Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other
payment or distribution on account of the Company's Equity Interests or to the
direct or indirect holders of the Company's Equity Interests in their capacity
as stockholders (other than dividends or distributions payable (a) in Equity
Interests (other than Disqualified Stock) of the Company or (b) to the Company
or a Restricted Subsidiary of the Company);
(ii) purchase, redeem or otherwise acquire or retire for
value any Equity Interests of the Company or any direct or indirect parent of
the Company (other than any such Equity Interests owned by the Company or any
Restricted Subsidiary of the Company);
(iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Subordinated Indebtedness, except a payment of interest or principal at any
Stated Maturity; or
(iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless:
(a) at the time of and after giving effect to such Restricted
Payment, no Default or Event of Default shall have occurred and be continuing;
(b) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable period, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to Section 4.09(a); and
(c) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Company and the Restricted
Subsidiaries on or after the Issue Date, is less than the sum, without
duplication, of
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(i) the amount of the Company's (x) Cumulative
Consolidated Cash Flow determined at the time of such Restricted Payment less
(y) 150% of the cumulative consolidated interest expense, determined for the
period commencing on the first day of the fiscal quarter which includes the
Issue Date and ending on the last day of the last fiscal quarter preceding the
date on which such Restricted Payment is to be made for which reports have been
filed with the Commission or provided to the Trustee pursuant to Section 4.03,
plus
(ii) 100% of the aggregate Net Cash Proceeds received by
the Company after the Issue Date as a Capital Contribution or from the issue or
sale (other than to a Subsidiary of the Company) of Equity Interests of the
Company (other than Disqualified Stock) or from the issue or sale (other than to
a Subsidiary of the Company) of Disqualified Stock or debt securities of the
Company that have been converted or exchanged into such Equity Interests, plus
the amount of Net Cash Proceeds received by the Company upon such conversion or
exchange (other than a conversion or exchange by a Subsidiary of the Company),
plus
(iii) the aggregate amount equal to the net reduction in
Restricted Investments in Unrestricted Subsidiaries on or after the Issue Date
resulting from (x) dividends, distributions, interest payments, return of
capital, repayments of Restricted Investments or other transfers of assets to
the Company or any Restricted Subsidiary from any Unrestricted Subsidiary and
not otherwise included in the calculation of Cumulative Consolidated Cash Flow
required by clause (c)(i) above, (y) proceeds realized by the Company or any
Restricted Subsidiary upon the sale of such Restricted Investment to a Person
other than the Company or any Subsidiary of the Company, or (z) the
redesignation of any Unrestricted Subsidiary as a Restricted Subsidiary, not to
exceed in the case of any of the immediately preceding clauses (x), (y) or (z)
the aggregate amount of Restricted Investments made by the Company or any
Restricted Subsidiary in such Unrestricted Subsidiary on or after the Issue
Date, plus
(iv) to the extent that any Restricted Investment that
was made on or after the Issue Date is sold for cash or otherwise liquidated or
repaid for cash, the lesser of, to the extent paid to the Company or a
Restricted Subsidiary, (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B) the initial
amount of such Restricted Investment, minus
(v) 50% of the cumulative aggregate principal amount of
any outstanding Indebtedness incurred pursuant to Section 4.09(b)(ii).
(B) So long as no Default or Event of Default shall
have occurred and be continuing, the foregoing provisions shall not prohibit
(i) the payment of any dividend within 60 days after
the date of declaration thereof, if at said date of declaration such payment
would have complied with the foregoing provisions;
(ii) the redemption, repurchase, retirement, defeasance
or other acquisition of any Subordinated Indebtedness or Equity Interests of the
Company in exchange for, or out of the Net Cash Proceeds of the substantially
concurrent sale (other than to a
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Subsidiary of the Company) of, Equity Interests of the Company (other than any
Disqualified Stock); provided that the amount of any such Net Cash Proceeds that
are utilized for, and the Equity Interests issued or exchanged for, any such
redemption, repurchase, retirement, defeasance or other acquisition shall be
excluded from clause (c) of the preceding paragraph and each other clause of
this paragraph;
(iii) the defeasance, redemption, retirement, repurchase
or other acquisition of Subordinated Indebtedness with the Net Cash Proceeds
from, or issued in exchange for, a substantially concurrent incurrence of
Permitted Refinancing Indebtedness; provided that the amount of any such Net
Cash Proceeds that are utilized for any such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded from clause (c) of the
preceding paragraph and each other clause of this paragraph;
(iv) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company held by any member
of the Company's or a Restricted Subsidiary's management; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $3 million in any fiscal year;
(v) Restricted Investments not to exceed the aggregate
fair market value (measured on the date each such Restricted Investment was made
or returned, as applicable), when taken together with all other Restricted
Investments made pursuant to this clause (v) that are at the time outstanding,
the sum of (x) $30 million, plus (y) the amount then available for the making of
Restricted Payments pursuant to clause (c) of the preceding paragraph without
giving effect to subclause (i) thereof;
(vi) Restricted Investments the payment for which
consists exclusively of Equity Interests (other than Disqualified Stock) of the
Company; and
(vii) the repurchase of Equity Interests of the Company
in accordance with, and only to the extent required by, dissenters rights of
appraisal under applicable law.
Each Restricted Payment permitted pursuant to clauses (i), (iv), (v), (vi) and
(vii) above shall be included, and each Restricted Payment permitted pursuant to
clauses (ii), (iii) and (vi) above shall be excluded (except as specifically set
forth in each such clause), for all purposes when performing the calculation set
forth in clause (c) of Section 4.07(A).
(C) The Board of Directors may not designate any
Subsidiary of the Company (other than a newly created Subsidiary in which no
Investment has previously been made (other than any de minimis amount required
to capitalize such Subsidiary in connection with its organization)) as an
Unrestricted Subsidiary (a "Designation") unless: (i) no Default or Event of
Default shall have occurred and be continuing at the time of or after giving
effect to such Designation and (ii) the Company would not be prohibited under
this Indenture from making a Restricted Investment at the time of such
Designation (assuming the effectiveness of such Designation for purposes of this
Section 4.07) in an amount equal to the fair market
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value of the net Investment of the Company and all Restricted Subsidiaries in
such Subsidiary on such date.
(D) In the event of any such Designation, all
outstanding Investments owned by the Company and the Restricted Subsidiaries in
the Subsidiary so designated will be deemed to be a Restricted Investment made
as of the time of such Designation and will reduce the amount available for
Restricted Payments under Section 4.07(A) or (B). All such outstanding
Investments will be deemed to constitute Restricted Payments in an amount equal
to the fair market value of such Investments at the time of such Designation. A
Designation may be revoked and an Unrestricted Subsidiary may thus be
redesignated as a Restricted Subsidiary (a "Revocation") by a resolution of the
Board of Directors delivered to the Trustee; provided that the Company shall not
make any Revocation unless: (i) no Default or Event of Default shall have
occurred and be continuing at the time of or after giving effect to such
Revocation; and (ii) 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 at such time for all purposes under
this Indenture.
(E) The amount of all Restricted Payments (other than
cash) shall be the fair market value on the date of the Restricted Payment of
the asset(s) or securities proposed to be transferred or issued by the Company
(or such Restricted Subsidiary, as the case may be) pursuant to the Restricted
Payment. The fair market value of any asset(s) or securities that are required
to be valued by this Section 4.07 shall be determined in good faith by the Board
of Directors; provided that such determination shall be supported by the opinion
or appraisal of an accounting, appraisal or investment banking firm of national
standing if such fair market value would exceed $10 million.
SECTION 4.8 Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.
------------
(A) The Company shall not, and shall not permit any of
the Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to:
(i) (a) pay dividends or make any other distributions
to the Company or any of the Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company or any of the
Restricted Subsidiaries,
(ii) make loans or advances to the Company or any of the
Restricted Subsidiaries, or
(iii) transfer any of its properties or assets to the
Company or any of the Restricted Subsidiaries.
(B) The foregoing restrictions shall not apply to
encumbrances or restrictions existing under or by reason of:
(a) Existing Indebtedness as in effect on the Issue Date;
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(b) any Permitted Credit Facility or Permitted Foreign Credit
Facility, provided that (i) the aggregate outstanding amount of any such
Indebtedness does not exceed the amount permitted under clause (v) of the
definition of Permitted Indebtedness, (ii) with respect to any Permitted Credit
Facility, such restrictions apply only in the event of a payment default under
such Permitted Credit Facility, and (iii) the chief financial officer of the
Company determines in good faith that (A) any such restrictions contained in any
such Permitted Credit Facility or Permitted Foreign Credit Facilities are no
more restrictive, taken as a whole, than those contained in a similar credit
facility with terms that are commercially reasonable for a borrower engaged in a
business comparable to the Company that has substantially comparable
Indebtedness, and (B) any such restrictions shall not materially affect the
Company's ability to make principal, premium or interest payments on the Notes;
(c) applicable law;
(d) any instrument governing Indebtedness or Capital Stock of a
Person or assets acquired by the Company or any of the Restricted Subsidiaries
as in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired; provided, that in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred;
(e) customary non-assignment provisions in leases entered into in
the ordinary course of business;
(f) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature described in
clause (iii) above on the property so acquired, constructed, leased or
improved';
(g) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary pending
its sale or other disposition, provided that the consummation of such
transaction would not result in an Event of Default or an event that, with the
passing of time or giving of notice or both, would constitute an Event of
Default, that such restriction terminates if such transaction is not consummated
and that the consummation or abandonment of such transaction occurs within one
year of the date such agreement was entered into';
(h) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those contained in
the agreements governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded;
(i) Liens securing Indebtedness otherwise permitted to be incurred
pursuant to Section 4.12 that limit the right of the Company or any of the
Restricted Subsidiaries to dispose of the assets subject to such Lien; and
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(j) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business.
SECTION 4.9 Incurrence of Indebtedness and Issuance of Preferred Stock.
----------------------------------------------------------
(a) The Company shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable for,
contingently or otherwise (including by way of merger, consolidation or
acquisition) (collectively, "incur"), any Indebtedness and the Company shall not
issue or incur any Disqualified Stock and shall not permit any of the Restricted
Subsidiaries to issue or incur any shares of Preferred Stock; provided, however,
that the Company may incur Indebtedness or issue or incur shares of Disqualified
Stock and the Restricted Subsidiaries may incur Acquired Debt or Acquired
Preferred Stock if either:
(i) the Consolidated Leverage Ratio at the end of the
Company's most recently ended fiscal quarter for which a consolidated balance
sheet of the Company (which has been filed with the Commission or provided to
the Trustee pursuant to Section 4.03) immediately preceding the date on which
such additional Indebtedness is incurred or such Preferred Stock is issued or
incurred would have been less than 6.0 to 1.0, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom); or
(ii) the Consolidated Capital Ratio at the end of the most
recently ended fiscal quarter (for which a consolidated balance sheet of the
Company has been filed with the Commission or provided to the Trustee pursuant
to Section 4.03) would have been less than 2.0 to 1.0 determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom).
(b) Notwithstanding the foregoing, the provisions of the paragraph
set forth immediately above shall not prohibit the incurrence of any of the
following items of Indebtedness (collectively, "Permitted Indebtedness"):
(i) Permitted Refinancing Indebtedness;
(ii) the incurrence by the Company of Indebtedness
represented by the Notes and the Exchange Notes;
(iii) the incurrence of Indebtedness by the Company owing to
any Restricted Subsidiary or Indebtedness of any Restricted Subsidiary owing to
the Company or any Restricted Subsidiary (but such Indebtedness shall be deemed
to be incurred upon such Indebtedness being held by any person other than the
Company or such Restricted Subsidiary including upon Designation and upon such
Restricted Subsidiary otherwise no longer being a Restricted Subsidiary);
provided that in the case of Indebtedness of the Company, such obligations shall
be unsecured and subordinated in all respects to the Company's obligations
pursuant to the Notes;
(iv) the incurrence by the Company of Indebtedness in an
aggregate amount incurred and outstanding at any time pursuant to this clause
(iv) of up to $30 million;
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(v) the incurrence (A) by the Company or any Restricted
Subsidiary (other than any Foreign Subsidiary) of Senior Debt (including under
one or more Permitted Credit Facilities) and (B) by any Foreign Subsidiary of
Indebtedness pursuant to one or more Permitted Foreign Credit Facilities, in an
aggregate amount incurred and outstanding at any time pursuant to this clause
(v) of up to the sum of (x) $125 million and (y) 85% of the aggregate accounts
receivable of the Company and the Restricted Subsidiaries as of the date of the
most recently available balance sheet of the Company which has been included in
a report filed with the Commission or provided to the Trustee pursuant to
Section 4.03;
(vi) the incurrence by the Company or any Foreign Subsidiary
of Purchase Money Indebtedness (A) pursuant to the terms of any Purchase Money
Indebtedness facility existing and as in effect on the Issue Date or (B)
constituting not more than 75% of the cost, including shipping, installation and
importation costs and sales, use and similar taxes (collectively, "Costs")
payable upon acquisition of the subject property (determined in accordance with
GAAP in good faith by the Board of Directors of the Company), to the Company or
any such Foreign Subsidiary, as applicable, of the property so purchased,
developed, acquired, constructed, improved or leased; provided that, with
respect to any Purchase Money Indebtedness incurred under clause (B) above, at
least 25% of the Costs payable upon acquisition of the subject property shall be
funded from Newly Raised Capital; provided, further, that any assets acquired by
a Foreign Subsidiary pursuant to this clause (vi) are acquired for use in the
ordinary course of business of such Foreign Subsidiary;
(vii) the incurrence by the Company or any of the Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing
or hedging interest or foreign currency exchange rate risk with respect to any
floating rate Indebtedness or foreign currency based Indebtedness, respectively,
that is permitted by the terms of this Indenture to be outstanding; provided
that the notional amount of any such Hedging Obligation does not exceed the
amount of Indebtedness or other liability to which such Hedging Obligation
relates; and
(viii) the incurrence by the Company and the Restricted
Subsidiaries of Indebtedness solely in respect of bankers acceptances, letters
of credit and performance bonds, all in the ordinary course of business.
(c) Indebtedness or Preferred Stock of any Person which is
outstanding at the time such Person becomes a Restricted Subsidiary of the
Company (including upon designation of any Subsidiary or other Person as a
Restricted Subsidiary or upon a Revocation such that such Subsidiary becomes a
Restricted Subsidiary) or is merged with or into or consolidated with the
Company or a Restricted Subsidiary of the Company shall be deemed to have been
incurred at the time such Person becomes such a Restricted Subsidiary of the
Company or is merged with or into or consolidated with the Company or a
Restricted Subsidiary of the Company, as applicable.
(d) Upon each incurrence, the Company may designate pursuant to
which provision of this Section 4.09 such Indebtedness is being incurred and
such Indebtedness shall not be deemed to have been incurred by the Company under
any other provision of this Section 4.09, except as stated otherwise in the
foregoing provisions or in the next sentence. For purposes of determining
compliance with this covenant, in the event that an item of Indebtedness
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meets the criteria of more than one of the types of Indebtedness described in
Section 4.09(b)(i) through (viii) above, or is permitted under the first
paragraph of this Section 4.09 and under one or more of such Sections, the
Company, in its sole discretion, may from time to time reclassify such item of
Indebtedness.
(e) The Company shall not, and shall not permit any of its
Restricted Subsidiaries (other than Foreign Subsidiaries) to, incur any
Indebtedness (including Permitted Indebtedness) that is contractually
subordinated in right of payment to any other Indebtedness unless such
Indebtedness is also contractually subordinated in right of payment to the Notes
on substantially identical terms; provided, however, that no Indebtedness shall
be deemed to be contractually subordinated in right of payment to any other
Indebtedness solely by virtue of being unsecured.
SECTION 4.10 Asset Sales.
-----------
The Company shall not, and shall not permit any of the Restricted
Subsidiaries to, directly or indirectly, consummate any Asset Sale, unless:
(i) 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 (as determined in good faith by the Board of Directors
(including as to the value of all noncash consideration) and set forth in an
Officer's Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of;
(ii) at least 75% of the consideration therefor is in the form
of cash and/or Cash Equivalents or Qualified Consideration; and
(iii) the Net Cash Proceeds received by the Company (or such
Restricted Subsidiary, as the case may be) from such Asset Sale are applied
within 360 days following the receipt of such Net Cash Proceeds, to the extent
the Company (or such Restricted Subsidiary, as the case may be) elects:
(a) to the redemption or repurchase of outstanding
Indebtedness, (I) that is either (A) secured Indebtedness or (B) Indebtedness of
the Company that ranks equally with the Notes but has a maturity date that is
prior to the maturity date of the Notes, in either case other than Subordinated
Indebtedness, or (II) that is Indebtedness of a Restricted Subsidiary; and/or
(b) to reinvest such Net Cash Proceeds (or any portion
thereof) in properties or assets (including Equity Interests of a Person that
will become a Restricted Subsidiary as a result of such investment) that will be
used in a Permitted Business.
The balance of such Net Cash Proceeds, after the application of such Net Cash
Proceeds as described in the immediately preceding clauses (a) and (b), shall
constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds equals or exceeds $10
million (taking into account income earned on such Excess Proceeds), the Company
shall be required to make a pro rata offer to all Holders and pari passu
Indebtedness with comparable provisions
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requiring such Indebtedness to be purchased with the proceeds of such Asset Sale
(an "Asset Sale Offer") to purchase the maximum principal amount or accreted
value in the case of Indebtedness issued with an original issue discount of
Notes and pari passu Indebtedness that may be purchased out of the Excess
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof or the accreted value thereof, as applicable, plus
accrued and unpaid interest thereon to the date of purchase (subject to the
right of Holders as of the relevant record date to receive interest due on the
relevant interest payment date), in accordance with the procedures set forth in
this Indenture and the agreements governing such pari passu Indebtedness. To the
extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount of Notes and
pari passu Indebtedness tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes and pari passu Indebtedness to be purchased on a pro rata basis in
proportion to the respective principal amounts (or accreted values in the case
of Indebtedness issued with an original issue discount) of the Notes and such
other Indebtedness. Upon completion of such Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero for purposes of the first sentence of
this paragraph.
The amount of
(i) any liabilities (as shown on the Company's (or such
Restricted Subsidiary's, as the case may be) most recent balance sheet), other
than Subordinated Indebtedness, of the Company or any Restricted Subsidiary,
that are assumed by the transferee of any such assets pursuant to an agreement
that immediately releases the Company and all of the Restricted Subsidiaries
from all liability in respect thereof;
(ii) Indebtedness of any Restricted Subsidiary that is no
longer a Restricted Subsidiary as a result of such Asset Sale, if the Company
and all of the Restricted Subsidiaries immediately are released from all
Guarantees of payment of such Indebtedness and such Indebtedness is no longer
the liability of the Company or any of the Restricted Subsidiaries; and
(iii) any securities, notes or other obligations received by
the Company (or such Restricted Subsidiary, as the case may be) from such
transferee that are converted by the Company (or such Restricted Subsidiary, as
the case may be) into cash and/or Cash Equivalents within 90 days of the date of
such Asset Sale (to the extent of the cash and/or Cash Equivalents received)
will be deemed to be cash and/or Cash Equivalents for purposes of this
provision.
Notwithstanding any provision of this Section 4.10, the provisions of
this Section 4.10 shall not apply to any transaction constituting a Restricted
Payment that is permitted by Section 4.07 or that otherwise constitutes a
Permitted Investment.
SECTION 4.11 Transactions with Affiliates.
----------------------------
The Company shall not, and shall not permit any of the Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or
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assets to, or purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms that are not
materially less favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person; and
(ii) with respect to any Affiliate Transaction or series of
related Affiliate Transactions
(A) involving aggregate consideration in excess of $5
million, the Company delivers to the Trustee a resolution of the Board of
Directors set forth in an Officers' Certificate that such Affiliate Transaction
is approved by a majority of the disinterested members of the Board of Directors
and that such Affiliate Transaction complies with clause (i) above and is in the
best interests of the Company or such Restricted Subsidiary; and
(B) if involving aggregate consideration in excess of
$10 million, a favorable written opinion as to the fairness to the Company of
such Affiliate Transaction from a financial point of view is also obtained by
the Company from an accounting, appraisal or investment banking firm of national
standing.
Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions:
(i) (a) the entering into, maintaining or performance of any
employment contract, collective bargaining agreement, benefit plan, program or
arrangement, related trust agreement or any other similar arrangement for or
with any employee, officer or director heretofore or hereafter entered into in
the ordinary course of business, including vacation, health, insurance, deferred
compensation, retirement, savings or other similar plans or (b) the payment of
compensation, performance of indemnification or contribution obligations, or an
issuance, grant or award of stock, options, or other equity-related interests or
other securities, to employees, officers or directors in the ordinary course of
business;
(ii) transactions between or among the Company and/or the
Restricted Subsidiaries;
(iii) payment of reasonable directors fees;
(iv) any sale or other issuance of Equity Interests (other
than Disqualified Stock) of the Company;
(v) Affiliate Transactions in effect or approved by the Board
of Directors on the Issue Date, including any amendments thereto (provided that
the terms of such amendments are not materially less favorable to the Company
than the terms of such agreement prior to such amendment); and
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(vi) Restricted Payments that are permitted under Section 4.07
and Permitted Investments described under clause (d) of the definition thereof.
SECTION 4.12 Liens.
-----
The Company shall not, and shall not permit any of the Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or otherwise
cause or suffer to exist or become effective any Lien of any kind (other than
Permitted Liens) to secure Indebtedness upon any of their property or assets,
now owned or hereafter acquired, or upon any income or profits therefrom unless
all payments due under this Indenture and the Notes are secured (except as
provided in the next clause) on an equal and ratable basis with the obligations
so secured and no Lien shall be granted or be allowed to exist which secures
Subordinated Indebtedness except with respect to Acquired Debt, in which case,
however, such Liens must be made junior and subordinate to the Liens granted to
the Holders of the Notes.
SECTION 4.13 Corporate Existence.
-------------------
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the lose thereof is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.14 Change of Control.
-----------------
(a) Upon the occurrence of a Change of Control, each Holder will
have the right to require the Company to purchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at a purchase price in
cash equal to 101% of the aggregate principal amount thereof (the "Change of
Control Payment"), plus accrued and unpaid interest (and Liquidated Damages, if
any) thereon to the date of purchase (subject to the right of Holders as of a
record date to receive interest due on the relevant interest payment date);
provided, that, the Company shall not be obligated to repurchase Notes pursuant
to a Change of Control Offer in the event that it has exercised its rights to
redeem all of the Notes pursuant to this Indenture. Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to purchase Notes on the date specified in such notice, which date shall be no
earlier than 30 and no later than 60 days from the date such notice is mailed
(the "Change of Control Payment Date"), in accordance with the procedures
required by this Indenture and described in such notice.
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(b) The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations to the
extent such laws and regulations are applicable in connection with the purchase
of Notes as a result of a Change of Control. To the extent that the provisions
of any securities laws or regulations conflict with any of the provisions of
this Section 4.14, the Company shall comply with the applicable securities laws
and regulations and will be deemed not to have breached its obligations under
this Section 4.14 by virtue thereof.
(c) On the Change of Control Payment Date, the Company shall, to
the extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment plus accrued and unpaid
interest thereon and Liquidated Damages, if any, in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail or deliver to each Holder of Notes
so tendered the Change of Control Payment plus accrued and unpaid interest
thereon and Liquidated Damages, if any, for such Notes, and the Trustee shall
promptly authenticate and mail or deliver (or cause to be transferred by book
entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of Notes surrendered, if any; provided that each such new Note will be
in a principal amount of $1,000 or an integral multiple thereof. The Company
shall publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.
SECTION 4.15 Business Activities.
-------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage, to more than a de minimis extent, in any business other
than a Permitted Business.
SECTION 4.16 Payments for Consent.
--------------------
Neither the Company nor any of its Restricted Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or is paid to all Holders of the Notes that consent, waive or agree to amend
such terms or provisions of this Indenture or the Notes in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
SECTION 4.17 Money for Payments to Be Held in Trust.
--------------------------------------
If the Company shall at any time act as its own Paying Agent, it
shall, on or before each due date of the principal, premium, interest or
Liquidated Damages, if any, with respect to the Notes, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal, premium, interest or Liquidated Damages, if any, so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided, and shall promptly notify the Trustee of its action or failure so to
act.
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Whenever the Company shall have one or more Paying Agents for the
Notes, it shall, on or before each due date of the principal, premium, interest
or Liquidated Damages, if any, with respect to the Notes, deposit with a Paying
Agent a sum in same day funds (or New York Clearing House funds if such deposit
is made prior to the date on which such deposit is required to be made)
sufficient to pay the principal, premium, interest or Liquidated Damages, if
any, so becoming due (or at the option of the Company, payment of interest may
be mailed by check to the Holders of the Notes at their respective addresses Bet
forth in the register of Holders; provided that all payments with respect to
Notes represented by one or more permanent global Notes will be paid by wire
transfer of immediately available funds to the account of the Depository Trust
Company or any successor thereto) such sum to be held in trust for the benefit
of the Persons entitled to such principal, premium, interest or Liquidated
Damages, if any, and (unless such Paying Agent is the Trustee) the Company shall
promptly notify the Trustee of such action or any failure so to act.
The Company shall cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent shall:
(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 Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee written notice of any default by the Company
(or any other obligor upon the Notes) in the making of any payment of principal,
premium, interest or Liquidated Damages, if any;
(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 respects with
the provisions of this Indenture relating to the duties, rights and obligations
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
direct any 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 shall 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, premium, interest or
Liquidated Damages, if any, with respect to a 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 at the written request of the Company or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Note shall 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
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to such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, shall at the expense of the
Company cause notice to be promptly sent to each Holder 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 notification any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 4.18 Status as Investment Company.
----------------------------
The Company shall not, and shall 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 to 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.
ARTICLE 5
SUCCESSORS
----------
SECTION 5.1 Merger, Consolidation or Sale of Assets.
---------------------------------------
(a) The Company may not, directly or indirectly, (1) consolidate or
merge with or into (whether or not the Company is the surviving corporation), or
sell, assign, transfer, convey or otherwise dispose of all or substantially all
of its properties or assets, in one or more related transactions, to another
Person or (2) permit any of the Restricted Subsidiaries to enter into any such
transaction or series of transactions if it would result in such disposition of
all or substantially all of the assets of the Company and the Restricted
Subsidiaries on a consolidated basis, unless:
(i) the Company is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the Person formed by or surviving any such consolidation
or merger (if other than the Company) or the Person to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
assumes all the obligations of the Company under the Registration Agreement, the
Notes, the Exchange Notes and this Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee;
(iii) no Default or Event of Default (or an event that, with
the passing of time or giving of notice or both, would constitute an Event of
Default) shall exist or shall occur immediately after giving effect on a pro
forma basis to such transaction;
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(iv) except in the case of a merger of the Company with or
into a Wholly Owned Restricted Subsidiary of the Company, the Company or the
Person formed by or surviving any such consolidation or merger (if other than
the Company), or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made will immediately after such transaction and
after giving pro forma effect thereto and any related financing transactions as
if the same had occurred at the beginning of the applicable period, be permitted
to incur at least $1.00 of additional Indebtedness pursuant to Section
4.09(a)(i);
(v) if, as a result of any such transaction, property or
assets of the Company would become subject to a Lien subject to the provisions
of this Indenture described under Section 4.12, the Company or the successor
entity to the Company shall have secured the Notes as required by said Section;
and
(vi) the Company shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
(b) The Company may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person.
SECTION 5.2 Successor Corporation Substituted.
---------------------------------
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01
hereof, the successor Person formed by such consolidation or into which the
Company is merged or to which such transfer is made shall succeed to and (except
in the case of a lease) be substituted for (so that from and after the date of
such consolidation, merger or transfer, the provisions of this Indenture
referring to the "Company" shall refer instead to the successor Person and not
to the Company), and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person had been named
herein as the company, and (except in the case of a lease) the Company shall be
released from the obligations under the Notes and this Indenture except with
respect to any obligations that arise from, or are related to, such transaction.
ARTICLE 6
DEFAULTS AND REMEDIES
---------------------
SECTION 6.1 Events of Default.
-----------------
(a) "Events of Defaults" are:
(i) default for 30 days in the payment when due of interest
on the Notes; or
(ii) default in the payment when due of the principal of, or
premium, if any, on the Notes; or
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(iii) failure by the Company or any of the Restricted Subsidiaries
to comply with the provisions described in Section 4.10 or 4.14; or
(iv) failure by the Company or any of the Restricted Subsidiaries
for 60 days after notice to comply with any of its other agreements in this
Indenture, the Notes or the Escrow Agreement; or
(v) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness of the Company or any of the Restricted Subsidiaries (or the
payment of which is Guaranteed by the Company or any of the Restricted
Subsidiaries) whether such Indebtedness or Guarantee now exists or is created
after the Issue Date, and either such Indebtedness is already due and payable or
such default results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the amount of any such Indebtedness,
together with the amount of any other such Indebtedness the maturity of which
has been so accelerated or which is already due and payable, aggregates $10
million or more; or
(vi) one or more judgments, orders or decrees for the payment of
money in excess of $10 million, individually or in the aggregate (net of
applicable insurance coverage which is acknowledged in writing by the insurer),
shall be entered against the Company or any 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
(vii) the Company shall assert or acknowledge in writing that
the Escrow Agreement is invalid or unenforceable; or
(viii) the Company or any of its Significant Subsidiaries:
(A) commences a voluntary case under any Bankruptcy Law,
(B) consents to the entry of an order for relief against it
in an involuntary case under any Bankruptcy Law,
(C) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is not paying its debts as they become due; or
(ix) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any of its
Significant Subsidiaries,
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(B) appoints a custodian of the Company or any of its
Significant Subsidiaries or for all or substantially all of the property of the
Company or any of its Significant Subsidiaries, or
(C) orders the liquidation of the Company or any of its
Significant Subsidiaries; and the order or decree remains unstayed and in effect
for 60 consecutive days.
(b) The Company shall be required to deliver to the Trustee
annually a statement regarding compliance with this Indenture, and the Company
shall be required within 30 days of becoming aware of any Default or Event of
Default to deliver to the Trustee a statement specifying such Default or Event
of Default. The Trustee may withhold from Holders notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal of, premium, if any, or interest on, the Notes) if it
determines that withholding notice is in their interest.
SECTION 6.2 Acceleration
------------
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the then outstanding
Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (viii)
or (ix) of Section 6.01 hereof occurs with respect to the Company, any of its
Restricted Subsidiaries that constitutes a Significant Subsidiary or any group
of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, all outstanding Notes shall be due and payable
immediately without further action or notice. The Holders of a majority in
aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.
SECTION 6.3 Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 6.4 Waiver of Past Defaults.
-----------------------
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes (or, with respect to a provision of this Indenture
that may only be amended by
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the Holders of not less than 66 2/3% in aggregate principal amount of the then
outstanding Notes, the Holders of not less than 66 2/3% in aggregate principal
amount of the then outstanding Notes) by written notice to the Trustee may on
behalf of the Holders of all of the Notes waive an existing Default or Event of
Default and its consequences hereunder, except a continuing Default or Event of
Default in the payment of the principal of, premium and Liquidated Damages, if
any, or interest on, the Notes (including in connection with an offer to
purchase). 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, but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 6.5 Control by Majority.
-------------------
Holders may not enforce this Indenture or the Notes except as
provided herein. Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee
determines may be unduly prejudicial to the rights of other Holders or that may
involve the Trustee in personal liability.
SECTION 6.6 Limitation on Suits.
-------------------
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders offer and, if requested, provide
to the Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.7 Rights of Holders of Notes to Receive Payment.
---------------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest an
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the Note, on or after the respective due dates expressed in the Note (including
in connection with an offer to purchase), or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
SECTION 6.8 Collection Suit by Trustee.
--------------------------
If an Event of Default specified in Section 6.01(i) or (ii) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and 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.
SECTION 6.9 Trustee May File Proofs of Claim.
--------------------------------
The Trustee is authorized to file such proofs of claim and 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, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to participate as a member, voting or otherwise, of
any official committee of creditors appointed in such matter and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims 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 to the Trustee any amount due to
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 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. 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, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10 Priorities.
----------
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
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First: to the Trustee, its agents and counsel for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any, and
interest, respectively, and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.10.
SECTION 6.11 Undertaking for Costs.
---------------------
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 or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the cost of the suit, and the
court in its discretion may assess reasonable Costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of
a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
-------
SECTION 7.1 Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the occurrence and continuance of an Event of
Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) 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 similar documents) or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates (or similar
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documents) and opinions to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate the accuracy
of mathematical calculations or other facts stated therein or otherwise verify
the contents thereof).
(c) The Trustee may not be relieved from liabilities for its own
grossly negligent action, its own grossly negligent failure to act, or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was grossly negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c) and (e) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
be request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or expense
including reasonable attorneys' fees that might be incurred by it in compliance
with such request or direction.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.2 Rights of Trustee.
-----------------
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in any such document. The
Trustee shall receive and retain financial reports and statements of the Company
as provided herein, but it shall have no duty to review or analyze such reports
or statements to determine compliance with covenants or other obligations of the
Company.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any opinion of
counsel shall be full and complete authorization and protection from liability
in
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respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any such attorney or
agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) 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 unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
(g) Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, 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, order, approval, bond or other paper or document unless requested in
writing to do so by the Holders representing more than 25% in aggregate
principal amount of 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
indemnity reasonably satisfactory to it against such cost, expense or liability
as a condition to so proceeding.
SECTION 7.3 Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the Commission
for permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof
SECTION 7.4 Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not
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be responsible for any statement or recital herein or any statement in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.
SECTION 7.5 Notice of Defaults.
------------------
(a) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this Indenture.
(b) If a Default or Event of Default occurs and is continuing and if
it is known to the Trustee in accordance with the provisions of paragraph (a) of
this Section 7.05, the Trustee shall mail to Holders a notice of the Default or
Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
SECTION 7.6 Reports by Trustee to Holders of the Notes.
------------------------------------------
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports
as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders shall
be mailed to the Company and filed with the Commission and each stock exchange
on which the Notes are listed in accordance with TIA Section 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
SECTION 7.7 Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
parties shall agree from time to time. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee and hold it harmless against
any and all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the company (including this Section 7.07) and defending itself against any
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claim (whether asserted by the Company or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or expense may
be attributable to its gross negligence or bad faith. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement, made without its consent, which consent shall not be
unreasonably withheld or delayed.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture or the resignation or removal
of the Trustee.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01 (vii) or (viii) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.8 Replacement of Trustee.
----------------------
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the
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Company shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the then outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, Etc.
--------------------------------
If the Trustee consolidates, merges or converts into, or transfer all
or substantially all of its corporate trust business to (including the
administration of this Indenture), another corporation, the successor
corporation without any further act shall be the successor Trustee.
SECTION 7.10 Eligibility; Disqualification.
-----------------------------
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has (or in the case of a subsidiary of a bank holding
company, its parent shall have) a combined capital and surplus of at least
$100.0 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee is subject to TIA Section 311 (a), excluding any creditor
relationship listed in TIA Section 311 (b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311 (a) to the extent indicated therein.
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ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
----------------------------------------
SECTION 8.1 Option to Effect Legal Defeasance or Covenant Defeasance.
--------------------------------------------------------
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.2 Legal Defeasance and Discharge.
------------------------------
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all of its obligations
under such Notes and this Indenture (and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments delivered to it by the
Company acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due from the
trust referred to below; (b) the Company's obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost or stolen Notes and the maintenance of an office or agency for payment and
money for security payments held in trust; (c) the rights, powers, trusts,
duties and immunities of the Trustee, and the Company's obligations in
connection therewith; and (d) Section 8.02 of this Indenture. Subject to
compliance with this Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03
hereof.
SECTION 8.3 Covenant Defeasance.
-------------------
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Article V and in Sections 4.03,
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15 and 4.16 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not "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 (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply
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with and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant 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 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03, subject to the satisfaction of the conditions set forth in Section
8.04 hereof, Sections 6.01(iii) through 6.01(vi) hereof shall not constitute
Events of Default.
SECTION 8.4 Conditions to Legal or Covenant Defeasance.
------------------------------------------
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit, or cause to be deposited,
with the Trustee, in trust, for the benefit of the Holders, cash in U.S.
dollars, non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest on the outstanding Notes on the stated maturity thereof or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(b) in the case of Legal Defeasance, the Company must deliver to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that, since the Issue Date, the Company has received
from, or there has been published by, the Internal Revenue Service a ruling, or
there has been a change in the applicable United States federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders will not recognize income, gain or loss for
United States federal income tax purposes as a result of such Legal Defeasance,
and will be subject to United States federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company must deliver to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that the Holders will not recognize income, gain or loss
for United States federal income tax purposes as a result of such Covenant
Defeasance, and such Holders will be subject to United States 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;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit);
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, any material
agreement or instrument (other
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than this Indenture) to which the Company or any of the Restricted Subsidiaries
is a party or by which the Company or any of the Restricted Subsidiaries is
bound;
(f) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over other creditors of the Company, or with the
intent of defeating, hindering, delaying or defrauding creditors of the Company
or others; and
(g) the Company must deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States reasonably acceptable
to the Trustee, each stating that the conditions precedent provided for or
relating to Legal Defeasance or Covenant Defeasance, as applicable, in the case
of the Officers' Certificate, in clauses (a) through (f) and, in the case of the
Opinion of Counsel, in clauses (a) (with respect to the validity and perfection
of the security interest) and clauses (b) and (c) of this paragraph, have been
complied with.
SECTION 8.5 Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions.
-------------------------------------
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively, and solely for purposes of this Section 8.05,
the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding
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 (including the Company acting as Paying Agent) 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 against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
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 outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.6 Repayment to Company.
--------------------
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, interest
or Liquidated Damages, if any, on any Note and remaining unclaimed for two years
after such principal, and premium, if any, interest or Liquidated Damages has
become due and payable shall be paid to the Company
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on its request or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Note shall thereafter, as an unsecured 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, shall 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, in the New York
Times and 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 notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 8.7 Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 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 Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, interest or Liquidated Damages 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 held by the Trustee or Paying Agent.
SECTION 8.8 Survival.
--------
The Trustee's rights under this Article 8 shall survive termination of
this Indenture.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
--------------------------------
SECTION 9.1 Without Consent of Holders.
--------------------------
Notwithstanding Section 9.02 hereof, the Company and the Trustee may
amend or supplement this Indenture or the Notes without the consent of any
Holder:
(a) to cure any ambiguity, omission, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place
of certificated Notes or to alter the provisions of Article 2 hereof (including
the related definitions in a manner that does not materially adversely affect
any Holder;
(c) to provide for the assumption of the Company obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
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(d) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the legal rights
hereunder of any Holder; or
(e) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.2 With Consent of Holders.
-----------------------
Except as provided below in this Section 9.02, the Company and the
Trustee, may amend or supplement this Indenture (including Section 3.09 and 4.10
hereof) and the Notes or any supplemental indenture or modify the rights of the
Holders with the consent of the Holders of a majority in aggregate principal
amount of the then outstanding Notes (including consents obtained in connection
with a tender offer or exchange offer for, or purchase of, the Notes), and,
subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture or the Notes may be waived with the consent
of the Holders of a majority in aggregate principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for, or purchase of, the Notes); provided that no such
modification may, without the consent of each Holder affected thereby:
(i) reduce the principal amount of, change the fixed maturity
of, or alter the redemption provisions of, the Notes,
(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,
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(vii) following the occurrence of a Change of Control or an
Asset Sale, alter the Company's obligation to purchase the Notes as a result of
any such Change of Control or Asset Sale 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 Holders, or
(ix) release any Liens created by the Escrow Agreement except
in accordance with the terms of the Escrow Agreement.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders as aforesaid, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
indenture or waiver.
SECTION 9.3 Compliance with Trust Indenture Act.
-----------------------------------
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental indenture that complies with the TIA as
then in effect.
SECTION 9.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note.
However, any such Holder or subsequent Holder may revoke the consent as to its
Note if the Trustee receives written notice of revocation before the date the
waiver, supplement or amendment becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds every
Holder. An amendment or waiver shall become effective upon receipt by the
Trustee of the requisite number of written consents under Section 9.01 or 9.02
as applicable.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to give their consent or take
any other action described above
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or required or permitted to be taken pursuant to this Indenture. If a record
date is fixed, then notwithstanding the immediately preceding paragraph, those
Persons who held Notes at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date.
SECTION 9.5 Notation on or Exchange of Notes.
--------------------------------
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6 Trustee to Sign Amendments, Etc.
-------------------------------
Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee and all
other conditions to the execution and delivery of such amendment or supplement
set forth in this Article 9 are fulfilled. The Company may not sign an
amendment or supplemental indenture until the Board of Directors approves it.
In executing any amended or supplemental indenture, the Trustee shall be
entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture and that such amendment is the legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, subject to customary exceptions, and complies with
the provisions hereof (including Section 9.03).
ARTICLE 10
SATISFACTION AND DISCHARGE
--------------------------
SECTION 10.1 Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall be discharged and shall cease to be of further
effect as to all Notes issued hereunder, when either
(a) all such Notes theretofore authenticated and delivered (except
lost, stolen or destroyed Notes that have been replaced or paid and 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) 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 as trust funds in trust for
the purpose an amount of money sufficient
77
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to pay and discharge the entire indebtedness on the Notes not theretofore
delivered to the Trustee for cancellation, for principal amount, premium, if
any, and accrued interest to the date of such deposit; (ii) the Company has paid
all sums payable by it under this Indenture; and (iii) the Company has delivered
irrevocable instructions to the Trustee to apply the deposited money toward the
payment of the Notes at Stated Maturity or on the redemption date, as the case
may be.
In addition, the Company must deliver an Officers' Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been complied with.
SECTION 10.2 Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 4.17
hereof, all money deposited with the Trustee pursuant to Section 10.01 hereof
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 Paying Agent) as the Trustee may
determine, to Persons entitled thereto, of the principal (and premium, if any),
interest and Liquidated Damages, if any, for whose payment such money has been
deposited with the Trustee.
If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 10.01 hereof by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though such deposit had occurred pursuant to
Section 10.01 hereof, provided that if the Company has made any payment of
principal of, premium, if any, or interest on any Notes because of 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 or
Government Securities held by the Trustee or Paying Agent.
ARTICLE 11
SECURITY
--------
SECTION 11.1 Security.
--------
(a) On the Issue Date, the Company shall deposit, and at all times,
subject to the Escrow Agreement, grant to the Trustee as security for the
benefit of the Holders, security interests in the Escrow Collateral. The Escrow
Collateral must be in such amount together with the proceeds from the investment
thereof, to be sufficient, in the opinion of a nationally recognized firm of
independent public accountants selected by the Company, to provide for payment
in full of the first three scheduled interest payments (but not any liquidated
damages) due on the outstanding Notes. Security interests in the Escrow
Collateral shall be pledged by the Company to the Trustee for the benefit of the
Holders pursuant to the Escrow Agreement and shall be held by the Trustee in the
Escrow Account pending disposition pursuant to the Escrow
78
<PAGE>
Agreement. The Liens created by the Escrow Agreement shall be first priority
security interests in the Escrow Collateral.
Pursuant to the Escrow Agreement, funds may be disbursed from the
Escrow Account only to pay interest on the Notes. If a portion of the Notes has
been retired by the Company, funds representing the lesser of
(i) the excess of the amount sufficient to pay interest
through and including June 1, 2001 on the Notes not so retired and
(ii) the interest payments which have not previously been made
on such retired Notes for each interest payment date through and including the
interest payment date to occur on June 1, 2001, shall be paid to the Company if
no Default then exists under this Indenture.
Pending such disbursements, all funds contained in the Escrow Account
shall be invested in U.S. Government Securities. Interest earned on the U.S.
Government Securities shall be placed in the Escrow Account. The proceeds of
the Escrow Account shall be applied, first, to amounts owing to the Trustee in
respect of fees and expenses of the Trustee and, second, to all obligations
under the Notes and this Indenture.
(b) Each Holder, by its acceptance of a Note, consents and agrees
to the terms of the Escrow Agreement (including, without limitation, the
provisions providing for foreclosure and release of the Escrow Collateral) as
the same may be in effect or may be amended from time to time in accordance with
its terms, and authorizes and directs the Trustee to enter into the Escrow
Agreement and to perform its respective obligations and exercise its respective
rights thereunder in accordance therewith. The Company shall do or cause to be
done all such acts and things as may be reasonably necessary or proper, or as
may be required by the provisions of the Escrow Agreement, to assure and confirm
to the Trustee the security interest in the Escrow Collateral contemplated
hereby, by the Escrow Agreement or any part thereof, as from time to time
constituted, so as to render the same available for the security and benefit of
this Indenture and of the Notes secured hereby, according to the intent and
purposes herein expressed. The Company shall take, or shall cause to be taken,
any and all actions reasonably required (and any action reasonably requested by
the Trustee) to cause the Escrow Agreement to create and maintain, as security
for the obligations of the Company under this Indenture and the Notes, valid and
enforceable first priority liens in and on the Escrow Collateral, in favor of
the Trustee, superior to and prior to the rights of third Persons and subject to
no other Liens.
(c) The release of any Escrow Collateral pursuant to the Escrow
Agreement shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Escrow
Collateral is released pursuant to this Indenture and the Escrow Agreement. To
the extent applicable, the Company shall cause TIA Section 314(d), relating to
the release of property or securities from the Lien and security interest of the
Escrow Agreement and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Escrow
Agreement, to be complied with. Any certificate or opinion required by TIA
Section 314(d) may be made by an officer of the Company, except in cases where
TIA Section 314(d) requires that such certificate or opinion be made by an
79
<PAGE>
independent Person, which Person shall be an independent appraiser or other
expert selected or approved by the Company in the exercise of reasonable care.
(d) The Company shall cause TIA Section 314(b), relating to
opinions of counsel regarding the Lien under the Escrow Agreement, to be
complied with. The Trustee may, to the extent permitted by Section 7.02 hereof,
accept as conclusive evidence of compliance with the foregoing provisions the
appropriate statements contained in such instruments.
(e) The Trustee, in its sole discretion and without the consent of
the Holders, may, and at the request of the Holders of at least 25% in aggregate
principal amount of Notes then outstanding shall, on behalf of the Holders, take
all actions it deems necessary or appropriate in order to (i) enforce any of the
terms of the Escrow Agreement and (ii) collect and receive any and all amounts
payable in respect of the obligations of the Company thereunder. The Trustee
shall have power to institute and to maintain such suits and proceedings as the
Trustee may deem expedient to preserve or protect its interests and the
interests of the Holders in the Escrow Collateral (including power to institute
and maintain suits or proceedings to restrain the enforcement of or compliance
with any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair the security interest hereunder or be
prejudicial to the interest of the Holders or of the Trustee).
ARTICLE 12
MISCELLANEOUS
-------------
SECTION 12.1 Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 12.2 Notices.
-------
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
Attention: Chief Financial Officer
Telephone: (650) 298-0400
Facsimile: (650) 298-0420
80
<PAGE>
with a copy to:
Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, CA 94025
Attention: Scott C. Dettmer
Telephone: (650) 321-2400
Facsimile: (650) 321-2800
If to the Trustee:
State Street Bank and Trust Company
of California, N.A.
633 West 5th Street, 12th Floor
Los Angeles, CA 90071
Attention: Corporate Trust Administration
(Equinix, Inc. 13% Senior Notes
due 2007)
Telephone: (213) 362-7369
Facsimile: (213) 362-7357
With a copy to:
Shipman & Goodwin LLP
One American Row
Hartford, CT 06103-2819
Attention: Daniel P. Brown, Jr., Esq.
Telephone: (860) 251-5919
Facsimile: (860) 251-5999
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged by the sender's
telecopier, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
81
<PAGE>
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it, except that any notice or communication to the Trustee shall be
deemed to have been duly given to the Trustee when received at the Corporate
Trust Office of the Trustee.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 12.3 Communication by Holders with Other Holders.
-------------------------------------------
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
SECTION 12.4 Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, except with respect to the initial
authentication of Notes on the date of this Indenture, the Company shall furnish
to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 12.5 Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she has or
they have made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
82
<PAGE>
SECTION 12.6 Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.7 No Personal Liability of Directors, Officers, Employees and
-----------------------------------------------------------
Stockholders.
- ------------
No past, present or future director, officer, employee, incorporator,
agent or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
SECTION 12.8 GOVERNING LAW.
-------------
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
The Company shall submit to the jurisdiction of the U.S. federal and
New York state courts located in the Borough of Manhattan, City and State of New
York for purposes of all legal actions and proceedings instituted in connection
with the Notes and this Indenture.
SECTION 12.9 Consent to Jurisdiction and Service.
-----------------------------------
To the fullest extent permitted by applicable law, the Company hereby
irrevocably submits to the jurisdiction of any Federal or State court located in
the Borough of Manhattan in The City of New York, New York in any suit, action
or proceeding based on or arising out of or relating to this Agreement or any
Notes or Exchange Notes, and irrevocably agree that all claims in respect of
such suit or proceeding may be determined in any such court. The Company
irrevocably waives, to the fullest extent permitted by law, any objection which
they may have to the laying of the venue of any such suit, action or proceeding
brought in such a court and any claim that any suit, action or proceeding
brought in such a court has been brought in an inconvenient forum. The Company
agrees that final judgment in any such suit, action or proceeding brought in
such a court shall be conclusive and binding upon the Company and may be
enforced in the courts of any jurisdiction to which the Company is subject by a
suit upon such judgment, provided that service of process is effected upon the
Company in the manner specified herein or as otherwise permitted by law. To the
extent that the Company has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service of
now, attachment prior to judgment, attachment in aid of execution, executor or
otherwise) with respect to itself or its property, the Company hereby
irrevocably waives such immunity in respect of their respective obligations
under this Agreement, to the extent permitted by law.
83
<PAGE>
SECTION 12.10 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.11 Successors.
----------
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 12.12 Severability.
------------
In case any provision in this Indenture or in the Notes 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 12.13 Counterpart 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.
SECTION 12.14 Table of Contents, Headings, Etc.
--------------------------------
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Indenture signature page follows]
84
<PAGE>
[Indenture signature page]
Dated as of December 1, 1999
EQUINIX, INC.
By: /s/ Jay S. Adelson
---------------------
Name: Jay S. Adelson
Title: Secretary
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee
By: /s/ Scott C. Emmons
----------------------
Name: Scott C. Emmons
Title: Vice President
85
<PAGE>
EXHIBIT A-1
(Face of Note)
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
This Note is issued with original issue discount for purposes of
Section 1271 et seq. of the Internal Revenue Code. For each $1,000 of principal
amount of this Security, the issue price is $949.35 and the amount of original
issue discount is $50.65. The issue date of this Security is December 1, 1999
and the yield to maturity is 14.074%.
CUSIP______________
13% Senior Notes due 2007
No. $200,000,000
EQUINIX, INC.
promises to pay to [Insert if a Global Note: Cede & Co.][Insert if a Definitive
Note:________]
or registered assigns, the principal sum of
Dollars on December 1, 2007.
Interest Payment Dates: December 1 and June 1.
Record Dates: November 15 and May 15.
A-1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: December 1, 1999
EQUINIX, INC.
By: _______________________________
Name:
Title:
By:________________________________
Name:
Title:
A-1
<PAGE>
Trustee's Certificate of Authentication
---------------------------------------
This is one of the Notes referred to in the within-mentioned Indenture:
Dated: December 1, 1999
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By:
_____________________________
Authorized Signatory
A-2
<PAGE>
(Back of Note)
13% Senior Notes due 2007
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Equinix, Inc., a Delaware corporation (the "Company"),
--------
promises to pay interest on the principal amount of this Note at 13% per annum
from December 1, 1999 until maturity and shall pay the Liquidated Damages
payable in accordance with the provisions of the following paragraph. The
Company shall pay interest and Liquidated Damages semi-annually on December 1
and June 1 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes
shall accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance; provided that if there is no
existing Default or Event of Default relating to the payment of interest, and if
this Note is authenticated between a Record Date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; provided, further, that the first
Interest Payment Date shall be June 1, 2000. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at a rate
that is 1.0% per annum in excess of the rate then in effect; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest shall be computed on the basis of a
360-day year of twelve 30-day months.
The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement. If (a) the Company fails to file any of the
Registration Statements required by the Registration Rights Agreement on or
before the date specified for such filing, (b) any of such Registration
Statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness, (c) the Company fails to consummate the
Registered Exchange Offer within 210 days of the Issue Date with respect to the
Exchange Offer Registration Statement, or (d) any Registration Statement
required by the Registration Rights Agreement is declared effective but
thereafter ceases to be effective or usable in connection with its intended
purpose (each such event referred to in clauses (a) through (d) above a
"Registration Default"), then the Company shall pay to each holder of Transfer
Restricted Notes (as defined in the Registration Rights Agreement) affected
thereby liquidated damages ("Liquidated Damages") which shall accrue and be
payable semi-annually on the Notes and the Exchange Notes (in addition to the
stated interest on the Notes and the Exchange Notes) from and including the date
such Registration Default occurs to, but excluding the date on which the
applicable Registration Statement is filed or is declared effective, the
Registered Exchange Offer is consummated, or the applicable Registration
Statement is again declared effective or made usable. During the time that
Liquidated Damages is accruing continuously, the rate of such Liquidated Damages
shall be 0.50% per annum during the first 90-day period and shall increase by
0.25% per annum for each subsequent 90-day period, but in no event shall such
rate exceed 1.50% per annum in the aggregate regardless of the number of
Registration Defaults. If, after the cure of all Registration
A-3
<PAGE>
Defaults then in effect, there is a subsequent Registration Default, the rate of
Liquidated Damages for such subsequent Registration Default shall initially be
0.50%, regardless of the Liquidated Damages rate in effect with respect to any
prior Registration Default at the time of the cure of such Registration Default.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders at the close of business on May 15 or November 15 next
preceding the Interest Payment Date, even if such Notes are canceled after such
Record Date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes
shall be payable as to principal, premium and Liquidated Damages, if any, and
interest at the office or agency of the Company maintained for such purpose
within or outside of the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check mailed
to the Holders at their addresses set forth in the register of Holders kept by
the Registrar, and provided that payment by wire transfer of immediately
available funds shall be required with respect to principal of and interest,
premium and Liquidated Damages on, all Global Notes and all other Notes the
Holders of which shall have provided wire transfer instructions to the Company
or the Paying Agent. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and
--------------------------
Trust Company of California, N.A., the Trustee under the Indenture, shall act as
Paying Agent and Registrar. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company or any of its Restricted Subsidiaries
may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture
---------
dated as of December 1, 1999 ("Indenture") between the Company and the Trustee.
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, as amended (15
U.S. Code Sections 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such
terms, and Holders are referred to the Indenture and the TIA for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $200 million in
aggregate principal amount.
5. OPTIONAL REDEMPTION.
-------------------
(a) The Notes shall not be redeemable at the Company's option prior
to December 1, 2003. Thereafter, the Notes shall be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest thereon to the applicable redemption date (subject to the right of
Holders as of the relevant Record Date to receive interest due on the relevant
Interest Payment Date), if redeemed during the twelve-month period beginning on
December 1 of the years indicated below:
A-4
<PAGE>
Year Percentage
---- ----------
2003.................................. 106.500%
2004.................................. 103.250%
2005 and thereafter................... 100.000%
(b) Any redemption pursuant to this Section 5 shall be made pursuant
to the provisions of Sections 3.01 through 3.06 of the Indenture.
6. MANDATORY REDEMPTION. The Company shall not be required to make
--------------------
mandatory redemption or sinking fund payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
------------------------------
(a) Upon the occurrence of a Change of Control, each Holder shall
have the right to require the Company to purchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at a purchase price in
cash equal to 101% of the aggregate principal amount thereof (the "Change of
Control Payment"), plus accrued and unpaid interest (and Liquidated Damages, if
any) thereon to the date of purchase (subject to the right of Holders as of a
Record Date to receive interest due on the relevant Interest Payment Date);
provided, that, the Company shall not be obligated to repurchase Notes pursuant
to a Change of Control Offer in the event that it has exercised its rights to
redeem all of the Notes pursuant to the Indenture. Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to purchase Notes on the date specified in such notice, which date shall be no
earlier than 30 and no later than 60 days from the date such notice is mailed
(the "Change of Control Payment Date"), in accordance with the procedures
required by the Indenture and described in such notice.
(b) The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations to the
extent such laws and regulations are applicable in connection with the purchase
of Notes as a result of a Change of Control. To the extent that the provisions
of any securities laws or regulations conflict with any of the provisions of
this covenant, the Company shall comply with the applicable securities laws and
regulations and will be deemed not to have breached its obligations under this
covenant by virtue thereof.
(c) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment plus accrued and unpaid
interest thereon and Liquidated Damages, if any, in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail or deliver to each Holder so
tendered the Change of Control Payment plus accrued and unpaid interest thereon
and Liquidated Damages, if any, for such Notes, and the Trustee
A-5
<PAGE>
shall promptly authenticate and mail or deliver (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of Notes surrendered, if any; provided that each such new
Note will be in a principal amount of $1,000 or an integral multiple thereof.
The Company shall publicly announce the results of the Change of Control Offer
on or as soon as practicable after the Change of Control Payment Date.
(d) The Company shall not, and shall not permit any of the Restricted
Subsidiaries to, directly or indirectly, consummate any Asset Sale, unless (i)
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 (as determined in good faith by the Board of Directors (including as to
the value of all noncash consideration) and set forth in an Officers'
Certificate delivered to the Trustee) of the assets or Equity Interests issued
or sold or otherwise disposed of and (ii) at least 75% of the consideration
therefor is in the form of cash and/or Cash Equivalents or Qualified
Consideration, and (iii) the Net Cash Proceeds received by the Company (or such
Restricted Subsidiary, as the case may be) from such Asset Sale are applied
within 360 days following the receipt of such Net Cash Proceeds, to the extent
the Company (or such Restricted Subsidiary, as the case may be) elects, (a) to
the redemption or repurchase of outstanding Indebtedness (I) that is either (A)
secured Indebtedness or (B) Indebtedness of the Company that ranks equally with
the Notes but has a maturity date that is prior to the maturity date of the
Notes, in either case other than Subordinated Indebtedness or (II) that is
Indebtedness of a Restricted Subsidiary and/or (b) to reinvest such Net Cash
Proceeds (or any portion thereof) in properties or assets (including Equity
Interests of a person that will become a Restricted Subsidiary as a result of
such investment) that will be used in a Permitted Business. The balance of such
Net Cash Proceeds, after the application of such Net Cash Proceeds as described
in the immediately preceding clauses (a) and (b), shall constitute "Excess
Proceeds."
(e) When the aggregate amount of Excess Proceeds equals or exceeds
$10 million (taking into account income earned on such Excess Proceeds), the
Company shall be required to make a pro rata offer to all Holders and pari passu
Indebtedness with comparable provisions requiring such Indebtedness to be
purchased with the proceeds of such Asset Sale (an "Asset Sale Offer") to
purchase the maximum principal amount or accreted value in the case of
Indebtedness issued with an original issue discount of Notes and pari passu
Indebtedness that may be purchased out of the Excess Proceeds, at a purchase
price in cash in an amount equal to 100% of the principal amount thereof or the
accreted value thereof, as applicable, plus accrued and unpaid interest thereon
to the date of purchase (subject to the right of Holders of record on the
relevant Record Date to receive interest due on the relevant Interest Payment
Date), in accordance with the procedures set forth in Article 3 of the Indenture
and the agreements governing such pari passu Indebtedness. To the extent that
any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company may use such Excess Proceeds for any purpose not otherwise prohibited by
the Indenture. If the aggregate principal amount of Notes and pari passu
Indebtedness tendered into such Asset Sale Offer surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
pari passu Indebtedness to be purchased on a pro rata basis in proportion to the
respective principal amounts (or accreted values in the case of Indebtedness
issued with an original issue discount) of the Notes and such other
Indebtedness. Upon completion of such Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero for purposes of the first sentence of this
paragraph.
A-6
<PAGE>
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at
--------------------
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest shall cease to accrue on
Notes or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
---------------------------------
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a Record
Date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note on the
---------------------
Registrar's books may be treated as its owner for all purposes under the
Indenture.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
--------------------------------
the Indenture and the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the Indenture or the Note may be waived with the consent of the Holders of a
majority in aggregate principal amount of the then outstanding Notes. Without
the consent of any Holder of a Note, the Indenture or the Notes may be amended
or supplemented among other things, to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to Holders of the Notes in case of a merger or consolidation or sale of all or
substantially all of the Company's assets in accordance with the terms of the
Indenture, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA.
12. DEFAULTS AND REMEDIES.
---------------------
(a) Events of Default under the Indenture include: (i) the failure to
pay interest on, including Liquidated Damages, if any, with respect to, the
Notes, when the same becomes due and payable if such default continues for a
period of 30 days, (ii) the failure to pay principal of any Notes when such
principal becomes due and payable, at maturity, upon redemption or otherwise;
(iii) failure by the Company or any Restricted Subsidiary to comply with
Sections 4.10 or 4.14 of the Indenture; (iv) failure by the Company or any
Restricted Subsidiary for 60 days after notice to comply with any of its other
agreements in the Indenture, the Escrow Agreement or this Note; (v) default
under any mortgage, indenture or instrument
A-7
<PAGE>
under which there may be issued or by which there may be secured or evidenced
any Indebtedness by the Company or any of the Restricted Subsidiaries (or the
payment of which is Guaranteed by the Company or any of the Restricted
Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created
after the Issue Date, and either such Indebtedness is already due and payable or
such default results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the amount of any such Indebtedness,
together with the amount of any other such Indebtedness or the maturity of which
has been so accelerated, aggregates $10.0 million or more; (vi) failure by the
Company or any of the Restricted Subsidiaries to pay final judgments not subject
to appeal aggregating in excess of $10.0 million; (vii) one or more judgments,
orders or decrees for the payment of money in excess of $10.0 million,
individually or in the aggregate (net of applicable insurance coverage which is
acknowledged in writing by the insurer), shall be entered against the Company or
any 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; (viii) the Company shall assert or
acknowledge in writing that the Escrow Agreement is invalid or unenforceable; or
(ix) certain events of bankruptcy or insolvency with respect to the Company or
any of its Significant Subsidiaries.
(b) If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all principal of, premium (if any) on and interest on the Notes to
be due and payable immediately. Notwithstanding the foregoing, in the case of
an Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Company or a Significant Subsidiary, all outstanding Notes will
become due and payable without further action or notice.
(c) Holders may not directly enforce the Indenture or the Notes
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power.
(d) The Holders of a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of all the Holders
waive any existing Default or Event of Default and its consequences under the
Indenture, except a continuing Default or Event of Default in the payment of
principal of, premium, if any, or interest on the Notes.
(e) The Company shall be required to deliver to the Trustee annually
a statement regarding compliance with the Indenture, and the Company shall be
required upon becoming aware of any Default or Event of Default to deliver to
the Trustee a statement specifying such Default or Event of Default. The Trustee
may withhold from Holders notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal of,
premium, if any, or interest on, the Notes) if it determines that withholding
notice is in their interest.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
-----------------------------
any other capacity, may make loans to, accept deposits from, and perform
services for the
A-8
<PAGE>
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
--------------------------
incorporator or stockholder of the Company, as such, will have any liability for
any obligations of the Company with respect to the Notes or the Indenture, or
for any claim based on, or in respect or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note will waive and release any
and all such liability. Such waiver and release are part of the consideration
for issuance of the Notes. Such waiver may not be effective to waive
liabilities under federal securities laws and it is the view of the Commission
that such a waiver is against public policy.
15. AUTHENTICATION. This Note shall not be valid until authenticated
--------------
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of
-------------
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entirety), JT TEN (= joint tenants with right of survivorship and
not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
-----------------------------------------------------------
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders
- ---------------------------
under the Indenture, Holders shall have all the rights set forth in the
Registration Rights Agreement.
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
Attention: Chief Financial Officer
A-9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:______________ Your Signature:
(Sign exactly as your name appears on the face of this
Note)
Tax Identification No.:________________________________
SIGNATURE GUARANTEE:
_______________________________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar,
which requirements include membership or participation
in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to,
or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.14 of the Indenture, check the box below:
(B) Section 4.10 (B) Section 4.14
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you
elect to have purchased: $_________
Date:______________ Your Signature:
(Sign exactly as your name appears on the face of this
Note)
Tax Identification No.:________________________________
SIGNATURE GUARANTEE:
_______________________________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar,
which requirements include membership or participation
in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to,
or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-11
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/1/
The following exchanges of a part of this Global Note for an interest in another
Global Note or for a Definitive Note, or exchanges of a part of another Global
Note or Definitive Note for an interest in this Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount of
Amount of decrease in Amount of increase in this Global Note
Principal Amount of Principal Amount of following such
Date of Exchange this Global Note this Global Note decrease (or increase)
- ---------------- --------------------- --------------------- ----------------------
<S> <C> <C> <C>
</TABLE>
____________________________
/1/ This should be included only if the Note is issued in global form.
A-12
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC") TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE 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.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY
BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, PRIOR TO THE EXPIRATION OF
A DISTRIBUTION COMPLIANCE PERIOD (DEFINED AS 40 DAYS AFTER THE ISSUE DATE WITH
RESPECT TO THE NOTES), MAY NOT BE: OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A)(1) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903
OR RULE 904 OF REGULATION S, AS DEFINED IN THE SECURITIES ACT OR (2) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144, AND (B) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES.
A-2-1
<PAGE>
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
A-2-2
<PAGE>
CUSIP ________
13% Senior Notes due 2007
No. $
This Note is issued with original issue discount for purposes of
Section 1271 et seq. of the Internal Revenue Code. For each $1,000 of principal
amount of this Security, the issue price is $949.35 and the amount of original
issue discount is $50.65. The issue date of this Security is December 1, 1999
and the yield to maturity is 14.074%.
EQUINIX, INC. promises to pay to Cede & Co. or registered assigns, the
principal sum of 200,000 Dollars on December 1, 2007.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
A-2-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: December 1, 1999
EQUINIX, INC.
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
A-2-4
<PAGE>
Trustee's Certificate of Authentication
---------------------------------------
This is one of the Notes referred to in the within-mentioned Indenture:
Dated: December 1, 1999
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee
By: _____________________________
Authorized Signatory
EQUINIX, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
A-2-5
<PAGE>
(Back of Regulation S Temporary Global Note)
13% Senior Notes due 2007
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Equinix, Inc., a Delaware corporation (the "Company"),
--------
promises to pay interest on the principal amount of this Note at 13% per annum
from December 1, 1999 until maturity and shall pay the Liquidated Damages
payable in accordance with the provisions of the following paragraph. The
Company shall pay interest and Liquidated Damages semi-annually on December 1
and June 1 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on the
Notes shall accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance; provided that if there
is no existing Default or Event of Default relating to the payment of interest,
and if this Note is authenticated between a Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such next succeeding Interest Payment Date; provided, further, that the first
Interest Payment Date shall be June 1, 2000. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at a rate
that is 1.0% per annum in excess of the rate then in effect; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest shall be computed on the basis of
a 360-day year of twelve 30-day months.
The Holder of this Note is entitled to the benefits of the Registration Rights
Agreement. If (a) the Company fails to file any of the Registration Statements
required by the Registration Rights Agreement on or before the date specified
for such filing, (b) any of such Registration Statements is not declared
effective by the Commission on or prior to the date specified for such
effectiveness, (c) the Company fails to consummate the Registered Exchange Offer
within 210 days of the Issue Date with respect to the Exchange Offer
Registration Statement, or (d) any Registration Statement required by the
Registration Rights Agreement is declared effective but thereafter ceases to be
effective or usable in connection with its intended purpose (each such event
referred to in clauses (a) through (d) above a "Registration Default"), then the
Company shall pay to each holder of Transfer Restricted Notes (as defined in the
Registration Rights Agreement) affected thereby liquidated damages ("Liquidated
Damages") which shall accrue and be payable semi-annually on the Notes and the
Exchange Notes (in addition to the stated interest on the Notes and the Exchange
Notes) from and including the date such Registration Default occurs to, but
excluding the date on which the applicable Registration Statement is filed or is
declared effective, the Registered Exchange Offer is consummated, or the
applicable Registration Statement is again declared effective or made usable.
During the time that Liquidated Damages is accruing continuously, the rate of
such Liquidated Damages shall be 0.50% per annum during the first 90-day period
and shall increase by 0.25% per annum for each subsequent 90-day period, but in
no event shall such rate exceed 1.50% per annum in the aggregate regardless of
the number of Registration Defaults. If, after the cure of all Registration
A-2-6
<PAGE>
Defaults then in effect, there is a subsequent Registration Default, the rate of
Liquidated Damages for such subsequent Registration Default shall initially be
0.50%, regardless of the Liquidated Damages rate in effect with respect to any
prior Registration Default at the time of the cure of such Registration Default.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders at the close of business on the May 15 or November 15 next
preceding the Interest Payment Date, even if such Notes are canceled after such
Record Date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes
shall be payable as to principal, premium and Liquidated Damages, if any, and
interest at the office or agency of the Company maintained for such purpose
within or outside of the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check mailed
to the Holders at their addresses set forth in the register of Holders kept by
the Registrar, and provided that payment by wire transfer of immediately
available funds shall be required with respect to principal of and interest,
premium and Liquidated Damages on, all Global Notes and all other Notes the
Holders of which shall have provided wire transfer instructions to the Company
or the Paying Agent. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and
--------------------------
Trust Company of California, N.A., the Trustee under the Indenture, shall act as
Paying Agent and Registrar. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company or any of its Restricted Subsidiaries
may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
---------
as of December 1, 1999 ("Indenture") between the Company and the Trustee. 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, as amended (15
U.S. Code Sections 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such
terms, and Holders are referred to the Indenture and the TIA for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $200.0 million
in aggregate principal amount.
5. OPTIONAL REDEMPTION.
-------------------
(a) The Notes shall not be redeemable at the Company's option prior
to December 1, 2003. Thereafter, the Notes shall be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest thereon to the applicable redemption date (subject to the right of
Holders as of a relevant Record Date to receive interest due on the relevant
Interest Payment Date), if redeemed during the twelve-month period beginning on
December 1 of the years indicated below:
A-2-7
<PAGE>
Year Percentage
---- ----------
2003.................................. 106.500%
2004.................................. 103.250%
2005 and thereafter................... 100.000%
(b) Any redemption pursuant to this Section 5 shall be made pursuant
to the provisions of Sections 3.01 through 3.06 of the Indenture.
6. MANDATORY REDEMPTION. The Company shall not be required to make
--------------------
mandatory redemption or sinking fund payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
------------------------------
(a) Upon the occurrence of a Change of Control, each Holder shall
have the right to require the Company to purchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at a purchase price in
cash equal to 101% of the aggregate principal amount thereof (the "Change of
Control Payment"), plus accrued and unpaid interest (and Liquidated Damages, if
any) thereon to the date of purchase (subject to the right of Holders as of a
Record Date to receive interest due on the relevant Interest Payment Date);
provided, that, the Company shall not be obligated to repurchase Notes pursuant
to a Change of Control Offer in the event that it has exercised its rights to
redeem all of the Notes pursuant to the Indenture. Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to purchase Notes on the date specified in such notice, which date shall be no
earlier than 30 and no later than 60 days from the date such notice is mailed
(the "Change of Control Payment Date"), in accordance with the procedures
required by the Indenture and described in such notice.
(b) The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations to the
extent such laws and regulations are applicable in connection with the purchase
of Notes as a result of a Change of Control. To the extent that the provisions
of any securities laws or regulations conflict with any of the provisions of
this covenant, the Company shall comply with the applicable securities laws and
regulations and will be deemed not to have breached its obligations under this
covenant by virtue thereof.
(c) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment plus accrued and unpaid
interest thereon and Liquidated Damages, if any, in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail or deliver to each Holder so
tendered the Change of Control Payment plus accrued and unpaid interest thereon
and Liquidated Damages, if any, for such Notes, and the Trustee
A-2-8
<PAGE>
shall promptly authenticate and mail or deliver (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of Notes surrendered, if any; provided that each such new
Note shall be in a principal amount of $1,000 or an integral multiple thereof.
The Company shall publicly announce the results of the Change of Control Offer
on or as soon as practicable after the Change of Control Payment Date.
(d) The Company shall not, and shall not permit any of the Restricted
Subsidiaries to, directly or indirectly, consummate any Asset Sale, unless (i)
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 (as determined in good faith by the Board of Directors (including as to
the value of all noncash consideration) and set forth in an Officers'
Certificate delivered to the Trustee) of the assets or Equity Interests issued
or sold or otherwise disposed of and (ii) at least 75% of the consideration
therefor is in the form of cash and/or Cash Equivalents or Qualified
Consideration, and (iii) the Net Cash Proceeds received by the Company (or such
Restricted Subsidiary, as the case may be) from such Asset Sale are applied
within 360 days following the receipt of such Net Cash Proceeds, to the extent
the Company (or such Restricted Subsidiary, as the case may be) elects, (a) to
the redemption or repurchase of outstanding Indebtedness (I) that is either (A)
secured Indebtedness or (B) Indebtedness of the Company that ranks equally with
the Notes but has a maturity date that is prior to the maturity date of the
Notes, in either case other than Subordinated Indebtedness or (II) that is
Indebtedness of a Restricted Subsidiary and/or (b) to reinvest such Net Cash
Proceeds (or any portion thereof) in properties or assets (including Equity
Interests of a person that will become a Restricted Subsidiary as a result of
such investment) that will be used in a Permitted Business. The balance of such
Net Cash Proceeds, after the application of such Net Cash Proceeds as described
in the immediately preceding clauses (a) and (b), shall constitute "Excess
Proceeds."
(e) When the aggregate amount of Excess Proceeds equals or exceeds
$10 million (taking into account income earned on such Excess Proceeds), the
Company shall be required to make a pro rata offer to all Holders and pari passu
Indebtedness with comparable provisions requiring such Indebtedness to be
purchased with the proceeds of such Asset Sale (an "Asset Sale Offer") to
purchase the maximum principal amount or accreted value in the case of
Indebtedness issued with an original issue discount of Notes and pari passu
Indebtedness that may be purchased out of the Excess Proceeds, at a purchase
price in cash in an amount equal to 100% of the principal amount thereof or the
accreted value thereof, as applicable, plus accrued and unpaid interest thereon
to the date of purchase (subject to the right of Holders of record on the
relevant Record Date to receive interest due on the relevant Interest Payment
Date), in accordance with the procedures set forth in Article 3 of the Indenture
and the agreements governing such pari passu Indebtedness. To the extent that
any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company may use such Excess Proceeds for any purpose not otherwise prohibited by
the Indenture. If the aggregate principal amount of Notes and pari passu
Indebtedness tendered into such Asset Sale Offer surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
pari passu Indebtedness to be purchased on a pro rata basis in proportion to the
respective principal amounts (or accreted values in the case of Indebtedness
issued with an original issue discount) of the Notes and such other
Indebtedness. Upon completion of such Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero for purposes of the first sentence of this
paragraph.
A-2-9
<PAGE>
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at
--------------------
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest shall cease to accrue on
Notes or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
---------------------------------
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a Record
Date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note on the
---------------------
Registrar's books may be treated as its owner for all purposes under the
Indenture.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
--------------------------------
the Indenture and the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the Indenture or the Note may be waived with the consent of the Holders of a
majority in aggregate principal amount of the then outstanding Notes. Without
the consent of any Holder of a Note, the Indenture or the Notes may be amended
or supplemented among other things, to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to Holders of the Notes in case of a merger or consolidation or sale of all or
substantially all of the Company's assets in accordance with the terms of the
Indenture, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA.
12. DEFAULTS AND REMEDIES.
---------------------
(a) Events of Default under the Indenture include: (i) the failure to
pay interest on, including Liquidated Damages, if any, with respect to, the
Notes, when the same becomes due and payable if such default continues for a
period of 30 days, (ii) the failure to pay principal of any Notes when such
principal becomes due and payable, at maturity, upon redemption or otherwise;
(iii) failure by the Company or any Restricted Subsidiary to comply with
Sections 4.10 or 4.14 of the Indenture; (iv) failure by the Company or any
Restricted Subsidiary for 60 days after notice to comply with any of its other
agreements in the Indenture, the Escrow Agreement or this Note; (v) default
under any mortgage, indenture or instrument
A-2-10
<PAGE>
under which there may be issued or by which there may be secured or evidenced
any Indebtedness by the Company or any of the Restricted Subsidiaries (or the
payment of which is Guaranteed by the Company or any of the Restricted
Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created
after the Issue Date, and either such Indebtedness is already due and payable or
such default results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the amount of any such Indebtedness,
together with the amount of any other such Indebtedness or the maturity of which
has been so accelerated, aggregates $10.0 million or more; (vi) failure by the
Company or any of the Restricted Subsidiaries to pay final judgments not subject
to appeal aggregating in excess of $10.0 million or more; or (vii) one or more
judgments, orders or decrees for the payment of money in excess of $10.0
million, individually or in the aggregate (net of applicable insurance coverage
which is acknowledged in writing by the insurer), shall be entered against the
Company or any 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 shall
assert or acknowledge in writing that the Escrow Agreement is invalid or
unenforceable; or (ix) certain events of bankruptcy or insolvency with respect
to the Company or any of its Significant Subsidiaries.
(b) If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all principal of, premium (if any) on and interest on the Notes to
be due and payable immediately. Notwithstanding the foregoing, in the case of
an Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Company or a Significant Subsidiary, all outstanding Notes shall
become due and payable without further action or notice.
(c) Holders may not directly enforce the Indenture or the Notes
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power.
(d) The Holders of a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of all Holders
waive any existing Default or Event of Default and its consequences under the
Indenture, except a continuing Default or Event of Default in the payment of
principal of, premium, if any, or interest on the Notes.
(e) The Company shall be required to deliver to the Trustee annually
a statement regarding compliance with the Indenture, and the Company shall be
required upon becoming aware of any Default or Event of Default to deliver to
the Trustee a statement specifying such Default or Event of Default. The Trustee
may withhold from Holders notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal of,
premium, if any, or interest on, the Notes) if it determines that withholding
notice is in their interest.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
-----------------------------
any other capacity, may make loans to, accept deposits from, and perform
services for the
A-2-11
<PAGE>
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
--------------------------
incorporator or stockholder of the Company, as such, will have any liability for
any obligations of the Company with respect to the Notes or the Indenture, or
for any claim based on, or in respect or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note will waive and release any
and all such liability. Such waiver and release are part of the consideration
for issuance of the Notes. Such waiver may not be effective to waive
liabilities under federal securities laws and it is the view of the Commission
that such a waiver is against public policy.
15. AUTHENTICATION. This Note shall not be valid until authenticated
--------------
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of
-------------
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entirety), JT TEN (= joint tenants with right of survivorship and
not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
-----------------------------------------------------------
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders
- ---------------------------
under the Indenture, Holders shall have all the rights set forth in the
Registration Rights Agreement.
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
Attention: Chief Financial Officer
A-2-12
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:___________________ Your Signature:______________________________
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:_______________________
SIGNATURE GUARANTEE:
_____________________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-2-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased: $
Date:___________________ Your Signature:______________________________
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:_______________________
SIGNATURE GUARANTEE:
_____________________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-2-14
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary Global Note for
an interest in another Global Note, or of other Restricted Global Notes for an
interest in this Regulation S Temporary Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount of
Amount of decrease in Amount of increase in this Global Note
Principal Amount of Principal Amount of following such
Date of Exchange this Global Note this Global Note decrease (or increase)
- ----------------- ---------------------- --------------------- -----------------------
<S> <C> <C> <C>
</TABLE>
A-2-15
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
Attention: Chief Financial Officer
State Street Bank and Trust Company
of California, N.A.,
as Trustee
633 West 5th Street, 12th Floor
Los Angeles, CA 90071
Attention: Corporate Trust Department
Re: Equinix, Inc. 13% Senior Notes due 2007
Reference is hereby made to the Indenture, dated as of December 1,
1999 (the "Indenture"), between Equinix, Inc., as issuer (the "Company"), and
State Street Bank and Trust Company of California, N.A., as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
_________________ (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $____ in such Note[s] or interests (the "Transfer"), to
______________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
(1) [_] Check if Transferee will take delivery of a beneficial interest in the
144A Global Note or a Definitive Note Pursuant to Rule 144A. The
Transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the Transferor hereby further
certifies that the beneficial interest or Definitive Note is being
transferred to a Person that the Transferor reasonably believed and
believes is purchasing the beneficial interest or Definitive Note for
its own account, or for one or more accounts with respect to which
such Person exercises sole investment discretion, and such Person and
each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule
144A and such Transfer is in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation
of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will
be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive
Note and in this Indenture and the Securities Act.
B-1
<PAGE>
(2) [_] Check if Transferee will take delivery of a beneficial interest in the
Temporary Regulation S Global Note, the Regulation S Global Note or a
Definitive Note pursuant to Regulation S. The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a Person in the
United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any
Person acting on its behalf reasonably believed and believes that the
Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore
securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior
to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser). Upon consummation of the proposed
transfer in accordance with the terms of this Indenture, the
transferred beneficial interest or Definitive Note will be subject to
the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note, the Temporary
Regulation S Global Note and/or the Definitive Note and in this
Indenture and the Securities Act.
(3) [_] Check and complete if Transferee will take delivery of a beneficial
interest in a Definitive Note pursuant to any provision of the
Securities Act other than Rule 144A or Regulation S. The Transfer is
being effected in compliance with the transfer restrictions applicable
to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities
Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies
that (check one):
(a) [_] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to the Company or a
Subsidiary thereof;
or
(c) [_] such Transfer is being effected pursuant to an
effective registration statement under the Securities Act and in compliance
with the prospectus delivery requirements of the Securities Act.
B-2
<PAGE>
(4) [_] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) [_] Check if Transfer is pursuant to Rule 144. (i) The
Transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act and in compliance with the transfer restrictions
contained in this Indenture and any applicable blue sky securities laws of
any state of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of this
Indenture, the transferred beneficial interest or Definitive Note will no
longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in this Indenture.
(b) [_] Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and in compliance with the transfer
restrictions contained in this Indenture and any applicable blue sky
securities laws of any state of the United States and (ii) the restrictions
on transfer contained in the Indenture and the Private Placement Legend are
not required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of this
Indenture, the transferred beneficial interest or Definitive Note will no
longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(c) [_] Check if Transfer is Pursuant to other Exemption. (i)
The Transfer is being effected pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act other
than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky
securities laws of any State of the United States and (ii) the restrictions
on transfer contained in this Indenture and the Private Placement Legend
are not required in order to maintain compliance with the Securities Act.
Upon consummation of the proposed Transfer in accordance with the terms of
the Indenture, the transferred beneficial interest or Definitive Note will
not be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes or Restricted
Definitive Notes and in the Indenture.
B-3
<PAGE>
This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.
______________________________________
(Insert Name of Transferor)
By:________________________________
Name:
Title:
Dated:___________________
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP ___), or
(ii) [_] Regulation S Global Note (CUSIP ___) or
(b) (B) a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP ___), or
(ii) [_] Regulation S Global Note (CUSIP ___); or
(iii) [_] Unrestricted Global Note (CUSIP ___); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
Attention: Chief Financial Officer
State Street Bank and Trust Company
of California, N.A.,
as Trustee
633 West 5th Street, 12th Floor
Los Angeles, CA 90071
Attention: Corporate Trust Department
Re: Equinix, Inc. 13% Senior Notes due 2007
(CUSIP _______)
Reference is hereby made to the Indenture, dated as of December 1,
1999 (the "Indenture"), between Equinix, Inc., as issuer (the "Company") and
State Street Bank and Trust Company of California, N.A., as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
_____________ (the "Owner") owns and proposes to exchange the Note(s)
or interest in such Note(s) specified herein, in the principal amount of
$_____________ in such Note(s) or interests (the "Exchange"). In connection
with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial
Interests in an Unrestricted Global Note
(a) [_] Check if Exchange is from beneficial interest in a
Restricted Global Note to beneficial interest in an Unrestricted Global
Note. In connection with the Exchange of the owner's beneficial interest in
a Restricted Global Note for a beneficial interest in an Unrestricted
Global Note in an equal principal amount, the Owner hereby certifies (i)
the beneficial interest is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with
the transfer restrictions applicable to the Global Notes and pursuant to
and in accordance with the United States Securities Act of 1933, as amended
(the "Securities Act"), (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United
States.
C-1
<PAGE>
(b) [_] Check if Exchange is from beneficial interest in a
Restricted Global Note to Unrestricted Definitive Note. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note
for an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United
States.
(c) [_] Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest
in an Unrestricted Global Note, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(d) [_] Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted Definitive Note is being acquired for
the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Unrestricted
Definitive Note is being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial
Interests in Restricted Global Notes
(a) [_] Check if Exchange is from beneficial interest in a
Restricted Global Note to Restricted Definitive Note. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a Restricted Definitive Note with an equal principal amount, the Owner
hereby certifies that the Restricted Definitive Note is being acquired for
the Owner's own account without transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the
Restricted Definitive Note and in this Indenture and the Securities Act.
C-2
<PAGE>
(b) [_] Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial
interest in the [CHECK ONE] (B) 144A Global Note, (B) Regulation S Global
Note, with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, and in compliance
with any applicable blue sky securities laws of any state of the United
States. Upon consummation of the proposed Exchange in accordance with the
terms of the Indenture, the beneficial interest issued will be subject to
the restrictions on transfer enumerated in the Private Placement Legend
printed on the relevant Restricted Global Note and in this Indenture and
the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
____________________________________
(Insert Name of Owner)
By:_______________________________
Name:
Title:
Dated:__________________
C-3
<PAGE>
EXHIBIT 10.2
================================================================================
WARRANT AGREEMENT
Dated as of December 1, 1999
By and Between
EQUINIX, INC.
and
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A.
as Warrant Agent
_________________________
================================================================================
Warrants to Purchase Common Stock
Par Value $.001 Per Share
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1.1 Issuance of Warrants................................................................. 1
SECTION 1.2 Form of Warrant Certificates......................................................... 2
SECTION 1.3 Execution of Warrant Certificates.................................................... 2
SECTION 1.4 Authentication and Delivery.......................................................... 2
SECTION 1.5 Temporary Warrant Certificates....................................................... 3
SECTION 1.6 Separation of Warrants and Notes..................................................... 4
SECTION 1.7 Registration......................................................................... 4
SECTION 1.8 Registration of Transfers or Exchanges............................................... 4
SECTION 1.9 Lost, Stolen, Destroyed, Defaced or Mutilated Warrant Certificates................... 9
SECTION 1.10 Offices for Exercise, etc............................................................ 10
ARTICLE 2
DURATION, EXERCISE OF WARRANTS; EXERCISE
PRICE AND REPURCHASE OF WARRANTS
SECTION 2.1 Duration of Warrants................................................................. 10
SECTION 2.2 Exercise, Exercise Price, Settlement and Delivery.................................... 11
SECTION 2.3 Cancellation of Warrant Certificates................................................. 13
SECTION 2.4 Notice of an Exercise Event.......................................................... 13
ARTICLE 3
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.1 Enforcement of Rights................................................................ 13
SECTION 3.2 Obtaining Stock Exchange Listings.................................................... 14
ARTICLE 4
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.1 Payment of Taxes..................................................................... 14
SECTION 4.2 Qualification Under the Securities Laws.............................................. 14
SECTION 4.3 Rules 144 and 144A................................................................... 15
SECTION 4.4 Form of Initial Public Equity Offering............................................... 15
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 4.5 Registration of Shares............................................................... 15
ARTICLE 5
ADJUSTMENTS
SECTION 5.1 Adjustment of Exercise Rate; Notices................................................. 15
SECTION 5.2 Fractional Shares.................................................................... 21
SECTION 5.3 Certain Distributions................................................................ 22
ARTICLE 6
CONCERNING THE WARRANT AGENT
SECTION 6.1 Warrant Agent........................................................................ 22
SECTION 6.2 Conditions of Warrant Agent's Obligations............................................ 22
SECTION 6.3 Resignation and Appointment of Successor............................................. 26
ARTICLE 7
MISCELLANEOUS
SECTION 7.1 Amendment............................................................................ 27
SECTION 7.2 Notices and Demands to the Company and Warrant Agent................................. 28
SECTION 7.3 Addresses for Notices to Parties and for Transmission of Documents................... 28
SECTION 7.4 Notices to Holders................................................................... 29
SECTION 7.5 Applicable Law; Submission to Jurisdiction........................................... 29
SECTION 7.6 Persons Having Rights Under Agreement................................................ 29
SECTION 7.7 Headings, etc........................................................................ 29
SECTION 7.8 Counterparts......................................................................... 30
SECTION 7.9 Inspection of Agreement.............................................................. 30
SECTION 7.10 Availability of Equitable Remedies................................................... 30
SECTION 7.11 Obtaining of Governmental Approvals.................................................. 30
</TABLE>
<TABLE>
<S> <C>
EXHIBIT A - Form of Warrant Certificate........................................................ A-1
EXHIBIT B - Form of Legend for Global Warrants................................................. B-1
EXHIBIT C - Certificate To Be Delivered upon Exchange or
Registration of Transfer of Warrants............................................... C-1
EXHIBIT D - Form of Transferee Certificate for Institutional
Accredited Investors............................................................... D-1
EXHIBIT E - Form of Transferee Certificate for Regulation S Transfers.......................... E-1
EXHIBIT F - Form of Receipt of Payment of the Exercise Price................................... F-1
</TABLE>
-ii-
<PAGE>
INDEX OF DEFINED TERMS
----------------------
<TABLE>
<CAPTION>
Defined Term Section
- ------------ -------
<S> <C>
Affiliate........................................... 5.01(l)
Agreement........................................... Recitals
Business Day........................................ 2.01
Capital Stock....................................... 5.01(1)
Common Stock........................................ Recitals
Company............................................. Recitals
Current Market Value................................ 5.01(1)
Definitive Warrants................................. 1.02
Distribution........................................ 5.03
Distribution Rights................................. 5.03
Election To Exercise................................ 2.02(b)
Exercisability Date................................. 2.02(a)
Exercise Date....................................... 2.02(d)
Exercise Event...................................... 2.02(a)
Exercise Price...................................... 2.02(a)
Exercise Rate....................................... 2.02(a)
Expiration Date..................................... 2.01
Fundamental Transaction............................. 5.01(d)
Global Shares....................................... 2.02(f)
Global Warrants..................................... 1.02
Indenture........................................... Recitals
Independent Financial Expert........................ 5.01(1)
Initial Public Equity Offering...................... 2.02(a)
Initial Purchasers.................................. Recitals
Notes............................................... Recitals
Notice Date......................................... 2.05(b)
Officers' Certificate............................... 1.08(d)
Person.............................................. 2.02(a)
Private Placement Legend............................ 1.08(g)
Prospectus.......................................... 4.02
Registrar........................................... 1.07
Registration Rights Agreement....................... Recitals
Related Parties..................................... 6.02(e)
Requisite Warrant Holders........................... 7.01
Resale Restriction Termination Date................. 1.08
Securities Act...................................... 1.06
Separability Date................................... 1.06
Separation.......................................... 1.06
Shares.............................................. 1.01
Subject Class....................................... 4.04
Surviving Person.................................... 5.01(d)
Time of Determination............................... 5.01(1)
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Defined Term Section
- ------------ -------
<S> <C>
Trustee............................................. Recitals
Units............................................... Recitals
Warrant Agent....................................... Recitals
Warrant Agent Office................................ 1.10
Warrant Certificates................................ Recitals
Warrant Exercise Office............................. 2.02(b)
Warrant Register.................................... 1.07
Warrants............................................ Recitals
</TABLE>
-iv-
<PAGE>
WARRANT AGREEMENT
WARRANT AGREEMENT ("Agreement"), dated as of December 1, 1999 by and
---------
between EQUINIX, INC., a Delaware corporation (together with any successor
thereto, the "Company"), and STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA,
-------
N.A., as warrant agent (with any successor Warrant Agent, the "Warrant Agent").
-------------
WHEREAS, the Company has entered into a purchase agreement (the
"Purchase Agreement") dated November 24, 1999 with Salomon Smith Barney Inc.
------------------
("Salomon Smith Barney"), Goldman, Sachs & Co. and Morgan Stanley & Co.
Incorporated (collectively, the "Initial Purchasers") in which the Company has
------------------
agreed to sell to the Initial Purchasers 200,000 units (the "Units") consisting
-----
in the aggregate of (i) $200,000,000 aggregate principal amount of Senior Notes
due 2007 (the "Notes") of the Company to be issued under an indenture dated as
-----
of December 1, 1999 (the "Indenture"), between the Company and State Street Bank
---------
and Trust Company of California, N.A., as trustee (in such capacity, the
"Trustee"), and (ii) 2,251,000 Warrants (the "Warrants"), each Warrant initially
------- --------
entitling the holder thereof to purchase 11.255 shares of Common Stock, par
value $.001 per share (the "Common Stock"), of the Company. The certificates
------------
evidencing the Warrants are herein referred to collectively as the "Warrant
-------
Certificates"; and
- ------------
WHEREAS, each Unit will consist of one Note in the principal amount of
$1,000 and Warrants; the Notes and the Warrants comprising part of the Units
shall not be separately transferable until the Separability Date (as defined
below); and
WHEREAS, the price of the units includes the exercise price of the
Warrants; and
WHEREAS, the holders of the Warrants are entitled to the benefits of a
Common Stock Registration Rights Agreement dated as of December 1, 1999 between
the Company and the Initial Purchasers (the "Registration Rights Agreement");
-----------------------------
and
WHEREAS, the Company desires the Warrant Agent as warrant agent to
assist the Company in connection with the issuance, exchange, cancellation,
replacement and exercise of the Warrants, and in this Agreement wishes to set
forth, among other things, the terms and conditions on which the Warrants may be
issued, exchanged, cancelled, replaced and exercised;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
------------------------------------
SECTION 1.1 Issuance of Warrants. Warrants comprising part of the
--------------------
Units shall be originally issued in connection with the issuance of the Units
and such Warrants shall not be separately transferable from the Notes until on
or after the Separability Date as provided in Section 1.06 hereof.
<PAGE>
Each Warrant Certificate shall evidence the number of Warrants
specified therein, and each Warrant evidenced thereby shall, when exercisable as
provided herein and therein, represent the right, subject to the provisions
contained herein and therein, to purchase from the Company (and the Company
shall issue and sell to the holder of such Warrant) 11.255 fully paid,
registered and non-assessable shares of Common Stock at an exercise price of
$0.01 per share. The number of Shares issuable upon exercise of a Warrant is
subject to adjustment as provided herein and in the Warrant. The shares
purchasable upon exercise of a Warrant are hereinafter referred to as the
"Shares" and, unless the context otherwise requires, such term shall also
------
include any other securities or property purchasable and deliverable upon
exercise of a Warrant as provided in Article V, subject to adjustment as
provided herein and in the Warrant.
SECTION 1.2 Form of Warrant Certificates. The Warrant Certificates
----------------------------
will initially be issued either in global form (the "Global Warrants"),
---------------
substantially in the form of Exhibit A hereto, or in registered form as
---------
definitive Warrant Certificates (the "Definitive Warrants") substantially in the
-------------------
form of Exhibit A attached hereto. Any Global Warrants to be delivered pursuant
---------
to this Agreement shall bear the legend set forth in Exhibit B attached hereto.
---------
Such Global Warrants shall represent such of the outstanding Warrants as shall
be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Warrants from time to time endorsed thereon and
that the aggregate amount of outstanding Warrants represented thereby may from
time to time be reduced or increased, as appropriate. Any endorsement of a
Global Warrant to reflect the amount of any increase or decrease in the amount
of outstanding Warrants represented thereby shall be made by the Warrant Agent
and the Depositary (as defined below) in accordance with instructions given by
the holder thereof. The Depository Trust Company shall act as the Depositary
with respect to the Global Warrants until a successor shall be appointed by the
Company and the Warrant Agent.
SECTION 1.3 Execution of Warrant Certificates. The Warrant
---------------------------------
Certificates shall be executed on behalf of the Company by the chairman of its
Board of Directors, its president or any vice president and attested by its
secretary or assistant secretary. Such signatures may be the manual or
facsimile signatures of the present or any future such officers. Typographical
and other minor errors or defects in any such reproduction of any such signature
shall not affect the validity or enforceability of any Warrant Certificate that
has been duly countersigned and delivered by the Warrant Agent.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificate so signed shall be countersigned and delivered by the Warrant Agent
or disposed-of by the Company, such Warrant Certificate nevertheless may be
countersigned and delivered or disposed of as though the person who signed such
Warrant Certificate had not ceased to be such officer of the Company; and any
Warrant Certificate may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Warrant Certificate, shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Agreement any such person was not such an officer.
SECTION 1.4 Authentication and Delivery. Subject to the immediately
---------------------------
following paragraph, Warrant Certificates shall be authenticated by manual
signature and dated the date of authentication by the Warrant Agent and shall
not be valid for any purpose unless so
2
<PAGE>
authenticated and dated. The Warrant Certificates shall be numbered and shall be
registered in the Warrant Register (as defined in Section 1.07 hereof).
Upon the receipt by the Warrant Agent of a written order of the
Company, which order shall be signed by the chairman of its Board of Directors,
its president, chief financial officer or any vice president and attested by its
secretary or assistant secretary, and shall specify the amount of Warrants to be
authenticated, whether the Warrants are to be Global Warrants or Definitive
Warrants, the date of such Warrants and such other information as the Warrant
Agent may reasonably request, without any further action by the Company, the
Warrant Agent is authorized, upon receipt from the Company at any time and from
time to time of the Warrant Certificates, duly executed as provided in Section
1.03 hereof, to authenticate the Warrant Certificates and upon the holder's
request deliver them. Such authentication shall be by a duly authorized
signatory of the Warrant Agent (although it shall not be necessary for the same
signatory to sign all Warrant Certificates).
In case any authorized signatory of the Warrant Agent who shall have
authenticated any of the Warrant Certificates shall cease to be such authorized
signatory before the Warrant Certificate shall be disposed of by the Company or
the Warrant Agent, such Warrant Certificate nevertheless may be delivered or
disposed of as though the person who authenticated such Warrant Certificate had
not ceased to be such authorized signatory of the Warrant Agent; and any Warrant
Certificate may be authenticated on behalf of the Warrant Agent by such persons
as, at the actual time of authentication of such Warrant Certificates, shall be
the duly authorized signatories of the Warrant Agent, although at the time of
the execution and delivery of this Agreement any such person is not such an
authorized signatory.
The Warrant Agent's authentication on all Warrant Certificates shall
be in substantially the form set forth in Exhibit A hereto.
---------
SECTION 1.5 Temporary Warrant Certificates. Pending the preparation
------------------------------
of definitive Warrant Certificates, the Company may execute, and the Warrant
Agent shall authenticate and deliver, temporary Warrant Certificates, which are
printed, lithographed, typewritten or otherwise produced, substantially of the
tenor of the definitive Warrant Certificates in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Warrant Certificates may determine, as
evidenced by their execution of such Warrant Certificates.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay.
After the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates at any office or agency
maintained by the Company for that purpose pursuant to Section 1.10 hereof.
Subject to the provisions of Section 4.01 hereof, such exchange shall be without
charge to the holder. Upon surrender for cancellation of any one or more
temporary Warrant Certificates, the Company shall execute, and the Warrant Agent
shall authenticate and deliver in exchange therefor, one or more definitive
Warrant Certificates representing in the aggregate a like number of warrants.
Until so exchanged, the holder of a temporary Warrant Certificate shall in all
3
<PAGE>
respects be entitled to the same benefits under this Agreement as a holder of a
definitive Warrant Certificate.
SECTION 1.6 Separation of Warrants and Notes. The Notes and the
--------------------------------
Warrants will not be separately transferable until the Separability Date.
"Separability Date" shall mean the earliest to occur of: (i) June 1, 2000, (ii)
-----------------
the occurrence of an Exercise Event (as defined herein), (iii) the occurrence of
an Event of Default (as defined in the Indenture), (iv) the date on which a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to a registered exchange offer for the Notes or
--------------
covering the sale by holders of the Notes is declared effective under the
Securities Act, or (v) such earlier date as may be determined by Salomon Smith
Barney in its sole discretion and specified to the Company, the Trustee, the
Warrant Agent and the Unit Agent in writing. Notwithstanding the foregoing, the
Warrants shall become separately transferable on the date of commencement of a
Change of Control Offer (as defined in the Indenture). The separation of the
Warrants and the Notes is herein referred to as a "Separation."
----------
SECTION 1.7 Registration. The Company will keep, at the office or
------------
agency maintained by the Company for such purpose, a register or registers in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of, and registration of transfer and exchange
of, Warrants as provided in this Article. Each person designated by the Company
from time to time as a person authorized to register the transfer and exchange
of the Warrants is hereinafter called, individually and collectively, the
"Registrar." The Company hereby initially appoints the Warrant Agent as
---------
Registrar. Upon written notice to the Warrant Agent and any acting Registrar,
the Company may appoint a successor Registrar for such purposes.
The Company will at all times designate one person (who may be the
Company and who need not be a Registrar) to act as repository of a master list
of names and addresses of the holders of Warrants (the "Warrant Register"). The
----------------
Warrant Agent will act as such repository unless and until some other person is,
by written notice from the Company to the Warrant Agent and the Registrar,
designated by the Company to act as such. The Company shall cause each
Registrar to furnish to such repository, on a current basis, such information as
to all registrations of transfer and exchanges effected by such Registrar, as
may be necessary to enable such repository to maintain the Warrant Register on
as current a basis as is practicable.
SECTION 1.8 Registration of Transfers or Exchanges.
--------------------------------------
(a) Transfer or Exchange of Definitive Warrants. When
-------------------------------------------
Definitive Warrants are presented to the Warrant Agent with a request from the
holder:
(i) to register the transfer of the Definitive
Warrants; or
(ii) to exchange such Definitive Warrants for an
equal number of Definitive Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if the requirements under this Warrant Agreement as set forth in this Section
1.08 hereof for such
4
<PAGE>
transactions are met; provided, however, that the Definitive Warrants presented
-------- -------
or surrendered by a holder for registration of transfer or exchange:
(x) shall be duly endorsed or accompanied by a written instruction of
transfer or exchange in form satisfactory to the Company and the
Warrant Agent, duly executed by such holder or by his attorney,
duly authorized in writing; and
(y) in the case of Warrants the offer and sale of which have not been
registered under the Securities Act and are presented for
transfer or exchange prior to (X) the date which is two years (or
such shorter period as may be prescribed by Rule 144(k) (or any
successor provision thereto)) after the later of the date of
original issuance of the Warrants and the last date on which the
Company or any affiliate of the Company was the owner of such
Warrants, or any predecessor thereto, and (Y) such later date, if
any, as may be required by any subsequent change in applicable
law (the "Resale Restriction Termination Date"), such Warrants
-----------------------------------
shall be accompanied by the following additional information and
documents, as
(A) if such warrants are being delivered to the
Warrant Agent by a holder for registration in the name of such holder, without
transfer, a certification from such holder to that effect (in substantially the
form of Exhibit C hereto); or
---------
(B) if such Warrants are being transferred to a
qualified institutional buyer (as defined in Rule 144A under the Securities Act)
(a "QIB") in accordance with Rule 144A under the Securities Act, a certification
from the transferor to that effect (in substantially the form of Exhibit C
---------
hereto); or
(C) if such warrants are being transferred to an
institutional "accredited investor" within the meaning of subparagraphs (a)(1),
(a)(2), (a)(3) or (a)(7) of Rule 501 under the Securities Act (an "Institutional
-------------
Accredited Investor"), delivery by the transferor of a certification to that
- -------------------
effect (in substantially the form of Exhibit C hereto), and delivery by the
---------
proposed transferee of a Transferee Certificate for Institutional Accredited
Investors (in substantially the form of Exhibit D hereto); or
---------
(D) if such Warrants are being transferred in
reliance on Regulation S under the Securities Act, delivery by the transferor of
a certification to that effect (in substantially the form of Exhibit C hereto),
---------
and a Certificate for Regulation S Transfers in the form of Exhibit E hereto; or
---------
(E) if such Warrants are being transferred in
reliance on Rule 144 under the Securities Act, delivery by the transferor of (i)
a certification from the transferor to that effect (in substantially the form of
Exhibit C hereto), and (ii) an opinion of counsel reasonably satisfactory to the
- ---------
Company to the effect that such transfer is in compliance with the Securities
Act; or
(F) if such Warrants are being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a
5
<PAGE>
certification from the transferor to that effect (in substantially the form of
Exhibit C hereto) and an opinion of counsel reasonably satisfactory to the
- ---------
Company to the effect that such transfer is in compliance with the Securities
Act; provided that the Company may, based upon the views of its own counsel,
--------
instruct the Warrant Agent not to register such transfer in any case where the
proposed transferee is not a QIB, Non-U.S. Person or Institutional Accredited
Investor.
(b) (Restrictions on Transfer of a Definitive Warrant
------------------------------------------------
for a Beneficial Interest in a Global Warrant. A Definitive Warrant may not be
- ---------------------------------------------
transferred by a holder for a beneficial interest in a Global Warrant except
upon satisfaction of the requirements set forth below. Upon receipt by the
Warrant Agent of a Definitive Warrant, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Warrant Agent,
together with:
(A) certification from such holder (in
substantially the form of Exhibit C hereto) that such Definitive Warrant is
---------
being transferred to a QIB in accordance with Rule 144A under the Securities
Act; and
(B) written instructions directing the Warrant
Agent to make, or to direct the Depositary to make, an endorsement on the Global
Warrant to reflect an increase in the aggregate amount of the Warrants
represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Shares represented by the Global Warrant to be increased accordingly. If no
Global Warrant is then outstanding, the Company shall issue and the Warrant
Agent shall upon written instructions from the Company authenticate a new Global
Warrant in the appropriate amount.
(c) Transfer or Exchange of Global Warrants. The
---------------------------------------
transfer or exchange of Global Warrants or beneficial interests therein shall be
effected through the Depositary, in accordance with this Section 1.08, the
Private Placement Legend, this Agreement (including the restrictions on transfer
set forth herein) and the procedures of the Depositary therefor.
(d) Transfer or Exchange of a Beneficial Interest in
------------------------------------------------
a Global Warrant for a Definitive Warrant.
- -----------------------------------------
(i) Any person having a beneficial interest in a
Global Warrant may transfer or exchange such beneficial interest for a
Definitive Warrant upon receipt by the Warrant Agent of written instructions or
such other form of instructions as is customary for the Depositary from the
Depositary or its nominee on behalf of any person having a beneficial interest
in a Global Warrant, including a written order containing registration
instructions and, in the case of any such transfer or exchange prior to the
Resale Restriction Termination Date, the following additional information and
documents:
(A) if such beneficial interest is being
transferred to the person designated by the Depositary as being the beneficial
owner, a certification from such person to that effect (in substantially the
form of Exhibit C hereto); or
---------
6
<PAGE>
(B) if such beneficial interest is being
transferred to a QIB in accordance with Rule 144A under the Securities Act, a
certification from the transferor to that effect (in substantially the form of
Exhibit C hereto); or
- ---------
(C) if such beneficial interest is being
transferred to an Institutional Accredited Investor, delivery by the transferor
of a certification to that effect (in substantially the form of Exhibit C
---------
hereto), and delivery by the proposed transferee of a Transferee Certificate for
Institutional Accredited Investors (in substantially the form of Exhibit D
---------
hereto); or
(D) if such beneficial interest is being
transferred in reliance on Regulation S under the Securities Act, delivery by
the transferor of (i) a certification to that effect (in substantially in the
form of Exhibit C hereto), and (ii) a Certificate for Regulation S Transfers in
---------
Transfers in the form of Exhibit E hereto; or
---------
(E) if such beneficial interest is being
transferred in reliance on Rule 144 under the Securities Act, delivery by the
transferor of (i) a certification to that effect (in substantially the form of
Exhibit C hereto) and (ii) an opinion of counsel reasonably satisfactory to the
- ---------
Company to the effect that such transfer is in compliance with the Securities
Act; or
(F) if such beneficial interest is being
transferred in reliance on another exemption from the registration requirements
of the Securities Act, a certification from the transferor to that effect (in
substantially the form of Exhibit C hereto) and an opinion of counsel reasonably
---------
satisfactory to the Company to the effect that such transfer is in compliance
with the Securities Act; provided that the Company may instruct the Warrant
--------
Agent not to register such transfer in any case where the proposed transferee is
not a QIB, Non-U.S. Person or Institutional Accredited Investor.
then the Warrant Agent will cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Warrant Agent, the
aggregate amount of the Global Warrant to be reduced and, following such
reduction, the Company will execute and, upon receipt of an authentication order
in the form of an officers' certificate (a certificate signed by two officers of
such company, one of whom must be the principal executive officer, principal
financial officer or principal accounting officer) (an "Officers' Certificate"),
---------------------
the Warrant Agent will authenticate and deliver to the transferee a Definitive
Warrant.
(ii) Definitive Warrants issued in exchange for a
beneficial interest in a Global Warrant pursuant to this Section 1.08(d) shall
be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Warrant Agent in writing. The Warrant Agent shall
deliver such Definitive Warrants to the persons in whose names such Warrants are
so registered and adjust the Global Warrant pursuant to paragraph (h) of this
Section 1.08.
(e) Restrictions on Transfer or Exchange of Global
----------------------------------------------
Warrants. Notwithstanding any other provisions of this Agreement (other than the
- --------
provisions set forth in subsection (f) of this Section 1.08), a Global Warrant
may not be transferred or exchanged as a
7
<PAGE>
whole except by the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
(f) Authentication of Definitive Warrants in Absence
------------------------------------------------
of Depositary. If at any time:
- -------------
(i) the Depositary for the Global Warrants
notifies the Company that the Depositary is unwilling or unable to continue as
Depositary for the Global Warrant and a successor Depositary for the Global
Warrant is not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, at its sole discretion,
notifies the Warrant Agent in writing that it elects to cause the issuance of
Definitive Warrants for all Global Warrants under this Agreement,
then the Company will execute, and the Warrant Agent will, upon receipt of an
Officers' Certificate requesting the authentication and delivery of Definitive
Warrants, authenticate and deliver Definitive Warrants, in an aggregate number
equal to the aggregate number of warrants represented by the Global Warrant, in
exchange for such Global Warrant.
(g) Private Placement Legend. Upon the registration of
------------------------
transfer, exchange or replacement of Warrant Certificates not bearing the legend
set forth in the first paragraph of Exhibit A attached hereto (the "Private
--------- -------
Placement Legend"), the Warrant Agent shall deliver Warrant Certificates that
- ----------------
do not bear the Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Warrant Certificates bearing the Private Placement
Legend, the Warrant Agent shall deliver Warrant Certificates that bear the
Private Placement Legend unless, and the Warrant Agent is hereby authorized to
deliver Warrant Certificates without the Private Placement Legend if, (i) the
requested transfer is not prior to the date which is two years (or such shorter
period as may be prescribed by Rule 144(k) (or any successor provision thereto)
under the Securities Act or any successor provision thereunder) after the later
of the original Issue Date of the Warrants or the last day on which the Company
or any of its Affiliates was the owner of the Warrant or any predecessor
security, (ii) there is delivered to the Warrant Agent an opinion of counsel
reasonably satisfactory to the Company and the Warrant Agent to the effect 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)
the Warrants to be transferred or exchanged represented by such Warrant
Certificates are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act.
(h) Cancellation or Adjustment of a Global Warrant.
----------------------------------------------
At such time as all beneficial interests in a Global Warrant have either been
exchanged for Definitive Warrants, redeemed, repurchased or cancelled, such
Global Warrant shall be returned to the Company or, upon written order to the
Warrant Agent in the form of an Officers' Certificate from the Company, retained
and cancelled by the Warrant Agent. At any time prior to such cancellation, if
any beneficial interest in a Global Warrant is exchanged for Definitive
warrants, redeemed, repurchased or cancelled, the number of Warrants represented
by such Global
8
<PAGE>
Warrant shall be reduced and an endorsement shall be made on such Global Warrant
by the Warrant Agent to reflect such reduction.
(i) Obligations with Respect to Transfers or Exchanges
--------------------------------------------------
of Definitive Warrants.
- ----------------------
(i) To permit registrations of transfers or
exchanges, the Company shall execute, at the Warrant Agent's request, and the
Warrant Agent shall authenticate Definitive Warrants and Global Warrants.
(ii) All Definitive Warrants and Global Warrants
issued upon any registration, transfer or exchange of Definitive Warrants or
Global Warrants shall be the valid obligations of the Company, entitled to the
same benefits under this Warrant Agreement as the Definitive Warrants or Global
Warrants surrendered upon the registration of transfer or exchange.
(iii) Prior to due presentment for registration
of transfer of any Warrant, the Warrant Agent and the Company may deem and treat
the person in whose name any Warrant is registered as the absolute owner of such
Warrant, and neither the Warrant Agent nor the Company shall be affected by
notice to the contrary.
SECTION 1.9 Lost, Stolen, Destroyed, Defaced or Mutilated Warrant
-----------------------------------------------------
Certificates. Upon receipt by the Company and the Warrant Agent (or any agent
- ------------
of the Company or the Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction, defacement, or mutilation
of any Warrant Certificate and of an indemnity bond satisfactory to them and, in
the case of mutilation or defacement, upon surrender thereof to the Warrant
Agent for cancellation, then, in the absence of notice to the Company or the
Warrant Agent that such Warrant Certificate has been acquired by a bona fide
purchaser or holder in due course, the Company shall execute, and an authorized
signatory of the Warrant Agent shall manually authenticate and deliver, in
exchange for or in lieu of the lost, stolen, destroyed, defaced or mutilated
Warrant Certificate, a new Warrant Certificate representing a like number of
Warrants, bearing a number or other distinguishing symbol not contemporaneously
outstanding. Upon the issuance of any new Warrant Certificate under this
Section in a name other than the prior registered holder of the lost, stolen,
destroyed, defaced or mutilated Warrant Certificate, the Company may require the
payment from the holder of such Warrant Certificate of a sum sufficient to cover
any tax, stamp tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Warrant
Agent and the Registrar) in connection therewith. Every substitute Warrant
Certificate executed and delivered pursuant to this Section in lieu of any lost,
stolen or destroyed Warrant Certificate shall constitute an additional
contractual obligation of the Company, whether or not the lost, stolen or
destroyed Warrant Certificate shall be at any time enforceable by anyone, and
shall be entitled to the benefits of (but shall be subject to all the
limitations of rights set forth in) this Agreement equally and proportionately
with any and all other Warrant Certificates duly executed and delivered
hereunder. The provisions of this Section 1.09 are exclusive with respect to
the replacement of lost, stolen, destroyed, defaced or mutilated Warrant
Certificates and shall preclude (to the extent lawful) any and all other rights
or remedies
9
<PAGE>
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement of lost, stolen, destroyed, defaced or mutilated
Warrant Certificates.
The Warrant Agent is hereby authorized to authenticate in accordance
with the provisions of this Agreement, and deliver the new Warrant Certificates
required pursuant to the provisions of this Section.
SECTION 1.10 Offices for Exercise, etc. So long as any of the
-------------------------
Warrants remain outstanding, the Company will designate and maintain in the
Borough of Manhattan, The City of New York: (a) an office or agency where the
Warrant Certificates may be presented for exercise, (b) an office or agency
where the Warrant Certificates may be presented for registration of transfer and
for exchange (including the exchange of temporary Warrant Certificates for
definitive Warrant Certificates pursuant to Section 1.05 hereof), and (c) an
office or agency where notices and demands to or upon the Company in respect of
the Warrants or of this Agreement may be served. The Company may from time to
time change or rescind such designation, as it may deem desirable or expedient;
provided, however, that an office or agency shall at all times be maintained in
- -------- -------
the Borough of Manhattan, The City of New York, as provided in the first
sentence of this Section. In addition to such office or offices or agency or
agencies, the Company may from time to time designate and maintain one or more
additional offices or agencies within or outside The City of New York, where
Warrant Certificates may be presented for exercise or for registration of
transfer or for exchange, and the Company may from time to time change or
rescind such designation, as it may deem desirable or expedient. The Company
will give to the Warrant Agent written notice of the location of any such office
or agency and of any change of location thereof. The Company hereby designates
State Street Bank and Trust Company, N.A., an affiliate of the Warrant Agent, at
its principal corporate trust office identified in Section 7.03 in the Borough
of Manhattan, The City of New York (the "Warrant Agent Office"), as the initial
--------------------
agency maintained for each such purpose. In case the Company shall fail to
maintain any such office or agency or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands may
be made and notice may be served at the Warrant Agent Office and the Company
appoints the Warrant Agent as its agent to receive all such presentations,
surrenders, notices and demands.
ARTICLE 2
DURATION, EXERCISE OF WARRANTS; EXERCISE
PRICE AND REPURCHASE OF WARRANTS
--------------------------------
SECTION 2.1 Duration of Warrants. Subject to the terms and conditions
--------------------
established herein, the Warrants shall expire at 5:00 p.m., New York City time,
on December 1, 2007. The applicable date of expiration of a particular Warrant
is referred to herein as the "Expiration Date" of such Warrant. Each Warrant
---------------
may be exercised on any Business Day (as defined below) on or after the
Exercisability Date (as defined in Section 2.02) and on or prior to the close of
business on the Expiration Date.
Any Warrant not exercised before the close of business on the
Expiration Date shall become void, and all rights of the holder under the
Warrant Certificate evidencing such Warrant and under this Agreement shall
cease.
10
<PAGE>
"Business Day" shall mean any day on which (i) banks in New York City,
------------
(ii) the principal U.S. securities exchange or market, if any, on which any
Common Stock is listed or admitted to trading and (iii) the principal U.S.
securities exchange or market, if any, on which the Warrants are listed or
admitted to trading are open for business.
SECTION 2.2 Exercise, Exercise Price, Settlement and Delivery. (a)
-------------------------------------------------
Subject to the provisions of this Agreement, a holder of a Warrant shall have
the right to purchase from the Company on or after the Exercisability Date and
on or prior to the close of business on the Expiration Date 11.255 fully paid,
registered and non-assessable shares of Common Stock (and any other securities
or property purchasable or deliverable upon exercise of such Warrant as provided
in Article V), subject to adjustment in accordance with Article V hereof. The
purchase price of $0.01 for each share purchased (the "Exercise Price") will be
--------------
paid to the Warrant Agent on the date hereof as part of the purchase price of
the Units and promptly remitted to the Company which shall deliver a receipt
therefor in the form of Exhibit F hereof. The number of Shares for which a
---------
particular Warrant may be exercised (the "Exercise Rate") shall be subject to
-------------
adjustment from time to time as set forth in Article V hereof.
"Exercisability Date" means, with respect to each Warrant, the date as
-------------------
of which both of the following shall have occurred (whether before or on such
date): (i) the Separability Date and (ii) an Exercise Event.
"Exercise Event" means, with respect to each Warrant, the date of the
--------------
occurrence of the earliest of: (1) immediately prior to a Warrant Change of
Control (as defined in the Registration Rights Agreement), (2) the 90th day (or
such earlier date as determined by the Company in its sole discretion) following
an Initial Public Equity Offering, (3) other than in connection with an Initial
Public Equity Offering the date upon which a class of equity securities of the
Company becomes subject to registration under the Exchange Act, (4) December 1,
2001.
"Initial Public Equity Offering" means the first primary public
------------------------------
offering (whether or not underwritten, but excluding any offering pursuant to
Form S-8 under the Securities Act or any other publicly registered offering
pursuant to the Securities Act pertaining to an issuance of shares of Common
Stock or securities exercisable therefor under any benefit plan, employee
compensation plan, or employee or director stock purchase plan) of Common Stock
of the Company pursuant to an effective registration statement under the
Securities Act.
"Person" means any individual, corporation, partnership, limited
------
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity, including any predecessor of any such entity.
(a) Warrants may be exercised on or after the date
they are exercisable hereunder by surrendering at any office or agency
maintained for that purpose by the Company pursuant to Section 1.10 (each a
"Warrant Exercise Office") the Warrant Certificate evidencing such Warrants with
-----------------------
the form of election to exercise Shares set forth on the reverse side of the
Warrant Certificate (the "Election to Exercise") duly completed and signed by
--------------------
the registered holder or holders thereof or by the duly appointed legal
representative thereof or by a
11
<PAGE>
duly authorized attorney, and in the case of a transfer, such signature shall be
guaranteed by an eligible guarantor institution. Each Warrant may be exercised
-----------------------------
only in whole.
- -------------
(b) Upon exercise of a Warrant, no payment or adjustment shall be made
on account of any dividends on the Shares issued. No refund of the exercise
price will be made in the event that any Warrant is not exercised or otherwise
is surrendered.
(c) Upon such surrender of a Warrant Certificate at any Warrant
Exercise Office (other than any Warrant Exercise Office that also is an office
of the Warrant Agent), such Warrant Certificate and payment shall be promptly
delivered to the Warrant Agent. The "Exercise Date" for a Warrant shall be the
-------------
date when all of the items referred to in the first sentence of paragraph (b) of
this Section 2.02 are received by the Warrant Agent at or prior to 12:00 Noon,
New York City time, on a Business Day and the exercise of the Warrants will be
effective as of such Exercise Date. If any items referred to in the first
sentence of paragraph (b) are received after 12:00 Noon, New York City time, on
a Business Day, the exercise of the Warrants to which such item relates will be
effective on the next succeeding Business Day. Notwithstanding the foregoing,
in the case of an exercise of Warrants on the Expiration Date, if all of the
items referred to in the first sentence of paragraph (b) are received by the
Warrant Agent at or prior to 5:00 p.m., New York City time, on the Expiration
Date, the exercise of the Warrants to which such items relate will be effective
on the Expiration Date.
(d) Upon the exercise of a Warrant in accordance with the terms
hereof, the receipt of a Warrant Certificate, the Warrant Agent shall, as soon
as practicable, advise the Company in writing of the number of Warrants
exercised in accordance with the terms and conditions of this Agreement and the
Warrant Certificates, the instructions of each exercising holder of the Warrant
Certificates with respect to delivery of the Shares to which such holder is
entitled upon such exercise, and such other information as the Company shall
reasonably request.
(e) Subject to Section 5.02 hereof, as soon as practicable after the
exercise of any Warrant or Warrants in accordance with the terms hereof, the
Company shall issue or cause to be issued to or upon the written order of the
registered holder of the Warrant Certificate evidencing such exercised Warrant
or Warrants, a certificate or certificates evidencing the Shares to which such
holder is entitled, in fully registered form, registered in such name or names
as may be directed by such holder pursuant to the Election to Exercise, as set
forth on the reverse of the Warrant Certificate. Such certificate or
certificates evidencing the Shares shall be deemed to have been issued and any
persons who are designated to be named therein shall be deemed to have become
the holder of record of such Shares as of the close of business on the Exercise
Date; the Shares may initially be issued in global form (the "Global Shares").
-------------
Such Global Shares shall represent such of the outstanding Shares as shall be
specified therein and each shall provide that it shall represent the aggregate
amount of outstanding Shares from time to time endorsed thereon and that the
aggregate amount of outstanding Shares represented thereby may from time to time
be reduced or increased, as appropriate. Any endorsement of a Global Share to
reflect the amount of any increase or decrease in the amount of outstanding
Shares represented thereby shall be made by the registrar for the Shares and the
Depositary (referred to below) in accordance with instructions given by the
holder thereof. The Depository Trust Company shall (if possible) act as the
Depositary with respect to the Global
12
<PAGE>
Shares until a successor shall be appointed by the Company and the registrar for
the Shares. After such exercise of any Warrant or Shares, the Company shall also
issue or cause to be issued to or upon the written order of the registered
holder of such Warrant Certificate, a new Warrant Certificate, countersigned by
the Warrant Agent pursuant to written instruction, evidencing the number of
Warrants, if any, remaining unexercised unless such Warrants shall have expired.
SECTION 2.3 Cancellation of Warrant Certificates. In the event the
------------------------------------
Company shall purchase or otherwise acquire Warrants, the Warrant Certificates
evidencing such Warrants may thereupon be delivered to the Warrant Agent, and if
so delivered, shall at the Company's written instruction be canceled by it and
retired. The Warrant Agent shall cancel all Warrant Certificates properly
surrendered for exchange, substitution, transfer or exercise. Upon the
Company's written request, the Warrant Agent shall deliver such canceled Warrant
Certificates to the Company.
SECTION 2.4 Notice of an Exercise Event. The Company shall, as soon as
--------------------------- ----------
practicable after the occurrence of an Exercise Event, send or cause to be sent
- ----------- --------------
to each holder of Warrants and to each beneficial owner of the warrants with
respect to which such Exercise Event has occurred to the extent that the
Warrants are held of record by a depositary or other agent (with a copy to the
Warrant Agent), by first-class mail, at the addresses appearing on the Warrant
Register, a notice prepared by the Company advising such holder of the Exercise
Event which has occurred, which notice shall describe the type of Exercise Event
and the date of the occurrence thereof, as applicable, and the date of
expiration of the right to exercise the Warrants prominently set forth in the
face of such notice. The Company agrees to make available the foregoing right
notwithstanding any other provision herein to the contrary. Such right may, if
it would be in the best interests of holders of Warrants, be in lieu of the
right to receive the number of Shares to which the holder would have been
entitled.
ARTICLE 3
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
-----------------------------
SECTION 3.1 Enforcement of Rights. (a) Notwithstanding any of the
---------------------
provisions of this Agreement, any holder of any Warrant Certificate, without the
consent of the Warrant Agent, the holder of any Shares or the holder of any
other Warrant Certificate, may, in and for his own behalf, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, his right to exercise the Warrant or Warrants evidenced by
his Warrant Certificate in the manner provided in such Warrant Certificate and
in this Agreement.
(b) Neither the Warrants nor any Warrant Certificate shall entitle the
holders thereof to any of the rights of a holder of Shares, including, without
limitation, the right to vote or to receive any dividends or other payments or
to consent or to receive notice as stockholders in respect of the meetings of
stockholders or for the election of directors of the Company or any other
matter, or any rights whatsoever as stockholders of the Company, except as
expressly provided herein (including Section 5.03 hereof).
13
<PAGE>
SECTION 3.2 Obtaining Stock Exchange Listings. The Company will from
---------------------------------
time to time take all action which may be necessary so that the Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States
(including the Nasdaq National Market), if any, on which other shares of Common
Stock are then listed.
ARTICLE 4
CERTAIN COVENANTS OF THE COMPANY
--------------------------------
SECTION 4.1 Payment of Taxes. The Company will pay all documentary
----------------
stamp taxes attributable to the initial issuance of Warrants and of the Shares
upon the exercise of Warrants; provided, however, that the Company shall not be
-------- -------
required to pay any tax or other governmental charge which may be payable in
respect of any transfer or exchange of any Warrant Certificates or any
certificates for Shares in a name other than the registered holder of a Warrant
Certificate surrendered upon the exercise of a Warrant. In any such case, no
transfer or exchange shall be made unless or until the person or persons
requesting issuance thereof shall have paid to the Company the amount of such
tax or other governmental charge or shall have established to the satisfaction
of the Company that such tax or other governmental charge has been paid or an
exemption is available therefrom.
SECTION 4.2 Qualification Under the Securities Laws. (b) Immediately
---------------------------------------
prior to the occurrence of an Exercise Event arising as a result of an Initial
Public Equity Offering, the Company will, if permitted by applicable law, take
all such action as is necessary to cause the offer and sale by the Company of
the Shares issuable or deliverable upon exercise of the Warrants to be
registered or otherwise qualified under the provisions of the Securities Act and
pursuant to all applicable state securities laws and to provide for the issuance
of all Shares delivered upon exercise of the Warrants pursuant to an effective
shelf registration statement under the Securities Act. Subject to the last
sentence of this Section 4.02(a) and to paragraph (b) of this Section 4.02, so
long as any unexpired Warrants which have become exercisable due to the
occurrence of such an Exercise Event remain outstanding, the Company will file
such amendments and/or supplements to any registration statement under the
Securities Act or under any state securities laws covering the issuance of such
Shares and supplement and keep current any prospectus forming a part of such
registration statement as may be necessary to permit the Company to deliver to
each person exercising a Warrant a prospectus meeting the requirements of
Section 10(a)(3) of the Securities Act (a "Prospectus") and the regulations of
----------
the Securities and Exchange Commission and otherwise complying with the
Securities Act and regulations thereunder, and as may be necessary to comply
with any applicable state securities laws. The Warrant Agent shall have no duty
to monitor when such registration or qualification is necessary nor shall the
Warrant Agent be responsible for the Company's failure to comply with this
Section 4.02. The Company's obligation to maintain a Prospectus for delivery to
each person exercising a Warrant shall be terminated on the date the Company
delivers to the Warrant Agent an unqualified opinion of counsel reasonably
satisfactory to the Warrant Agent to the effect that all Shares registrable or
deliverable upon exercise of the Warrants may be issued without the requirement
of registration under the Securities Act and will be freely transferable after
receipt without limitation under the Securities Act.
14
<PAGE>
(b) The Company may suspend the effectiveness of such shelf
registration statement and the use of any related prospectus in the event that,
and for a period not to exceed an aggregate of 45 days in any calendar year if,
(i) an event occurs and is continuing as a result of which the shelf
registration statement would, in the Company's good faith judgment, which
determination shall be evidenced by a resolution of the Company's board of
directors, contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make statements therein, in the light of the
circumstances under which they were made, not misleading, and (ii) (a) the
Company determines in its good faith judgment, which determination shall be
evidenced by a resolution of the Company's board of directors, that the
disclosure of an event at such time would be required to be disclosed in the
registration statement and would have a material adverse effect on the business,
operations or prospects of the Company (provided, the Company would not
--------
otherwise be required to disclose such event) or (b) the disclosure otherwise
relates to a pending material business transaction which has not yet been
publicly disclosed.
SECTION 4.3 Rules 144 and 144A. The Company covenants that it will
------------------
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Securities and
Exchange Commission thereunder in a timely manner in accordance with the
requirements of the Securities Act and the Exchange Act and, if at any time the
Company is not required to file such reports, it will, upon the request of any
holder or beneficial owner of warrants, make available such information
necessary to permit sales pursuant to Rule 144A under the Securities Act.
SECTION 4.4 Form of Initial Public Equity Offering. The Company agrees
--------------------------------------
that it will not make an Initial Public Equity Offering of any class of its
Capital Stock (other than the Shares) without amending the terms of the
Company's certificate of incorporation to provide that the Shares are
convertible into the class of Capital Stock subject to the Initial Public Equity
Offering (the "Subject Class") on a share-for-share basis and that the rights,
-------------
conditions and privileges of the Subject Class shall not be adverse to the
holders of the Shares.
SECTION 4.5 Registration of Shares. The Company agrees that it will
----------------------
comply with all applicable laws, including the Securities Act and any applicable
state securities laws, in connection with the offer and sale of Common Stock
(and other securities and property deliverable) upon exercise of the Warrants.
ARTICLE 5
ADJUSTMENTS
-----------
SECTION 5.1 Adjustment of Exercise Rate; Notices. The Exercise Rate is
------------------------------------
subject to adjustment from time to time as provided in this Section.
(a) Adjustment for Change in Capital Stock. If, after the date
--------------------------------------
hereof, the Company:
(i) pays a dividend or makes a distribution on any of its Common
Stock in shares of any of its Common Stock or Warrants, rights or options
15
<PAGE>
exercisable for its Common Stock, other than a dividend or distribution of the
type described in Section 5.03;
(ii) pays a dividend or makes a distribution on any of
its Common Stock in shares of any of its Capital Stock (as defined below), other
than Common Stock or rights, warrants or options exercisable for its Common
Stock and other than a dividend or distribution of the type of described in
Section 5.03; or
(iii) subdivides any of its outstanding shares of Common
Stock into a greater number of shares; or
(iv) combines any of its outstanding shares of Common
Stock into a smaller number of shares; or
(v) issues by reclassification of any of its Common Stock
any shares of any of its Capital Stock;
then the Exercise Rate in effect immediately prior to such action for each
Warrant then outstanding shall be adjusted so that the holder of a Warrant
thereafter exercised may receive the number of shares of Capital Stock of the
Company which such holder would have owned immediately following such action if
such holder had exercised the Warrant immediately prior to such action or
immediately prior to the record date applicable thereto, if any (regardless of
whether the Warrants then outstanding are then exercisable). If there are no
outstanding shares of Common Stock that are of the same class as the Shares at
the time of any such action and such action has therefore been taken only in
respect of the Shares, the adjustment shall relate to the Shares in their same
form if it would not frustrate the intent and purposes of this Section 5.01.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
In the event that such dividend or distribution is not so paid or made or such
subdivision, combination or reclassification is not effected, the Exercise Rate
shall again be adjusted to be the Exercise Rate which would then be in effect if
such record date or effective date had not been so fixed.
If after an adjustment a holder of a Warrant upon exercise of such
Warrant may receive shares of two or more classes of Capital Stock of the
Company, the Exercise Rate shall thereafter be subject to adjustment upon the
occurrence of an action taken with respect to any such class of Capital Stock as
is contemplated by this Article V with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article V.
(b) Adjustment for Sale of Common Stock Below Current Market Value.
--------------------------------------------------------------
If, after the date hereof, the Company grants or sells any Common Stock or any
securities convertible into or exchangeable or exercisable for any Common Stock
at a price below the then Current Market Value other than:
- ----------------------------------------------
(c) pursuant to the exercise of the Warrants,
16
<PAGE>
(d) pursuant to any security convertible into, or exchangeable or
exercisable for shares of Common Stock outstanding as of the date of this
Agreement,
(e) upon the conversion, exchange or exercise of any convertible,
exchangeable or exercisable security as to which upon the issuance thereof an
adjustment pursuant to this Article V has been made, and
(f) upon the conversion, exchange or exercise of convertible,
exchangeable or exercisable securities of the Company outstanding on the date of
this Agreement (to the extent in accordance with the terms of such securities as
in effect on the date of this Agreement)
(g) the Exercise Rate for each Warrant then outstanding shall be
adjusted in accordance with the formula:
E' = E x (O + N)
--------------
(O + (N x P/M))
where:
E' = the adjusted Exercise Rate for each Warrant then outstanding;
E = the then current Exercise Rate for each Warrant then outstanding;
O = the number of shares of Common Stock outstanding immediately prior
to the sale of Common Stock or issuance of securities convertible,
exchangeable or exercisable for Common Stock;
N = the number of shares of Common Stock so sold or the maximum stated
number of shares of Common Stock issuable upon the conversion,
exchange or exercise of any such convertible, exchangeable or
exercisable securities, as the case may be;
P = the proceeds per share of Common Stock received by the Company,
which (i) in the case of shares of Common Stock is the amount
received by the Company in consideration for the sale and issuance
of such shares; and (ii) in the case of securities convertible into
or exchangeable or exercisable for shares of Common Stock is the
amount received by the Company in consideration for the sale and
issuance of such convertible or exchangeable or exercisable
securities, plus the minimum aggregate amount of additional
consideration, other than the surrender of such convertible or
exchangeable securities, payable to the Company upon exercise,
conversion or exchange thereof; and
M = the Current Market Value as of the Time of Determination or at the
time of sale, as the case may be.
The adjustment shall become effective immediately after the record
date for the determination of stockholders entitled to receive the rights,
warrants or options to which this paragraph (b) applies or upon consummation of
the sale of Common Stock, as the case may be. To the extent that shares of
Common Stock are not delivered after the expiration of such rights or warrants,
the Exercise Rate for each Warrant then outstanding shall be readjusted to the
Exercise Rate which would otherwise be in effect had the adjustment made upon
the issuance of such
17
<PAGE>
rights or warrants been made on the basis of delivery of only the number of
shares of Common Stock actually delivered. In the event that such rights or
warrants are not so issued, the Exercise Rate for each Warrant then outstanding
shall again be adjusted to be the Exercise Rate which would then be in effect if
such date fixed for determination of stockholders entitled to receive such
rights or warrants had not been so fixed.
No adjustment shall be made under this paragraph (b) if the
application of the formula stated above in this paragraph (b) would result in a
value of E' that is lower than the value of E.
No adjustment shall be made under this paragraph (b) for any
adjustment which is the subject of paragraph (a) of this Section 5.01.
No adjustment in the Exercise Rate shall be made under this paragraph
(b) upon the conversion, exchange or exercise of options to acquire shares of
Common Stock by officers, directors or employees of the Company; provided that
--------
the exercise price of such options, at the time of issuance thereof, is at least
equal to the then Current Market Value of the Common Stock underlying such
options.
(h) Notice of Adjustment. Whenever the Exercise Rate is adjusted, the
--------------------
Company shall promptly mail to holders of Warrants then outstanding at the
addresses appearing on the Warrant Register a notice of the adjustment. The
Company shall file with the Warrant Agent and any other Registrar such notice
and a certificate from the Company's independent public accountants briefly
stating the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence that the adjustment is correct.
Neither the Warrant Agent nor any such Registrar (a) shall be deemed to have
knowledge of any adjustment of the Exercise Rate unless and until such
certificate is received, and (b) shall be under any duty or responsibility with
respect to any such certificate except to exhibit the same during normal
business hours to any holder desiring inspection thereof.
(i) Reorganization of Company; Special Distributions. (i) If the
------------------------------------------------
Company, in a single transaction or through a series of related transactions,
merges, consolidates or amalgamates with or into any other person or sells,
assigns, transfers, leases, conveys or otherwise disposes of all or
substantially all of its properties and assets to another person or group of
affiliated persons or is a party to a merger or binding share exchange which
reclassifies or changes its outstanding Common Stock (a "Fundamental
-----------
Transaction"), as a condition to consummating any such transaction the person
- -----------
formed by or surviving any such consolidation or merger if other than the
Company or the person to whom such transfer has been made (the "Surviving
---------
Person") shall enter into a supplemental warrant agreement. The supplemental
- ------
warrant agreement shall provide (a) that the holder of a warrant then
outstanding may exercise it for the kind and amount of securities, cash or other
assets which such holder would have received immediately after the Fundamental
Transaction if such holder had exercised the Warrant immediately before the
effective date of the transaction (regardless of whether the Warrants are then
exercisable), assuming (to the extent applicable) that such holder (i) was not a
constituent person or an affiliate of a constituent person to such transaction,
(ii) made no election with respect thereto, and (iii) was treated alike with the
plurality of non-electing holders, and (b) that the Surviving Person shall
succeed to and be substituted to every right and obligation of the
18
<PAGE>
Company in respect of this Agreement and the Warrants. The supplemental warrant
agreement shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article V. The
Surviving Person shall mail to holders of Warrants at the addresses appearing on
the Warrant Register a notice briefly describing the supplemental warrant
agreement. If the issuer of securities deliverable upon exercise of Warrants is
an affiliate of the Surviving Person, that issuer shall join in the supplemental
warrant agreement.
(ii) Notwithstanding the foregoing, if the Company enters into a
Fundamental Transaction with another Person (other than a subsidiary of the
Company) and consideration is payable to holders of shares of Capital Stock (or
other securities or property) issuable or deliverable upon exercise of the
Warrants that are exercisable in exchange for their shares in connection with
such Fundamental Transaction which consists solely of cash, then the holders of
Warrants shall be entitled to receive distributions on the date of such event on
an equal basis with holders of such shares (or other securities issuable upon
exercise of the Warrants) as if the Warrants had been exercised immediately
prior to such event, less the Exercise Price therefor. Upon receipt of such
payment, if any, the rights of a holder of such a Warrant shall terminate and
cease and such holder's Warrants shall expire.
(iii) If this paragraph (d) applies, it shall supersede the
application of paragraph (a) of this Section 5.01.
(j) Company Determination Final. Any determination that the Company
---------------------------
or the Board of Directors of the Company must make pursuant to this Article V is
conclusive absent manifest error.
(k) Warrant Agent's Adjustment Disclaimer. The Warrant Agent has no
-------------------------------------
duty to determine when an adjustment under this Article V should be made, how it
should be made or what it should be. The Warrant Agent has no duty to determine
whether a supplemental warrant agreement under paragraph (f) need be entered
into or whether any provisions of any supplemental warrant agreement are
correct. The Warrant Agent shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued
upon exercise of Warrants. The Warrant Agent shall not be responsible for the
Company's failure to comply with this Article V.
(l) Adjustment for Tax Purposes. The Company may make such increases
---------------------------
in the Exercise Rate, in addition to those otherwise required by this Section,
as it considers to be advisable in order that any event treated for Federal
income tax purposes as a dividend of stock or stock rights shall not be taxable
to the recipients.
(m) Underlying Shares. The Company shall at all times reserve and
-----------------
keep available, free from preemptive rights, out of its authorized but unissued
Common Stock or Common Stock held in the treasury of the Company, for the
purpose of effecting the exercise of Warrants, the full number of Shares then
deliverable upon the exercise of all Warrants then outstanding and payment of
the exercise price, and the shares so deliverable shall be fully paid and
nonassessable and free from all liens and security interests.
19
<PAGE>
(n) Specificity of Adjustment. Irrespective of any adjustments in the
-------------------------
number or kind of shares purchasable upon the exercise of the Warrants, Warrant
Certificates theretofore or thereafter issued may continue to express the same
number and kind of Shares per Warrant as are stated on the Warrant Certificates
initially issuable pursuant to this Agreement.
(o) Voluntary Adjustment. The Company from time to time may increase
--------------------
the Exercise Rate by any number and for any period of time (provided that such
--------
period is not less than 20 Business Days). Whenever the Exercise Rate is so
increased, the Company shall mail to holders at the addresses appearing on the
Warrant Register and file with the Warrant Agent a notice of the increase. The
Company shall give the notice at least 15 days before the date the increased
Exercise Rate takes effect. The notice shall state the increased Exercise Rate
and the period it will be in effect. A voluntary increase in the Exercise Rate
does not change or adjust the Exercise Rate otherwise in effect as determined by
this Section 5.01.
(p) Multiple Adjustments. After an adjustment to the Exercise Rate
--------------------
for outstanding Warrants under this Article V, any subsequent event requiring an
adjustment under this Article V shall cause an adjustment to the Exercise Rate
for outstanding Warrants as so adjusted.
(q) Definitions.
-----------
"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 purposes of this
definition, "control" (including, with correlative meanings, the terms
-------
"controlling," "controlled by" and "under common control with") 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.
"Capital Stock" means, with respect to any person, any and all shares,
-------------
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such person's capital stock, whether
outstanding on the Issue Date (as defined in the Indenture) or issued after the
Issue Date, and any and all rights, warrants or options exchangeable for or
convertible into such capital stock.
"Current Market Value" per share of Common Stock of the Company or any
--------------------
other security at any date means (i) if the security is not registered under the
Exchange Act, (a) the value of the security, determined in good faith by the
Board of Directors of the Company and certified in a board resolution, based on
the most recently completed arm's-length transaction between the Company and a
person other than an Affiliate of the Company and the closing of which occurs on
such date or shall have occurred within the six-month period preceding such
date, or (b) if no transaction shall have occurred on such date or within such
six-month period, the fair market value of the security as determined by an
Independent Financial Expert (provided that, in the case of the calculation of
Current Market Value for determining the cash value of fractional shares, any
such determination within six months that is, in the good faith judgment of the
Board, a reasonable determination of value, may be utilized) or (ii) (a) if the
security is
20
<PAGE>
registered under the Exchange Act, the average of the daily closing sales prices
of the securities for the 20 consecutive days immediately preceding such date,
or (b) if the securities have been registered under the Exchange Act for less
than 20 consecutive trading days immediately preceding such date, then the
average of the daily closing sales prices for all of the trading days before
such date for which closing sales prices are available, in the case of each of
(ii)(a) and (ii)(b), as certified to the Warrant Agent by the President, the
Chief Executive Officer or the Chief Financial Officer of the Company. The
closing sales price for each such trading day shall be: (A) in the case of a
security listed or admitted to trading on any United States national securities
exchange or quotation system, the closing sales price, regular way, on such day,
or if no sale takes place on such day, the average of the closing bid and asked
prices on such day, (B) in the case of a security not then listed or admitted to
trading on any national securities exchange or quotation system, the last
reported sale price on such day, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reputable quotation source designated by the Company, (C) in the case of a
security not then listed or admitted to trading on any national securities
exchange or quotation system and as to which no such reported sale price or bid
and asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation service, or a
newspaper of general circulation in the Borough of Manhattan, City and State of
New York, customarily published on each Business Day, designated by the Company,
or, if there shall be no bid and asked prices on such day, the average of the
high bid and low asked prices, as so reported, on the most recent day (not more
than 30 days prior to the date in question) for which prices have been so
reported and (D) if there are not bid and asked prices reported during the 30
days prior to the date in question, the Current Market Value shall be determined
as if the Shares (or other securities) were not registered under the Exchange
Act.
"Independent Financial Expert" 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 material financial interest for its proprietary account in
the Company or any of its Affiliates and (ii) which, in the judgment of the
Board of Directors of the Company, is otherwise independent with respect to the
Company and its Affiliates and qualified to perform the task for which it is to
be engaged.
"Time of Determination" means, (i) in the case of any distribution of
---------------------
securities or other property to existing stockholders to which paragraph (b)
applies, the time and date of the determination of stockholders entitled to
receive such securities or property or (ii) in the case of any other issuance
and sale to which paragraph (b) applies, the time and date of such issuance or
sale.
(r) When De Minimis Adjustment may be Deferred. No Adjustment in the
------------------------------------------
Exercise Rate need be made unless the adjustment would require an increase of at
least 1% in the Exercise Rate. Any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustments. All
calculations under this Section 5 shall be made to the nearest 1/1000th of a
share, as the case may be.
SECTION 5.2 Fractional Shares. The Company will not be required to
-----------------
issue fractional Shares upon exercise of the Warrants or distribute Share
certificates that evidence fractional Shares. In lieu of fractional Shares,
there shall be paid to the registered holders of
21
<PAGE>
Warrant Certificates at the time Warrants evidenced thereby are exercised as
herein provided an amount in cash equal to the same fraction of the Current
Market Value, per Share on the Business Day preceding the date the Warrant
Certificates evidencing such Warrants are surrendered for exercise. Such
payments will be made by check or by transfer to an account maintained by such
registered holder with a bank in The City of New York. If any holder surrenders
for exercise more than one Warrant Certificate, the number of Shares deliverable
to such holder may, at the option of the Company, be computed on the basis of
the aggregate amount of all the Warrants exercised by such holder.
SECTION 5.3 Certain Distributions. If at any time the Company
---------------------
grants, issues or sells options, convertible securities, or rights to purchase
stock, warrants or other securities pro rata to the record holders of any Common
--- ----
Stock of the Company ("Distribution Rights") or, without duplication, makes any
-------------------
dividend or otherwise makes any distribution, including, subject to applicable
law, pursuant to any plan of liquidation ("Distribution") on Common Stock, then
------------
the Company shall grant, issue, sell or make to each registered holder of
Warrants then outstanding, the aggregate Distribution Rights or Distribution, as
the case may be, which such holder would have acquired if such holder had held
the maximum number of Shares acquirable upon complete exercise of such holder's
Warrants (regardless of whether the Warrants are then exercisable) immediately
before the record date for the grant, issuance or sale of such Distribution
Rights or Distribution, as the case may be, or, if there is no such record date,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Distribution Rights or Distribution, as the
case may be.
ARTICLE 6
CONCERNING THE WARRANT AGENT
----------------------------
SECTION 6.1 Warrant Agent. The Company hereby appoints State
-------------
Street Bank and Trust Company of California, N.A. as Warrant Agent of the
Company in respect of the Warrants and the Warrant Certificates upon the terms
and subject to the conditions herein and in the Warrant Certificates set forth;
and State Street Bank and Trust Company of California, N.A. hereby accepts such
appointment. The Warrant Agent shall have the powers and authority specifically
granted to and conferred upon it in the Warrant Certificates and hereby and such
further powers and authority to act on behalf of the Company as the Company may
hereafter grant to or confer upon it and it shall accept in writing. All of the
terms and provisions with respect to such powers and authority contained in the
Warrant Certificates are subject to and governed by the terms and provisions
hereof. The Warrant Agent may act through agents and shall not be responsible
for the misconduct or negligence of any such agent appointed with due care.
SECTION 6.2 Conditions of Warrant Agent's Obligations. The Warrant
-----------------------------------------
Agent accepts its obligations herein set forth upon the terms and conditions
hereof and in the Warrant Certificates, including the following, to all of which
the Company agrees and to all of which the rights hereunder of the holders from
time to time of the Warrant Certificates shall be subject:
(a) The Warrant Agent shall be entitled to
compensation to be agreed upon with the Company in writing for all services
rendered by it and the Company
22
<PAGE>
agrees promptly to pay such compensation and to reimburse the Warrant Agent for
its reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel) incurred without gross negligence or willful misconduct on its part in
connection with the services rendered by it hereunder. The Company also agrees
to indemnify the Warrant Agent and any predecessor Warrant Agent, their
directors, officers, affiliates, agents and employees for, and to hold them and
their directors, officers, affiliates, agents and employees harmless against,
any loss, liability or expense of any nature whatsoever (including, without
limitation, reasonable fees and expenses of counsel) incurred without gross
negligence or willful misconduct on the part of the Warrant Agent, arising out
of or in connection with its acting as such Warrant Agent hereunder and its
exercise of its rights and performance of its obligations hereunder. The
obligations of the Company under this Section 6.02 shall survive the exercise
and the expiration of the Warrant Certificates and the resignation and removal
of the Warrant Agent.
(b) In acting under this Agreement and in connection
with the Warrant Certificates, the Warrant Agent is acting solely as agent of
the Company and does not assume any obligation or relationship of agency or
trust for or with any of the owners or holders of the Warrant Certificates.
(c) The Warrant Agent may consult with counsel of its
selection and any advice or written opinion of such 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 accordance with such advice or
opinion.
(d) The Warrant Agent shall be fully protected and
shall incur no liability for or in respect of any action taken or omitted to be
taken or thing suffered by it in reliance upon any Warrant Certificate, notice,
direction, consent, certificate, affidavit, opinion of counsel, instruction,
statement or other paper or document reasonably believed by it to be genuine and
to have been presented or signed by the proper parties.
(e) The Warrant Agent, and its officers, directors,
affiliates and employees ("Related Parties"), may become the owners of, or
---------------
acquire any interest in, Warrant Certificates, shares or other obligations of
the Company with the same rights that it or they would have it if were not the
Warrant Agent hereunder and, to the extent permitted by applicable law, it or
they may engage or be interested in any financial or other transaction with the
Company and may act on, or as depositary, trustee or agent for, any committee or
body of holders of shares or other obligations of the Company as freely as if it
were not the Warrant Agent hereunder. Nothing in this Agreement shall be deemed
to prevent the Warrant Agent or such Related Parties from acting in any other
capacity for the Company.
(f) The Warrant Agent shall not be under any liability
for interest on, and shall not be required to invest, any monies at any time
received by it pursuant to any of the provisions of this Agreement or of the
Warrant Certificates.
(g) The Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement (or any term or
provision hereof) or the execution and delivery hereof (except the due execution
and delivery hereof by the Warrant Agent) or in respect of the validity or
execution of any Warrant Certificate (except its authentication thereof).
23
<PAGE>
(h) The recitals and other statements contained herein
and in the Warrant Certificates (except as to the Warrant Agent's authentication
thereon) shall be taken as the statements of the Company and the Warrant Agent
assumes no responsibility for the correctness of the same. The Warrant Agent
does not make any representation as to the validity or sufficiency of this
Agreement or the Warrant Certificates, except for its due execution and delivery
of this Agreement; provided, however, that the Warrant Agent shall not be
-------- -------
relieved of its duty to authenticate the Warrant Certificates as authorized by
this Agreement. The Warrant Agent shall not be accountable for the use or
application by the Company of the proceeds of the exercise of any Warrant.
(i) Before the Warrant Agent acts or refrains from
acting with respect to any matter contemplated by this Warrant Agreement, it may
require:
(1) an Officers' Certificate (as defined in the
Indenture) stating on behalf of the Company that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Warrant Agreement
relating to the proposed action have been complied with; and
(2) if reasonably necessary in the sole judgment
of the Warrant Agent, an opinion of counsel for the Company stating that, in the
opinion of such counsel, all such conditions precedent have been complied with
provided that such matter is one customarily opined on by counsel.
(3) Each Officers' Certificate or, if requested,
an opinion of counsel with respect to compliance with a condition or covenant
provided for in this Warrant Agreement shall include:
(4) a statement that the person making such
certificate or opinion has read such covenant or condition;
(5) 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;
(6) a statement that, in the opinion of such
person, he or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(7) a statement as to whether or not, in the
opinion of such person, such condition or covenant has been complied with.
(j) The Warrant Agent shall be obligated to perform
such duties as are herein and in the Warrant Certificates specifically set forth
and no implied duties or obligations shall be read into this Agreement or the
Warrant Certificates against the Warrant Agent. The Warrant Agent shall not be
accountable or under any duty or responsibility for the use by the Company of
any of the Warrant Certificates authenticated by the Warrant Agent and delivered
by it to the Company pursuant to this Agreement. The Warrant Agent shall have no
24
<PAGE>
duty or responsibility in case of any default by the Company in the performance
of its covenants or agreements contained in the Warrant Certificates or in the
case of the receipt of any written demand from a holder of a Warrant Certificate
with respect to such default, including, without limiting the generality of the
foregoing, any duty or responsibility to initiate or attempt to initiate any
proceedings at law or otherwise or, except as provided in Section 7.02 hereof,
to make any demand upon the Company.
(k) Unless otherwise specifically provided herein, any
order, certificate, notice, request, direction or other communication from the
Company made or given under any provision of this Agreement shall be sufficient
if signed by its chairman of the Board of Directors, its president, its
treasurer, its controller or any vice president or its secretary or any
assistant secretary.
(l) The Warrant Agent shall have no responsibility in
respect of any adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute,
acknowledge and deliver, or cause to be performed, executed, acknowledged and
delivered, all such further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
by the Warrant Agent of the provisions of this Agreement.
(n) The Warrant Agent is hereby authorized and
directed to accept written instructions with respect to the performance of its
duties hereunder from any one of the chairman of the Board of Directors, chief
executive officer, the chief financial officer, any vice president or the
secretary or assistant secretary of the Company or any other officer or official
of the Company reasonably believed to be authorized to give such instructions
and to apply to such officers or officials for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions with
respect to any matter arising in connection with the Warrant Agent's duties and
obligations arising under this Agreement. Such application by the Warrant Agent
for written instructions from the Company may, at the option of the Warrant
Agent, set forth in writing any action proposed to be taken or omitted by the
Warrant Agent with respect to its duties or obligations under this Agreement and
the date on or after which such action shall be taken and the Warrant Agent
shall not be liable for any action taken or omitted in accordance with a
proposal included in any such application on or after the date specified therein
(which date shall be not less than 10 Business Days after the Company receives
such application unless the Company consents to a shorter period), provided that
(i) such application includes a statement to the effect that it is being made
pursuant to this paragraph (n) and that unless objected to prior to such date
specified in the application, the Warrant Agent will not be liable for any such
action or omission to the extent set forth in such paragraph (n) and (ii) prior
to taking or omitting any such action, the Warrant Agent has not received
written instructions objecting to such proposed action or omission.
(o) Whenever in the performance of its duties under
this Agreement the Warrant Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such
25
<PAGE>
fact or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed on behalf of the Company by any one of the chairman of the
Board of Directors, the chief executive officer, the chief financial officer,
any vice president or the secretary or assistant secretary of the Company or any
other officer or official of the Company reasonably believed to be authorized to
give such instructions and delivered to the Warrant Agent; and such certificate
shall be full authorization to the Warrant Agent for any action taken or
suffered in good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(p) The Warrant Agent shall not be required to risk or
expend its own funds in the performance of its obligations and duties hereunder.
SECTION 6.3 Resignation and Appointment of Successor. (a) The
----------------------------------------
Company agrees, for the benefit of the holders from time to time of the Warrant
Certificates, that there shall at all times be a Warrant Agent hereunder.
(b) The Warrant Agent may at any time resign as
Warrant Agent by giving written notice to the Company of such intention on its
part, specifying the date on which its desired resignation shall become
effective; provided, however, that such date shall be at least 60 days after the
-------- -------
date on which such notice is given unless the Company agrees to accept less
notice. Upon receiving such notice of resignation, the Company shall promptly
appoint a successor Warrant Agent, qualified as provided in Section 6.03(d)
hereof, by written instrument in duplicate signed on behalf of the Company, one
copy of which shall be delivered to the resigning Warrant Agent and one copy to
the successor Warrant Agent. As provided in Section 6.03(d) hereof, such
resignation shall become effective upon the earlier of (x) the acceptance of the
appointment by the successor Warrant Agent or (y) 60 days after receipt by the
Company of notice of such resignation. The Company may, at any time and for any
reason, and shall, upon any event set forth in the next succeeding sentence,
remove the Warrant Agent and appoint a successor Warrant Agent by written
instrument in duplicate, specifying such removal and the date on which it is
intended to become effective, signed on behalf of the Company, one copy of which
shall be delivered to the Warrant Agent being removed and one copy to the
successor Warrant Agent. The Warrant Agent shall be removed as aforesaid if it
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Warrant Agent or of its property shall be appointed, or any
public officer shall take charge or control of it or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation. Any removal of
the Warrant Agent and any appointment of a successor Warrant Agent shall become
effective upon acceptance of appointment by the successor Warrant Agent as
provided in Section 6.03(d). As soon as practicable after appointment of the
successor Warrant Agent, the Company shall cause written notice of the change in
the Warrant Agent to be given to each of the registered holders of the Warrants
in the manner provided for in Section 8.04 hereof.
(c) Upon resignation or removal of the Warrant Agent,
if the Company shall fail to appoint a successor Warrant Agent within a period
of 60 days after receipt of such notice of resignation or removal, then the
holder of any Warrant Certificate or the retiring Warrant Agent may apply to a
court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. Pending appointment of a successor to the Warrant Agent,
26
<PAGE>
either by the Company or by such a court, the duties of the Warrant Agent shall
be carried out by the Company.
(d) Any successor Warrant Agent, whether appointed by
the Company or by a court, shall be a bank or trust company in good standing,
incorporated under the laws of the United States of America or any State thereof
and having (or, in the case of subsidiary of a bank holding company, its parent
shall have), at the time of its appointment, a combined capital surplus of at
least $50 million. Such successor Warrant Agent shall execute and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder and all the provisions of this Agreement, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Warrant Agent hereunder,
and such predecessor shall thereupon become obligated to (i) transfer and
deliver, and such successor Warrant Agent shall be entitled to receive, all
securities, records or other property on deposit with or held by such
predecessor as Warrant Agent hereunder and (ii) upon payment of the amounts then
due it pursuant to Section 6.02(a) hereof, pay over, and such successor Warrant
Agent shall be entitled to receive, all monies deposited with or held by any
predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant
Agent hereunder may be merged or converted, or any corporation or bank with
which the Warrant Agent may be consolidated, or an corporation or bank resulting
from any merger, conversion or consolidation to which the Warrant Agent shall be
a party, or any corporation or bank to which the Warrant Agent shall sell or
otherwise transfer all or substantially all of its corporate trust business
(including the administration of this Warrant Agreement), shall be the successor
to the Warrant Agent under this Agreement (provided that such corporation or
bank shall be qualified as aforesaid) without the execution or filing of any
document or any further act on the part of any of the parties hereto.
(f) No Warrant Agent under this Warrant Agreement
shall be personally liable for any action or omission of any successor Warrant
Agent.
ARTICLE 7
MISCELLANEOUS
-------------
SECTION 7.1 Amendment. This Agreement and the terms of the
---------
Warrants may be amended by the Company and the Warrant Agent, without the
consent of the holder of any Warrant Certificate, for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision contained herein or therein, or to effect any assumptions
of the Company's obligations hereunder and thereunder by a successor corporation
under the circumstances described in Section 5.01(d) hereof or in any other
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of the Warrant Certificates.
The Company and the Warrant Agent may amend, modify or supplement this
Agreement and the terms of the Warrants, and waivers to departures from the
terms hereof and
27
<PAGE>
thereof may be given, with the consent of the Requisite Warrant Holders (as
defined below) for the purpose of adding any provision to or changing in any
manner or eliminating any of the provisions of this Agreement or modifying in
any manner the rights of the holders of the outstanding Warrants; provided,
--------
however, that no such modification that increases the Exercise Price or
- -------
decreases the Exercise Rate, makes any change to the last paragraph of Section
5.01(d), reduces the period of time during which the Warrants are exercisable
hereunder, or effects any change to this Section 7.01 may be made with respect
to any Warrant without the consent of the holder of such Warrant. "Requisite
---------
Warrant Holders" means (i) in the case of any amendment, modification,
- ---------------
supplement or waiver affecting Warrant Holders as such holders of a majority in
number of the outstanding Warrants so affected, or (ii) in the case of any
amendment, modification, supplement or waiver affecting Warrant Holders, a
majority in number of Shares represented by the Warrants that would be issuable
assuming exercise thereof at the time such amendment, modification, supplement
or waiver is voted upon. Notwithstanding any other provision of this Agreement,
the Warrant Agent's consent must be obtained regarding any supplement or
amendment which alters the Warrant Agent's rights or duties (it being expressly
understood that the foregoing shall not be in derogation of the right of the
Company to remove the Warrant Agent in accordance with Section 6.03 hereof). For
purposes of any amendment, modification or waiver hereunder, Warrants held by
the Company or any of its Affiliates shall be disregarded.
Any modification or amendment made in accordance with this Agreement
will be conclusive and binding on all present and future holders of Warrant
Certificates whether or not they have consented to such modification or
amendment or waiver and whether or not notation of such modification or
amendment is made upon such Warrant Certificates. Any instrument given by or on
behalf of any holder of a Warrant Certificate in connection with any consent to
any modification or amendment will be conclusive and binding on all subsequent
holders of such Warrant Certificate.
SECTION 7.2 Notices and Demands to the Company and Warrant Agent.
----------------------------------------------------
If the Warrant Agent shall receive any notice or demand addressed to the Company
by the holder of a Warrant Certificate pursuant to the provisions hereof or of
the Warrant Certificates, the Warrant Agent shall promptly forward such notice
or demand to the Company.
SECTION 7.3 Addresses for Notices to Parties and for Transmission
-----------------------------------------------------
of Documents. All notices hereunder to the parties hereto shall be deemed to
- ------------
have been given when sent by certified or registered mail, postage prepaid, or
by facsimile transmission, confirmed by first class mail, postage prepaid,
addressed to any party hereto as follows:
To the Company:
Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
Telephone: (650) 298-0400
Facsimile: (650) 298-0420
Attention: Chief Financial Officer
To the Warrant Agent:
State Street Bank and Trust Company
28
<PAGE>
of California, N.A.
633 West 5th Street, 12th Floor
Los Angeles, CA 90071
Telephone: (213) 362-7369
Facsimile: (213) 362-7357
Attention: Corporate Trust Administration (Equinix, Inc. Warrant
Agreement)
To the Warrant Agent's New York Agent:
State Street Bank and Trust Company, N.A.
61 Broadway
New York, NY 10006
Telephone: (212) 612-3900
Facsimile: (212) 612-3205
Attention: Corporate Trust Administration (Equinix, Inc. Warrant
Agreement)
or at any other address of which either of the foregoing shall
have notified the other in writing.
SECTION 7.4 Notices to Holders. Notices to holders of Warrants
------------------
shall be mailed to such holders at the addresses of such holders as they appear
in the Warrant Register. Any such notice shall be sufficiently given if sent by
first-class mail, postage prepaid.
SECTION 7.5 APPLICABLE LAW; SUBMISSION TO JURISDICTION. THE
------------------------------------------
VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER AND OF THE RESPECTIVE TERMS AND PROVISIONS THEREOF
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 7.6 Persons Having Rights Under Agreement. Nothing in this
-------------------------------------
Agreement expressed or implied and nothing that may be inferred from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the Company, the Warrant Agent, the
holders of the Warrant Certificates and, with respect to Sections 4.02 and 4.04,
the holders of Shares issued pursuant to Warrants, any right, remedy or claim
under or by reason of this Agreement or of any covenant, condition, stipulation,
promise or agreement hereof; and all covenants (except for Sections 4.02 and
4.04 which shall be for the benefit of all holders of Shares issued pursuant to
Warrants), conditions, stipulations, promises and agreements in this Agreement
contained shall be for the sole and exclusive benefit of the Company and the
Warrant Agent and their successors and of the holders of the Warrant
Certificates.
SECTION 7.7 Headings, etc.. The table of contents, cross reference
--------------
table and the descriptive headings of the several Articles and Sections of this
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
29
<PAGE>
SECTION 7.8 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
SECTION 7.9 Inspection of Agreement. A copy of this Agreement
-----------------------
shall be available during regular business hours at the principal corporate
trust office of the Warrant Agent, for inspection by the holder of any Warrant
Certificate. The Warrant Agent may require such holder to submit his Warrant
Certificate for inspection by it.
SECTION 7.10 Availability of Equitable Remedies. Since a breach of
----------------------------------
the provisions of this Agreement could not adequately be compensated by money
damages, holders of Warrants shall be entitled, in addition to any other right
or remedy available to them, to an injunction restraining such breach or a
threatened breach and to specific performance of any such provision of this
Agreement, and in either case no bond or other security shall be required in
connection therewith, and the parties hereby consent to such injunction and to
the ordering of specific performance.
SECTION 7.11 Obtaining of Governmental Approvals. The Company will
-----------------------------------
from time to time take all action required to be taken by it which may be
necessary to obtain and keep effective any and all permits, consents and
approvals of governmental agencies and authorities and securities acts filings
under United States Federal and state laws, and the rules and regulations of all
stock exchanges on which the Warrants are listed which may be or become
requisite in connection with the issuance, sale, transfer and delivery of the
Warrant Certificates, the exercise of the Warrants or the issuance, sale,
transfer and delivery of the Shares issued upon exercise of the Warrants.
[Signature Page Follows]
30
<PAGE>
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by
the parties hereto as of the day and year first written above.
EQUINIX, INC.
By: /s/ Jay S. Adelson
-----------------------
Name: Jay S. Adelson
Title: Secretary
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., as Warrant Agent
By: /s/ Scott C. Emmons
------------------------
Name: Scott C. Emmons
Title: Vice President
<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE 'SECURITIES ACT'). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED PRIOR TO THE DATE WHICH IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE AND THE LAST DATE ON WHICH THE ISSUER
OR AN AFFILIATE OF THE ISSUER WAS THE OWNER OF THE SECURITY, IN EITHER CASE
OTHER THAN (1) TO THE ISSUER, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ('RULE 144A'), TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER
THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), AND, IF SUCH TRANSFER
IS BEING EFFECTED BY CERTAIN TRANSFERORS SPECIFIED IN THE WARRANT AGREEMENT (AS
DEFINED BELOW) PRIOR TO THE EXPIRATION OF THE APPLICABLE DISTRIBUTION COMPLIANCE
PERIOD (WITHIN THE MEANING OF RULE 903(c)(3) OF REGULATION S UNDER THE
SECURITIES ACT), A CERTIFICATE WHICH MAY BE OBTAINED FROM THE ISSUER OR THE
WARRANT AGENT IS DELIVERED BY THE TRANSFEREE TO THE ISSUER AND THE WARRANT
AGENT, (4) TO AN INSTITUTION THAT IS AN ACCREDITED INVESTOR AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION, AND A CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY IS
DELIVERED BY THE TRANSFEREE TO THE ISSUER AND THE WARRANT AGENT, (5) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ANY OTHER APPLICABLE SECURITIES LAWS. AN INSTITUTIONAL ACCREDITED INVESTOR
HOLDING THIS SECURITY AGREES IT WILL FURNISH TO THE ISSUER AND THE WARRANT AGENT
SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO
CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER
A-1
<PAGE>
HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF
THE ISSUER THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A OR (2) AN INSTITUTION THAT IS AN ACCREDITED INVESTOR AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS HOLDING
THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S.
PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING
THE REQUIREMENTS OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.
A-2
<PAGE>
CUSIP #[ ]
No. [ ] [ ] Warrants
WARRANT CERTIFICATE
EQUINIX, INC.
This Warrant Certificate certifies that STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., or registered assigns, is the registered holder of
200,000 warrants (the "Warrants") to purchase shares of Common Stock, par value
$0.001 per share (the "Common Stock"), of EQUINIX, INC., a Delaware corporation
(the "Company," which term includes its successors and assigns). Each Warrant
entitles the holder to purchase from the Company at an any time from 9:00 a.m.
New York City time on or after the Exercisability Date until 5:00 p.m., New York
City time, on December 1, 2007 (the "Expiration Date"), 11.255 fully paid,
registered and non-assessable shares of Common Stock, subject to adjustment as
provided in Article V of the Warrant Agreement, at the exercise price of $0.01
for each share purchased (the "Exercise Price"), which has been paid to the
Company on the date of issuance of this Warrant and is non-refundable whether or
not this Warrant is exercised or otherwise surrendered for cancellation. The
shares of Common Stock purchasable upon exercise of a Warrant are herein
referred to as the "Shares" and, unless the context otherwise requires, such
term shall also mean the other securities or property purchasable and
deliverable upon exercise of a Warrant as provided in the Warrant Agreement. A
Warrant may be exercised solely by the surrender of the Warrant at any office or
agency maintained for that purpose by the Company (the "Warrant Agent Office"),
as provided in the Warrant Agreement. Capitalized terms used herein without
being defined herein shall have the definitions ascribed to such terms in the
Warrant Agreement.
The Company has initially designated the principal corporate trust
office of State Street Bank and Trust Company, N.A., an affiliate of the Warrant
Agent, in the Borough of Manhattan, The City of New York, as the initial Warrant
Agent Office. The number of Shares issuable upon exercise of the Warrants is
subject to adjustment upon the occurrence of certain events set forth in the
Warrant Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York City
time, on December 1, 2007 shall thereafter be void.
If the Company merges, amalgamates or consolidates with or into, or
sells all or substantially all of its property and assets to, another Person
solely for cash, the holders of Warrants shall be entitled to receive
distributions on the date of such event on an equal basis with holders of Shares
(or other securities issuable upon exercise of the Warrants) as if the Warrants
had been exercised immediately prior to such event (less the Exercise Price).
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
A-3
<PAGE>
THIS WARRANT CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
A-4
<PAGE>
WITNESS the seal of the Company and signatures of its duly authorized officers.
Dated: December 1, 1999
EQUINIX, INC.
By: ___________________________
Name:
Title:
Attest:
By: ___________________________
Name:
Title:
Countersignature:
This is one of the Warrants referred to in the within mentioned Warrant
Agreement:
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A.,
as Warrant Agent
By: ___________________________
Authorized Signatory
A-5
<PAGE>
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
EQUINIX, INC.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring at 5:00 p.m., New York City time, on
December 1, 2007 (the "Expiration Date"), each of which represents the right to
purchase at any time on or after the Exercisability Date (as defined in the
Warrant Agreement) and on or prior to the Expiration Date 11.255 shares of
Common Stock, subject to adjustment as set forth in the Warrant Agreement. The
Warrants are issued pursuant to a Warrant Agreement dated as of December 1, 1999
(the "Warrant Agreement"), duly executed and delivered by the Company to State
Street Bank and Trust Company of California, N.A., as Warrant Agent (the
"Warrant Agent"), which Warrant Agreement is hereby incorporated by reference in
and made a part of this instrument and is hereby referred to for a description
of the rights, limitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants.
Warrants may be exercised by surrendering at any Warrant Agent Office
this Warrant Certificate with the form of Election to Exercise set forth hereon
duly completed and executed.
If all of the items referred to in the preceding paragraph are
received by the Warrant Agent at or prior to 12:00 Noon, New York City time, on
a Business Day, the exercise of the Warrant to which such items relate will be
effective on such Business Day. If any items referred to in the preceding
paragraph are received after 12:00 Noon, New York City time, on a Business Day,
the exercise of the Warrants to which such item relates will be deemed to be
effective on the next succeeding Business Day. Notwithstanding the foregoing,
in the case of an exercise of Warrants on December 1, 2007, if all of the items
referred to in the preceding paragraph are received by the Warrant Agent at or
prior to 5:00 p.m., New York City time, on such Expiration Date, the exercise of
the Warrants to which such items relate will be effective on the Expiration
Date.
As soon as practicable after the exercise of any Warrant or Warrants,
the Company shall issue or cause to be issued to or upon the written order of
the registered holder of this Warrant Certificate, a certificate or certificates
evidencing the Share or Shares to which such holder is entitled, in fully
registered form, registered in such name or names as may be directed by such
holder pursuant to the Election to Exercise, as set forth on the reverse of this
Warrant Certificate. Such certificate or certificates evidencing the Share or
Shares shall be deemed to have been issued and any persons who are designated to
be named therein shall be deemed to have become the holder of record of such
Share or Shares as of the close of business on the date upon which the exercise
of this Warrant was deemed to be effective as provided in the preceding
paragraph.
The Company will not be required to issue fractional shares of Common
Stock upon exercise of the Warrants or distribute Share certificates that
evidence fractional shares of Common Stock. In lieu of fractional shares of
A-6
<PAGE>
Common Stock, there shall be paid to the registered Holder of this Warrant
Certificate at the time such Warrant Certificate is exercised an amount in cash
equal to the same fraction of the Current Market Value per share of Common Stock
on the Business Day preceding the date this Warrant Certificate is surrendered
for exercise.
Warrant Certificates, when surrendered at any office or agency
maintained by the Company for that purpose by the registered holder thereof in
person or by legal representative or attorney duly authorized in writing, may be
exchanged for a new Warrant Certificate or new Warrant Certificates evidencing
in the aggregate a like number of Warrants, in the manner and subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
Upon due presentment for registration of transfer of this Warrant
Certificate at any office or agency maintained by the Company for that purpose,
a new Warrant Certificate evidencing in the aggregate a like number of Warrants
shall be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Agreement, without charge
except for any tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder hereof as the absolute owner of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone) for the
purpose of any exercise hereof and for all other purposes, and neither the
Company nor the Warrant Agent shall be affected by any notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in New
York city, (ii) the principal U.S. securities exchange or market, if any, on
which the Common Stock is listed or admitted to trading and (iii) the principal
U.S. securities exchange or market, if any, on which the Warrants are listed or
admitted to trading are open for business.
The Warrants and the Shares are entitled to the benefits of a
registration rights agreement relating to the Warrants and the shares of Common
Stock issuable upon exercise thereof (the "Registration Rights Agreement"),
pursuant to which the holders representing not less than a majority of
Registrable Securities (as defined in the Registration Rights Agreement) have
the right under certain circumstances to require the Company to effect one
demand registration of the Registrable Securities. The Registration Rights
Agreement also provides the holders of Registrable Securities with the right,
subject to the conditions and limitations contained therein, to include the
Registrable Securities in certain registration statements filed by the Company
for its account or for the account of any of its securityholders.
A-7
<PAGE>
(FORM OF ELECTION TO EXERCISE)
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise [ ] of
the Warrants represented by this Warrant Certificate.
The undersigned requests that a certificate representing such Shares
be registered in the name of ____________________ whose address is ____________
and that such shares be delivered to ______________________ whose address is
___________________________. Any cash payments to be paid in lieu of a
fractional Share should be made to _____________ whose address is
__________________________ and the check representing payment thereof should be
delivered to ________________________ whose address is
_____________________________.
Dated ____________________________, _________
Name of holder of
Warrant Certificate: ________________________________________________________
(Please Print)
Tax Identification or
Social Security Number: _____________________________________________________
Address: ____________________________________________________________________
____________________________________________________________________
Signature: _________________________________________________________
Note: The above signature must correspond with the name as
written upon the face of this Warrant Certificate in
every particular, without alteration or enlargement
or any change whatever and if the certificate
representing the Shares or any Warrant Certificate
representing Warrants not exercised is to be
registered in a name other than that in which this
Warrant Certificate is registered, or if any cash
payment to be paid in lieu of a fractional share is
to be made to a person other than the registered
holder of this Warrant Certificate, the signature of
the holder hereof must be guaranteed as provided in
the Warrant Agreement.
A-8
<PAGE>
Dated ______________________, _________
Signature: _________________________________________________
Note: The above signature must correspond with the
name as written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever.
Signature Guaranteed: ______________________________________
[FORM OF ASSIGNMENT]
For value received _______________________ hereby sells,
assigns and transfers unto __________________________ the within Warrant
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ______________________ attorney, to
transfer said Warrant Certificate on the books of the within-named Company, with
full power of substitution in the premises.
Dated ______________________, _________
Signature: _________________________________________________
Note: The above signature must correspond with the
name as written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever.
Signature Guaranteed: ______________________________________
A-9
<PAGE>
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS1
The following exchanges of a part of this Global Warrant for certificated
Warrants have been made:
<TABLE>
<CAPTION>
Number of Warrants of
Amount of decrease in Amount of increase in this Global Warrant Signature of
Date of Number of Warrants of Number of Warrants of following such authorized officer
Exchange this Global Warrant this Global Warrant decrease (or increase) of Warrant Agent
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
______________
1 This is to be included only if the Warrant is in global form.
A-10
<PAGE>
EXHIBIT B
---------
FORM OF LEGEND FOR GLOBAL WARRANT
Any Global Warrant authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS SECURITY IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT
AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY 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 THE
WARRANT AGREEMENT, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY 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
THE WARRANT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER 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>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock
(the "Warrants") of EQUINIX, INC.
This Certificate relates to _____ Warrants held in* ____ book-entry
or* _____ certificated form by _____________ (the "Transferor").
The Transferor:*
has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant held by the
Depositary a Warrant or Warrants in definitive, registered form of authorized
denominations and an aggregate number equal to its beneficial interest in such
Global Warrant (or the portion thereof indicated above); or
has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request and in respect of each such
Warrant, the Transferor does hereby certify that Transferor is familiar with the
Warrant Agreement relating to the above captioned Warrants and the restrictions
on transfers thereof as provided in Section 1.08 of such Warrant Agreement, and
that the transfer of this Warrant does not require registration under the
Securities Act of 1933, as amended (the "Act") because*:
---
Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 1.08(a)(y)(A) or Section
1.08(d)(i)(A) of the Warrant Agreement).
Such Warrant is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Act), in reliance on Rule 144A.
Such Warrant is being transferred to an "institutional accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act).
Such Warrant is being transferred in reliance on Regulation S
under the Act.
Such Warrant is being transferred in accordance with Rule 144
under the Act.
C-1
<PAGE>
Such Warrant is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the Act.
______________________________________________________________________________
[INSERT NAME OF TRANSFEROR]
By:___________________________________________________________________________
Date: ______________________________
*Check applicable box.
C-2
<PAGE>
EXHIBIT D
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
- -----------------------------------------------
__________, _____
State Street Bank and Trust Company
of California, N.A.
633 West 5th Street, 12th Floor
Los Angeles, CA 90071
Attention: Corporate Trust Administration (Equinix, Inc. Warrant Agreement)
Ladies and Gentlemen:
In connection with our proposed purchase of warrants (the
"Warrants") to purchase Common Stock of Equinix, Inc. (the "Company"), we
confirm that:
1. We have received such information as we deem necessary in
order to make our investment decision.
2. We understand that any subsequent transfer of the Warrants
is subject to certain restrictions and conditions set forth in the Warrant
Agreement and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Warrants except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
3. We understand that the offer and sale of the Warrants have
not been registered under the Securities Act, and that the Warrants may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Warrants prior to (x) the date which is two
years after the later of the date of original issuance of the Warrants (or such
shorter period as may be prescribed by Rule 144(k) under the Securities Act or
any successor provision thereto) or the last day on which the Company or any
affiliate of the Company was owner of such Warrants, or any predecessor thereto,
and (y) such later date, if any, as may be required by applicable laws, we will
do so only (A) to the Company, (B) inside the United States in accordance with
Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) inside the United States to an institutional "accredited
investor" (as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to the Warrant Agent a signed
letter substantially in the form hereof, (D) outside the United States in
accordance with Regulation S under the Securities Act, (E) pursuant to the
exemption from registration provided
D-1
<PAGE>
by Rule 144 under the Securities Act (if available) or (F) pursuant to an
effective registration statement under the Securities Act and (G) pursuant to
another available exemption under the Securities Act, and we further agree to
provide to any person purchasing Warrants from us a notice advising such
purchaser that resales of the Warrants are restricted as stated herein.
4. We understand that, on any proposed resale of Warrants, we will
be required to furnish to the Warrant Agent and the Company, such certification,
legal opinions and other information as the Warrant Agent and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Warrants purchased by us will bear
a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and 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 Warrants, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or their investment, as the case may be.
6. We are acquiring the Warrants purchased by us for our account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
D-2
<PAGE>
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 proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:________________________
[Authorized Signatory]
Upon transfer the Warrants would be registered in the name of the new beneficial
owner as follows:
Name:___________________________
Address:________________________
Taxpayer ID Number:_____________
D-3
<PAGE>
EXHIBIT E
Form of Certificate to Be Delivered
in Connection with Regulation S Transfers
- -----------------------------------------
___________, ______
State Street Bank and Trust Company
of California, N.A.
633 West 5th Street, 12th Floor
Los Angeles, CA 90071
Attention: Corporate Trust Administration (Equinix, Inc. Warrant Agreement)
Ladies and Gentlemen:
In connection with our proposed sale of Warrants of Equinix, Inc.
(the "Company"), we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, we represent that:
(1) the offer of the Warrants 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 under the Securities Act, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer restrictions
applicable to the Warrants; and
(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 Warrants 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 Warrants under the
Securities Act; or pursuant to an available exemption from the registration
requirements under the Act.
E-1
<PAGE>
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. Defined terms used herein without
definition have the respective meanings provided in Regulation S under the
Securities Act.
Very truly yours,
[Name of Transferor]
By:_____________________________
[Authorized Signatory]
Upon transfer the Warrants would be registered in the name of the new beneficial
owner as follows:
Name:________________________________
Address:_____________________________
Taxpayer ID Number:__________________
E-2
<PAGE>
EXHIBIT F
FORM OF RECEIPT OF PAYMENT OF THE EXERCISE PRICE
EQUINIX, INC.
901 Marshall Street
Redwood City, CA 94603
(650) 298-0400
December 1, 1999
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
State Street Bank and Trust Company
of California, N.A.
633 West 5th Street, 12th Floor
Los Angeles, CA 90071
Attention: Corporate Trust Administration (Equinix, Inc. Warrant Agreement)
Ladies and Gentlemen,
Reference is made to the Warrant Agreement (the "Warrant Agreement")
of even date herewith between Equinix, Inc. (the "Company") and State Street
Bank and Trust Company of California, N.A. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to such terms in the
Warrant Agreement.
The Company hereby acknowledges receipt on the date hereof of
$22,510.00 representing payment in full of the Exercise Price of the Warrants.
No further payment by any holder of Warrants shall be required upon any exercise
of the Warrants. The payment of the Exercise Price is nonrefundable, whether or
not the Warrants are exercised or otherwise surrendered for cancellation.
F-1
<PAGE>
Very truly yours,
EQUINIX, INC.
__________________________
Name:
By:_______________________
Name:
Title:
F-2
<PAGE>
EXHIBIT 10.3
- --------------------------------------------------------------------------------
COMMON STOCK REGISTRATION RIGHTS AGREEMENT
Dated as of December 1, 1999
among
EQUINIX, INC.,
BENCHMARK CAPITAL PARTNERS II, L.P.,
CISCO SYSTEMS, INC.,
MICROSOFT CORPORATION,
EPARTNERS,
ALBERT M. AVERY, IV,
JAY S. ADELSON
AND
SALOMON SMITH BARNEY INC.,
GOLDMAN, SACHS & CO. and
MORGAN STANLEY & CO. INCORPORATED,
as Initial Purchasers
- --------------------------------------------------------------------------------
<PAGE>
THIS COMMON STOCK REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
---------
made and entered into as of December 1, 1999, among Equinix, Inc., a Delaware
corporation (the "Company"), Benchmark Capital Partners II, L.P., Cisco Systems,
-------
Inc., Microsoft Corporation, Epartners, Albert M. Avery, IV and Jay S. Adelson
(collectively, the "Investors") Salomon Smith Barney Inc. ("Salomon Smith
---------
Barney"), Goldman, Sachs & Co. and Morgan Stanley & Co. (together with Salomon
Smith Barney, the "Initial Purchasers").
------------------
This Agreement is made pursuant to the Purchase Agreement, dated as of
November 24, 1999, among the Company and the Initial Purchasers (the "Purchase
--------
Agreement"), relating to the sale by the Company to the Initial Purchasers of an
- ---------
aggregate of 200,000 Units, each Unit consisting of $1,000 principal amount 13%
Senior Notes due 2007 (the "Notes") and ONE Warrant (collectively, "Warrants")
----- --------
to purchase initially 11.255 shares of common stock, par value $0.001 per share,
of the Company. In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide to the Holders (as defined
herein) the registration rights for the Registrable Securities (as defined
herein) set forth in this Agreement and the Investors (as defined herein) have
agreed to provide the Holders, among other things, the tag-along rights for the
Warrants and the Registrable Securities set forth herein. The execution of this
Agreement is a condition to the obligations of the Initial Purchasers to
purchase the Units 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:
"Advice" shall have the meaning ascribed to that term in the last
------
paragraph of Section 4.
"Affiliate" of any specified Person shall mean 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.
"Agreement" shall have the meaning ascribed to that term in the
---------
preamble hereto.
"Business Day" shall mean a day that is not a Legal Holiday.
------------
"Capital Stock" shall mean, 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 capital stock, partnership
interests or any other participation, right or other interest in the nature of
an equity interest in such Person or any option, warrant or other security
convertible into or exercisable or exchangeable for any of the foregoing.
<PAGE>
"Common Stock" shall mean the common stock, par value $0.001 per
------------
share, of the Company and any options, warrants or security convertible into or
exercisable or exchangeable for such common stock.
"Company" shall have the meaning ascribed to that term in the preamble
-------
hereto and shall also include the Company's successors.
"Continuing Directors" shall have the meaning ascribed to that term in
--------------------
the Indenture.
"Convertible Preferred Stock" will include the outstanding Series A
---------------------------
Preferred Stock and Series B Preferred Stock and any other securities
convertible or exercisable or exchangeable into Common Stock of the Company,
whether outstanding on the Issue Date or thereafter issued.
"Current Market Value" per share of Common Stock of the Company or any
--------------------
other security at any date shall mean (i) if the security is not registered
under the Exchange Act, the fair market value of the security as determined by a
nationally or regionally recognized independent financial expert or (ii) (a) if
the security is registered under the Exchange Act, the average of the daily
closing sales prices of the security for the 20 consecutive days immediately
preceding such date, or (b) if the security has been registered under the
Exchange Act for less than 20 consecutive trading days before such date, then
the average of the daily closing sales prices for all of the trading days before
such date for which closing sales prices are available, in the case of each of
(ii)(a) and (ii)(b), as certified to the Warrant Agent (as specified in the
Warrant) by the President, any Vice President or the Chief Financial Officer of
the Company. The closing sales price for each such trading day shall be: (A)
in the case of a security listed or admitted to trading on any United States
national securities exchange or quotation system, the closing sales price,
regular way, on such day or, if no sale takes place on such day, the average of
the closing bid and asked prices on such day, (B) in the case of a security not
then listed or admitted to trading on any national securities exchange or
quotation system, the last reported sale price on such day or, if no sale takes
place on such day, the average of the closing bid and asked prices on such day,
as reported by a reputable quotation source designated by the Company, (C) in
the case of a security not then listed or admitted to trading on any national
securities exchange or quotation system and as to which no such reported sale
price or bid and asked prices are available, the average of the reported high
bid and low asked prices on such day, as reported by a reputable quotation
service, or a newspaper of general circulation in the Borough of Manhattan, City
and State of New York, customarily published on each Business Day, designated by
the Company, or, if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent
day (not more than 30 days prior to the date in question) for which prices have
been so reported and (D) if there are no bid and asked prices reported during
the 30 days prior to the date in question, the Current Market Value shall be
determined as if the securities were not registered under the Exchange Act.
"Demand Registration" shall have the meaning ascribed to that term in
-------------------
Section 2.1.
2
<PAGE>
"Effectiveness Period" shall have the meaning ascribed to that term in
--------------------
Section 2.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended from time to time.
"Exercise Event" shall mean the date of the occurrence of the earliest
--------------
of: (1) immediately prior to a Warrant Change of Control, (2) the 90th day (or
such earlier date as determined by the Company in its sole discretion) following
an Initial Public Equity Offering, (3) other than in connection with an Initial
Public Equity Offering the date upon which a class of equity securities of the
Company becomes subject to registration under the Exchange Act, or (4) December
1, 2001.
"Fair Market Value" shall mean the value of any securities as
-----------------
determined (without any discount for lack of liquidity, the amount of such
securities proposed to be sold or the fact that such securities held by any
Holder of such security may represent a minority interest in a private company)
by a nationally or regionally recognized investment banking firm selected by the
Company for the determination of such value.
"Holder" shall mean the Initial Purchasers, for so long as each
------
Initial Purchaser owns any Warrants or Registrable Securities, and each of their
successors, assigns and direct and indirect transferees who become registered
owners of Warrants or Registrable Securities.
"Indenture" shall mean the indenture dated as of December 1, 1999
---------
between the Company and State Street Bank and Trust Company, as trustee pursuant
to which the Notes have been issued.
"Initial Public Equity Offering" shall mean the first primary public
------------------------------
offering (whether or not underwritten, but excluding any offering pursuant to
Form S-8 under the Securities Act or any other publicly registered offering
pursuant to the Securities Act pertaining to an issuance of shares of Common
Stock or securities exercisable therefor under any benefit plan, employee
compensation plan, or employee or director stock purchase plan) of Common Stock
of the Company pursuant to an effective registration statement under the
Securities Act.
"Initial Purchasers" shall have the meaning ascribed to that term in
------------------
the preamble hereto.
"Legal Holiday" shall mean a Saturday, a Sunday or a day on which
-------------
banking institutions in New York, New York are required by law, regulation or
executive order to remain closed.
"Notes" shall have the meaning ascribed to that term in the preamble
-----
hereto.
"Participating Holder" shall have the meaning ascribed to that term in
--------------------
Section 3.2(a).
"Person" shall mean an individual, partnership, corporation, trust or
------
unincorporated organization, or a government or agency or political subdivision
thereof.
3
<PAGE>
"Piggy-Back Registration" shall have the meaning ascribed to that term
-----------------------
in Section 2.2.
"Proposed Purchaser" shall have the meaning ascribed to that term in
------------------
Section 3.2(a).
"Prospectus" the prospectus included in any Registration Statement
----------
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Registrable Securities covered
by such Registration Statement, and all other amendments and supplements to any
such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.
"Purchase Agreement" shall have the meaning ascribed to that term in
------------------
the preamble hereto.
"Registrable Securities" shall mean any of (i) the Common Stock issued
----------------------
and issuable upon exercise of the Warrants and (ii) any other securities issued
or issuable with respect to the Warrants or Warrant Shares by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise.
As to any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
offering of such securities by the holder thereof shall have been declared
effective under the Securities Act and such securities shall have been disposed
of by such holder pursuant to such registration statement, (b) such securities
have been sold to the public pursuant to, or are eligible for sale to the public
without volume or manner of sale restrictions under, Rule 144(k) (or any similar
provision then in force, but not Rule 144A) promulgated under the Securities
Act, (c) such securities shall have been otherwise transferred and new
certificates for such securities not bearing a legend restricting further
transfer shall have been delivered by the Company or its transfer agent and
subsequent disposition of such securities shall not require registration or
qualification under the Securities Act or any similar state law then in force or
(d) such securities shall have ceased to be outstanding.
"Registration Expenses" shall mean all expenses incident to the
---------------------
Company's performance of or compliance with this Agreement, including, without
limitation, all SEC and stock exchange or National Association of Securities
Dealers, Inc. registration and filing fees and expenses, fees and expenses of
compliance with securities or blue sky laws (including, without limitation,
reasonable fees and disbursements of ONE counsel in connection with blue sky
qualifications of the Registrable Securities), rating agency fees, printing
expenses, messenger, telephone and delivery expenses, fees and disbursements of
counsel for the Company and all independent certified public accountants and any
fees and disbursements of underwriters customarily paid by issuers or sellers of
securities (but not including any underwriting discounts or commissions, fees of
counsel to the Holders or transfer taxes, if any, attributable to the sale of
Subject Equity by Holders of such Subject Equity).
4
<PAGE>
"Registration Statement" shall mean any registration statement of the
----------------------
Company which covers any of the Subject Equity 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.
"Requisite Shares" shall mean a number of Warrants, Warrant Shares and
----------------
Registrable Securities equivalent to 50% or more of the Warrant Shares subject
to the originally issued Warrants.
"Rule 144" shall mean Rule 144 under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
"Rule 144A" shall mean Rule 144A under the Securities Act, as such
---------
Rule may be amended from time to time.
"Salomon Smith Barney" shall have the meaning ascribed to that term in
--------------------
the preamble hereto.
"SEC" shall mean the Securities and Exchange Commission.
---
"Securities Act" shall mean the Securities Act of 1933, as amended
--------------
from time to time.
"Stockholder" shall mean, collectively, each Holder, each Investor and
-----------
the Affiliates of any Investor owning Common Stock or other securities
convertible or exercisable or exchangeable into Common Stock.
"Subject Equity" shall have the meaning ascribed to that term in
--------------
Section 2.1.
"Suspension Period" shall have the meaning ascribed to that term in
-----------------
Section 2.1.
"Tag-Along Notice" shall have the meaning ascribed to that term in
----------------
Section 3.2(a).
"Tag-Along Right" shall have the meaning ascribed to that term in
---------------
Section 3.2(a).
"Transfer" shall have the meaning ascribed to that the term in Section
--------
3.2(a).
"Transfer Notice" shall have the meaning ascribed to that term in
---------------
Section 3.2(a).
"Triggering Date" shall mean the date of the consummation of a bona
---------------
fide underwritten public offering of Common Stock as a result of which at least
20% of the
5
<PAGE>
outstanding shares of Common Stock are listed on a United States national
securities exchange or the Nasdaq National Market.
"Voting Stock" shall have the meaning ascribed to that term in the
------------
Indenture.
"Warrant Change of Control" shall mean the occurrence of any of the
-------------------------
following events: (i) any "person" or "group" is or becomes the "beneficial
owner" (as such terms used in Section 13(d)(3) of 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 50%
or more of the Voting Stock (measured by voting power rather than number of
shares) of the Company, (ii) during any period of two consecutive years,
Continuing Directors cease for any reason to constitute a majority of the Board
of Directors of the Company, or (iii) subject to clause (i) above the Company
consolidates or merges with or into any other Person or the Company and/or any
of its subsidiaries sell, assign, convey, transfer, lease or otherwise dispose
of all or substantially all of the assets and properties of the Company and its
subsidiaries on a consolidated basis to any other Person, other than a
consolidation or merger or disposition of assets pursuant to a transaction in
which the outstanding Voting Stock of the Company is changed into or exchanged
for securities or other property with the effect that the beneficial owners of
the outstanding Voting Stock of the Company immediately prior to such
transaction, beneficially own, directly or indirectly, at least a majority of
the Voting Stock (measured by voting power rather than number of shares) of the
surviving corporation or the Person to whom the Company's assets are transferred
immediately following such transaction or (iv) the adoption of a plan relating
to the liquidation or dissolution of the Company.
"Warrants" shall have the meaning ascribed to that term in the
--------
preamble hereto.
"Warrant Shares" shall mean the shares of Common Stock issued and
--------------
issuable upon exercise of the Warrants and any other securities issued or
issuable with respect to the Warrants by way of stock dividend, stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.
"Withdrawal Election" shall have the meaning ascribed to that term in
-------------------
Section 2.3(c).
2. Registration Rights.
-------------------
2.1 Demand Registration. (a) Request for Registration. At any time
------------------- ------------------------
and from time to time on or after an Exercise Event, Holders owning,
individually or in the aggregate, the Requisite Shares may require the Company
to effect one registration (a "Demand Registration") under the Securities Act of
-------------------
the Warrants, Warrant Shares and Registrable Securities (the "Subject Equity").
--------------
Any such request will specify the Subject Equity proposed to be sold and will
also specify the intended method of disposition thereof. The Company shall give
written notice of such registration request within 10 days after the receipt
thereof to all other Holders. Within 20 days after receipt of such notice by
any Holder, such Holder may request in writing that its Registrable Securities
be included in such registration and the Company shall include in the Demand
Registration the Registrable Securities of any such selling Holder
6
<PAGE>
requested to be so included. Each such request by such other selling Holders
shall specify the number of Registrable Securities proposed to be sold and the
intended method of disposition thereof. Upon a demand, the Company will prepare,
file and use its best efforts to cause to become effective within 90 days of
such demand a Registration Statement in respect of all the Subject Equity which
Holders request, no later than 30 days after the date of such notice, for
inclusion therein and keep such Registration Statement continuously effective
for the shorter of (a) 90 days or (b) such period of time as all of the Subject
Equity included in such Registration Statement shall have been sold thereunder
(the "Effectiveness Period"); provided, however, that if such demand occurs
-------------------- -------- -------
during the "lock up" or "black out" period (not to exceed 90 days) imposed on
the Company pursuant to or in connection with any underwriting or purchase
agreement relating to an underwritten Rule 144A or registered public offering of
Common Stock or securities convertible into or exchangeable or exercisable for
Common Stock, the Company shall not be required to so notify Holders of Subject
Equity and file such demand registration statement prior to the end of such
"lock up" or black out" period, in which event the Company will use its best
efforts to cause such Demand Registration statement to become effective no later
than the later of (i) 90 days after such demand or (ii) 30 days after the end of
such "lock up" or "black out" period; provided, further, that the Company may
-------- -------
postpone the filing of, or suspend the effectiveness of, any registration
statement or amendment thereto, suspend the use of any Prospectus and shall not
be required to amend or supplement the Registration Statement, any related
Prospectus or any document incorporated therein by reference (other than an
effective registration statement being used for an underwritten offering) in the
event that, and for a period (a "Suspension Period") not to exceed an aggregate
-----------------
of 45 days with respect to the Demand Registration if, (i) an event or
circumstance occurs and is continuing as a result of which the Registration
Statement, any related Prospectus or any document incorporated therein by
reference as then amended or supplemented or proposed to be filed would, in the
Company's good faith judgment, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and (ii)(A) the Company determines in its good faith judgment that the
disclosure of such event at such time would have a material adverse effect on
the business, operations or prospects of the Company or (B) the disclosure
otherwise relates to a material business transaction which has not yet been
publicly disclosed; provided, further that the Effectiveness Period shall be
-------- -------
extended by the number of days in any Suspension Period. In the event of any
"lock up" or "black out" period in any underwriting or purchase agreement, the
Company will so notify the Holders of Registrable Securities. Notwithstanding
the foregoing, in lieu of filing and causing to become effective a Demand
Registration, the Company may satisfy its obligation with respect to such Demand
Registration by making (or having its designee make) an offer to purchase all
Subject Equity at a price at least equal to Current Market Value and
consummating (or having its designee consummate) the purchase of Subject Equity
as to which Holders accept such offer within 60 days of such offer; provided
--------
that if through the exercise of reasonable efforts the Company is unable to
consummate such purchase within 60 days, such period may be extended for such
reasonable period of time as may be necessary to consummate.
(b) Effective Registration. A registration will not be deemed to have
----------------------
been effected as a Demand Registration unless it has been declared effective by
the SEC and the Company has complied in all material respects with its
obligations under this Agreement with respect thereto; provided that if, after
--------
it has become effective, the offering of Subject Equity pursuant to such
registration is or becomes the subject of any stop order, injunction or other
7
<PAGE>
order or requirement of the SEC or any other governmental or administrative
agency, or if any court prevents or otherwise limits the sale of Subject Equity
pursuant to the registration (for any reason other than the act or omissions of
the Holders) for the period of time contemplated hereby, such registration will
be deemed not to have been effected. If (i) a registration requested pursuant
to this Section 2.1 is deemed not to have been effected or (ii) the registration
requested pursuant to this Section 2.1 does not remain effective for the
Effectiveness Period, then the Company shall continue to be obligated to effect
an additional registration pursuant to this Section 2.1. The Holders of Subject
Equity shall be permitted to withdraw all or any part of the Subject Equity from
a Demand Registration at any time prior to the effective date of such Demand
Registration. If at any time a Registration Statement is filed pursuant to a
Demand Registration, and subsequently a sufficient amount of the Subject Equity
is withdrawn from the Demand Registration so that such Registration Statement
does not cover at least the amount of Requisite Shares, the Holders who have not
withdrawn their Subject Equity shall have the opportunity to include an
additional amount of Subject Equity in the Demand Registration so that such
Registration Statement covers at the Requisite Shares. If an additional amount
of Subject Equity is not so included, the Company may withdraw the Registration
Statement. Such withdrawn Registration Statement will not count as a Demand
Registration and the Company shall continue to be obligated to effect a
registration pursuant to this Section 2.1.
(c) Priority in Demand Registrations Pursuant to Section 2.1. If a
--------------------------------------------------------
Demand Registration pursuant to this Section 2.1 involves an underwritten
offering and the lead managing underwriter advises the Company in writing that,
in its view, the number of securities requested to be included in such
registration (including securities of the Company which are not Subject Equity)
exceeds the number which can be sold in such offering, the Company will include
in such registration only the Subject Equity requested to be included in such
registration. In the event that the amount of Subject Equity requested to be
included in such registration exceeds the number which, in the view of such lead
managing underwriter, can be sold, the amount of such Subject Equity to be
included in such registration shall be allocated pro rata among all requesting
--- ----
Holders on the basis of the relative number of shares of Subject Equity then
held by each such Holder (provided that any Subject Equity thereby allocated to
any such Holder that exceed such Holder's request shall be reallocated among the
remaining requesting Holders in like manner). In the event that the number of
Subject Equity requested to be included in such registration is less than the
number which, in the view of the lead managing underwriter, can be sold, the
Company may include in such registration the securities the Company proposes to
sell up to the number of securities that, in the view of the lead managing
underwriter, can be sold.
(d) Selection of Underwriter. If the Holders so elect, the offering
------------------------
of such Subject Equity pursuant to such Demand Registration shall be in the form
of an underwritten offering. The Holders making such Demand Registration shall
select one or more nationally recognized firms of investment bankers, who shall
be reasonably acceptable to the Company, to act as the managing underwriter or
underwriters in connection with such offering and shall select any additional
investment bankers and managers to be used in connection with the offering.
(e) Expenses. The Company will pay all Registration Expenses in
--------
connection with the registrations requested pursuant to Section 2.1(a). Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or
8
<PAGE>
disposition of such Holder's Registrable Securities pursuant to a registration
statement requested pursuant to this Section 2.1.
2.2 Piggy-Back Registration. If at any time the Company proposes to
-----------------------
file a Registration Statement under the Securities Act with respect to an
offering by the Company for its own account or for the account of any of its
respective securityholders covering the sale of Common Stock (other than (a) a
registration statement on Form S-4 or S-8, (b) a registration statement filed in
connection with an offer of securities solely to the Company's existing
securityholders, (c) a Demand Registration, or (d) a registration statement
filed in connection with an Initial Public Equity Offering, provided, that the
registration statement relating to such Initial Public Equity Offering solely
covers securities proposed for sale by the Company for its own account and not
for the account of any of its securityholders) for sale on the same terms and
conditions as the securities of the Company or any other selling securityholder
included therein, then the Company shall give written notice of such proposed
filing to the Holders of Registrable Securities as soon as practicable (but in
no event less than 10 Business Days before the anticipated filing date), and
such notice shall offer such Holders the opportunity to register such number of
Registrable Securities as each such Holder may request (which request shall
specify the Registrable Securities intended to be disposed of by such Holder and
the intended method of distribution thereof) (a "Piggy-Back Registration"). The
-----------------------
Company shall use its best efforts to cause the managing underwriter or
underwriters of such proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company or any
other securityholder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Any Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any Registration
Statement pursuant to this Section 2.2 by giving written notice to the Company
of its request to withdraw. The Company may withdraw a Piggy-Back Registration
at any time prior to the time it becomes effective; provided that the Company
--------
shall give prompt notice thereof to participating Holders. The Company will pay
all Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 2.2, and each Holder shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to a
registration statement effected pursuant to this Section 2.2.
No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Company of its
obligation to effect a registration upon the request of Holders pursuant to
Section 2.1, and no failure to effect a registration under this Section 2.2 and
to complete the sale of Registrable Securities in connection therewith shall
relieve the Company of any other obligation under this Agreement.
2.3 Reduction of Piggy-Back Registration. (a) If the lead managing
------------------------------------
underwriter of any underwritten offering described in Section 2.2 has informed,
in writing, the Holders of the Registrable Securities requesting inclusion in
such offering that it is its view that the total number of securities which the
Company, the Holders and any other Persons desiring to participate in such
registration intend to include in such offering is such as to materially and
adversely affect the success of such offering, including the price at which such
securities can be sold, then the number of Registrable Securities to be offered
for the account of such Holders and
9
<PAGE>
the number of such securities to be offered for the account of all such other
Persons (other than the Company) participating in such registration shall be
reduced or limited pro rata in proportion to the respective number of securities
--- ----
requested to be registered to the extent necessary to reduce the total number of
securities requested to be included in such offering to the number of
securities, if any, recommended by such lead managing underwriter; provided that
--------
if such offering is effected for the account of any securityholder of the
Company other than the Holders, pursuant to the demand registration rights of
any such securityholder, then the number of securities to be offered for the
account of the Company (if any) and the Holders (but not such securityholders
who have exercised their demand registration rights) shall be reduced or limited
pro rata in proportion to the respective number of securities requested to be
- --- ----
registered to the extent necessary to reduce the total number of securities
requested to be included in such offering to the number of securities, if any,
recommended by such lead managing underwriter.
(b) If the lead managing underwriter of any underwritten offering
described in Section 2.2 notifies the Holders requesting inclusion of
Registrable Securities in such offering, that the kind of securities that such
Holders, the Company and any other Persons desiring to participate in such
registration intend to include in such offering is such as to materially and
adversely affect the success of such offering, (x) the Registrable Securities to
be included in such offering shall be reduced as described in clause (a) above
or (y) if a reduction in the Registrable Securities pursuant to clause (a) above
would, in the judgment of the lead managing underwriter, be insufficient to
substantially eliminate the adverse effect that inclusion of the Registrable
Securities requested to be included would have on such offering, such
Registrable Securities will be excluded from such offering.
(c) If, as a result of the proration provisions of this Section 2.3,
any Holder shall not be entitled to include all Registrable Securities in a
Piggy-Back Registration that such Holder has requested to be included, such
Holder may elect to withdraw his request to include Registrable Securities in
such registration (a "Withdrawal Election"); provided that a Withdrawal Election
------------------- --------
shall be irrevocable and, after making a Withdrawal Election, a Holder shall no
longer have any right to include Registrable Securities in the registration as
to which such Withdrawal Election was made.
3. Transfers.
---------
3.1 Generally. All Subject Equity at any time and from time to time
---------
outstanding shall be held subject to the conditions and restrictions set forth
in this Section 3. All shares of Capital Stock now or hereafter held by the
Investors shall be held subject to the conditions and restrictions set forth in
this Section 3. Each Holder of Subject Equity and the Investors by executing
this Agreement or by accepting a certificate representing Capital Stock or other
indicia of ownership therefor from the Company agree with the Company and with
each other Stockholder to such conditions and restrictions.
3.2 Tag-Along Rights. (a) Prior to the Triggering Date, each of the
----------------
Holders of Subject Equity shall have the right (the "Tag-Along Right") to
---------------
require the Proposed Purchaser to purchase from each of them all Subject Equity
owned by such Holder in the event of any proposed direct or indirect sale or
other disposition (collectively, a "Transfer") of Common Stock or Convertible
--------
Preferred Stock (whether now or hereafter issued) to any Person or Persons
10
<PAGE>
(such other Person or Persons being hereinafter referred to as the "Proposed
--------
Purchaser") by any Investor or Investors or any of their Affiliates in any
- ---------
transaction or series of related transactions resulting in a Warrant Change of
Control. Each Investor shall notify, or cause to be notified, each Holder of
Subject Equity in writing (a "Transfer Notice") of each such proposed Transfer
---------------
at least 30 days prior to the date thereof. Such notice shall set forth: (a)
the name of the Proposed Purchaser and the number of shares of Common Stock and
other securities, if any, proposed to be transferred, (b) the name and address
of the Proposed Purchaser, (c) the proposed amount of consideration and terms
and conditions of payment offered by such Proposed Purchaser (if the proposed
consideration is not cash, the Transfer Notice shall describe the terms of the
proposed consideration) and (d) that either the Proposed Purchaser has been
informed of the "Tag-Along Right" and has agreed to purchase Subject Equity in
accordance with the terms hereof or that the Investors or any of their
Affiliates will make such purchase. The Tag-Along Right may be exercised by any
Holder of Subject Equity by delivery of a written notice to the Company ("Tag-
---
Along Notice"), within 10 days of receipt of the Transfer Notice, indicating its
- ------------
election to exercise the Tag-Along Right (the "Participating Holders"). The
---------------------
Tag-Along Notice shall state the amounts of Subject Equity that such Holder
proposes to include in such Transfer to the Proposed Purchaser. Failure by any
Holder to provide a Tag-Along Notice within the 10-day notice period shall be
deemed to constitute an election by such Holder not to exercise its Tag-Along
Right. The closing with respect to any sale to a Proposed Purchaser pursuant to
this Section shall be held at the time and place specified in the Transfer
Notice but in any event within 60 days of the date such Transfer Notice is
given; provided that if through the exercise of reasonable efforts the Company
--------
is unable to cause such transaction to close within 60 days, such period may be
extended for such reasonable period of time as may be necessary to close such
transaction. Consummation of the sale of Common Stock by any Investor or any of
its Affiliates to a Proposed Purchaser shall be conditioned upon consummation of
the sale by each Participating Holder to such Proposed Purchaser (or the
Investor) of the Subject Equity entitled to be transferred as described above,
if any. Additionally:
(b) In the event that the Proposed Purchaser does not purchase Subject
Equity entitled to be transferred as described above on the same terms and
conditions as purchased from the Investors or any of their Affiliates, then the
Investors or their Affiliates shall purchase such Subject Equity if the Transfer
occurs.
(c) Each Holder shall have the right to require the Proposed Purchaser
to purchase from such Holder up to a percentage of the number of Warrants,
Warrant Shares and each class and series of Registrable Securities owned by such
Holder equaling the percentage derived by dividing the total number of shares of
Common Stock that the Investors and their Affiliates propose to Transfer by the
total number of shares of Common Stock owned by the Investors and their
Affiliates; provided that in the event of any proposed Transfer by the Investors
--------
or any of their Affiliates in any transaction or series of related transactions
pursuant to which the Investors and their Affiliates would, after giving effect
to such Transfer, beneficially own less than a majority of the outstanding
Common Stock, each Holder shall have the right to require the Proposed Purchaser
to purchase all of the Warrants, Warrant Shares and Registrable Securities owned
by such Holder.
(d) Any Subject Equity purchased from the Participating Holders
pursuant to this Section 3.2 shall be paid for in the same type of consideration
and at the same
11
<PAGE>
price per share of Common Stock and upon the same terms and conditions of such
proposed Transfer of Common Stock by the Investors and/or any of their
Affiliates. Notwithstanding the foregoing, shares of Convertible Preferred Stock
being Transferred shall be entitled to receive the Fair Market Value of
consideration, up to but not in excess of the aggregate liquidation preference
of, plus accrued and unpaid dividends on, such shares of Convertible Preferred
Stock prior to any payment of consideration in respect of that Subject Equity
which is to be sold pursuant to the exercise of a tag-along right relating to
such Convertible Preferred Stock. In the event that the Fair Market Value of
consideration that is paid in respect of any shares of Convertible Preferred
Stock being Transferred is in excess of its aggregate liquidation preference
plus accrued and unpaid dividends, such shares of Convertible Preferred Stock
shall be deemed for all purposes of this provision to have been converted into
Common Stock immediately prior to such Transfer. If the Subject Equity to be
purchased includes securities or property other than Common Stock, the price to
be paid for such securities or property shall be the same price per share or
other denomination paid by the Proposed Purchaser for like securities purchased
from any Investor or any of its Affiliates or, if like securities are not
purchased from any Investor or any of its Affiliates by the Proposed Purchaser,
the Fair Market Value of such securities. The Investor shall arrange for payment
directly by the Proposed Purchaser to each Participating Holder, upon delivery
of the certificate or certificates representing the Warrants and/or Registrable
Securities duly endorsed for transfer, together with such other documents as the
Proposed Purchaser may reasonably request.
(e) If at the end of 60 days following the date on which a
Transfer Notice was given, or as otherwise extended pursuant to the provisions
of Section 3.2(a), the sale of Common Stock by the Investors or their Affiliates
and the sale of the Subject Equity entitled to be transferred as provided above
have not been completed in accordance with the terms of the Proposed Purchaser's
offer, all certificates representing such Subject Equity shall be returned to
the Participating Holders, and all the restrictions on Transfer contained in
this Agreement with respect to Common Stock owned by the Investors and their
Affiliates shall remain in effect.
3.3 Drag-Along Rights. If at any time prior to an Initial Public
-----------------
Equity Offering, the Investors and their respective Affiliates determine to sell
all of the Capital Stock of the Company owned by them to a Person other than an
Investor or an Affiliate of an Investor in a transaction resulting in a Warrant
Change of Control, the transferring Investors (whether directly or through an
Affiliate) shall have the right to require the Holders of Subject Equity to sell
such Subject Equity to such transferee; provided that (a) the consideration to
--------
be received by the Holders of Subject Equity shall be the same type of
consideration received by the Investors and their Affiliates and, in any event,
shall be cash or freely transferable marketable securities, and (b) after giving
effect to such transaction, the Investors and their Affiliates shall not own,
directly or indirectly, any Capital Stock or rights to purchase Capital Stock of
the Company. Any Warrants and/or Registrable Securities purchased from the
Holders thereof pursuant to this Section 3.3 shall be paid for at the same price
per share of Common Stock and upon the same terms and conditions of such
proposed transfer of Common Stock by the Investors and their Affiliates.
Notwithstanding the foregoing, shares of Convertible Preferred Stock being
transferred by an Investor or its Affiliates shall be entitled to receive the
Fair Market Value of consideration, up to but not in excess of the aggregate
liquidation preference of, plus accrued and unpaid dividends on, such shares of
Convertible Preferred Stock prior to any payment of consideration in respect of
that Subject Equity which the holder thereof is obligated to sell. In
12
<PAGE>
the event that the Fair Market Value of consideration that is paid in respect of
any shares of Convertible Preferred Stock being transferred by an Investor or
its Affiliates is in excess of its aggregate liquidation preference plus accrued
and unpaid dividends, such shares of Convertible Preferred Stock shall be deemed
for all purposes of this provision to have been converted into Common Stock
immediately prior to such transfer. If the Subject Equity to be purchased
includes securities other than Common Stock, the price to be paid for such
securities shall be the same price per share or other denomination paid by the
proposed purchaser for like securities purchased from the Investors and their
Affiliates or, if like securities are not purchased from the Investors and their
Affiliates, the Fair Market Value of such securities.
4. Registration Procedures.
-----------------------
In connection with the obligations of the Company with respect to any
Registration Statement pursuant to Sections 2.1 and 2.2 hereof, the Company
shall:
(a) A reasonable period of time prior to the initial filing of a
Registration Statement or Prospectus and a reasonable period of time prior to
the filing of any amendment or supplement thereto (including any document that
would be incorporated or deemed to be incorporated therein by reference),
furnish to the Initial Purchasers and the managing underwriters, if any, copies
of all such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to the
review of such Holders, and such underwriters, if any, and cause the officers
and directors of the Company, counsel to the Company and independent certified
public accountants to the Company to respond to such reasonable inquiries as
shall be necessary, in the opinion of counsel to such underwriters, to conduct a
reasonable investigation within the meaning of the Securities Act; provided that
--------
the foregoing inspection and information gathering shall be coordinated on
behalf of the Initial Purchasers by Salomon Smith Barney. The Company shall not
file any such Registration Statement or related Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities included in such Registration Statement shall reasonably object on a
timely basis;
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable time
period required hereunder; cause the related Prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement as so amended or in such Prospectus as so
supplemented;
(c) Notify the holders of Registrable Securities to be sold and
the managing underwriters, if any, promptly, and (if requested by any such
person), confirm such notice in writing, (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment is proposed to be filed, and
(B) with respect to a Registration Statement or any post-effective amendment,
when the same has become effective, (ii) of any request by the SEC or any other
Federal or state governmental authority for amendments or supplements to a
13
<PAGE>
Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC, any state securities commission, any other
governmental agency or any court of any stop order, order or injunction
suspending or enjoining the use of a Prospectus or the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, and (v) of the happening of any
event or information becoming known that makes any statement made in a
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in such Registration Statement,
Prospectus or documents so that it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, not misleading, and that in the
case of a Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(d) Use its best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of any order enjoining or suspending the use of a
Prospectus or the effectiveness of a Registration Statement or the lifting of
any suspension of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment;
(e) If requested by the managing underwriters, if any, or if
none, by the Holders of a majority of the Registrable Securities being sold
pursuant to such Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, or if none, such Holders, reasonably believe
should be included therein, and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment under the Securities Act
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take any
-------- -------
action pursuant to this Section 4(e) that would, in the opinion of counsel for
the Company, violate applicable law;
(f) Upon written request to the Company, furnish to each Holder
of Registrable Securities to be sold pursuant to a Registration Statement and
each managing underwriter, if any, without charge, at least one conformed copy
of such Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested
(including those previously furnished or incorporated by reference) as soon as
practicable after the filing of such documents with the SEC;
(g) Deliver to each Holder of Registrable Securities to be sold
pursuant to a Registration Statement, and the underwriters, if any, without
charge, as many copies of the Prospectus (including each form of prospectus) and
each amendment or supplement thereto as such persons reasonably request; and the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of
14
<PAGE>
Registrable Securities and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto;
(h) Prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the Holders of
Registrable Securities to be sold, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions as any such Holder or underwriter reasonably requests in writing;
keep each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
hereunder and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; provided, however, that the
-------- -------
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or (ii) take any action which
would subject it to general service of process or to taxation in any
jurisdiction where they are not so subject;
(i) In connection with any sale or transfer of Registrable
Securities that will result in such securities no longer being Registrable
Securities, cooperate with the Holders thereof and the managing underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates shall not
bear any restrictive legends and shall be in a form eligible for deposit with
The Depository Trust Company and to enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters, if
any, or such Holders may request at least two Business Days prior to any sale of
Registrable Securities;
(j) Upon the occurrence of any event contemplated by Section
4(c)(v), as promptly as practicable, prepare a supplement or amendment,
including, if appropriate, a post-effective amendment, to each Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(k) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings) and take all such other reasonable actions in connection therewith
(including those reasonably requested by the managing underwriters, if any, or
the Holders of a majority of the Registrable Securities being sold) in order to
expedite or facilitate the disposition of such Registrable Securities, and,
whether or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (i) make such representations and
warranties to the Holders of such Registrable Securities and the underwriters,
if any, with respect to the business of the Company and its subsidiaries
(including with respect to businesses or assets acquired or to be acquired by
any of them), and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case, in
form, substance and scope as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if
15
<PAGE>
and when requested; (ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, addressed to each
selling Holder of Registrable Securities and each of the underwriters, if any),
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such
underwriters; (iii) use their best efforts to obtain customary "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 is, or is required to
be, included in the Registration Statement), addressed each of the underwriters,
if any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings; (iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable to the
selling Holders and the underwriters, if any, than those set forth in Section 5
hereof (or such other provisions and procedures acceptable to Holders of a
majority of Registrable Securities covered by such Registration Statement and
the managing underwriters, if any); and (v) deliver such documents and
certificates as may be reasonably requested by the Holders of a majority of the
Registrable Securities being sold and the managing underwriters, if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company;
(l) Make available for inspection by a representative of the
Initial Purchasers selling Registrable Securities, any underwriter participating
in any such disposition of Registrable Securities, and any attorney, consultant
or accountant retained by such Initial Purchasers or underwriter, 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 (including with respect to businesses and assets acquired or to be
acquired to the extent that such information is available to the Company), and
cause the officers, directors, agents and employees of the Company and its
subsidiaries (including with respect to businesses and assets acquired or to be
acquired to the extent that such information is available to the Company) to
supply all information in each case reasonably requested by any such
representative, underwriter, attorney, consultant or accountant in connection
with such Registration Statement; provided, however, that such persons shall
-------- -------
first agree in writing with the Company that any information that is reasonably
and in good faith designated by the Company in writing as confidential at the
time of delivery of such information shall be kept confidential by such Persons,
unless (i) disclosure of such information is required by court or administrative
order or is necessary to respond to inquiries of regulatory authorities, (ii)
disclosure of such information is required by law (including any disclosure
requirements pursuant to Federal securities laws in connection with the filing
of the Registration Statement or the use of any Prospectus), (iii) such
information becomes generally available to the public other than as a result of
a disclosure or failure to safeguard such information by such Person or (iv)
such information becomes available to such Person from a source other than the
Company and its subsidiaries and such source is not bound by a confidentiality
agreement; and provided, further, that the foregoing inspection and information
-------- -------
gathering shall be coordinated on behalf of the Initial Purchasers by Salomon
Smith Barney;
16
<PAGE>
(m) Comply with all applicable rules and regulations of the SEC
and make generally available to their securityholders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
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
Registrable Securities are sold to underwriters in a firm commitment or
reasonable efforts underwritten offering and (ii) if not sold to underwriters in
such an offering, commencing on the first day of the first fiscal quarter after
the effective date of a Registration Statement, which statement shall cover said
period, consistent with the requirements of Rule 158 under the Securities Act;
and
(n) Cooperate with each seller of Registrable Securities covered
by any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc.
The Company may require a Holder of Registrable Securities to be
included in a Registration Statement to furnish to the Company such information
regarding (i) the intended method of distribution of such Registrable
Securities, (ii) such Holder and (iii) the Registrable Securities held by such
Holder as is required by law to be disclosed in such Registration Statement and
the Company may exclude from such Registration Statement the Registrable
Securities of any Holder who fails to furnish such information within a
reasonable time after receiving such request.
If any such Registration Statement refers to any Holder by name or
otherwise as the Holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such Holder will assist in
meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such Holder by name or otherwise is not required by the
Securities Act, the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(c)(ii), 4(c)(iii),
4(c)(iv) or 4(c)(v) hereof, such Holder will forthwith discontinue disposition
of such Registrable Securities covered by such Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(j) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
------
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus. If the Company shall give any
such notice, the Effectiveness Period shall be extended by the number of days
during such period from and including the date of the giving of such notice to
and including the date when each Holder of Registrable Securities covered by
such Registration Statement shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 4(j) hereof or (y)
the
17
<PAGE>
Advice, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus.
5. Indemnification and Contribution.
--------------------------------
(a) The Company shall indemnify and hold harmless the Initial
Purchasers, each Holder, each underwriter who participates in an offering of
Registrable Securities, 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 and each of their respective directors,
officers, employees and agents, 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 thereto), covering Registrable
Securities, 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, in the light of the
circumstances under which they were made, 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;
(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, if 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 counsel chosen by Salomon Smith
Barney), 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 5(a);
provided 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 to the Company by the Initial
Purchasers, such Holder 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 and each of their respective directors,
officers, employees and agents, or any underwriter in writing expressly for use
in the Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto) or (ii) contained in any preliminary
prospectus if the Initial Purchasers, such Holder or such underwriter failed to
send or
18
<PAGE>
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 such
delivery is required by the Securities Act and such Prospectus would have
corrected such untrue statement or omission. Any amounts advanced by the Company
to an indemnified party pursuant to this Section 5 as a result of such losses
shall be returned to the Company if it shall be finally determined by such a
court in a judgment not subject to appeal or final review that such indemnified
party was not entitled to indemnification by the Company.
(b) By accepting the benefits of this Agreement, 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
Registrable Securities and the other selling Holders and each of their
respective directors, officers (including each officer of the Company who signed
the Registration Statement), employees and agents and each Person, if any, who
controls the Company, the Initial Purchasers, any underwriter or any other
selling Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all loss, liability, claim,
damage and expense whatsoever described in the indemnity contained in Section
5(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 thereto) or any Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such selling Holder expressly for use in the
Registration Statement (or any amendment thereto), or any such Prospectus (or
any amendment or supplement thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from 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 5(a) above, counsel to the indemnified parties shall be
selected by Salomon Smith Barney and, in the case of parties indemnified
pursuant to Section 5(b) above, counsel to the indemnified parties shall be
selected by the Company. Notwithstanding the foregoing sentence, in case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, unless such indemnified party shall
have one or more legal defenses available to it which are not available to the
indemnifying party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying
party to such indemnified party of its election as aforesaid to assume the
defense thereof and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 5 for any legal or other expenses other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. 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. In
no event shall the
19
<PAGE>
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 in the same jurisdiction 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 5 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 5(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 5 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 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, as incurred; provided 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, 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 the Initial Purchasers and
the Holders, on the other hand, with respect to the statements or omissions
which resulted in such loss, liability, claim, damage or expense, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault of the Company, on the one hand, and of the Initial Purchasers
and the Holders, 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 fact relates to
information supplied by the Company, on the one hand, or by or on behalf of the
Initial Purchasers or the Holders, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Initial Purchasers and the Holders
of the Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 5 were to be determined by pro rata
--- ----
allocation or by any other method of
20
<PAGE>
allocation that does not take into account the relevant equitable
considerations. For purposes of this Section 5, each Affiliate of the Initial
Purchasers or a Holder, and each director, officer, employee, agent and Person,
if any, who controls a Initial Purchaser or Holder or such Affiliate 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 Initial Purchaser or Holder,
and each director of the Company, each 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.
6. Rules 144 and 144A.
------------------
The Company shall use its best efforts to file any reports required to
be filed by it under the Securities Act and the Exchange Act in a timely manner
and, if at any time it is not required to file such reports but in the past had
been required to or did file such reports, it will, upon the request of any
Holder of Warrants or Registrable Securities, make available other information
as required by, and so long as necessary to permit, sales of its Warrants and
Registrable Securities pursuant to Rule 144A. Notwithstanding the foregoing,
nothing in this Section 6 shall be deemed to require the Company to register any
of its securities pursuant to the Exchange Act.
7. Underwritten Registrations.
--------------------------
If any of the Registrable Securities covered by any Registration
Statement are to be sold in an underwritten public offering, the investment
banker or investment bankers and manager or managers that will administer the
offering will be selected by the Holders of a majority of such Registrable
Securities included in such offering, subject to the consent of the Company
(which will not be unreasonably withheld or delayed).
No Person may participate in any underwritten public offering
hereunder unless such person (i) agrees to sell such Registrable Securities on
the basis reasonably provided in any underwriting arrangements approved by the
Persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
If the Company has complied with all its obligations under this
Agreement with respect to a Demand Registration (including the Company's option
to make and consummate an offer to purchase Subject Equity, if applicable) or a
Piggy-Back Registration relating to an underwritten public offering, all holders
of Warrants and Registrable Securities participating in any such Demand
Registration or Piggy-Back Registration, as the case may be, upon request of the
lead managing underwriter with respect to such underwritten public offering,
will be required to not sell or otherwise dispose of any Warrant or Registrable
Security owned by them for a period not to exceed 180 days from the consummation
of such underwritten public offering.
8. Miscellaneous.
-------------
8.1 In the event of a breach by the Company, the Investors or by a
Holder of any of its obligations under this Agreement, each Holder, the
Investors and the Company, in
21
<PAGE>
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company, the Investors and each Holder agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach of any of the provisions of this Agreement and each hereby
further agrees that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would be
adequate.
8.2 No Conflicting Agreements. The Company and the Investors will
-------------------------
not enter into any agreement that conflicts with the rights granted to the
Holders and indemnified persons in this Agreement or otherwise conflicts with
the provisions hereof. Without the written consent of the Holders of a majority
of the outstanding Warrants and each class and series of Registrable Securities,
the Company and the Investors shall not grant to any Person any rights which
conflict with the provisions of this Agreement.
8.3 No Piggy-back on Demand Registrations. The Company shall not
-------------------------------------
grant to any of its securityholders (other than the Holders in such capacity)
the right to include any of their securities in any Registration Statement filed
pursuant to a Demand Registration unless any such right expressly provides that
(i) such securityholders will agree to be cut-back if the lead managing
underwriter with respect to such Demand Registration has informed the Holders,
in writing, that it is its view that the total number of securities requested
for inclusion is such as to materially and adversely affect the success of any
offering relating to such Demand Registration, and (ii) Holders of Subject
Equity will in no event be required to cut-back Subject Equity proposed for
inclusion in such Demand Registration.
8.4 Amendments and Waivers. The provisions of this Agreement,
----------------------
including the 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 Holders
of not less than the Requisite Shares; provided, however, that, for the purposes
-------- -------
of this Agreement, Warrants, Warrant Shares and Registrable Securities that are
owned, directly or indirectly, by the Company, the Investors or any of their
Affiliates are not deemed outstanding. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of a majority of the
Registrable Securities being sold by such Holders pursuant to such Registration
Statement; provided, however, that the provisions of this sentence may not be
-------- -------
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. Notwithstanding the foregoing, no
amendment, modification, supplement, waiver or consent with respect to Section 5
shall be made or given otherwise than with the prior written consent of each
Person affected thereby.
8.5 Notices. All notices and other communications provided for
-------
herein shall be made in writing by hand-delivery, next-day air courier,
certified first-class mail, return receipt requested, telex or telecopier:
(a) if to the Company, as provided in the Purchase Agreement,
22
<PAGE>
(b) if to the Investors,
Benchmark Capital Partners II, L.P.
Attn: Andrew Rachleff
Ph.: 650-854-8180
Fax: 650-854-8183
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134
Attn: Mike Volpi
Ph.: 408-526-4499
Fax: 408-526-4100
Microsoft Corporation
One Microsoft Way
Redmond, WA 98052
Attn: Greg Maffei
Ph.: 425-936-5266
Fax: 425-936-2625
EPARTNERS, a Delaware general partnership
22 Chelsea Manor Street
London SW 35 RL UK
Attn: Bruce McWilliam
Ph.: 011-44-207-881-2900
Fax: 011-44-207-881-2901
Albert M. Avery, IV
c/o Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
Ph.: (650) 298-0400
Fax: (650) 298-0420
Jay S. Adelson
c/o Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
Ph.: (650) 298-0400
Fax: (650) 298-0420
(c) if to the Initial Purchasers, as provided in the Purchase
Agreement, or
23
<PAGE>
(d) if to any other Person who is then the registered Holder of
Warrants or Registrable Securities, to the address of such Holder as it appears
in the register therefor of the Company.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given: when delivered by hand, if personally
delivered; one Business Day after being timely delivered to a next-day air
courier; five Business Days after being deposited in the mail, postage prepaid,
if mailed; when answered back, if telexed; and when receipt is acknowledged by
the recipient's telecopier machine, if telecopied.
8.6 Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign any of its rights hereunder without the prior written consent of each
Holder and each indemnified party under Section 5(a). Notwithstanding the
foregoing, no successor or assignee of the Company shall have any of the rights
granted under this Agreement until such Person shall acknowledge its rights and
obligations hereunder by a signed written statement of such person's acceptance
of such rights and obligations.
8.7 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.
8.8 Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL
-----------------------------------------
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
THE COMPANY AND THE INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
8.9 Severability. The remedies provided herein are cumulative and
------------
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
24
<PAGE>
8.10 Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
25
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Common Stock
Registration Rights Agreement to be duly executed as of the date first written
above.
EQUINIX, INC.
By: /s/ Jay S. Adelson
-------------------------------------
Name: Jay S. Adelson
Title: Secretary
BENCHMARK CAPITAL PARTNERS II, L.P.
as nominee for
Benchmark Capital Partners II, L.P.
Benchmark Founders Fund II, L.P.
Benchmark Founders Fund II-A, L.P.
Benchmark Members' Fund, L.P.
By: Benchmark Capital Management Co. II,
L.L.C., its general partner
By: /s/ Andrew S. Rachleff
-------------------------------------
Name: Andrew S. Rachleff
Title: Managing Member
CISCO SYSTEMS, INC.
By: /s/ Michelangelo Volpi
-------------------------------------
Name: Michelangelo Volpi
Title: SVP, Business Development
MICROSOFT CORPORATION
By: /s/ Gregory Maffei
-------------------------------------
Name: Gregory Maffei
Title: Chief Financial Officer
EPARTNERS, a Delaware general partnership
By: News America Incorporated, its General
Partner
By: /s/ Lawrence A. Jacobs
-------------------------------------
Name: Lawrence A. Jacobs
Title: Senior Vice President
<PAGE>
/s/ Albert M. Avery, IV
-------------------------------------
Albert M. Avery, IV
/s/ Jay S. Adelson
-------------------------------------
Jay S. Adelson
SALOMON SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO., INCORPORATED
By: Salomon Smith Barney Inc.
By: /s/ W. Mark Barber
-------------------------------------
Name: W. Mark Barber
Title: Vice President
<PAGE>
EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
Dated as of December 1, 1999
by and among
EQUINIX, INC.
and
SALOMON SMITH BARNEY INC.
MORGAN STANLEY & CO. INCORPORATED
GOLDMAN, SACHS & CO.
as Initial Purchasers
$200,000,000 Aggregate Principal Amount of 13% Senior Notes due 2007
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions........................................................... 1
2. Exchange Offer........................................................ 4
3. Shelf Registration Statement.......................................... 6
4. Liquidated Damages.................................................... 7
5. Registration Procedures............................................... 7
6. Registration Expenses................................................. 14
7. Indemnification....................................................... 15
8. Rules 144 and 144A.................................................... 18
9. Underwritten Registrations............................................ 18
10. Miscellaneous......................................................... 18
(a) Remedies....................................................... 18
(b) No Inconsistent Agreements..................................... 19
(c) Adjustments Affecting Transfer Restricted Notes................ 19
(d) Amendments and Waivers......................................... 19
(e) Notices........................................................ 19
(f) Successors and Assigns......................................... 20
(g) Counterparts................................................... 20
(h) Headings....................................................... 20
(i) Governing Law.................................................. 20
(j) Severability................................................... 21
(k) Notes Held by the Company or Its Affiliates.................... 21
(l) Third Party Beneficiaries...................................... 21
(m) Entire Agreement............................................... 21
</TABLE>
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
---------
entered into as of December 1, 1999, by and among Equinix, Inc., a Delaware
corporation (the "Company"), and Salomon Smith Barney Inc., Morgan Stanley & Co.
-------
Incorporated and Goldman, Sachs & Co. (the "Initial Purchasers").
------------------
This Agreement is entered into in connection with the Purchase
Agreement, dated November 24, 1999, by and among the Company and the Initial
Purchasers (the "Purchase Agreement") relating to the sale by the Company to the
------------------
Initial Purchasers of Units (the "Units") consisting of $200,000,000 aggregate
-----
principal amount of the Company's 13% Senior Notes due 2007 (the "Notes") and
-----
Warrants to purchase 2,251,000 shares of the Company's Common Stock. In order
to induce the Initial Purchasers to enter into the Purchase Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement for the benefit of the holders of Transfer Restricted Notes (as
defined), including, without limitation, the Initial Purchasers. The execution
and delivery of this Agreement is a condition to the Initial Purchasers'
obligation to purchase the Units under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Advice: see the last paragraph of Section 5.
------
Agreement: see the first introductory paragraph to this Agreement.
---------
Applicable Period: see Section 2(b).
-----------------
Business Day: means a day that is not a Saturday, a Sunday or a day
------------
on which banking institutions are required to be closed in New York, New York.
Company: see the first introductory paragraph to this Agreement.
-------
Effectiveness Period: see Section 3(a).
--------------------
Event Date: see Section 4(b).
----------
Exchange Act: means the Securities Exchange Act of 1934, as amended,
------------
and successor statue or statues thereto.
Exchange Notes: means senior debt securities of the Company with
--------------
substantially identical terms to the Notes (except that such debt securities
will not contain terms with respect to additional interest or transfer
restrictions under the Securities Act) to be exchanged for the Notes in the
Exchange Offer.
<PAGE>
Exchange Offer: means the offer to exchange the Exchange Notes for
--------------
the Notes.
Exchange Offer Registration Statement: see Section 2(a).
-------------------------------------
Holder: means any registered holder of Transfer Restricted Notes.
------
Indemnified Person: see Section 7(c).
------------------
Indemnifying Person: see Section 7(c).
-------------------
Indenture: means the Indenture, dated as of December 1, 1999, by and
---------
between the Company and State Street Bank and Trust Company of California, N.A.,
as trustee, pursuant to which the Notes, Exchange Notes and any Private Exchange
Notes are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchasers: see the first introductory paragraph to this
------------------
Agreement.
Inspectors: see Section 5(o).
----------
Issue Date: means December 1, 1999, the original issue date of the
----------
Notes.
Interest Payment Date: has the meaning specified in the Indenture.
---------------------
Liquidated Damages: see Section 4(a).
------------------
NASD: means the National Association of Securities Dealers, Inc.
----
Notes: see the second introductory paragraph to this Agreement.
-----
Participant: see Section 7(a).
-----------
Participating Broker-Dealer: see Section 2(b).
---------------------------
Person: means an individual, trustee, corporation, partnership,
------
limited liability company, joint stock company, trust, unincorporated
association, union, business association, firm or other legal entity.
Private Exchange: see Section 2(b).
----------------
Private Exchange Notes: see Section 2(b).
----------------------
Prospectus: means the prospectus included in any Registration
----------
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Transfer Restricted Notes covered by such Registration Statement,
and all other amendments and supplements to the Prospectus, including post-
effective
2
<PAGE>
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: see the second introductory paragraph to this
------------------
Agreement.
Records: see Section 5(o).
-------
Registration Default: see Section 4(a).
--------------------
Registration Statement: means any registration statement of the
----------------------
Company, including, but not limited to, the Exchange Offer Registration
Statement or Shelf Registration Statement, that covers any of the Transfer
Restricted Notes pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
Rule 144: means Rule 144 under the Securities Act, as such Rule may
--------
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith by subsequent holders that are not
affiliates of an issuer of such securities being free of the registration and
prospectus delivery requirements of the Securities Act.
Rule 144A: means Rule 144A under the Securities Act, as such Rule may
---------
be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: means Rule 415 under the Securities Act, as such Rule may
--------
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: means the United States Securities and Exchange Commission.
---
Securities Act: means the United States Securities Act of 1933, as
--------------
amended.
Shelf Filing Event: see Section 3(a).
------------------
Shelf Registration Statement: see Section 3(a).
----------------------------
TIA: means the Trust Indenture Act of 1939, as amended.
---
Transfer Restricted Notes: means each outstanding Note until (i) the
-------------------------
date on which such Note 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 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
3
<PAGE>
pursuant to Rule 144 under the Securities Act or (v) the date on which such Note
is eligible for resale pursuant to Rule 144 without volume restriction.
Trustee: means the trustee under the Indenture and the trustee under
-------
any separate indenture governing the Exchange Notes.
Underwritten registration or underwritten offering: means a
--------------------------------------------------
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
--------------
(a) The Company agrees, for the benefit of the Holders, that it will,
at its cost, (i) within 90 calendar days after the Issue Date, use its
reasonable best efforts to file a Registration Statement (the "Exchange Offer
--------------
Registration Statement") with the SEC with respect to a registered offer to
- ----------------------
exchange the Exchange Notes for the Notes, (ii) within 210 calendar days after
the Issue Date, use its reasonable best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act and
(iii) within 30 calendar days of the Exchange Offer Registration Statement being
declared effective, use its reasonable best efforts to offer the Exchange Notes
in exchange for surrender of the Notes unless the Exchange Offer would not be
permitted by applicable law or SEC policy. The Company will keep the Exchange
Offer open for not less than 30 calendar days (or longer if required by
applicable law) after the date notice of the Exchange Offer is mailed to the
Holders. For each Note surrendered to the Company pursuant to the Exchange
Offer, the Holder of such Note will receive an Exchange Note having a principal
amount equal to that of the surrendered Note. Interest on the Exchange Notes
will accrue from the last Interest Payment Date on which interest was paid on
the Notes surrendered in exchange therefor or, if no interest has been paid on
such Notes, from the Issue Date.
(b) (b) The Company shall include within the Prospectus contained in
the Exchange Offer Registration Statement a section entitled "Plan of
Distribution," 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 that is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by such
broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"), whether
---------------------------
such positions or policies have been publicly disseminated by the Staff of the
SEC or such positions or policies represent the prevailing views of the Staff of
the SEC. Such "Plan of Distribution" section shall also allow, to the extent
permitted by applicable policies and regulations of the SEC, the use of the
Prospectus by all Participating Broker-Dealers and other Persons, if any, with
similar prospectus delivery requirements for a period of 180 calendar days
following the consummation of the Exchange Offer, and include a statement
describing the manner in which Participating Broker-Dealers may resell the
Exchange Notes.
The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein for the lesser of (x) 180 calendar days following
consummation of the Exchange Offer or (y) such period of time as may be
necessary in order to permit such Prospectus to be lawfully delivered by
Participating Broker-Dealers subject to the prospectus delivery requirements of
the
4
<PAGE>
Securities Act and other Persons, if any, with similar prospectus delivery
requirements in connection with offers and sales of the Exchange Notes; provided
that such period shall not exceed 180 calendar days following the consummation
of the Exchange Offer (the "Applicable Period").
-----------------
If, upon consummation of the Exchange Offer, any Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution and determines upon advice of its outside counsel that
it is not eligible to participate in the Exchange Offer, the Company upon the
request of any such Initial Purchaser and receipt of an opinion of outside
counsel for such Initial Purchaser, reasonably satisfactory in form and
substance to the Company and its counsel, to the effect that the Private
Exchange (as defined below) does not require compliance with the registration
requirements of the Securities Act, shall, as soon as practicable following
delivery of such request and opinion, 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 in all material respects to the Exchange Notes except for the
existence of restrictions on transfer thereof under the Securities Act and
securities laws of the several states of the United States and that are issued
pursuant to the same indenture as the Exchange Notes (the "Private Exchange
----------------
Notes"). The Company shall cause the CUSIP Bureau to issue the same CUSIP
- -----
number for the Private Exchange Notes as for the Exchange Notes. Interest on
the Private Exchange Notes will accrue from the last Interest Payment Date on
which interest was paid on the Notes surrendered in exchange therefor or, if no
interest has been paid on the Notes, from the Issue Date.
In connection with the Exchange Offer, the Company shall:
(1) 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;
(2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York, which may be the
Trustee or an affiliate thereof; and
(3) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last Business Day on which the
Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Company shall:
(1) accept for exchange all Notes validly tendered and not validly
withdrawn pursuant to the Exchange Offer or the Private Exchange;
(2) deliver to the Trustee for cancellation all Notes so accepted for
exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder tendering such Notes, Exchange Notes or Private Exchange Notes, as the
case may be, equal in principal amount to the Notes of such Holder so accepted
for exchange.
5
<PAGE>
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event will provide that the Exchange Notes will not
be subject to the transfer restrictions set forth in the Indenture and that the
Exchange Notes, the Private Exchange Notes and the Notes, if any, will vote and
consent together on all matters as one class and that none of the Exchange
Notes, the Private Exchange Notes or the Notes, if any, will have the right to
vote or consent as a separate class on any matter.
3. Shelf Registration Statement
----------------------------
(a) In the event that (i) changes in law or in currently applicable
interpretations of the Staff of the SEC do not permit the Company to effect such
an Exchange Offer, (ii) the Exchange Offer Registration Statement is not
declared effective within 210 calendar days of the Issue Date, (iii) any Holder
notifies the Company on or by the 20th Business Day following consummation of
the Exchange Offer that (a) it is prohibited by law or SEC policy from
participating in the Exchange Offer, (b) it may not resell the Exchange Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or (c) it is a
broker-dealer and owns Notes acquired directly from the Company or an affiliate
of the Company (each such event referred to in clauses (i), (ii) and (iii), a
"Shelf Filing Event"), the Company will, at its cost, (a) use its reasonable
------------------
best efforts to file with the SEC a shelf registration statement (the "Shelf
-----
Registration Statement") covering resales of the Notes, on or prior to the later
- ----------------------
of (x) 30 days after the Shelf Filing Event or (y) 120 days after the Issue
Date, (b) use its reasonable best efforts to cause the Shelf Registration
Statement to be declared effective by the SEC on or prior to the 90th day after
such obligation arises and (c) use its reasonable best efforts to keep
continuously effective the Shelf Registration Statement until two years after
the Issue Date or such shorter period that will terminate when all the Notes
covered by such Shelf Registration Statement have been sold pursuant thereto
(the "Effectiveness Period"). The Company will, in the event the Shelf
--------------------
Registration Statement is filed, provide to each Holder copies of the Prospectus
which is a part of the Shelf Registration Statement, notify each such Holder
when the Shelf Registration Statement for the Notes has become effective and
take such other actions as are reasonably required to permit unrestricted
resales of the Notes. Holders will be required to deliver information to be used
in connection with the Shelf Registration Statement in order to have their
Transfer Restricted Notes included in the Shelf Registration Statement. The
Shelf Registration Statement shall be on Form S-1 or another appropriate form
permitting registration of such Transfer Restricted Notes for resale by Holders
in the manner or manners designated by them and set forth in such Shelf
Registration Statement (including, without limitation, one or more underwritten
offerings). The Company shall not permit and shall not be required to permit any
securities other than the Transfer Restricted Notes to be included in any Shelf
Registration Statement.
(b) Supplements and Amendments. The Company shall promptly supplement
--------------------------
and amend any Shelf Registration Statement if required by the rules, regulations
or instructions applicable to the registration form used for such Shelf
Registration Statement, if required by the Securities Act or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Notes covered by such Shelf Registration Statement or by any underwriter of such
6
<PAGE>
Notes, in each case, with the Company's consent, which consent shall not be
unreasonably withheld or delayed.
4. Liquidated Damages
------------------
(a) The Company and the Initial Purchasers agree that the Holders of
Transfer Restricted Notes will suffer damages if the Company fails to fulfill
its obligations under Section 2 or Section 3 hereof, as applicable, and that it
would not be feasible to ascertain the extent of such damages. Accordingly, in
the event that (i) neither the Exchange Offer Registration Statement nor Shelf
Registration Statement is filed with the SEC on or prior to the date specified
herein for such filing, (ii) neither the Exchange Offer Registration Statement
nor a Shelf Registration Statement is declared effective on or prior to the date
specified for such effectiveness, (iii) the Exchange Offer is not consummated
within 30 days of the Exchange Offer Registration Statement being declared
effective or (iv) the SEC shall have issued a stop order suspending the
effectiveness of the Exchange Offer Registration Statement or any Shelf
Registration Statement with respect to the Notes at a time when such Exchange
Offer Registration Statement or Shelf Registration Statement, as the case may
be, is required to be kept effective by the Company (each such event described
in clauses (i) through (iv) above, a "Registration Default"), then the Company
--------------------
agrees to pay, or cause to be paid, as liquidated damages and not as a penalty
to each Holder of Transfer Restricted Notes affected by such Registration
Default, additional interest ("Liquidated Damages"). During the time that
------------------
Liquidated Damages are accruing continuously, the rate of such Liquidated
Damages shall be .50% per annum during the first 90-day period and shall
increase by .50% per annum for each subsequent 90-day period, but in no event
shall such rate exceed 1.50% per annum in the aggregate regardless of the number
of Registration Defaults. If, after the cure of all Registration Defaults then
in effect, there is a subsequent Registration Default, the rate of Liquidated
Damages for such subsequent Registration Default shall initially be .50%
regardless of the Liquidated Damages rate in effect with respect to any prior
Registration Default at the time of the cure of such Registration Default.
(b) The Company shall notify the Trustee under the Indenture
immediately upon the happening of an event in respect of which Liquidated
Damages are required to be paid (an "Event Date"). The Company shall pay the
----------
Liquidated Damages due on the Transfer Restricted Notes by depositing with the
Trustee (which shall not be the Company for these purposes), in trust, for the
benefit of the Holders thereof, at least one day prior to the next Interest
Payment Date, sums sufficient to pay the Liquidated Damages then due. The
Liquidated Damages due shall be payable in cash on each Interest Payment Date.
Each obligation to pay Liquidated Damages shall be deemed to accrue from and
including the applicable Event Date (but excluding the date on which the
applicable Registration Statement is filed or declared effective) to the date
the Exchange Offer is consummated, or the applicable Registration Statement is
again declared effective or made usable.
5. Registration Procedures
-----------------------
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of such securities covered thereby in accordance with the intended
method or methods of disposition thereof, and
7
<PAGE>
pursuant thereto and in connection with any Registration Statement filed by the
Company hereunder, the Company shall:
(a) Use its reasonable best efforts to prepare and file with or
confidentially submit to the SEC a Registration Statement or Registration
Statements as prescribed by Section 2 or 3, and use its reasonable best efforts
to cause each such Registration Statement to become effective and remain
effective as provided herein; provided that, if (1) a Shelf Registration
Statement is filed pursuant to Section 3, or (2) a Prospectus contained in an
Exchange Offer Registration Statement filed pursuant to Section 2 is required to
be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period and has advised the
Company that it is a Participating Broker-Dealer, before filing such
Registration Statement or any related Prospectus or any amendments or
supplements thereto, the Company shall, if requested, furnish to and afford the
Holders of the Transfer Restricted Notes to be registered pursuant to such Shelf
Registration Statement or each such Participating Broker-Dealer, as the case may
be, covered by such Registration Statement and their counsel, a reasonable
opportunity to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed. The Company shall not file any such Registration
Statement or Prospectus or any amendments or supplements thereto if the Holders
of a majority in aggregate principal amount of the Transfer Restricted Notes
covered by such Registration Statement, including any such Participating Broker-
Dealer, shall reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period, as applicable, subject to the right of the Company to allow such
effectiveness to lapse for valid business reasons for a period or periods not in
excess of 45 days within any 180 consecutive day period; cause the related
Prospectus to be supplemented by any Prospectus supplement required by
applicable law, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act; and comply with the
provisions of the Securities Act and the Exchange Act applicable to it with
respect to the disposition of all securities covered by such Registration
Statement as so amended or such Prospectus as so supplemented and with respect
to the subsequent resale of any securities being sold by a Participating Broker-
Dealer covered by any such Prospectus. The Company shall be deemed not to have
used its reasonable best efforts to keep a Registration Statement effective
during the Effectiveness Period or Applicable Period, as the case may be, if it
voluntarily takes any action that would result in selling Holders of the
Transfer Restricted Notes covered thereby or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Transfer Restricted
Notes or such Exchange Notes during that period unless such action is required
by applicable law, rule or regulation or unless the Company complies with this
Agreement, including, without limitation, the provisions of paragraph 5(k)
hereof and the last paragraph of this Section 5.
(c) If (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period from whom the Company has received
8
<PAGE>
written notice that it will be a Participating Broker-Dealer, notify the selling
Holders of Transfer Restricted Notes, and each such Participating Broker-Dealer
and its counsel promptly (but in any event within two Business Days), and if
requested by such Holders or Participating Broker Dealers, confirm such notice
in writing, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective (including in such
notice a written statement that any Holder may, upon request, obtain, without
charge, one conformed copy of such Registration Statement or post-effective
amendment including financial statements and schedules, documents incorporated
or deemed to be incorporated by reference and exhibits), (ii) of the issuance by
the SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus or the initiation of any proceedings for that purpose, (iii) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from 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 or threatening of any proceeding for
such purpose, (iv) of the happening of any event, the existence of any condition
or any information becoming known that requires the making of any changes in, or
amendments or supplements to, such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and (v) of the
Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d) If (1) a Shelf Registration Statement is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its reasonable best efforts to prevent the issuance of
any order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Transfer
Restricted Notes or the Exchange Notes to be sold by any Participating Broker-
Dealer, for sale in any jurisdiction, and, if any such order is issued, to use
its reasonable best efforts to obtain the withdrawal of any such order at the
earliest possible date.
(e) If a Shelf Registration Statement is filed pursuant to Section 3
and if requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Transfer Restricted Notes being
sold in connection with an underwritten offering, (i) as promptly as practicable
incorporate in a prospectus supplement or post-effective amendment such
information or revisions to information therein relating to such underwriters or
selling Holders as the managing underwriters, if any, or such Holders or their
counsel reasonably request to be included or made therein and (ii) make all
required filings of such prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment.
9
<PAGE>
(f) If (1) a Shelf Registration Statement is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, furnish to each selling Holder of Transfer Restricted Notes
and to each such Participating Broker-Dealer who so requests and to counsel and
each managing underwriter, if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration Statement is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer, deliver to each selling Holder of Transfer
Restricted Notes or each such Participating Broker-Dealer, as the case may be,
their respective counsel, and the underwriters, if any, without charge, as many
copies of the Prospectus or Prospectuses (including each form of preliminary
prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably request; and,
subject to the last paragraph of this Section 5, the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by each of
the selling Holders of Transfer Restricted Notes and each Participating Broker-
Dealer, and the underwriters or agents, if any, and dealers (if any), in
connection with the offering and sale of the Transfer Restricted Notes covered
by such Prospectus and any amendment or supplement thereto for a period equal to
the Effectiveness Period or the Applicable Period, as applicable.
(h) Prior to any public offering of Transfer Restricted Notes, use its
reasonable best efforts to register or qualify, and cooperate with the selling
Holders of Transfer Restricted Notes and prior to any delivery of a Prospectus
contained in the Exchange Offer Registration Statement by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use
its reasonable best efforts to cooperate with each such Participating Broker-
Dealer, the underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of such Transfer Restricted Notes or Exchange Notes, as the case
may be, for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any such selling Holder, Participating
Broker-Dealer, or the managing underwriter or underwriters, if any, reasonably
request in writing; provided that where Transfer Restricted Notes are offered
pursuant to an underwritten offering, counsel to the underwriters shall, at the
cost and expense of the Company, perform the Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this Section
5(h); cooperate with such selling Holders and any such Participating Broker-
Dealer to keep each such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period or the Applicable Period with respect
to such Registration Statement and to do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Exchange Notes by such Participating Broker-Dealers or the
Transfer Restricted Notes covered by the applicable Registration Statement;
provided that the Company shall not be required to (A) qualify generally to do
business in any jurisdiction where it is not then so qualified, (B) take any
action that would
10
<PAGE>
subject it to general service of process in any such jurisdiction where it is
not then so subject or (C) subject itself to taxation in any such jurisdiction
where it is not then so subject.
(i) If a Shelf Registration Statement is filed pursuant to Section 3,
cooperate with the selling Holders of Transfer Restricted Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Notes to be sold,
which certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company; and enable such Transfer
Restricted Notes to be in such denominations and registered in such names as the
managing underwriter or underwriters, if any, or Holders, by the second day
prior to the delivery of the Transfer Restricted Notes or Exchange Notes to be
sold may reasonably request in writing.
(j) Use its reasonable best efforts to cause the Transfer Restricted
Notes covered by the Registration Statement to be registered with or approved by
such governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Transfer Restricted Notes, in which case the Company will
cooperate in all respects with the filing of such Registration Statement and the
granting of such approvals.
(k) If (1) a Shelf Registration Statement is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(c)(iv) or 5(c)(v) hereof, as promptly as practicable prepare and (subject to
Section 5(a) hereof) file with the SEC, at the Company's sole expense, a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Transfer Restricted Notes
being sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(l) Use its reasonable best efforts to cause the Transfer Restricted
Notes covered by a Registration Statement to be rated with no more than three
appropriate rating agencies, if so requested by the Holders of a majority in
aggregate principal amount of Transfer Restricted Notes covered by such
Registration Statement or the managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Notes, (i) provide the Trustee with printed
certificates for the Transfer Restricted Notes in a form eligible for deposit
with The Depository Trust Company and (ii) provide a CUSIP number for the
Exchange Notes and the Private Exchange Notes, if applicable.
11
<PAGE>
(n) In connection with an underwritten offering of Transfer Restricted
Notes pursuant to a Shelf Registration Statement, enter into an underwriting
agreement as is customary in underwritten offerings of debt securities similar
to the Notes and take all such other actions as are reasonably requested by the
managing underwriter or underwriters in order to expedite or facilitate the
registration or the disposition of such Transfer Restricted Notes pursuant to
the Shelf Registration Statement and, in such connection, (i) make such
representations and warranties to the underwriters, with respect to the business
of the Company and its subsidiaries 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 of debt securities similar to the Notes, and confirm the
same in writing if and when requested; (ii) obtain the opinion or opinions of
counsel to the Company and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
underwriters covering the matters customarily covered in opinions requested in
underwritten offerings of debt securities similar to the Notes and such other
matters as may be reasonably requested by underwriters; (iii) to the extent
permitted by Statement of Auditing Standards No. 72, obtain "cold comfort"
letters and updates thereof in form and substance reasonably satisfactory to the
managing underwriter or underwriters 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 each of
the underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities similar to the Notes and such other
matters as reasonably requested by the managing underwriter or underwriters; 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 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of Transfer Restricted Notes
covered by such Registration Statement, the managing underwriter or underwriters
or agents and the Company) with respect to all parties to be indemnified
pursuant to said Section. The above shall be done at and dated as of the date
of each closing under such underwriting agreement, or to such lesser extent
required thereunder.
(o) If (1) a Shelf Registration Statement is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2 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 any selling Holder of such
Transfer Restricted Notes being sold, and each Participating Broker-Dealer, any
underwriter participating in any such disposition of Transfer Restricted Notes,
if any, not more than one attorney, accountant or other agent retained by all
selling Holders, and any attorney, accountant or other agent retained by each
Participating Broker-Dealer, as the case may be (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 reasonably requested
by any such Inspector in connection with such Registration Statement. Records
which the Company determines, in good faith, to be
12
<PAGE>
confidential and any Records which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors without the Company's prior consent
unless (i) the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, (ii) the information in such
Records has been made generally available to the public other than as a result
of a disclosure or failure to safeguard by such Inspector or (iii) disclosure of
such information is, in the opinion of counsel for any Inspector, necessary in
connection with any action, claim, suit or proceeding, directly or indirectly,
involving or potentially involving such Inspector and arising out of, based
upon, related to, or involving this Agreement, or any transactions contemplated
hereby or arising hereunder. Each selling Holder of such Transfer Restricted
Notes and each 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 Inspector, each selling Holder of such
Transfer Restricted Notes and each 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 pursuant to clauses (i) or (iii) of
the previous sentence or otherwise, give notice to the Company and allow the
Company to undertake appropriate action to obtain a protective order or
otherwise prevent disclosure of the Records deemed confidential at its expense.
(p) Provide an indenture trustee for the Transfer Restricted Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2, as the case may be, to be qualified under
the TIA not later than the effective date of the Exchange Offer or the first
Registration Statement relating to the Transfer Restricted Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Transfer Restricted Notes, to effect such changes to such
indenture as may be required for such indenture to be so qualified in accordance
with the terms of the TIA; and execute, and use its reasonable best efforts to
cause such 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 such indenture to be so qualified in a timely manner.
(q) Upon consummation of the Exchange Offer or a Private Exchange,
obtain one or more opinions of counsel to the Company, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Notes participating in the Exchange Offer or the Private Exchange, as
the case may be, that the Exchange Notes or the Private Exchange Notes, as the
case may be, and the related indenture constitute legally valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms.
(r) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the 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 Notes that such Transfer Restricted Notes are being cancelled in
exchange for the Exchange Notes or the Private Exchange Notes, as the case may
be; in no event shall such Notes be marked as paid or otherwise satisfied solely
as a result of their being exchanged for Exchange Notes or Private Exchange
Notes.
13
<PAGE>
(s) Cooperate with each seller of Transfer Restricted Notes covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Transfer Restricted Notes and their respective counsel in
connection with any filings required to be made with the NASD.
Each Holder of Notes who wishes to exchange such Notes for Exchange
Notes in the Exchange Offer will be required to represent, among other things,
that (i) any Exchange Notes to be received by it will be acquired in the
ordinary course of its business, (ii) 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
and (iii) it is not an "affiliate," as defined in Rule 405 of the Securities
Act, of the Company, or if it is an affiliate, it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
If the Holder is not a Participating Broker-Dealer, it will be
required to represent that it is not engaged in, and does not intend to engage
in, the distribution of the Exchange Notes. If the Holder is a Participating
Broker-Dealer that will receive Exchange Notes for its own account in exchange
for Notes that were acquired as a result of market-making activities or other
trading activities, it will be required to acknowledge that it will deliver a
Prospectus in connection with any resale of such Exchange Notes.
The Company may require each seller of Transfer Restricted Notes as to
which any Registration is being effected to make certain representations and to
furnish to the Company such information regarding such seller and the
distribution of such Transfer Restricted Notes as the Company may, from time to
time, reasonably request. The Company may exclude from such Registration the
Transfer Restricted Notes of any seller who fails to furnish such information
within a reasonable time after receiving such request. Each Holder of Transfer
Restricted Notes as to which any Shelf Registration Statement is effected is
hereby deemed to agree to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such seller not materially misleading.
Each Holder of Transfer Restricted Notes and each Participating
Broker-Dealer agrees by acquisition of such Transfer Restricted Notes or
Exchange Notes to be sold by such Participating Broker-Dealer, as the case may
be, that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv) or 5(c)(v)
it will forthwith discontinue disposition of such Transfer Restricted Notes
covered by such Registration Statement or Prospectus or Exchange Notes to be
sold by such Holder or Participating Broker-Dealer, as the case may be, and, in
each case, dissemination of such Prospectus until such Holder's or Participating
Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k), or until it is advised in writing (the "Advice")
------
by the Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amendments or supplements thereto.
6. Registration Expenses
---------------------
All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company whether or not
the Exchange Offer
14
<PAGE>
or a Shelf Registration Statement is filed or becomes effective, including,
without limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
in connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of one counsel chosen by the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Notes in connection with Blue Sky qualifications of the Transfer Restricted
Notes or Exchange Notes and determination of the eligibility of the Transfer
Restricted Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the holders of Transfer Restricted Notes are located, in
the case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in
the case of Transfer Restricted Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Transfer Restricted Notes or Exchange Notes in a form eligible for deposit with
The Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriter or underwriters, if any,
or by the Holders of a majority in aggregate principal amount of the Transfer
Restricted Notes included in any Registration Statement or by any Participating
Broker-Dealer, as the case may be, (iii) messenger, telephone and delivery
expenses incurred in connection with the Exchange Offer Registration Statement
and any Shelf Registration Statement, (iv) fees and disbursements of counsel for
the Company and fees and disbursements of one special counsel for the Initial
Purchasers and the sellers of Transfer Restricted Notes, (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(n)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) rating agency fees, (vii) Securities Act liability insurance, if the
Company desires such insurance, (viii) fees and expenses of all other Persons
retained by the Company, (ix) the expense of any annual or special audit, (x)
the fees and expenses incurred in connection with the listing of the securities
to be registered on any securities exchange, (xi) the fees and disbursements of
underwriters, if any, but only to the extent customarily paid by issuers or
sellers of securities and excluding any underwriting discounts or commissions or
transfer taxes, if any, attributable to the sale of the Transfer Restricted
Notes and fees and disbursements of counsel, and (xii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.
7. Indemnification
---------------
(a) The Company agrees to indemnify and hold harmless each Holder of
Transfer Restricted Notes to be included in any Registration Statement and each
Participating Broker-Dealer, the officers and directors of each such Person, and
each Person, if any, who controls any such Person within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant"), from and against any and all losses, claims, damages and
-----------
liabilities (including, without limitation, the reasonable legal fees and other
reasonable expenses actually incurred in connection with any suit, action or
proceeding or any claim asserted) caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) or caused by,
arising out of or based upon any omission or alleged omission to state therein a
15
<PAGE>
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Participant furnished to the Company in writing by or on behalf of such
Participant expressly for use therein; provided, however, that the Company shall
not be liable if such untrue statement or omission or alleged untrue statement
or omission was contained or made in any preliminary prospectus and corrected in
the Prospectus or any amendment or supplement thereto and the Prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission of a material fact that was the subject matter of the related
proceeding and any such loss, liability, claim, damage or expense suffered or
incurred by the Participants resulted from any action, claim or suit by any
Person who purchased Transfer Restricted Notes or Exchange Notes which are the
subject thereof from such Participant and it is established in the related
proceeding that such Participant failed to deliver or provide a copy of the
Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Transfer Restricted Notes or Exchange Notes
sold to such Person unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 5(g) of this Agreement.
(b) Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless the Company, its directors and officers
and each Person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to each Participant, but only with
reference to information relating to such Participant furnished to the Company
in writing by or on behalf of such Participant expressly for use in any
Registration Statement or Prospectus, any amendment or supplement thereto, or
any preliminary prospectus. The liability of any Participant under this
paragraph shall in no event exceed the proceeds received by such Participant
from sales of Transfer Restricted Notes or Exchange Notes giving rise to such
obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
------------------
notify the Person against whom such indemnity may be sought (the "Indemnifying
------------
Person") in writing, and the Indemnifying Person, upon request of the
- ------
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise. In any such proceeding, any Indemnified Person
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed in
writing to the contrary, (ii) the Indemnifying Person has failed within a
reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same
16
<PAGE>
counsel would be inappropriate due to actual or potential conflicting interests
between them. It is understood that, unless there is a conflict among
Indemnified Persons, the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such reasonable fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Participants and such control Persons of Participants shall be designated in
writing by Participants who sold a majority in interest of Transfer Restricted
Notes sold by all such Participants and any such separate firm for the Company,
its directors, officers and control Persons of the Company shall be designated
in writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent (which consent
shall not be unreasonably withheld), but if settled with such consent or if
there is a final non-appealable judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Person
shall, without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (A) includes
an unconditional release of such Indemnified Person, in form and substance
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of an
Indemnified Person.
(d) If the indemnification provided for in the preceding paragraphs of
this Section 7 is unavailable to, or insufficient to hold harmless, an
Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Person or Persons on the one hand and the Indemnified
Person or Persons on the other in connection with the statements or omissions
(or alleged statements or omissions) that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof) as well as any other
relevant equitable considerations. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Indemnifying Person on
the one hand or by the Indemnified Person, as the case may be, on the other, the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission and any other equitable
considerations appropriate under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by
17
<PAGE>
such Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall a Participant be required to contribute any amount in excess of the amount
by which proceeds received by such Participant from sales of Transfer Restricted
Notes or Exchange Notes, as the case may be, exceeds the amount of any damages
that such Participant has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. 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.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
------------------
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any time
it is not required to file such reports, it will, upon the request of any Holder
of Transfer Restricted Notes, make available other information so long as
necessary to permit sales pursuant to Rule 144 and Rule 144A under the
Securities Act.
9. Underwritten Registrations
--------------------------
If any of the Transfer Restricted Notes covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will manage
the offering will be selected by the Company. The Holders shall be responsible
for all underwriting commissions and discounts.
No Holder of Transfer Restricted Notes may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Transfer Restricted Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company of any of its
--------
obligations under this Agreement, each Holder of Transfer Restricted Notes and
each Participating Broker-Dealer holding Exchange Notes, in addition to being
entitled to exercise all rights provided herein, in the Indenture or, in the
case of an Initial Purchaser, in the Purchase Agreement, or granted by law,
including recovery of damages (which damages with respect to a breach by the
Company of its obligations under Sections 2 and 3 hereof shall be the payment of
Liquidated Damages pursuant to Section 4 hereof), will be entitled to specific
performance of its rights under this Agreement. The Company agrees that, except
for such Liquidated Damages, monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the
18
<PAGE>
event of any action for specific performance in respect of such breach, it shall
waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not entered, as of
--------------------------
the date hereof, and shall not enter, after the date of this Agreement, into any
agreement with respect to any of its securities that is inconsistent with the
rights granted to the Holders of Transfer Restricted Notes in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not entered and
will not enter into any agreement with respect to any of its securities which
will grant to any Person piggy-back rights with respect to a Registration
Statement.
(c) Adjustments Affecting Transfer Restricted Notes. The Company
-----------------------------------------------
shall not, directly or indirectly, take any action with respect to the Transfer
Restricted Notes as a class that would adversely affect the ability of the
Holders of Transfer Restricted Notes to include such Transfer Restricted Notes
in a registration undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement 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 (A) the Holders of not less than a majority in aggregate principal
amount of the then outstanding Transfer Restricted Notes and (B) in
circumstances that would adversely affect Participating Broker-Dealers, the
Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Exchange Notes then held by all Participating Broker-
Dealers; provided, however, that Section 7 and this Section 10(d) may not be
amended, modified or supplemented without the prior written consent of each
Holder and each Participating Broker-Dealer. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Transfer Restricted Notes
whose securities are being tendered pursuant to the Exchange Offer or sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Transfer
Restricted Notes may be given by Holders of at least a majority in aggregate
principal amount of the Transfer Restricted Notes being tendered or being sold
by such Holders pursuant to such Registration Statement.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or telecopier:
(i) if to a Holder of Transfer Restricted Notes or any
Participating Broker-Dealer, at the most current address of such Holder or
Participating Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Indenture:
(ii) if to the Company, at the address as follows:
19
<PAGE>
Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
Facsimile: (650) 298-0420
Attention: Chief Executive Officer
with a copy to:
Gunderson Dettmer
155 Constitution Drive
Menlo Park, CA 94025
Facsimile: (650) 321-2800
Attention: Scott C. Dettmer
(iii) if to the Initial Purchasers, as provided in the Purchase
Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days
after being deposited in the mail, postage prepaid, if mailed; one Business Day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when delivery is confirmed by the sender's telecopier machine, if
telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties hereto
and the Holders; provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder unless and to
the extent such successor or assign holds Transfer Restricted Notes.
(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.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
20
<PAGE>
(j) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(k) Notes Held by the Company or 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 its
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.
(l) Third Party Beneficiaries. Holders of Transfer Restricted Notes
-------------------------
and Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(m) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchasers on
the one hand and the Company on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
21
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EQUINIX, INC.
By: /s/ Jay S. Adelson
---------------------------
Name: Jay S. Adelson
Title: Secretary
SALOMON SMITH BARNEY INC.
MORGAN STANLEY & CO. INCORPORATED
GOLDMAN, SACHS & CO.
By: Salomon Smith Barney Inc.
By: /s/ W. Mark Barber
---------------------------
Name: W. Mark Barber
Title: Vice President
<PAGE>
EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of
___________ between Equinix, Inc., a Delaware corporation ("the Company"), and
_____________________ ("Indemnitee").
WITNESSETH THAT:
WHEREAS, Indemnitee performs a valuable service for the Company; and
WHEREAS, the Board of Directors of the Company has adopted Bylaws (the
"Bylaws") providing for the indemnification of the officers and directors of the
Company to the maximum extent authorized by Section 145 of the Delaware General
Corporation Law, as amended ("Law"); and
WHEREAS, the Bylaws and the Law, by their nonexclusive nature, permit
contracts between the Company and the officers or directors of the Company with
respect to indemnification of such officers or directors; and
WHEREAS, in accordance with the authorization as provided by the Law,
the Company may purchase and maintain a policy or policies of directors' and
officers' liability insurance ("D & O Insurance"), covering certain liabilities
which may be incurred by its officers or directors in the performance of their
obligations to the Company; and
WHEREAS, in recognition of past services and in order to induce
Indemnitee to continue to serve as an officer or director of the Company, the
Company has determined and agreed to enter into this contract with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's service as an officer
or director after the date hereof, the parties hereto agree as follows:
1. Indemnity of Indemnitee. The Company hereby agrees to hold
-----------------------
harmless and indemnify Indemnitee to the full extent authorized or permitted by
the provisions of the Law, as such may be amended from time to time, and Article
VII, Section 6 of the Bylaws, as such may be amended. In furtherance of the
foregoing indemnification, and without limiting the generality thereof:
(a) Proceedings Other Than Proceedings by or in the Right of the
------------------------------------------------------------
Company. Indemnitee shall be entitled to the rights of indemnification provided
- -------
in this Section 1(a) if, by reason of his Corporate Status (as hereinafter
defined), he is, or is threatened to be made, a party to or participant in any
Proceeding (as hereinafter defined) other than a Proceeding by or in the right
of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified
against all Expenses (as hereinafter defined), judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter therein,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the
<PAGE>
Company and, with respect to any criminal Proceeding, had no reasonable cause to
believe his conduct was unlawful.
(b) Proceedings by or in the Right of the Company. Indemnitee
---------------------------------------------
shall be entitled to the rights of indemnification provided in this Section 1(b)
if, by reason of his Corporate Status, he is, or is threatened to be made, a
party to or participant in any Proceeding brought by or in the right of the
Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified against
all Expenses actually and reasonably incurred by him or on his behalf in
connection with such Proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company; provided, however, that, if applicable law so provides, no
indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company unless and to the extent that the Court of
Chancery of the State of Delaware shall determine that such indemnification may
be made.
(c) Indemnification for Expenses of a Party Who is Wholly or
--------------------------------------------------------
Partly Successful. Notwithstanding any other provision of this Agreement, to the
- -----------------
extent that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified to the maximum extent permitted by law against all Expenses actually
and reasonably incurred by him or on his behalf in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or on his behalf in connection
with each successfully resolved claim, issue or matter. For purposes of this
Section and without limitation, the termination of any claim, issue or matter in
such a Proceeding by dismissal, with or without prejudice, shall be deemed to be
a successful result as to such claim, issue or matter.
2. Additional Indemnity. In addition to, and without regard to any
--------------------
limitations on, the indemnification provided for in Section 1, the Company shall
and hereby does indemnify and hold harmless Indemnitee against all Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf if, by reason of his Corporate
Status, he is, or is threatened to be made, a party to or participant in any
Proceeding (including a Proceeding by or in the right of the Company),
including, without limitation, all liability arising out of the negligence or
active or passive wrongdoing of Indemnitee. The only limitation that shall
exist upon the Company's obligations pursuant to this Agreement shall be that
the Company shall not be obligated to make any payment to Indemnitee that is
finally determined (under the procedures, and subject to the presumptions, set
forth in Sections 6 and 7 hereof) to be unlawful under Delaware law.
3. Contribution in the Event of Joint Liability.
--------------------------------------------
(a) Whether or not the indemnification provided in Sections 1
and 2 hereof is available, in respect of any threatened, pending or completed
action, suit or proceeding in which Company is jointly liable with Indemnitee
(or would be if joined in such action, suit or proceeding), Company shall pay,
in the first instance, the entire amount of any judgment or settlement of such
action, suit or proceeding without requiring Indemnitee to contribute to such
2
<PAGE>
payment and Company hereby waives and relinquishes any right of contribution it
may have against Indemnitee. Company shall not enter into any settlement of any
action, suit or proceeding in which Company is jointly liable with Indemnitee
(or would be if joined in such action, suit or proceeding) unless such
settlement provides for a full and final release of all claims asserted against
Indemnitee.
(b) Without diminishing or impairing the obligations of the
Company set forth in the preceding subparagraph, if, for any reason, Indemnitee
shall elect or be required to pay all or any portion of any judgment or
settlement in any threatened, pending or completed action, suit or proceeding in
which Company is jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), Company shall contribute to the amount of expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred and paid or payable by Indemnitee in proportion
to the relative benefits received by the Company and all officers, directors or
employees of the Company other than Indemnitee who are jointly liable with
Indemnitee (or would be if joined in such action, suit or proceeding), on the
one hand, and Indemnitee, on the other hand, from the transaction from which
such action, suit or proceeding arose; provided, however, that the proportion
determined on the basis of relative benefit may, to the extent necessary to
conform to law, be further adjusted by reference to the relative fault of
Company and all officers, directors or employees of the Company other than
Indemnitee who are jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), on the one hand, and Indemnitee, on the other hand,
in connection with the events that resulted in such expenses, judgments, fines
or settlement amounts, as well as any other equitable considerations which the
law may require to be considered. The relative fault of Company and all
officers, directors or employees of the Company other than Indemnitee who are
jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding), on the one hand, and Indemnitee, on the other hand, shall be
determined by reference to, among other things, the degree to which their
actions were motivated by intent to gain personal profit or advantage, the
degree to which their liability is primary or secondary, and the degree to which
their conduct is active or passive.
(c) Company hereby agrees to fully indemnify and hold Indemnitee
harmless from any claims of contribution which may be brought by officers,
directors or employees of the Company other than Indemnitee who may be jointly
liable with Indemnitee.
4. Indemnification for Expenses of a Witness. Notwithstanding any
-----------------------------------------
other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a witness in any Proceeding to which Indemnitee is not
a party, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.
5. Advancement of Expenses. Notwithstanding any other provision of
-----------------------
this Agreement, the Company shall advance all Expenses incurred by or on behalf
of Indemnitee in connection with any Proceeding by reason of Indemnitee's
Corporate Status within ten (10) days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that
3
<PAGE>
Indemnitee is not entitled to be indemnified against such Expenses. Any advances
and undertakings to repay pursuant to this Section 5 shall be unsecured and
interest free. Notwithstanding the foregoing, the obligation of the Company to
advance Expenses pursuant to this Section 5 shall be subject to the condition
that, if, when and to the extent that the Company determines that Indemnitee
would not be permitted to be indemnified under applicable law, the Company shall
be entitled to be reimbursed, within thirty (30) days of such determination, by
Indemnitee (who hereby agrees to reimburse the Company) for all such amounts
theretofore paid; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee should be indemnified under applicable
law, any determination made by the Company that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any advance of
Expenses until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed).
6. Procedures and Presumptions for Determination of Entitlement to
---------------------------------------------------------------
Indemnification. It is the intent of this Agreement to secure for Indemnitee
- ---------------
rights of indemnity that are as favorable as may be permitted under the law and
public policy of the State of Delaware. Accordingly, the parties agree that the
following procedures and presumptions shall apply in the event of any question
as to whether Indemnitee is entitled to indemnification under this Agreement:
(a) To obtain indemnification (including, but not limited to,
the advancement of Expenses and contribution by the Company) under this
Agreement, Indemnitee shall submit to the Company a written request, including
therein or therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to
what extent Indemnitee is entitled to indemnification. The Secretary of the
Company shall, promptly upon receipt of such a request for indemnification,
advise the Board of Directors in writing that Indemnitee has requested
indemnification.
(b) Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 6(a) hereof, a determination, if
required by applicable law, with respect to Indemnitee's entitlement thereto
shall be made in the specific case by one of the following three methods, which
shall be at the election of Indemnitee: (1) by a majority vote of the
disinterested directors, even though less than a quorum, or (2) by independent
legal counsel in a written opinion, or (3) by the stockholders.
(c) If the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent
Counsel shall be selected as provided in this Section 6(c). The Independent
Counsel shall be selected by Indemnitee (unless Indemnitee shall request that
such selection be made by the Board of Directors). Indemnitee or the Company, as
the case may be, may, within 10 days after such written notice of selection
shall have been given, deliver to the Company or to Indemnitee, as the case may
be, a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of "Independent Counsel" as defined in
Section 13 of this Agreement, and the
4
<PAGE>
objection shall set forth with particularity the factual basis of such
assertion. Absent a proper and timely objection, the person so selected shall
act as Independent Counsel. If a written objection is made and substantiated,
the Independent Counsel selected may not serve as Independent Counsel unless and
until such objection is withdrawn or a court has determined that such objection
is without merit. If, within 20 days after submission by Indemnitee of a written
request for indemnification pursuant to Section 6(a) hereof, no Independent
Counsel shall have been selected and not objected to, either the Company or
Indemnitee may petition the Court of Chancery of the State of Delaware or other
court of competent jurisdiction for resolution of any objection which shall have
been made by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the court or by such other person as the court shall designate, and the
person with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under Section 6(b) hereof. The
Company shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with acting pursuant
to Section 6(b) hereof, and the Company shall pay all reasonable fees and
expenses incident to the procedures of this Section 6(c), regardless of the
manner in which such Independent Counsel was selected or appointed.
(d) In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 6(a) of this Agreement. Anyone seeking to overcome this
presumption shall have the burden of proof and the burden of persuasion, by
clear and convincing evidence.
(e) Indemnitee shall be deemed to have acted in good faith if
Indemnitee's action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of the Enterprise in the course of their duties, or
on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by
the Enterprise. In addition, the knowledge and/or actions, or failure to act,
of any director, officer, agent or employee of the Enterprise shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement. Whether or not the foregoing provisions of this Section
6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all
times acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Anyone seeking to overcome this
presumption shall have the burden of proof and the burden of persuasion, by
clear and convincing evidence.
(f) If the person, persons or entity empowered or selected under
Section 6 to determine whether Indemnitee is entitled to indemnification shall
not have made a determination within thirty (30) days after receipt by the
Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable
law; provided, however, that such 30 day period may be
5
<PAGE>
extended for a reasonable time, not to exceed an additional fifteen (15) days,
if the person, persons or entity making the determination with respect to
entitlement to indemnification in good faith requires such additional time for
the obtaining or evaluating documentation and/or information relating thereto;
and provided, further, that the foregoing provisions of this Section 6(g) shall
not apply if the determination of entitlement to indemnification is to be made
by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within
fifteen (15) days after receipt by the Company of the request for such
determination the Board of Directors or the Disinterested Directors, if
appropriate, resolve to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within seventy five (75)
days after such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within fifteen (15) days after such receipt
for the purpose of making such determination, such meeting is held for such
purpose within sixty (60) days after having been so called and such
determination is made thereat.
(g) Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
Independent Counsel, member of the Board of Directors, or stockholder of the
Company shall act reasonably and in good faith in making a determination under
the Agreement of the Indemnitee's entitlement to indemnification. Any costs or
expenses (including attorneys' fees and disbursements) incurred by Indemnitee in
so cooperating with the person, persons or entity making such determination
shall be borne by the Company (irrespective of the determination as to
Indemnitee's entitlement to indemnification) and the Company hereby indemnifies
and agrees to hold Indemnitee harmless therefrom.
(h) The Company acknowledges that a settlement or other
disposition short of final judgment may be successful if it permits a party to
avoid expense, delay, distraction, disruption and uncertainty. In the event that
any action, claim or proceeding to which Indemnitee is a party is resolved in
any manner other than by adverse judgment against Indemnitee (including, without
limitation, settlement of such action, claim or proceeding with or without
payment of money or other consideration) it shall be presumed that Indemnitee
has been successful on the merits or otherwise in such action, suit or
proceeding. Anyone seeking to overcome this presumption shall have the burden of
proof and the burden of persuasion, by clear and convincing evidence.
7. Remedies of Indemnitee.
----------------------
(a) In the event that (i) a determination is made pursuant to
Section 6 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses is not timely made pursuant
to Section 5 of this Agreement, (iii) no determination of entitlement to
indemnification shall have been made pursuant to Section 6(b) of this Agreement
within 90 days after receipt by the Company of the request for indemnification,
(iv) payment of indemnification is not made pursuant to this Agreement within
ten (10) days after receipt by the Company of a written request therefor, or (v)
payment of indemnification is not made within ten (10) days after a
determination has been made that Indemnitee is entitled to indemnification or
such determination is deemed to have been made pursuant to Section 6 of this
Agreement, Indemnitee shall be entitled to
6
<PAGE>
an adjudication in an appropriate court of the State of Delaware, or in any
other court of competent jurisdiction, of his entitlement to such
indemnification. Indemnitee shall commence such proceeding seeking an
adjudication within 180 days following the date on which Indemnitee first has
the right to commence such proceeding pursuant to this Section 7(a). The Company
shall not oppose Indemnitee's right to seek any such adjudication.
(b) In the event that a determination shall have been made
pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding commenced pursuant to this Section 7
shall be conducted in all respects as a de novo trial, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination under
Section 6(b).
(c) If a determination shall have been made pursuant to Section
6(b) of this Agreement that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding
commenced pursuant to this Section 7, absent a prohibition of such
indemnification under applicable law.
(d) In the event that Indemnitee, pursuant to this Section 7,
seeks a judicial adjudication of his rights under, or to recover damages for
breach of, this Agreement, or to recover under any directors' and officers'
liability insurance policies maintained by the Company the Company shall pay on
his behalf, in advance, any and all expenses (of the types described in the
definition of Expenses in Section 13 of this Agreement) actually and reasonably
incurred by him in such judicial adjudication, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advancement of
expenses or insurance recovery.
(e) The Company shall be precluded from asserting in any
judicial proceeding commenced pursuant to this Section 7 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court that the Company is bound by all the provisions of
this Agreement.
8. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
-----------------------------------------------------------
(a) The rights of indemnification as provided by this Agreement
shall not be deemed exclusive of any other rights to which Indemnitee may at any
time be entitled under applicable law, the certificate of incorporation of the
Company, the Bylaws, any agreement, a vote of stockholders or a resolution of
directors, or otherwise. No amendment, alteration or repeal of this Agreement or
of any provision hereof shall limit or restrict any right of Indemnitee under
this Agreement in respect of any action taken or omitted by such Indemnitee in
his Corporate Status prior to such amendment, alteration or repeal. To the
extent that a change in the Law, whether by statute or judicial decision,
permits greater indemnification than would be afforded currently under the
Bylaws and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be cumulative
and in addition to every other right and remedy
7
<PAGE>
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 right or
remedy.
(b) To the extent that the Company maintains an insurance policy
or policies providing liability insurance for directors, officers, employees, or
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which such
person serves at the request of the Company, Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, employee or agent
under such policy or policies.
(c) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make
any payment of amounts otherwise indemnifiable hereunder if and to the extent
that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
9. Exception to Right of Indemnification. Notwithstanding any other
-------------------------------------
provision of this Agreement, Indemnitee shall not be entitled to indemnification
under this Agreement with respect to any Proceeding brought by Indemnitee, or
any claim therein, unless (a) the bringing of such Proceeding or making of such
claim shall have been approved by the Board of Directors of the Company or (b)
such Proceeding is being brought by the Indemnitee to assert, interpret or
enforce his rights under this Agreement.
10. Duration of Agreement. All agreements and obligations of the
---------------------
Company contained herein shall continue during the period Indemnitee is an
officer or director of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Indemnitee shall be subject to any Proceeding (or any
proceeding commenced under Section 7 hereof) by reason of his Corporate Status,
whether or not he is acting or serving in any such capacity at the time any
liability or expense is incurred for which indemnification can be provided under
this Agreement. This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the parties hereto and their respective successors
(including any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business or assets of the
Company), assigns, spouses, heirs, executors and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the Company or any
other Enterprise at the Company's request.
11. Security. To the extent requested by the Indemnitee and approved
--------
by the Board of Directors of the Company, the Company may at any time and from
time to time provide
8
<PAGE>
security to the Indemnitee for the Company's obligations hereunder through an
irrevocable bank line of credit, funded trust or other collateral. Any such
security, once provided to the Indemnitee, may not be revoked or released
without the prior written consent of the Indemnitee.
12. Enforcement.
-----------
(a) The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it hereby in
order to induce Indemnitee to serve as an officer or director of the Company,
and the Company acknowledges that Indemnitee is relying upon this Agreement in
serving as an officer or director of the Company.
(b) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral, written and implied, between the
parties hereto with respect to the subject matter hereof.
13. Definitions. For purposes of this Agreement:
-----------
(a) "Corporate Status" describes the status of a person who is
or was a director, officer, employee or agent or fiduciary of the Company or of
any other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise which such person is or was serving at the express written
request of the Company.
(b) "Disinterested Director" means a director of the Company who
is not and was not a party to the Proceeding in respect of which indemnification
is sought by Indemnitee.
(c) "Enterprise" shall mean the Company and any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the express written request
of the Company as a director, officer, employee, agent or fiduciary.
(d) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, participating, or being or preparing to
be a witness in a Proceeding.
(e) "Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither presently
is, nor in the past five years has been, retained to represent: (i) the Company
or Indemnitee in any matter material to either such party (other than with
respect to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in
9
<PAGE>
representing either the Company or Indemnitee in an action to determine
Indemnitee's rights under this Agreement. The Company agrees to pay the
reasonable fees of the Independent Counsel referred to above and to fully
indemnify such counsel against any and all Expenses, claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto.
(f) "Proceeding" includes any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought by or in the right of the Company or
otherwise and whether civil, criminal, administrative or investigative, in which
Indemnitee was, is or will be involved as a party or otherwise, by reason of the
fact that Indemnitee is or was a director of the Company, by reason of any
action taken by him or of any inaction on his part while acting as an officer or
director of the Company, or by reason of the fact that he is or was serving at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other Enterprise; in each case
whether or not he is acting or serving in any such capacity at the time any
liability or expense is incurred for which indemnification can be provided under
this Agreement; including one pending on or before the date of this Agreement;
and excluding one initiated by an Indemnitee pursuant to Section 7 of this
Agreement to enforce his rights under this Agreement.
14. Severability. If any provision or provisions of this Agreement
------------
shall be held by a court of competent jurisdiction to be invalid, void, illegal
or otherwise unenforceable for any reason whatsoever: (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including without limitation, each portion of any section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and shall remain enforceable to the fullest extent
permitted by law; and (b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of any section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.
15. Modification and Waiver. No supplement, modification,
-----------------------
termination or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
16. Notice By Indemnitee. Indemnitee agrees promptly to notify the
--------------------
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification covered hereunder. The
failure to so notify the Company shall not relieve the Company of any obligation
which it may have to the Indemnitee under this Agreement or otherwise unless and
only to the extent that such failure or delay materially prejudices the Company.
10
<PAGE>
17. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee, to the address set forth below Indemnitee
signature hereto.
(b) If to the Company, to:
Equinix, Inc.
901 Marshall Street
Redwood City, CA 94063
Attention: President
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
18. Identical Counterparts. This Agreement may be executed in one or
----------------------
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
19. Headings. The headings of the paragraphs of this Agreement are
--------
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
20. Governing Law. The parties agree that this Agreement shall be
-------------
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware without application of the conflict of laws principles
thereof.
21. Gender. Use of the masculine pronoun shall be deemed to include
------
usage of the feminine pronoun where appropriate.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
COMPANY
By:_______________________________________
Name: Albert M. Avery IV
Title: Chief Executive Officer
__________________________________________
Name: ____________________________________
Address:
__________________________________________
__________________________________________
__________________________________________
__________________________________________
<PAGE>
EXHIBIT 10.6
EQUINIX, INC.
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
August 26, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Registration Rights................................................... 1
1.1 Definitions................................................... 1
1.2 Request for Registration...................................... 2
1.3 Company Registration.......................................... 4
1.4 Form S-3 Registration......................................... 5
1.5 Obligations of the Company.................................... 6
1.6 Information from Holder....................................... 7
1.7 Expenses of Registration...................................... 7
1.8 Delay of Registration......................................... 7
1.9 Indemnification............................................... 7
1.10 Reports Under Securities Exchange Act of 1934................ 9
1.11 Assignment of Registration Rights............................ 10
1.12 "Market Stand-Off" Agreement................................. 10
1.13 Termination of Registration Rights........................... 11
1.14 Limitations on Subsequent Registration Rights................ 11
2. Covenants of the Company.............................................. 11
2.1 Delivery of Financial Statements.............................. 11
2.2 Inspection.................................................... 12
2.3 Termination of Information and Inspection Covenants........... 12
2.4 Right of First Offer.......................................... 12
2.5 Board Representation.......................................... 14
2.6 Termination of Certain Covenants.............................. 14
3. Miscellaneous......................................................... 14
3.1 Successors and Assigns........................................ 14
3.2 Governing Law................................................. 14
3.3 Counterparts.................................................. 14
3.4 Titles and Subtitles.......................................... 14
3.5 Notices....................................................... 14
3.6 Expenses...................................................... 15
3.7 Entire Agreement: Amendments and Waivers...................... 15
3.8 Severability.................................................. 15
3.9 Aggregation of Stock.......................................... 15
3.10 Prior Agreement.............................................. 15
</TABLE>
i
<PAGE>
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT is made as of
the 26/th/ day of August, 1999, by and among Equinix, Inc., a Delaware
corporation (the "Company"), Albert M. Avery, IV and Jay Adelson (the "Common
Holders") and the investors listed on Schedule A hereto, each of which is herein
----------
referred to as an "Investor."
RECITALS
--------
WHEREAS, certain of the Investors and the Common Holders possess
registration rights and certain of the Investors possess other investor rights
granted pursuant to that certain Investors' Rights Agreement, dated September
10, 1998, among the Company and the persons listed on the Schedule of Investors
attached thereto (the "Prior Agreement");
WHEREAS, certain of the Investors (the "Series B Investors") are
parties to the Series B Preferred Stock Purchase Agreement of even date herewith
(the "Series B Agreement") among the Company and the investors listed on the
Schedule of Investors attached thereto, pursuant to which the Series B Investors
are purchasing shares of Series B Preferred Stock of the Company;
WHEREAS, in order to induce the Company and the Common Holders to
approve the issuance of the Series B Preferred Stock and to induce the Investors
to invest funds in the Company pursuant to the Series B Agreement, the Prior
Investors and the Common Holders hereby agree to waive their rights under the
Prior Agreement, and the Investors, the Common Holders and the Company hereby
agree that this Agreement shall govern the rights of the Investors and the
Common Holders to cause the Company to register shares of Common Stock issued or
issuable to them and certain other matters as set forth herein; and
WHEREAS, the Series B Investors and the Company have agreed to enter
into this Agreement;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as
-------------------
follows:
1.1 Definitions. For purposes of this Section 1:
-----------
(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.11 hereof; provided, however, that the Common Holders shall not
be deemed to be Holders for purposes of Section 1.2.
(c) The term "Initial Offering" means the Company's first
firm commitment underwritten public offering of its Common Stock under the Act.
<PAGE>
(d) The term "1934 Act" means the Securities Exchange Act of
1934, as amended.
(e) The term "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(f) The term "Registrable Securities" means (i) the Common
Stock issuable or issued upon conversion of the Series A Preferred Stock and
Series B Preferred Stock, (ii) the 225,430 shares of Common Stock issuable upon
exercise of a proposed warrant in favor of Northpoint Communications, Inc.,
(iii) the four million forty thousand (4,040,000) shares of Common Stock issued
to the Common Holders; provided, however, that such shares of Common Stock held
by the Common Holders shall not be deemed Registrable Securities for the
purposes of Section 1.2 and (iv) any Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
that is issued as) a dividend or other distribution with respect to, or in
exchange for, or in replacement of, the shares referenced in (i), (ii) and (iii)
above, excluding in all cases, however, any Registrable Securities sold by a
person in a transaction in which his rights under this Section 1 are not
assigned.
(g) The number of shares of "Registrable Securities"
outstanding shall be determined by the number of shares of Common Stock
outstanding that are, and the number of shares of Common Stock issuable pursuant
to then exercisable or convertible securities that are, Registrable Securities.
(h) The term "SEC" shall mean the Securities and Exchange
Commission.
(i) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
1.2 Request for Registration.
------------------------
(a) Subject to the conditions of this Section 1.2, if the
Company shall receive at any time after six months after the Company's Initial
Offering a written request from the Holders of at least thirty (30%) of the
Registrable Securities then outstanding (the "Initiating Holders") that the
Company file a registration statement under the Act covering the registration of
Registrable Securities with an anticipated aggregate offering price of at least
twelve million, five hundred thousand dollars ($12,500,000), then the Company
shall, within twenty (20) days of the receipt thereof, give written notice of
such request to all Holders, and subject to the limitations of this Section 1.2,
use its most diligent efforts to effect the registration under the Act of all
Registrable Securities (including, without limitation, appropriate qualification
under applicable blue sky or other state securities laws) that the Holders
request to be registered in a written request received by the Company within
twenty (20) days of the mailing of the Company's notice pursuant to this Section
1.2(a).
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<PAGE>
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 1.2 and the Company shall include such information in the written
notice referred to in Section 1.2(a). In such event the right of any Holder to
include its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company (which underwriter or underwriters shall be
reasonably acceptable to a majority in interest of the Initiating Holders).
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Company in writing that marketing factors require a limitation of
the number of securities underwritten (including Registrable Securities), then
the Company, in writing, shall so advise all Holders of Registrable Securities
that would otherwise be underwritten pursuant hereto, and the number of shares
that may be included in the underwriting shall be allocated to the Holders of
such Registrable Securities on a pro rata basis based on the number of
Registrable Securities held by all such Holders (including the Initiating
Holders). Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from the registration.
(c) The Company shall not be required to effect a
registration pursuant to this Section 1.2:
(i) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, unless the Company is already subject to service in
such jurisdiction and except as may be required under the Act; or
(ii) after the Company has effected two (2)
registrations pursuant to this Section 1.2, and such registrations have been
declared or ordered effective; or
(iii) during the period starting with the date sixty
(60) days prior to the Company's good faith estimate of the date of the filing
of, and ending on a date one hundred twenty (120) days following the effective
date of, a Company-initiated registration subject to Section 1.3 below, provided
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective; or
(iv) if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 1.2, a certificate
signed by the Company's Chief Executive Officer or Chairman of the Board stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its stockholders for such
registration statement to be effected at such time, in which event the Company
shall have the right to defer such filing for a period of not more than one
hundred eighty (180) days after receipt of the request of the Initiating
Holders, provided that such right to delay a request shall be exercised by the
Company not more than once in any twelve (12)-month period.
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<PAGE>
1.3 Company Registration.
--------------------
(a) If (but without any obligation to do so) the Company
proposes to register (including for this purpose a registration effected by the
Company for stockholders other than the Holders) any of its stock or other
securities under the Act in connection with the public offering of such
securities (other than a registration relating solely to the sale of securities
to participants in a Company stock plan, a registration relating to a corporate
reorganization or other transaction under Rule 145 of the Act, a registration on
any form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities, or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities that are
also being registered), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.3(c), use all reasonable best efforts to cause to be registered under
the Act all of the Registrable Securities that each such Holder has requested to
be registered.
(b) Right to Terminate Registration. The Company shall have
-------------------------------
the right to terminate or withdraw any registration initiated by it under this
Section 1.3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The expenses of
such withdrawn registration shall be borne by the Company in accordance with
Section 1.6 hereof.
(c) Underwriting Requirements. In connection with any
-------------------------
offering involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under this Section 1.3 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters) and enter into an
underwriting agreement in customary form with an underwriter or underwriters
selected by the Company, and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
that the underwriters determine in their sole discretion will not jeopardize the
success of the offering (the securities so included to be apportioned pro rata
among the selling Holders according to the total amount of securities entitled
to be included therein owned by each selling Holder or in such other proportions
as shall mutually be agreed to by such selling Holders), but in no event shall
(i) the amount of securities of the selling Holders included in the offering be
reduced below thirty percent (30%) of the total amount of securities included in
such offering, unless such offering is the initial public offering of the
Company's securities, in which case the selling Holders may be excluded if the
underwriters make the determination described above and no other shareholder's
securities are included. For purposes of the preceding parenthetical concerning
apportionment, for any selling stockholder that is a Holder of Registrable
Securities and that is a partnership or corporation, the partners, retired
4
<PAGE>
partners and stockholders of such Holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "selling Holder," and any
pro rata reduction with respect to such "selling Holder" shall be based upon the
aggregate amount of Registrable Securities owned by all such related entities
and individuals.
1.4 Form S-3 Registration. In case the Company shall receive
---------------------
from the Holders of at least twenty percent (20%) of the Registrable Securities
a written request or requests that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company shall:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) use all reasonable best efforts to effect, as soon as
practicable, such registration and all such qualifications and compliances as
may be so requested and as would permit or facilitate the sale and distribution
of all or such portion of such Holders' Registrable Securities as are specified
in such request, together with all or such portion of the Registrable Securities
of any other Holders joining in such request as are specified in a written
request given within fifteen (15) days after receipt of such written notice from
the Company, provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
section 1.4:
(i) if Form S-3 is not available for such offering by
the Holders;
(ii) if the Holders, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (net of any underwriters' discounts or
commissions) of less than $1,000,000;
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer or Chairman of the Board of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than one hundred twenty (120)
days after receipt of the request of the Holder or Holders under this Section
1.4; provided, however, that the Company shall not utilize this right more than
once in any twelve month period; or
(iv) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders.
5
<PAGE>
Registrations effected pursuant to this Section 1.4 shall not be counted as
requests for registration effected pursuant to Sections 1.2.
1.5 Obligations of the Company. Whenever required under this
--------------------------
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration statement
with respect to such Registrable Securities and its reasonable best efforts to
cause such registration statement to become effective, and, upon the request of
the Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for a period of at least one-hundred
twenty (120) days or until the distribution contemplated in the Registration
Statement has been completed, whichever first occurs; provided, however, that
such 120-day period shall be extended for a period of time equal to the period
the Holder refrains from selling any securities included in such registration at
the request of an underwriter of Common Stock (or other securities) of the
Company.
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement;
(c) furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them;
(d) use its reasonable best efforts to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions;
(e) in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;
(f) notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act or the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and at
the request of any such Holder prepare and furnish to such Holder a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that such prospectus shall not include such untrue statement or
fail to omit such material fact;
6
<PAGE>
(g) cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed; and
(h) provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
1.6 Information from Holder. It shall be a condition precedent
-----------------------
to the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
1.7 Expenses of Registration. All expenses other than
------------------------
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to this Section 1, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company. Notwithstanding the foregoing, the Company shall not
be required to pay for any expenses of any registration proceeding begun
pursuant to Section 1.2 if the registration request is subsequently withdrawn at
the request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses pro
rata based upon the number of Registrable Securities that were to be requested
in the withdrawn registration), unless the Holders of a majority of the
Registrable Securities agree to forfeit their right to one demand registration
pursuant to Section 1.2.
1.8 Delay of Registration. No Holder shall have any right to
---------------------
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.9 Indemnification. In the event any Registrable Securities
---------------
are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners or officers, directors and
stockholders of each Holder, legal counsel and accountants for each Holder, any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the 1934
Act, against any losses, claims, damages or liabilities (joint or several) to
which they may become subject under the Act, the 1934 Act or any state
securities laws, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state
7
<PAGE>
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or (iii) any violation or alleged violation
by the Company of the Act, the 1934 Act, any state securities laws or any rule
or regulation promulgated under the Act, the 1934 Act or any state securities
laws; and the Company will reimburse each such Holder, underwriter or
controlling person 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 indemnity agreement contained
in this subsection 1.9(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon a Violation that occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person; provided
further, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Holder or
underwriter, or any person controlling such Holder or underwriter, from whom the
person asserting any such losses, claims, damages or liabilities purchased
shares in the offering, if a copy of the prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Holder or underwriter to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the shares to such person, and if the
prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, legal counsel and
accountants for the Company, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, the 1934 Act or any state securities laws, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will reimburse any person intended
to be indemnified pursuant to this subsection 1.9(b), for any legal or other
expenses reasonably incurred by such person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this subsection 1.9(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder (which
consent shall not be unreasonably withheld), provided that in no event shall any
indemnity under this subsection 1.9(b) exceed the gross proceeds from the
offering received by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.9, deliver to
the indemnifying party a written notice of the
8
<PAGE>
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party (together with all other indemnified parties that may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.9.
(d) If the indemnification provided for in this Section 1.9
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.10 Reports Under Securities Exchange Act of 1934. With a view
---------------------------------------------
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
9
<PAGE>
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the Initial Offering;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the Initial Offering), the Act and the
1934 Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Holder of any rule or regulation of the
SEC that permits the selling of any such securities without registration or
pursuant to such form.
1.11 Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities that (i) is a subsidiary, parent, member, affiliate,
partner, limited partner, retired partner or stockholder of a Holder, (ii) is a
Holder's family member or trust for the benefit of an individual Holder, or
(iii) after such assignment or transfer, holds at least one million (1,000,000)
of the then outstanding Registrable Securities (subject to appropriate
adjustment for stock splits, stock dividends, combinations and other
recapitalizations), provided: (a) the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.12 below;
and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act.
1.12 "Market Stand-Off" Agreement. Each Holder hereby agrees
---------------------------
that it will not, without the prior written consent of the managing underwriter,
during the period commencing on the date of the final prospectus relating to the
Company's initial public offering and ending on the date specified by the
Company and the managing underwriter (such period not to exceed one hundred
eighty (180) days) (i) lend, offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (whether such shares or any
such securities are then owned by the Holder or are thereafter acquired), or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise, provided that all officers and directors of the Company and all other
persons who hold one percent (1%) or more of the then outstanding
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Capital Stock of the Company also agree to such restrictions. The underwriters
in connection with the Company's initial public offering are intended third
party beneficiaries of this Section 1.12 and shall have the right, power and
authority to enforce the provisions hereof as though they were a party hereto.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.13 Termination of Registration Rights.
----------------------------------
(a) No Holder shall be entitled to exercise any right
provided for in this Section 1 after three (3) years following the Company's
Initial Offering.
(b) In addition, the right of any Holder to request
registration or inclusion in any registration pursuant to Section 1.3 shall
terminate if and when such Holder's Registrable Securities (and any affiliate of
the Holder with whom such Holder must aggregate its sales under Rule 144) can be
sold in any three (3)-month period without registration in compliance with Rule
144 of the Act.
1.14 Limitations on Subsequent Registration Rights. From and
---------------------------------------------
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.3 hereof, unless under
the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
such securities will not reduce the amount of the Registrable Securities of the
Holders that are included or (b) to demand registration of their securities.
2. Covenants of the Company.
------------------------
2.1 Delivery of Financial Statements. Each Holder shall be
--------------------------------
entitled to receive:
(a) As soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, an income statement
for such fiscal year, a balance sheet of the Company and statement of
stockholder's equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
and audited and certified by independent public accountants of nationally
recognized standing selected by the Company;
(b) as soon as practicable, but in any event within forty-
five (45) days after the end of each of the first three (3) quarters of each
fiscal year of the Company, an unaudited profit or loss statement, a statement
of cash flows for such fiscal quarter and an unaudited balance sheet as of the
end of such fiscal quarter;
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(c) within thirty (30) days of the end of each month, an
unaudited income statement and a statement of cash flows and balance sheet for
and as of the end of such month, including a comparison of the Company's actual
results with its budget;
(d) with respect to the financial statements called for in
subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment;
(e) as soon as practicable, but in any event within thirty
(30) days after the end of each fiscal year, a budget for the next fiscal year,
including balance sheets and sources and applications of funds statements and,
as soon as prepared, any other budgets or revised budgets prepared by the
Company; and
(f) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Holders may from time to time request, provided, however, that the Company shall
not be obligated under this subsection (f) or any other subsection of Section
2.1 to provide information which it deems in good faith to be a trade secret or
similar confidential information.
2.2 Inspection. The Company shall permit each Investor that
----------
holds at least one million (1,000,000) shares of Preferred Stock (and/or Common
Stock issued upon conversion thereof), at such Investor's expense, to visit and
inspect the Company's properties, to examine its books of account and records
and to discuss the Company's affairs, finances and accounts with its officers,
all at such reasonable times as may be requested by the Investor; provided,
however, that the Company shall not be obligated pursuant to this Section 2.2 to
provide access to any information that it reasonably considers to be a trade
secret or similar confidential information; and, provided further, that the
Investors coordinate their visitations and inspections so as to minimize the
disruptions and interruptions to the Company.
2.3 Termination of Information and Inspection Covenants. The
---------------------------------------------------
covenants set forth in Sections 2.1 and 2.2 shall terminate as to Investors and
be of no further force or effect when the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
firm commitment underwritten offering of its securities to the general public is
consummated or when the Company first becomes subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the 1934 Act, whichever event shall
first occur.
2.4 Right of First Offer. Subject to the terms and conditions
--------------------
specified in this paragraph 2.4, the Company hereby grants to each Major
Investor (as hereinafter defined) a right of first offer with respect to future
sales by the Company of its Shares (as hereinafter defined). For purposes of
this Section 2.4, a Major Investor shall mean any Investor or transferee that
holds at least one million (1,000,000) shares of Preferred Stock (or the Common
Stock issued upon conversion thereof) issued pursuant to the Series A Preferred
Stock Purchase
12
<PAGE>
Agreement or the Series B Agreement (as adjusted for stock splits, stock
dividends, combinations and other recapitalizations). For purposes of this
Section 2.4, Investor includes any general partners and affiliates of an
Investor. An Investor shall be entitled to apportion the right of first offer
hereby granted it among itself and its partners and affiliates in such
proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or securities
convertible into or exchangeable or exercisable for any shares of, any class of
its capital stock, whether now authorized or not, ("Shares"), the Company shall
first make an offering of such Shares to each Major Investor in accordance with
the following provisions.
(a) The Company shall deliver a notice in accordance with
Section 3.5 ("Notice") to the Major Investors stating (i) its bona fide
intention to offer such Shares, (ii) the number of such Shares to be offered,
and (iii) the price and terms upon which it proposes to offer such Shares.
(b) By written notification received by the Company, within
twenty (20) calendar days after receipt of the Notice, the Major Investor may
elect to purchase or obtain, at the price and on the terms specified in the
Notice, up to that portion of such Shares that equals the proportion that the
number of shares of Common Stock issued and held, or issuable upon conversion of
the Series A Preferred Stock or Series B Preferred Stock then held, by such
Major Investor bears to the total number of shares of Common Stock of the
Company then outstanding (assuming full conversion of all convertible
securities). Each Investor shall have a right of over-allotment such that if any
Investor fails to exercise its right hereunder to purchase such portion of the
shares, the other Investors may purchase the Non-Purchasing Investor's portion
on a pro rata basis (based upon the procedure set forth in this Section 2.4(b))
within ten (10) days from the date such Non-Purchasing Investor fails to
exercise its right to purchase its portion of the Shares.
(c) If all Shares that Investors are entitled to obtain
pursuant to subsection 2.4(b) are not elected to be obtained as provided in
subsection 2.4(b) hereof, the Company may, during the ninety (90) day period
following the expiration of the period (including the over-allotment period)
provided in subsection 2.4(b) hereof, offer the remaining unsubscribed portion
of such Shares to any person or persons at a price not less than, and upon terms
no more favorable to the offeree than those specified in the Notice. If the
Company does not enter into an agreement for the sale of the Shares within such
period, or if such agreement is not consummated within ninety (90) days of the
execution thereof, the right provided hereunder shall be deemed to be revived
and such Shares shall not be offered unless first reoffered to the Major
Investors in accordance herewith.
(d) The right of first offer in this paragraph 2.4 shall not
be applicable to (i) the issuance or sale of shares of Common Stock (or options
therefor) upon approval by the Company's Board of Directors to employees,
directors and consultants for the primary purpose of soliciting or retaining
their services; (ii) the issuance of securities pursuant to a bona fide, firmly
underwritten public offering of shares of Common Stock, registered under the
Act, (iii) the issuance of securities pursuant to the conversion or exercise of
convertible or exercisable securities, (iv) the issuance of securities upon
approval by the Company's Board of
13
<PAGE>
Directors in connection with a bona fide business acquisition of or by the
Company, whether by merger, consolidation, sale of assets, sale or exchange of
stock or otherwise, (v) the issuance of stock, warrants or other securities or
rights upon approval by the Company's Board of Directors to persons or entities
with which the Company has business relationships provided such issuances are
for other than primarily equity financing purposes, or (vi) the issuance of any
shares of Series A Preferred Stock or Series B Preferred Stock, authorized as of
the date hereof.
2.5 Board Representation. Immediately upon the Closing, the
--------------------
Board shall consist of Albert M. Avery, IV, Jay Adelson, Andy Rachleff, Charlie
Giancarlo and three vacancies.
2.6 Termination of Certain Covenants. The covenants set forth
--------------------------------
in Sections 2.4 shall terminate and be of no further force or effect upon the
consummation of the Company's Initial Offering.
3. Miscellaneous.
-------------
3.1 Successors and Assigns. Except as otherwise provided
----------------------
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
3.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission, nationally recognized overnight
courier service, or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties, or with respect to any party with an
address outside the United States such notice shall be deemed received within
three (3) business days upon deposit with a reputable international express
courier.
14
<PAGE>
3.6 Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7 Entire Agreement: Amendments and Waivers. This Agreement
----------------------------------------
(including the Exhibits hereto, if any) constitutes the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and thereof. Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the holders of a majority of the Registrable
Securities; provided, however, that in the event that such amendment or waiver
adversely affects the obligations and/or rights of the Common Holders in a
different manner than the other Holders, such amendment or waiver shall also
require the written consent of the holders of a majority in interest of the
Common Holders. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any Registrable Securities each
future holder of all such Registrable Securities, and the Company.
3.8 Severability. If one or more provisions of this Agreement
------------
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.9 Aggregation of Stock. All shares of Registrable Securities
--------------------
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
3.10 Prior Agreement. The Prior Agreement is hereby superseded
---------------
in its entirety and shall be of no further force or effect.
15
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EQUINIX, INC.
By: /s/ Albert M. Avery, IV
---------------------------------
Name: Albert M. Avery, IV
Title: Chief Executive Officer
COMMON HOLDERS:
/s/ Albert M. Avery, IV
-------------------------------------
Name: Albert M. Avery, IV
/s/ Jay Adelson
--------------------------------------
Name: Jay Adelson
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
BENCHMARK CAPITAL PARTNERS II, L.P.
as nominee for
Benchmark Capital Partners, II, L.P.
Benchmark Founders Fund II, L.P.
Benchmark Founders Fund II-A, L.P.
Benchmark Members' Fund, L.P.
By: Benchmark Capital Management Co. II,
L.L.C., its general partner
By: /s/ Andrew S. Rachleff
-----------------------------------
Managing Member
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
CISCO SYSTEMS, INC.
By: [SIGNATURE ILLEGIBLE]^^
-----------------------------------------
Name: ______________________________________
Title: _____________________________________
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
MICROSOFT CORPORATION
By: /s/ Greg Maffei
-----------------------------------------
Title: CFO
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
MORGAN STANLEY DEAN WITTER
EQUITY FUNDING, INC.
By: /s/ David R. Powers
-----------------------------------------
Title: Vice President
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
STANFORD UNIVERSITY
By: /s/ Carol Gilmer
-----------------------------------------
Title: Gift Administrator
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
JOHN MAYES
By: /s/ John Mayes
-----------------------------------------
Title: _____________________________________
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
PAUL AND JANE BARYAMES
By: /s/ Jane Baryames
-----------------------------------------
Title: /s/ Paul Baryames
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
JOHNSON WU
By: /s/ Johnson Wu
-----------------------------------------
Title: _____________________________________
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
EDWARD R. KOZEL
By: /s/ Edward R. Kozel
-----------------------------------------
Title: _____________________________________
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
RICHARD FRAWLEY
By: /s/ Richard Frawley
-----------------------------------------
Title: _____________________________________
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
JOEL EVANIER
By: /s/ Joel Evanier
-----------------------------------------
Title: Consultant
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
G & H PARTNERS
By: /s/ Jeff Higgins
-----------------------------------------
Title: Partner
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
CHARLES ROSS PARTNERS INVESTMENT FUND
NUMBER 10
By: [SIGNATURE ILLEGIBLE]^^
-----------------------------------------
Title: General Partner
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
COMDISCO, INC.
By: /s/ James P. Labe
-----------------------------------------
Title: President, Comdisco Ventures Division
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
E*TRADE GROUP
By: [SIGNATURE ILLEGIBLE]^^
-----------------------------------------
Title: _____________________________________
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
EPARTNERS, a Delaware general partnership
By: News America Incorporated, General
Partner
By: [SIGNATURE ILLEGIBLE]^^
-----------------------------------------
Title: Senior Vice President
-------------------------------------
Address: 1211 Avenue of the Americas
-----------------------------------
New York, New York 10036
-----------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
Carlyle Venture Partners, L.P.
By: TCG Ventures, Ltd., as the General Partner
By: /s/ Frank D. Yeary
-----------------------------------
Name: Frank D. Yeary
Title: Attorney-in-Fact
Address: c/o The Carlyle Group
1001 Pennsylvania Avenue, N.W.,
Suite 220
Washington, D.C. 20004
Carlyle U.S. Venture Partners, L.P.
By: TCG Ventures, L.L.C., as the General Partner
By: TCG Holdings, L.L.C., as the Manager
By: /s/ Frank D. Yeary
-----------------------------------
Name: Frank D. Yeary
Title: Managing Director
Address: 1001 Pennsylvania Avenue, N.W.,
Suite 220
Washington, D.C. 20004
Carlyle Venture Coinvestment, L.L.C.
By: TCG Ventures, L.L.C., as the Manager
By: TCG Holdings, L.L.C., as the Manager
By: /s/ Frank D. Yeary
-----------------------------------
Name: Frank D. Yeary
Title: Managing Director
Address: 1001 Pennsylvania Avenue, N.W.,
Suite 220
Washington, D.C. 20004
C/S Venture Investors, L.P.
By: TCG Ventures, Ltd., as the General Partner
By: /s/ Frank D. Yeary
-----------------------------------
Name: Frank D. Yeary
Title: Attorney-in-Fact
Address: c/o The Carlyle Group
1001 Pennsylvania Avenue, N.W.,
Suite 220
Washington, D.C. 20004
SIGNATURE PAGE TO THE INVESTORS' RIGHTS AGREEMENT
INVESTOR:
NORTHPOINT COMMUNICATIONS, INC.
By: [SIGNATURE ILLEGIBLE]^^
-----------------------------------------
Title: Chief Financial Officer
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
ENRON CORPORATION
By: [SIGNATURE ILLEGIBLE]^^
-----------------------------------------
Title: Vice President
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
DELL USA L.P., a Texas Limited Partnership
By: /s/ Alex C. Smith
-----------------------------------------
Dell Gen. P. Corp., its general partner
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
FINLAYSON INVESTMENTS PTE LTD
By: /s/ Ng Kin Meng (Mrs)
-----------------------------------------
Title: Company Secretary
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
ARTEMIS SA
By: /s/ Mrs. Patricia Barbizet
-----------------------------------------
Title: Managing Director
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
REUTERS HOLDINGS SWITZERLAND SA
By: [SIGNATURE ILLEGIBLE]^^
-----------------------------------------
Title: _____________________________________
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
MILLENNIUM SYSTEM TRADING LIMITED
By: [SIGNATURE ILLEGIBLE]^^
-----------------------------------------
Title: Director
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
AMERICA ONLINE, INC.
By: [SIGNATURE ILLEGIBLE]^^
-----------------------------------------
Title: President, AOL Investments
-------------------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
ANDREESSEN 1996 LIVING TRUST
By: /s/ Michael Mohr
-----------------------------------------
Michael Mohr
As: Trustee
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
LYNN DWIGANS & CO.
By: /s/ Lynn Dwigans
-----------------------------------------
Title: _____________________________________
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
<PAGE>
PAGE>
INVESTOR:
SALOMON SMITH BARNEY HOLDINGS INC.
By: /s/ W. Mark Barber
------------------------------
Title: Vice President
---------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
COTSAKOS VENTURES, LLC
Address: 510 Eucalyptus Avenue
-------------------------
Hillsborough, CA 94010
-------------------------
By: [Signature Illegible]
-------------------------------
Title: Manager
----------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
INVESTOR:
THOMAS A. BEVILACQUA
Address: 60 Why Worry Lane
--------------------------
Woodside, CA 94062
--------------------------
By: /s/ Thomas A. Bevilacqua
-------------------------------
Title:
----------------------------
SIGNATURE PAGE TO THE INVESTORS' RIGHT AGREEMENT
<PAGE>
EXHIBIT 10.7
AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
This AMENDMENT NO. 1 to the Amended and Restated Investors' Rights
Agreement dated as of November 30, 1999 (the "Investors' Rights Agreement") and
the Amended and Restated Voting Agreement (the "Voting Agreement"), each dated
August 26, 1999, by and among Equinix, Inc., a Delaware corporation (the
"Company"), Albert M. Avery, IV and Jay S. Adelson (the "Common Holders") and
the investors listed on Schedule A thereto, each of which is herein referred to
----------
as an "Investor," is entered into by the Company, the Common Holders and the
Investors whose names are set forth on the signature pages hereto.
WITNESSETH:
WHEREAS, the parties hereto are parties to the Investors' Rights
Agreement and the Voting Agreement;
WHEREAS, the parties hereto desire to amend the Investors' Rights
Agreement and the Voting Agreement to clarify that the piggyback rights set
forth in the Investors' Rights Agreement and the termination of the Voting
Agreement are triggered by the filing of a registration statement solely related
to the Company's common stock and that the Board may approve the grant of
additional registration rights;
WHEREAS, the parties hereto for purposes of amending said agreements: (i)
with respect to the Investors' Rights Agreement, constitute the holders of a
majority of the Registrable Securities (as defined in the Investors' Rights
Agreement) and (ii) with respect to the Voting Agreement, constitute the holders
of a majority of the currently outstanding voting securities held by the Party
or Parties (as defined in the Voting Agreement) for whose benefit such term has
been included.
NOW, THEREFORE, the parties hereto, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound, agree as follows:
ARTICLE I
Amendment to the Investors' Rights Agreement
1. Section 1.3(a) is hereby deleted and replaced in its entirety, as
follows:
If (but without any obligation to do so) the Company
proposes to register (including for this purpose a
registration effected by the Company for stockholders other
than the Holders) any of its Common Stock under the
<PAGE>
Act in connection with the public offering of such
securities (other than a registration relating solely to
the sale of securities to participants in a Company stock
plan, a registration relating to a corporate reorganization
or other transaction under Rule 145 of the Act, a
registration on any form that does not include
substantially the same information as would be required to
be included in a registration statement covering the sale
of the Registrable Securities, a registration in which the
only Common Stock being registered is Common Stock issuable
upon conversion of debt securities that are also being
registered, or a registration of debt securities relating
to a registered exchange offer), the Company shall, at such
time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the
Company in accordance with Section 3.5, the Company shall,
subject to the provisions of Section 1.3(c), use all
reasonable best efforts to cause to be registered under the
Act all of the Registrable Securities that each such Holder
has requested to be registered.
2. Section 1.14 is hereby deleted and replaced in its
entirety, as follows:
Unless unanimously approved by the Board of Directors, from
and after the date of this Agreement, the Company shall
not, without the prior written consent of the Holders of a
majority of the Registrable Securities, enter into any
agreement with any holder or prospective holder of any
securities of the Company that would allow such holder or
prospective holder (a) to include such securities in any
registration filed under Section 1.3 hereof, unless under
the terms of such agreement, such holder or prospective
holder may include such securities in any such registration
only to the extent that the inclusion of such securities
will not reduce the amount of the Registrable Securities of
the Holders that are included or (b) to demand registration
of their securities.
ARTICLE II
Amendment to the Voting Agreement
1. Section 14 is hereby deleted and replaced in its entirety,
as follows:
Term. This Agreement shall terminate and be of no further
----
force or effect upon (a) the consummation of the Company's
sale of its Common Stock pursuant to a registration
statement under the Securities Act of 1933, as amended
(other than a registration statement relating either to
sale of securities to employees of the Company pursuant to
its stock option, stock purchase or similar plan or a SEC
Rule 145 transaction), (b) the
2
<PAGE>
acquisition of the Company by another entity by means of
any transaction or series of related transactions
(including, without limitation, any reorganization, merger
or consolidation) that results in the transfer of fifty
percent (50%) or more of the outstanding voting power of
the Company or a sale of all or substantially all of the
assets of the Company, (c) such time as the Investors
(together with their respective affiliates and partners)
shall own less than twenty-five percent (25%) of the
outstanding voting Preferred Stock of the Company (as
adjusted for stock splits and other recapitalizations), (d)
August 26, 2009 or (e) the written consent of the holders
of a majority of the then outstanding Founders Shares and
the holders of a majority of the then outstanding Preferred
Shares.
Miscellaneous
1. Except as amended by this Amendment, all terms and provisions of the
Investors' Rights Agreement and the Voting Agreement continue in full force and
effect and unchanged and are hereby confirmed in all respects.
2. This Amendment may be signed in multiple counterparts, each of which
shall be an original, with the same effect as if the signatures were upon the
same instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Amendment to be duly executed by their respective officers on the date first
above written.
EQUINIX, INC.
By: /s/ Albert M. Avery, IV
-------------------------------
Name: Albert M. Avery, IV
Title: Chief Executive Officer
COMMON HOLDERS:
/s/ Albert M. Avery, IV
-----------------------------------
Name: Albert M. Avery, IV
/s/ Jay Adelson
-----------------------------------
Name: Jay Adelson
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
<PAGE>
INVESTOR:
BENCHMARK CAPITAL PARTNERS II, L.P.
as nominee for
Benchmark Capital Partners, II, L.P.
Benchmark Founders Fund II, L.P.
Benchmark Founders Fund II-A, L.P.
Benchmark Members' Fund, L.P.
By: Benchmark Capital Management Co. II,
L.L.C., its general partner
By: /s/ Andrew S. Rachleff
------------------------------------------
Managing Member
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
CISCO SYSTEMS, INC.
By: /s/ Michelangelo Volpi
------------------------------------------
Name: Michelangelo Volpi
----------------------------------------
Title: SVP, Business Development
---------------------------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
PAUL AND JANE BARYAMES
By: /s/ Paul Baryames
/s/ Jane Baryames
------------------------------------------
Name: ________________________________________
Title: _______________________________________
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
CARLYLE VENTURE PARTNERS, L.P.
By: TCG Ventures, Ltd., as the General Partner
------------------------------------------
By: /s/ Frank D. Yeary
------------------------------------------
Name: Frank D. Yeary
----------------------------------------
Title: Attorney-in-Fact
---------------------------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
C/S VENTURE INVESTORS, L.P.
By: TCG Ventures, Ltd., as the General Partner
------------------------------------------
By: /s/ Frank D. Yeary
------------------------------------------
Name: Frank D. Yeary
----------------------------------------
Title: Attorney-in-Fact
---------------------------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
CARLYLE VENTURE COINVESTMENT, L.L.C.
By: TCG Ventures, L.L.C., as the Manager
------------------------------------------
By: TCG Holdings, L.L.C., as the Manager
------------------------------------------
By: /s/ Frank D. Yeary
------------------------------------------
Name: Frank D. Yeary
----------------------------------------
Title: Attorney-in-Fact
---------------------------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
Carlyle U.S. Venture Partners, L.P
By: TCG Ventures, L.L.C., as the General Partner
--------------------------------------------
By: TCG Holdings, L.L.C., as the Manager
--------------------------------------------
By: /s/ Frank D. Yeary
--------------------------------------------
Title: Managing Director
-----------------------------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
/s/ Christos M. Cotsakos
------------------------------------------------
By: Cotsakos Ventures, LLC
--------------------------------------------
Name: Christos M. Cotsakos
------------------------------------------
Title: Manager
-----------------------------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
DELL USA L.P.
------------------------------------------------
By: /s/ Alex C. Smith
--------------------------------------------
Title: Vice President
-----------------------------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
Lynn Dwigans
----------------------------------------------
By: /s/ Lynn Dwigans
------------------------------------------
Name: _______________________________________
Title: _______________________________________
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
______________________________________________
By: /s/ Joel Evanier
------------------------------------------
Name: Joel Evanier
----------------------------------------
Title: Consultant
---------------------------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AND AMENDED AND RESTATED VOTING AGREEMENT
Enron Communications, Inc.
-------------------------
By: [SIGNATURE ILLEGIBLE]
----------------------
Name:____________________
Title: Vice President
-------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT AND AMENDED
AND RESTATED VOTING AGREEMENT
INVESTOR:
G & H Partners
-------------------------
By: /s/ Scott Dettmer
----------------------
Name: Scott Dettmer
--------------------
Title: Partner
-------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT AND AMENDED
AND RESTATED VOTING AGREEMENT
INVESTOR:
/s/ Richard Frawley
-------------------------
By:______________________
Name: Richard Frawley
--------------------
Title:___________________
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT AND AMENDED
AND RESTATED VOTING AGREEMENT
INVESTOR:
___________________________
By:/s/ Edward R. Kozel
------------------------
Name: Edward R. Kozel
----------------------
Title:_____________________
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT AND
AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
/s/ John Mayes
---------------------------
By:________________________
Name: John Mayes
----------------------
Title:_____________________
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT AND AMENDED
AND RESTATED VOTING AGREEMENT
INVESTOR:
Morgan Stanley Dean Witter Equity Funding, Inc
----------------------------------------------
By: /s/ David R. Powers
----------------------
Name: David R. Powers
--------------------
Title: Vice President
-------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT AND AMENDED
AND RESTATED VOTING AGREEMENT
INVESTOR:
North Point
-------------------------
By: /s/ Michael Malaga
----------------------
Name: Michael Malaga
--------------------
Title: Chairman & CEO
-------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT AND AMENDED
AND RESTATED VOTING AGREEMENT
INVESTOR:
Reuters Holdings Switzerland S.A.
--------------------------------------
By: /s/ Thierry Mabille de Poncheville
-----------------------------------
Name: Thierry Mabille de Poncheville
---------------------------------
Title:________________________________
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT AND AMENDED
AND RESTATED VOTING AGREEMENT
INVESTOR:
Stanford University
-------------------------
By: /s/ Carol Gilmer
----------------------
Name:____________________
Title: Gift Administrator
--------------------
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT AND AMENDED
AND RESTATED VOTING AGREEMENT
INVESTOR:
__________________________
By: /s/ Johnson L. Wu
-----------------------
Name: Johnson L. Wu
---------------------
Title:____________________
<PAGE>
EXHIBIT 10.8
Equinix, Inc.
1998 Stock Plan
Adopted on September 10, 1998
<PAGE>
<TABLE>
<CAPTION>
Page No.
-------
<S> <C>
SECTION 1. ESTABLISHMENT AND PURPOSE........................................................ 1
SECTION 2. ADMINISTRATION................................................................... 1
(a) Committees of the Board of Directors...................................................... 1
(b) Authority of the Board of Directors....................................................... 1
SECTION 3. ELIGIBILITY...................................................................... 1
(a) General Rule.............................................................................. 1
(b) Ten-Percent Stockholders.................................................................. 1
SECTION 4. STOCK SUBJECT TO PLAN............................................................ 2
(a) Basic Limitation.......................................................................... 2
(b) Additional Shares......................................................................... 2
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.......................................... 2
(a) Stock Purchase Agreement.................................................................. 2
(b) Duration of Offers and Nontransferability of Rights....................................... 2
(c) Purchase Price............................................................................ 2
(d) Withholding Taxes......................................................................... 2
(e) Restrictions on Transfer of Shares and Minimum Vesting.................................... 3
(f) Accelerated Vesting....................................................................... 3
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.................................................. 3
(a) Stock Option Agreement.................................................................... 3
(b) Number of Shares.......................................................................... 3
(c) Exercise Price............................................................................ 3
(d) Withholding Taxes......................................................................... 3
(e) Exercisability............................................................................ 4
(f) Accelerated Exercisability................................................................ 4
(g) Basic Term................................................................................ 4
(h) Nontransferability........................................................................ 4
(i) Termination of Service (Except by Death).................................................. 4
(j) Leaves of Absence......................................................................... 5
(k) Death of Optionee......................................................................... 5
(l) No Rights as a Stockholder................................................................ 5
(m) Modification, Extension and Assumption of Options......................................... 5
(n) Restrictions on Transfer of Shares and Minimum Vesting.................................... 5
(o) Accelerated Vesting....................................................................... 6
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 7. PAYMENT FOR SHARES............................................................... 6
(a) General Rule.............................................................................. 6
(b) Surrender of Stock........................................................................ 6
(c) Services Rendered......................................................................... 6
(d) Promissory Note........................................................................... 6
(e) Exercise/Sale............................................................................. 7
(f) Exercise/Pledge........................................................................... 7
SECTION 8. ADJUSTMENT OF SHARES............................................................. 7
(a) General................................................................................... 7
(b) Mergers and Consolidations................................................................ 7
(c) Reservation of Rights..................................................................... 8
SECTION 9. SECURITIES LAWS REQUIREMENTS..................................................... 8
(a) General................................................................................... 8
(b) Financial Reports......................................................................... 8
SECTION 10. NO RETENTION RIGHTS.............................................................. 8
SECTION 11. DURATION AND AMENDMENTS.......................................................... 8
(a) Term of the Plan.......................................................................... 8
(b) Right to Amend or Terminate the Plan...................................................... 9
(c) Effect of Amendment or Termination........................................................ 9
SECTION 12. DEFINITIONS...................................................................... 9
</TABLE>
ii
<PAGE>
Equinix Inc. 1998 Stock Plan
SECTION 1. ESTABLISHMENT AND PURPOSE.
The purpose of the Plan is to offer selected individuals an opportunity to
acquire a proprietary interest in the success of the Company, or to increase
such interest, by purchasing Shares of the Company's Stock. The Plan provides
both for the direct award or sale of Shares and for the grant of Options to
purchase Shares. Options granted under the Plan may include Nonstatutory Options
as well as ISOs intended to qualify under Section 422 of the Code.
Capitalized terms are defined in Section 12.
SECTION 2. ADMINISTRATION.
(a) Committees of the Board of Directors. The Plan may be administered
by one or more Committees. Each Committee shall consist of one or more members
of the Board of Directors who have been appointed by the Board of Directors.
Each Committee shall have such authority and be responsible for such functions
as the Board of Directors has assigned to it. If no Committee has been
appointed, the entire Board of Directors shall administer the Plan. Any
reference to the Board of Directors in the Plan shall be construed as a
reference to the Committee (if any) to whom the Board of Directors has assigned
a particular function.
(b) Authority of the Board of Directors. Subject to the provisions of
the Plan, the Board of Directors shall have full authority and discretion to
take any actions it deems necessary or advisable for the administration of the
Plan. All decisions, interpretations and other actions of the Board of Directors
shall be final and binding on all Purchasers, all Optionees and all persons
deriving their rights from a Purchaser or Optionee.
SECTION 3. ELIGIBILITY.
(a) General Rule. Only Employees, Outside Directors and Consultants
shall be eligible for the grant of Options or the direct award or sale of
Shares. Only Employees shall be eligible for the grant of ISOs.
(b) Ten-Percent Stockholders. An individual who owns more than 10% of
the total combined voting power of all classes of outstanding stock of the
Company, its Parent or any of its Subsidiaries shall not be eligible for
designation as an Optionee or Purchaser unless (i) the Exercise Price is at
least 110% of the Fair Market Value of a Share on the date of grant, (ii) the
Purchase Price (if any) is at least 100% of the Fair Market Value of a Share and
(iii) in the case of an ISO, such ISO by its terms is not exercisable after the
expiration of five years from the date of grant. For purposes of this Subsection
(b), in determining stock ownership, the attribution rules of Section 424(d) of
the Code shall be applied.
<PAGE>
SECTION 4. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. Shares offered under the Plan may be authorized
but unissued Shares or treasury Shares. The aggregate number of Shares that may
be issued under the Plan (upon exercise of Options or other rights to acquire
Shares) shall not exceed 5,508,540 Shares, subject to adjustment pursuant to
Section 8. The number of Shares that are subject to Options or other rights
outstanding at any time under the Plan shall not exceed the number of Shares
that then remain available for issuance under the Plan. The Company, during the
term of the Plan, shall at all times reserve and keep available sufficient
Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option or other
right for any reason expires or is canceled or otherwise terminated, the Shares
allocable to the unexercised portion of such Option or other right shall again
be available for the purposes of the Plan. In the event that Shares issued under
the Plan are reacquired by the Company pursuant to any forfeiture provision,
right of repurchase or right of first refusal, such Shares shall again be
available for the purposes of the Plan, except that the aggregate number of
Shares which may be issued upon the exercise of ISOs shall in no event exceed
5,508,540 Shares (subject to adjustment pursuant to Section 8).
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.
(a) Stock Purchase Agreement. Each award or sale of Shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Purchaser and the Company. Such award or sale
shall be subject to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions which are not inconsistent with the
Plan and which the Board of Directors deems appropriate for inclusion in a Stock
Purchase Agreement. The provisions of the various Stock Purchase Agreements
entered into under the Plan need not be identical.
(b) Duration of Offers and Nontransferability of Rights. Any right to
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Purchaser within 30 days after the grant of such right
was communicated to the Purchaser by the Company. Such right shall not be
transferable and shall be exercisable only by the Purchaser to whom such right
was granted.
(c) Purchase Price. The Purchase Price of Shares to be offered under the
Plan shall not be less than 85% of the Fair Market Value of such Shares, and a
higher percentage may be required by Section 3(b). Subject to the preceding
sentence, the Purchase Price shall be determined by the Board of Directors at
its sole discretion. The Purchase Price shall be payable in a form described in
Section 7.
(d) Withholding Taxes. As a condition to the purchase of Shares, the
Purchaser shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such purchase.
2
<PAGE>
(e) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares
awarded or sold under the Plan shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall be
set forth in the applicable Stock Purchase Agreement and shall apply in addition
to any restrictions that may apply to holders of Shares generally. In the case
of a Purchaser who is not an officer of the Company, an Outside Director or a
Consultant, any right to repurchase the Purchaser's Shares at the original
Purchase Price (if any) upon termination of the Purchaser's Service shall lapse
at least as rapidly as 20% per year over the five-year period commencing on the
date of the award or sale of the Shares. Any such right may be exercised only
within 90 days after the termination of the Purchaser's Service for cash or for
cancellation of indebtedness incurred in purchasing the Shares.
(f) Accelerated Vesting. Unless the applicable Stock Purchase Agreement
provides otherwise, any right to repurchase a Purchaser's Shares at the original
Purchase Price (if any) upon termination of the Purchaser's Service shall lapse
and all of such Shares shall become vested if (i) the Company is subject to a
Change in Control before the Purchaser's Service terminates and (ii) the
repurchase right is not assigned to the entity that employs the Purchaser
immediately after the Change in Control or to its parent or subsidiary.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Board of Directors deems appropriate for inclusion
in a Stock Option Agreement. The provisions of the various Stock Option
Agreements entered into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
(c) Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the
Fair Market Value of a Share on the date of grant, and a higher percentage may
be required by Section 3(b). The Exercise Price of a Nonstatutory Option shall
not be less than 85% of the Fair Market Value of a Share on the date of grant,
and a higher percentage may be required by Section 3(b). Subject to the
preceding two sentences, the Exercise Price under any Option shall be determined
by the Board of Directors at its sole discretion. The Exercise Price shall be
payable in a form described in Section 7.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such exercise. The Optionee shall
also make such arrangements as the Board of Directors may require
3
<PAGE>
for the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with the disposition of Shares acquired
by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. In the case
of an Optionee who is not an officer of the Company, an Outside Director or a
Consultant, an Option shall become exercisable at least as rapidly as 20% per
year over the five-year period commencing on the date of grant. Subject to the
preceding sentence, the exercisability provisions of any Stock Option Agreement
shall be determined by the Board of Directors at its sole discretion.
(f) Accelerated Exercisability. Unless the applicable Stock Option
Agreement provides otherwise, all of an Optionee's Options shall become
exercisable in full if (i) the Company is subject to a Change in Control before
the Optionee's Service terminates, (ii) such Options do not remain outstanding,
(iii) such Options are not assumed by the surviving corporation or its parent
and (iv) the surviving corporation or its parent does not substitute options
with substantially the same terms for such Options.
(g) Basic Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed 10 years from the date of grant, and a shorter
term may be required by Section 3(b). Subject to the preceding sentence, the
Board of Directors at its sole discretion shall determine when an Option is to
expire.
(h) Nontransferability. No Option shall be transferable by the Optionee
other than by beneficiary designation, will or the laws of descent and
distribution. An Option may be exercised during the lifetime of the Optionee
only by the Optionee or by the Optionee's guardian or legal representative. No
Option or interest therein may be transferred, assigned, pledged or hypothecated
by the Optionee during the Optionee's lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar process.
(i) Termination of Service (Except by Death). If an Optionee's Service
terminates for any reason other than the Optionee's death, then the Optionee's
Options shall expire on the earliest of the following occasions:
(i) The expiration date determined pursuant to Subsection (g)
above;
(ii) The date three months after the termination of the
Optionee's Service for any reason other than Disability, or such later date
as the Board of Directors may determine; or
(iii) The date six months after the termination of the Optionee's
Service by reason of Disability, or such later date as the Board of
Directors may determine.
The Optionee may exercise all or part of the Optionee's Options at any time
before the expiration of such Options under the preceding sentence, but only to
the extent that such Options had become exercisable before the Optionee's
Service terminated (or became exercisable as a result of the termination) and
the underlying Shares had vested before the Optionee's Service terminated (or
vested as a result of the termination). The balance of such Options shall lapse
4
<PAGE>
when the Optionee's Service terminates. In the event that the Optionee dies
after the termination of the Optionee's Service but before the expiration of the
Optionee's Options, all or part of such Options may be exercised (prior to
expiration) by the executors or administrators of the Optionee's estate or by
any person who has acquired such Options directly from the Optionee by
beneficiary designation, bequest or inheritance, but only to the extent that
such Options had become exercisable before the Optionee's Service terminated (or
became exercisable as a result of the termination) and the underlying Shares had
vested before the Optionee's Service terminated (or vested as a result of the
termination).
(j) Leaves of Absence. For purposes of Subsection (i) above, Service
shall be deemed to continue while the Optionee is on a bona fide leave of
absence, if such leave was approved by the Company in writing and if continued
crediting of Service for this purpose is expressly required by the terms of such
leave or by applicable law (as determined by the Company).
(k) Death of Optionee. If an Optionee dies while the Optionee is in
Service, then the Optionee's Options shall expire on the earlier of the
following dates:
(i) The expiration date determined pursuant to Subsection (g)
above; or
(ii) The date 12 months after the Optionee's death.
All or part of the Optionee's Options may be exercised at any time before the
expiration of such Options under the preceding sentence by the executors or
administrators of the Optionee's estate or by any person who has acquired such
Options directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that such Options had become exercisable
before the Optionee's death or became exercisable as a result of the death. The
balance of such Options shall lapse when the Optionee dies.
(l) No Rights as a Stockholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by the Optionee's Option until such person becomes entitled to receive
such Shares by filing a notice of exercise and paying the Exercise Price
pursuant to the terms of such Option.
(m) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Board of Directors may modify, extend or assume
outstanding Options or may accept the cancellation of outstanding Options
(whether granted by the Company or another issuer) in return for the grant of
new Options for the same or a different number of Shares and at the same or a
different Exercise Price. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, impair the Optionee's rights
or increase the Optionee's obligations under such Option.
(n) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares
issued upon exercise of an Option shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall be
set forth in the applicable Stock Option Agreement and
5
<PAGE>
shall apply in addition to any restrictions that may apply to holders of Shares
generally. In the case of an Optionee who is not an officer of the Company, an
Outside Director or a Consultant:
(i) Any right to repurchase the Optionee's Shares at the
original Exercise Price upon termination of the Optionee's Service shall
lapse at least as rapidly as 20% per year over the five-year period
commencing on the date of the option grant;
(ii) Any such right may be exercised only for cash or for
cancellation of indebtedness incurred in purchasing the Shares; and
(iii) Any such right may be exercised only within 90 days after
the later of (A) the termination of the Optionee's Service or (B) the date
of the option exercise.
(o) Accelerated Vesting. Unless the applicable Stock Option Agreement
provides otherwise, any right to repurchase an Optionee's Shares at the original
Exercise Price upon termination of the Optionee's Service shall lapse and all of
such Shares shall become vested if (i) the Company is subject to a Change in
Control before the Optionee's Service terminates and (ii) the repurchase right
is not assigned to the entity that employs the Optionee immediately after the
Change in Control or to its parent or subsidiary.
SECTION 7. PAYMENT FOR SHARES.
(a) General Rule. The entire Purchase Price or Exercise Price of Shares
issued under the Plan shall be payable in cash or cash equivalents at the time
when such Shares are purchased, except as otherwise provided in this Section 7.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, all or any part of the Exercise Price may be paid by surrendering, or
attesting to the ownership of, Shares that are already owned by the Optionee.
Such Shares shall be surrendered to the Company in good form for transfer and
shall be valued at their Fair Market Value on the date when the Option is
exercised. The Optionee shall not surrender, or attest to the ownership of,
Shares in payment of the Exercise Price if such action would cause the Company
to recognize compensation expense (or additional compensation expense) with
respect to the Option for financial reporting purposes.
(c) Services Rendered. At the discretion of the Board of Directors,
Shares may be awarded under the Plan in consideration of services rendered to
the Company, a Parent or a Subsidiary prior to the award. At the discretion of
the Board of Directors, Shares may also be awarded under the Plan in
consideration of services to be rendered to the Company, a Parent or a
Subsidiary after the award, except that the par value of such Shares, if newly
issued, shall be paid in cash or cash equivalents.
(d) Promissory Note. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, all or a portion of the Exercise Price or
Purchase Price (as the case may be) of Shares issued under the Plan may be paid
with a full-recourse promissory note.
6
<PAGE>
However, the par value of the Shares, if newly issued, shall be paid in cash or
cash equivalents. The Shares shall be pledged as security for payment of the
principal amount of the promissory note and interest thereon. The interest rate
payable under the terms of the promissory note shall not be less than the
minimum rate (if any) required to avoid the imputation of additional interest
under the Code. Subject to the foregoing, the Board of Directors (at its sole
discretion) shall specify the term, interest rate, amortization requirements (if
any) and other provisions of such note.
(e) Exercise/Sale. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to a securities broker approved by the Company to sell Shares and to deliver all
or part of the sales proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.
(f) Exercise/Pledge. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to pledge Shares to a securities broker or lender approved by the Company, as
security for a loan, and to deliver all or part of the loan proceeds to the
Company in payment of all or part of the Exercise Price and any withholding
taxes.
SECTION 8. ADJUSTMENT OF SHARES.
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of an extraordinary
dividend payable in a form other than Shares in an amount that has a material
effect on the Fair Market Value of the Stock, a combination or consolidation of
the outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors
shall make appropriate adjustments in one or more of (i) the number of Shares
available for future grants under Section 4, (ii) the number of Shares covered
by each outstanding Option or (iii) the Exercise Price under each outstanding
Option.
(b) Mergers and Consolidations. In the event that the Company is a party
to a merger or consolidation, outstanding Options shall be subject to the
agreement of merger or consolidation. Such agreement, without the Optionees'
consent, may provide for:
(i) The continuation of such outstanding Options by the Company
(if the Company is the surviving corporation);
(ii) The assumption of the Plan and such outstanding Options by
the surviving corporation or its parent;
(iii) The substitution by the surviving corporation or its parent
of options with substantially the same terms for such outstanding Options;
or
(iv) The cancellation of such outstanding Options without
payment of any consideration.
7
<PAGE>
(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee or Purchaser shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
SECTION 9. SECURITIES LAW REQUIREMENTS.
(a) General. Shares shall not be issued under the Plan unless the
issuance and delivery of such Shares comply with (or are exempt from) all
applicable requirements of law, including (without limitation) the Securities
Act of 1933, as amended, the rules and regulations promulgated thereunder, state
securities laws and regulations, and the regulations of any stock exchange or
other securities market on which the Company's securities may then be traded.
(b) Financial Reports. The Company each year shall furnish to Optionees,
Purchasers and stockholders who have received Stock under the Plan its balance
sheet and income statement, unless such Optionees, Purchasers or stockholders
are key Employees whose duties with the Company assure them access to equivalent
information. Such balance sheet and income statement need not be audited.
SECTION 10. NO RETENTION RIGHTS.
Nothing in the Plan or in any right or Option granted under the Plan shall
confer upon the Purchaser or Optionee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Company (or any Parent or Subsidiary employing or retaining
the Purchaser or Optionee) or of the Purchaser or Optionee, which rights are
hereby expressly reserved by each, to terminate his or her Service at any time
and for any reason, with or without cause.
SECTION 11. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's stockholders. In the event that the stockholders fail
to approve the Plan within 12 months after its adoption by the Board of
Directors, any grants of Options or sales or awards of Shares that have already
occurred shall be rescinded, and no additional grants, sales or awards shall be
made thereafter under the Plan. The Plan shall terminate automatically 10 years
after its adoption by the Board of Directors and may be terminated on any
earlier date pursuant to Subsection (b) below.
8
<PAGE>
(b) Right to Amend or Terminate the Plan. The Board of Directors may
amend, suspend or terminate the Plan at any time and for any reason; provided,
however, that any amendment of the Plan which increases the number of Shares
available for issuance under the Plan (except as provided in Section 8), or
which materially changes the class of persons who are eligible for the grant of
ISOs, shall be subject to the approval of the Company's stockholders.
Stockholder approval shall not be required for any other amendment of the Plan.
(c) Effect of Amendment or Termination. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Share previously issued or any Option
previously granted under the Plan.
SECTION 12. DEFINITIONS.
(a) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "Change in Control" shall mean:
(i) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization, if
persons who were not shareholders of the Company immediately prior to such
merger, consolidation or other reorganization own immediately after such
merger, consolidation or other reorganization 50% or more of the voting
power of the outstanding securities of each of (A) the continuing or
surviving entity and (B) any direct or indirect parent corporation of such
continuing or surviving entity; or
(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean a committee of the Board of Directors, as
described in Section 2(a).
(e) "Company" shall mean Equinix, Inc., a Delaware corporation.
(f) "Consultant" shall mean a person who performs bona fide services for
the Company, a Parent or a Subsidiary as a consultant or advisor, excluding
Employees and Outside Directors.
9
<PAGE>
(g) "Disability" shall mean that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment.
(h) "Employee" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.
(i) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Board of Directors in
the applicable Stock Option Agreement.
(j) "Fair Market Value" shall mean the fair market value of a Share, as
determined by the Board of Directors in good faith. Such determination shall be
conclusive and binding on all persons.
(k) "ISO" shall mean an employee incentive stock option described in
Section 422(b) of the Code.
(l) "Nonstatutory Option" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.
(m) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(n) "Optionee" shall mean an individual who holds an Option.
(o) "Outside Director" shall mean a member of the Board of Directors who
is not an Employee.
(p) "Parent" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.
(q) "Plan" shall mean this Equinix, Inc. 1998 Stock Plan.
(r) "Purchase Price" shall mean the consideration for which one Share
may be acquired under the Plan (other than upon exercise of an Option), as
specified by the Board of Directors.
(s) "Purchaser" shall mean an individual to whom the Board of Directors
has offered the right to acquire Shares under the Plan (other than upon exercise
of an Option).
(t) "Service" shall mean service as an Employee, Outside Director or
Consultant.
(u) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 8 (if applicable).
10
<PAGE>
(v) "Stock" shall mean the Common Stock of the Company, with a par value
of $0.001 per Share.
(w) "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to the Optionee's Option.
(x) "Stock Purchase Agreement" shall mean the agreement between the
Company and a Purchaser who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
(y) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
11
<PAGE>
EXHIBIT 21.1
List of Subsidiaries of the Registrant
--------------------------------------
Equinix - DC, Inc.
<PAGE>
EXHIBIT 23.1
The Board of Directors
Equinix, Inc.:
We consent to the use of our report dated July 31, 1999 except as to Note 9
which is as of December 18, 1999, relating to the consolidated balance sheet of
Equinix, Inc and subsidiary, a development stage enterprise, as of December 31,
1998 and the related consolidated statements of operations, stockholders' equity
and cash flows for the period from June 22, 1998 (inception) to December 31,
1998 which report is included in the registration statement on Form S-4, and to
the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Mountain View, California
December 29, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> OTHER 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JUN-22-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 SEP-30-1999
<CASH> 4,164,500 3,582,100
<SECURITIES> 5,000,000 42,907,100
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 167,600 1,204,900
<PP&E> 486,200 3,131,400
<DEPRECIATION> 4,200 252,300
<TOTAL-ASSETS> 10,001,200 73,353,000
<CURRENT-LIABILITIES> 411,500 11,509,000
<BONDS> 0 0
0 0
10,400 19,100
<COMMON> 4,100 7,000
<OTHER-SE> 9,575,200 59,828,700
<TOTAL-LIABILITY-AND-EQUITY> 10,001,200 73,353,000
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 785,700 7,413,700
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 138,600
<INCOME-PRETAX> (855,800) (7,285,400)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (855,800) (7,285,400)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (855,800) (7,285,400)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
