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EXHIBIT 10.57
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of December 20,
1999, by and among Futurelink Corp., a Delaware corporation (the "Company") and
the persons listed in Schedule 1 hereto (each a "Vendor" and collectively the
"Vendors").
Terms and Conditions
In consideration of the mutual covenants and agreements contained in this
Agreement and the Sale and Purchase Agreement, and intending to be legally
bound, the parties hereto agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following terms have
the meanings indicated below or in the referenced sections of this Agreement or
the Sale and Purchase Agreement, as applicable:
"Commission." The United States Securities and Exchange Commission.
"Common Stock." The Company's Common Stock, $.0001 par value per share, as
the same may be constituted from time to time.
"Completion Date." As defined in Section 1.1 of the Sale and Purchase
Agreement.
"Consideration Shares." As defined in Section 1.1 of the Sale and Purchase
Agreement and any and all shares of voting common stock of the Company which are
issued in respect of the Consideration Shares in connection with any stock
dividends, splits, reverse splits or combinations or into which the
Consideration Shares are converted, exchanged or substituted in any
recapitalization or other capital reorganization by the Company and any and all
equity securities of the Company or any successor or assign of the Company
(whether by merger, consolidation, sale of assets or otherwise) which may be
issued in respect of, in conversion of, in exchange for or in substitution of,
such Consideration Shares.
"Exchange Act." The Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
"NASD." The National Association of Securities Dealers, Inc.
"Person." An individual, a partnership, a corporation, a limited liability
company or partnership, an association, a joint stock company, a trust, a
business trust, a joint venture, an unincorporated organization or a government
entity or any department, agency, or political subdivision thereof.
"Sale and Purchase Agreement." The Agreement dated November 15, 1999 among
the parties hereto relating to the sale and purchase of the entire issued share
capital of KNS Holdings Limited.
"Securities Act." The Securities Act of 1933, as amended, and the rules and
regulations thereunder.
"Suspension Period." As defined in Section 2(b) hereof.
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SECTION 2. Required Registration.
(a) Within 180 days after the Completion Date, in accordance with the
Securities Act and the rules and regulations of the Commission, the Company
shall prepare and file with the Commission a registration statement under the
Securities Act on an appropriate form, covering the Consideration Shares and the
intended methods of distribution by the Vendors and shall use its commercially
reasonable efforts to cause such registration statement to become effective as
soon as practicable and to remain effective until the earlier to occur of the
date (i) the Consideration Shares covered thereby have been sold, or (ii) by
which each Vendor may sell all of its or his Consideration Shares covered
thereby within a three-month period under Rule 144 promulgated under the
Securities Act. For purposes of this Section 2(a) and Section 9, the
Consideration Shares of each Vendor shall be deemed to include the Consideration
Shares of each other Vendor that such Vendor would be required under any
provision of Rule 144 (other than paragraph (e)(3)(vi) thereof) to aggregate
with its or his Consideration Shares for purposes of the volume limitations of
Rule 144.
In the event that any public offering pursuant to this Agreement shall
involve, in whole or in part, an underwritten offering, the Company shall have
the right to designate an underwriter or underwriters as the lead or managing
underwriters of such underwritten offering who shall be reasonably acceptable to
Vendors owning a majority of the Consideration Shares proposed to be sold
therein.
Notwithstanding the foregoing, the Company may delay in filing the
registration statement and may withhold efforts to cause the registration
statement to become effective if the Company determines in good faith that such
registration might (1) interfere with or affect the negotiation or completion of
any transaction or other material event that is being contemplated by the
Company (whether or not a final decision has been made to undertake such
transaction) at the time the right to delay is exercised, or (2) involve initial
or continuing disclosure obligations that might not be in the best interest of
the Company's stockholders. The Company may exercise such right to delay the
filing of the registration statement one time and may delay the filing of the
registration statement for not more than ninety (90) days.
(b) Following the effectiveness of a registration statement filed pursuant
to this section, the Company may, at any time, suspend the effectiveness of such
registration for up to 90 days, as appropriate (a "Suspension Period"), by
giving notice to the Vendors, if the Company shall have determined that the
Company may be required to disclose in the registration statement (and is not
otherwise required at the time to disclose) any material corporate development
which disclosure may have a material effect on the Company. Notwithstanding the
foregoing, no more than two Suspension Periods may occur in any rolling 12-month
period. The Company shall end any Suspension Period early if, and as promptly as
practicable after, the corporate development giving rise thereto is disclosed or
becomes immaterial. Upon receipt of any notice from the Company of a Suspension
Period, the Vendors shall forthwith discontinue disposition of Consideration
Shares until the end of the Suspension Period or the Vendors earlier (i) are
advised in writing by the Company that the use of the applicable prospectus may
be resumed, (ii) have received copies of a supplemental or amended prospectus,
if applicable, and (iii) have received copies of any additional or
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supplemental filings which are incorporated or deemed to be incorporated by
reference into such prospectus.
(c) The Vendors acknowledge that the Company's obligations under this
Section 2 may be satisfied, in the Company's sole discretion, by the inclusion
of the Consideration Shares in any registration statement filed by the Company
for the benefit of any of its other stockholders.
SECTION 3. Restrictions on Public Sale by Securities Holders. Each Vendor
agrees not to make any public sale or distribution of equity securities of the
Company, including a sale pursuant to Rule 144, during such customary period
prior to and following the effective date of any underwritten registration, for
the benefit of the Company or of any selling stockholders, as any managing
underwriter(s) of such underwriting may reasonably request, provided that all
"affiliates" (within the meaning of Rule 144) of the Company are similarly
restricted.
SECTION 4. Registration Procedures. When the Company effects the
registration of the Consideration Shares under the Securities Act pursuant to
Section 2 hereof, the Company will, at its expense, as expeditiously as
possible:
(i) In accordance with the Securities Act and the rules and regulations of
the Commission, prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for such period
and such registration statement and prospectus accurate and complete for such
period;
(ii) Furnish to the Vendors such reasonable number of copies of the
registration statement (including exhibits), preliminary prospectus, final
prospectus, any amendment or supplement to any of the foregoing and such other
documents as the Vendors may reasonably request in order to facilitate the
public offering of such securities;
(iii) Use its best efforts to register or qualify the securities covered by
such registration statement and to maintain such registration or qualification
under such state securities or blue sky laws as any of the Vendors shall
reasonably request, except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction where it is not so
qualified;
(iv) Notify the Vendors, promptly after it shall receive notice thereof, of
the date and time when such registration statement and each post-effective
amendment thereto has become effective or a supplement to any prospectus forming
a part of such registration statement has been filed;
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(v) Notify the Vendors promptly of any request by the Commission for the
amending or supplementing of such registration statement or prospectus or for
additional information;
(vi) Notify each Vendor, at any time when a prospectus relating to such
securities is required to be delivered under the Securities Act, of any event
which would cause any such prospectus or any other prospectus as then in effect
to include an 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 promptly prepare and file with the Commission, and promptly
notify the Vendors of the filing of, such amendments or supplements to such
registration statement or prospectus as may be necessary to correct any such
statements or omissions.
(vii) Advise the Vendors, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
(viii) Use its best efforts to list or qualify all Consideration Shares
covered by such registration statement on any securities exchange or
inter-dealer quotation system on which any of the Company's shares of Common
Stock are then listed or quoted; and
(ix) Permit a single firm of counsel designated by the Vendors a reasonable
period of time prior to the filing of any Registration Statement with the
Commission to review said document, and shall not file any document in a form to
which such counsel reasonably objects;
(x) Enter into such customary agreements (including an underwriting
agreement in customary form) and take all other actions in connection with those
agreements as the Vendors or the underwriters, if any, reasonably request to
expedite or facilitate the disposition of the Consideration Shares;
(xi) Make available for inspection, upon reasonable notice during regular
business hours, by a single representative of any Vendor, any underwriter
participating in any disposition pursuant to the registration statement, and any
attorney, accountant, or other agent of any seller or underwriter, all financial
and other records, pertinent corporate documents, and properties of the Company,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any Vendor or underwriter in connection with
the registration statement; provided that an appropriate and customary
confidentiality agreement is executed by any such Vendor, underwriter, attorney,
accountant or other agent;
(xii) In connection with any underwritten offering, obtain a "comfort"
letter from the Company's independent public accountants in customary form and
covering those matters customarily covered by "comfort" letters as the Vendors
or the managing underwriter reasonably requests (and, if the Company is able
after using commercially
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reasonable efforts, the letter shall be addressed to the Vendors, the Company
and the underwriters, provided that the Vendors (A) acknowledge in writing that
they have liabilities/responsibilities equivalent to those of the underwriters
or (B) provide such other acknowledgement as may be required by the Company's
independent public accountants);
(xiii) In connection with any underwritten offering, furnish, at the
request of any underwriter(s) of the offering, an opinion of counsel
representing the Company for the purposes of the registration, in the form and
substance customarily given to underwriters in an underwritten public offering
and reasonably satisfactory to counsel representing the underwriter(s) of the
offering, addressed to the underwriters;
(xiv) Cooperate with each underwriter participating in the disposition of
such Consideration Shares and its respective counsel in connection with any
filings required to be made with the NASD; and
(xv) Otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least 12 months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder, and not file any amendment or supplement to such registration
statement or prospectus to which any Vendor shall have reasonably objected on
the grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or of the rules or
regulations thereunder, having been furnished with a copy thereof at least five
business days prior to the filing thereof.
SECTION 5. Expenses. With respect to any registration effected pursuant to
Section 2 hereof, all fees, costs and expenses of and incidental to such
registration and the public offering in connection therewith shall be borne by
the Company; provided, however, that the Vendors shall bear (i) their own
underwriting discounts or commissions, selling or placement agent or broker fees
and commissions, and transfer taxes, if any, in connection with the sales of
securities by such Vendors, and (ii) the legal fees and expenses of their own
counsel.
SECTION 6. Indemnification.
(a) Indemnification by the Company. In the event of any registration of
Consideration Shares under the Securities Act pursuant to this Agreement, to the
full extent permitted by law, the Company agrees to indemnify each Vendor, its
officers, directors, trustees, partners, employees, advisors and agents, and
each Person who controls any Vendor (within the meaning of the Securities Act
and the Exchange Act) against all losses, claims, damages, liabilities and
expenses caused by any untrue or allegedly untrue statement of material fact
contained in any registration statement under which the Consideration Shares
were registered under the Securities Act, any prospectus or preliminary
prospectus contained therein or any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which such
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statements were made, except to the extent the untrue or allegedly untrue
statement or omission or alleged omission resulted from information that such
Vendor furnished in writing to the Company expressly for use therein. In
connection with a firm or best efforts underwritten offering, to the extent
customarily required by the managing underwriter, the Company will indemnify the
underwriters, their officers and directors and each Person who controls the
underwriters (within the meaning of the Securities Act and the Exchange Act), to
the extent customary in such agreements.
(b) Indemnification by the Vendors. In connection with any registration
statement filed pursuant to this Agreement, each Vendor will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any registration statement or prospectus and
each Vendor agrees, severally and not jointly, to indemnify, to the extent
permitted by law, the Company, its directors, officers, trustees, partners,
employees, advisors and agents, and each Person who controls the Company (within
the meaning of the Securities Act and the Exchange Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or allegedly
untrue statement of a material fact or any omission or alleged omission to state
a material fact required to be stated in the registration statement or
prospectus or any amendment thereof or supplement thereto necessary to make the
statements therein not misleading in light of the circumstances under which such
statements were made, but only to the extent that the untrue or allegedly untrue
statement or omission or alleged omission is contained in or omitted from any
information or affidavit such Vendor furnished in writing to the Company
expressly for use therein and only in an amount not exceeding the net proceeds
received by such Vendor with respect to securities sold pursuant to such
registration statement. In connection with a firm or best efforts underwritten
offering, to the extent customarily required by the managing underwriter, each
Vendor, severally and not jointly, will indemnify the underwriters, their
officers and directors and each Person who controls the underwriters (within the
meaning of the Securities Act and the Exchange Act), to the extent customary in
such agreements.
(c) Indemnification Proceedings. Any Person entitled to indemnification
under this Agreement will (i) give prompt notice to the indemnifying party of
any claim with respect to which it seeks indemnification and (ii) unless in the
indemnified party's reasonable judgment a conflict of interest may exist between
the indemnified and indemnifying parties with respect to the claim, permit the
indemnifying party to assume the defense of the claim with counsel reasonably
satisfactory to the indemnified party. If the indemnifying party does not assume
the defense, the indemnifying party will not be liable for any settlement made
without its consent (but that consent may not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or will enter into any
settlement that does not include as an unconditional term thereof the claimant's
or plaintiff's release of the indemnified party from all liability concerning
the claim or litigation. An indemnifying party who is not entitled to or elects
not to assume the defense of a claim will not be under an obligation to pay the
fees and expenses of more than one counsel for all parties indemnified by the
indemnifying party with respect to the claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between
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the indemnified party and any other indemnified party with respect to the claim,
in which event the indemnifying party shall be obligated to pay the fees and
expenses of no more than one additional counsel for the indemnified parties.
(d) Contribution. If the indemnification provided for in Section 6(a) or
(b) is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each indemnifying
party thereunder shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities oR expenses, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party or parties on the one hand and the indemnified party or
parties 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 or by the Vendors and the parties' relative intent and
knowledge.
The parties hereto agree that it would not be just and equitable if
contribution pursuant this Section 6(d) were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding anything herein to the contrary, no Vendor shall be required to
contribute any amount in excess of the amount by which the net proceeds of the
offering (before deducting expenses, if any) received by such Vendor exceeds the
amount of any damages that such Vendor 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.
SECTION 7. Vendor Information. The Company may require each Vendor to
furnish the Company such information as may be required or advisable to be
included in the registration statement with respect to such Vendor and the
distribution of its Consideration Shares as the Company may from time to time
reasonably request and such Vendor shall furnish all such information.
SECTION 8. Delay of Registration. The Vendors shall not 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 these registration rights.
SECTION 9. Rule 144. The Company agrees that it will use its best efforts
to file with the Commission in a timely manner all reports and other documents
required to be filed by the Company under the Securities Act and the Exchange
Act and the rules and regulations adopted by the Commission thereunder, to the
extent required from
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time to time, to enable each Vendor to sell Consideration Shares without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, or (ii) any similar rule or
regulation hereafter adopted by the Commission, until the earlier to occur of
the date (i) the Consideration Shares covered thereby have been sold, or (ii) by
which each Vendor may sell all of its or his Consideration Shares covered
thereby within a three-month period under Rule 144 promulgated under the
Securities Act. The Company also agrees to furnish to each Vendor forthwith upon
request any information which such Vendor may reasonably request in availing
itself of Rule 144.
SECTION 10. Miscellaneous.
(a) Amendment. This Agreement may be amended or modified only by a written
agreement executed by the Company and each Vendor.
(b) Benefit of Parties; Assignment. All of the terms and provisions of this
Agreement shall be binding on and inure to the benefit of the parties and their
respective successors and assigns, including without limitation all subsequent
holders of securities entitled to the benefits of this Agreement who agree in
writing to become bound by the terms of this Agreement.
(c) Captions. The captions of the sections and subsections of this
Agreement are solely for convenient reference and shall not be deemed to affect
the meaning or interpretation of any provision of this Agreement.
(d) Cooperation. The parties agree that after execution of this Agreement
they will from time to time, upon the request of any other party and without
further consideration, execute, acknowledge and deliver in proper form any
further instruments and take such other action as any other party may reasonably
require to carry out effectively the intent of this Agreement.
(e) Counterparts; Facsimile Execution. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Facsimile execution and delivery of this Agreement shall be legal, valid and
binding execution and delivery for all purposes.
(f) Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter of this Agreement and supersedes
all prior agreements and understandings between the parties with respect
thereto. There are no promises, covenants or undertakings other than those
expressly set forth or provided for in this Agreement.
(g) Governing Law. The internal law of the State of New York will govern
the interpretation, construction, and enforcement of this Agreement and all
transactions
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and agreements contemplated hereby, notwithstanding the choice of law rules of
any state or country to the contrary.
(h) Notices. All notices, requests, demands, or other communications that
are required or may be given pursuant to the terms of this Agreement shall be in
writing and delivery shall be deemed sufficient in all respects and to have been
duly given on the date of service if delivered personally to the party to whom
notice is to be given, or upon receipt if mailed by first class mail, return
receipt requested, postage prepaid, and properly addressed to the addresses of
the parties set forth in the Sale and Purchase Agreement or to such other
address(es) as the respective parties hereto shall from time to time designate
to the other(s) in writing.
(i) Specific Performance. Each of the parties agrees that damages for a
breach of or default under this Agreement would be inadequate and that in
addition to all other remedies available at law or in equity that the parties
and their successors and assigns shall be entitled to specific performance or
injunctive relief, or both, in the event of a breach or a threatened breach of
this Agreement.
(j) Validity of Provisions. Should any part of this Agreement for any
reason be declared by any court of competent jurisdiction to be invalid, that
decision shall not affect the validity of the remaining portion, which shall
continue in full force and effect as if this Agreement had been executed with
the invalid portion eliminated, it being the intent of the parties that they
would have executed the remaining portion of the Agreement without including any
part or portion that may for any reason be declared invalid.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
FUTURELINK CORP.
By: /s/ Xxx Xxxxxx
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Name: Xxx Xxxxxx
Title: Director of Mergers and
Acquisitions
For and on behalf of the Vendors by:
DENIS XXXXXXXXXXX XXXXX
as Attorney
/s/ Denis Xxxxxxxxxxx Xxxxx
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Schedule 1
1. Xxxx Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxx Matthissen and
Quadrangle Trustee Company as trustee of the various family settlements
established by Xxxx Xxxxxxx
2. Xxxxxxx Xxxxxxx, Xxxx Xxxxx Xxxxxxx, Xxxxx Xxxxxxx Matthissen and
Quadrangle Trustee Company as trustee of various family settlements,
established by Xxxxxxx Xxxxxxx
3. Xxxxx Xxxxxx Xxxxxxx
4. Xxxxxxx Xxxx Xxxxxxx
5. Xxxxxxx Xxxxxxxx Monamy Xxxxxxxx-Xxxxxxx
6. Xxxxxx Xxxx
7. Xxxx Xxxxxxxx and Xxxxxx Xxxxxxxx
8. Xxxxx Xxxxxxx Xxxxxx Xxxxxx
9. Xxxxx Xxxxx
10. Yuri Pasea
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