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EXHIBIT 4.1
FUTURELINK CORP.
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of October 15,
1999, by and among Futurelink Corp., a Delaware corporation (the "Company") and
the stockholders signatories hereto (each, a "Stockholder" and together the
"Stockholders").
Terms and Conditions
In consideration of the mutual covenants and agreements contained in this
Agreement and the Purchase Agreement, and intending to be legally bound, the
parties hereto agree as follows:
. Definitions. As used in this Agreement, the following terms have the
meanings indicated below or in the referenced sections of this Agreement:
"Common Stock." The Company's Common Stock, $.0001 par value per share,
as the same may be constituted from time to time.
"Demand Registration." As defined in Section 3(a) hereof.
"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.
"Piggyback Registration." As defined in Section 4(a) hereof.
"Registrable Securities." Any shares of Common Stock of the Company held
by the Stockholders named on Schedule I hereto and any shares of Common Stock
that such Stockholder has the right to acquire, or does acquire, upon the
conversion or exercise of any option, warrant or other convertible security of
the Company or, in either case, their transferees; provided, that a Registrable
Security ceases to be a Registrable Security when (i) it is registered under
the Securities Act, (ii) it is sold or transferred in accordance with the
requirements of Rule 144 (or similar provisions then in effect) promulgated by
the SEC under the Securities Act ("Rule 144"), or (iii) it is eligible to be
sold or transferred under Rule 144 without holding period or volume
limitations.
"Registration Expenses." As defined in Section 7(a) hereof.
"SEC." The United States Securities and Exchange Commission.
"Securities Act." The Securities Act of 1933, as amended, and the rules
and regulations
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thereunder.
. Securities Subject to this Agreement.
Holders of Registrable Securities. A Person is deemed to be a holder of
Registrable Securities whenever that Person owns, directly or beneficially, or
has the right to acquire Registrable Securities, disregarding any legal
restrictions upon the exercise of that right.
(a) Majority of Registrable Securities. As used in this Agreement, the
term "majority of the Registrable Securities" means 51% or more of the
Registrable Securities being registered unless the context indicates that it is
51% or more of the Registrable Securities then issued and outstanding.
Section 2. Demand Registration.
(a) Request for Registration. Subject to the provisions of Section 3(b),
at any time and from time to time any one or more holders of Registrable
Securities may demand that the Company register all or part of its Registrable
Securities under the Securities Act such number of times and with such
restrictions as set forth opposite such holders name in Schedule I hereto (a
"Demand Registration"), provided, that for any Demand Registration the
aggregate number of shares to be registered per Demand Registration shall (i)
represent not less than 3% of the then issued and outstanding shares of Common
Stock of the Company or (ii) have a market value of at least $5 million as
measured by the average of the closing bid and asked price of the Common Stock
on the date immediately preceding the date of the demand. Within ten (10) days
after receipt of a demand, the Company will notify in writing all holders of
Registrable Securities of the demand. Any holder who wants to include his or
its Registrable Securities in the Demand Registration must notify the Company
within ten (10) business days of receiving the notice of the Demand
Registration. Except as provided in this Section 3, the Company will include
in all Demand Registrations all Registrable Securities for which the Company
receives the timely written demands for inclusion and may include such newly
issued shares as the Company may desire. All demands made pursuant to this
Section 3(a) must specify the number of Registrable Securities to be registered
and the intended method of disposing of the Registrable Securities.
(b) Form of Registration. The Demand Registration will be on Form S-3
whenever the Company is permitted to use such form, unless the holders of a
majority of the Registrable Securities or the underwriter reasonably request
registration on an expanded form. The Company will use commercially reasonable
efforts to qualify for registration on Form S-3.
(c) Registration Expenses. The Company will pay all Registration Expenses
for any Demand Registrations.
(d) Selection of Underwriters. The holders requesting the Demand
Registration shall select the investment banker(s) and manager(s) that will
administer the offering; provided, that the Company shall have given its prior
written consent to such selection (which consent shall not be unreasonably
delayed, conditioned or withheld). The Company and the holders of Registrable
Securities whose shares are being registered shall enter into a
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customary underwriting agreement with such investment banker(s) and manager(s).
(d) Priority on Demand Restrictions. If the managing underwriter gives
the Company and the holders of the Registrable Securities being registered a
written opinion that the number of Registrable Securities requested to be
included in the Demand Registration exceeds the number of securities that can
be sold, the Company will include in the registration only the number of
Registrable Securities that the underwriters believe can be sold. The number
of securities registered shall be allocated, first to the Company, to the
extent it wishes to register newly issued shares, then to the holders
requesting the Demand Registration, and then pro rata among the other holders
of Registrable Securities, on the basis of the total number of Company
securities requested to be included in the registration. In addition, if the
managing underwriter shall advise the Company, in writing or otherwise, that an
underwriters' over-allotment option, not in excess of 15% of the total offering
to be so effected, is necessary or desirable for the marketing of such
offering, all Company securities which are to be included in such offering
pursuant to this Section 3(e) shall be allocated first to the primary portion
of such offering and then to the underwriters' over-allotment portion on the
basis of the priority described in the preceding sentence.
(e) Delay in Filing. Notwithstanding the foregoing, the Company may delay
in filing a registration statement in connection with a Demand Registration 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 or withhold efforts
not more than twice in any twelve (12) month period and for not more than
ninety (90) days at a time. If, after a registration statement becomes
effective, the Company advises the holders of registered shares that the
Company considers it appropriate for the registration statement to be amended,
the holders of such shares shall suspend any further sales of their registered
shares until the Company advises them that the registration statement has been
amended. The 180-day time period referred to in Section 6(a)(3) during which
the registration statement must be kept current after its effective date shall
be extended for an additional number of business days equal to the number of
business days during which the right to sell shares was suspended pursuant to
the preceding sentence.
(f) Effective Demand Registration. A registration shall not constitute a
Demand Registration until it has become effective and remains continuously
effective for the lesser of (i) the period during which all Registrable
Securities registered in the Demand Registration are sold and (ii) 180 days;
provided, however, that a registration shall not constitute a Demand
Registration if (w) after such Demand Registration has become effective, such
registration or the related offer, sale or distribution of Registrable
Securities thereunder is interfered with by any stop order, injunction or other
order or requirement of the SEC or other governmental agency or court for any
reason not attributable to the holders requesting the Demand Registration or
the holders of Registrable Securities requesting to be included in such
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registration and such interference is not thereafter eliminated within five (5)
business days, or (x) the conditions specified in the underwriting agreement,
if any, entered into in connection with such Demand Registration are not
satisfied or waived, other than by reason of a failure on the part of the
holders requesting the Demand Registration or the holders of Registrable
Securities requesting to be included in such registration, or (y) the number of
Registrable Securities sold by the holders in such Demand Registration is less
than fifty percent (50%) of the number of Registrable Securities requested to
be included in such Demand Registration or (z) the number of Registrable
Securities registered by the Company in such Demand Registration is less than
seventy-five percent (75%) of the number of Registrable Securities requested to
be included in such Demand Registration.
(g) Requirement to Register. Notwithstanding anything else contained in
this Agreement to the contrary, to the extent a holder of Registrable
Securities has been delayed, restricted or otherwise prevented from registering
any or all such Registrable Securities as such holder may desire for a period
of eighteen (18) months from either (i) the date of this Agreement or (ii) if a
Demand Registration right has been exercised by such holder, from the effective
date of such registration statement filed pursuant to such Demand Registration
due to, among other things, any provisions contained in this Agreement or
Schedule I hereto, then (a) such holder shall be permitted to exercise any of
its Demand Registration or Piggyback Registration rights hereunder (subject to
the provisions hereof), (b) the Company shall be obligated to promptly upon
exercise of such rights, in accordance with the terms hereof, register all of
such Registrable Securities immediately without regard to any delaying,
prioritizing or restrictive provisions and (c) from the effective date of the
registration statement filed pursuant to such holder's Demand Registration or
Piggyback Registration until six (6) months following completion of the sale of
such Registrable Securities, the Company shall not register or make any public
sale or distribution of its equity securities (except pursuant to registrations
on Form S-8 or S-4 or any successor form).
Section 3 Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register
(including on behalf of a selling stockholder) any of its securities under the
Securities Act (except for the registration of securities to be offered
pursuant to an employee benefit plan on Form S-8, pursuant to a registration
made on Form S-4 or any successor forms then in effect) at any time other than
pursuant to a Demand Registration and the registration form to be used may be
used for the registration of the Registrable Securities (a "Piggyback
Registration"), it will so notify in writing all holders of Registrable
Securities no later than the earlier to occur of (i) the tenth (10th) day
following the Company's receipt of notice of exercise of other demand
registration rights, or (ii) forty-five (45) days prior to the anticipated
filing date. Subject to the provisions of Section 4(c), the Company will
include in the Piggyback Registration all Registrable Securities, on a pro rata
basis based upon the total number of Registrable Securities with respect to
which the Company has received written requests for inclusion within fifteen
(15) business days after the applicable holder's receipt of the Company's
notice. Such Registrable Securities may be made subject to an underwriters'
over-allotment option, if so requested by the managing underwriter. The
holders of Registrable Securities may withdraw all or any part of the
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Registrable Securities from a Piggyback Registration at any time before ten
(10) business days prior to the effective date of the Piggyback Registration.
The Company, the holders of Registrable Securities and any Person who hereafter
become entitled to register its securities in a registration initiated by the
Company must sell their securities on the same terms and conditions. A
registration of Registrable Securities pursuant to this Section 4 shall not be
counted as a Demand Registration under Section 3.
(b) Piggyback Expenses. The Company shall pay to the holders of the
Registrable Securities included in a Piggyback Registration all Registration
Expenses of those holders (except to the extent prohibited by applicable state
securities laws).
(c) Priority on Piggyback Registrations. If the managing underwriter
gives the Company its written opinion that the total number or dollar amount of
securities requested to be included in the registration exceeds the number or
dollar amount of securities that can be sold, the Company will include the
securities in the registration in the following order of priority: (i) first,
all securities the Company or the holder for whom the Company is effecting the
registration, as the case may be, proposes to sell; (ii) second, up to the full
number or dollar amount of Registrable Securities requested to be included in
the registration (allocated pro rata among the holders of Registrable
Securities, on the basis of the dollar amount or number of Registrable
Securities requested to be included, as the case may be); and (iii) third, any
other securities (provided they are of the same class as the securities sold by
the Company) requested to be included, allocated among the holders of such
securities in such proportions as the Company and those holders may agree. In
the event that the managing underwriter advises the Company that an
underwriters' over-allotment option is necessary or advisable, the preceding
priority shall apply to the determination of which securities are to be
included in the primary portion of such registration.
(d) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, the Company will select the investment banker(s) and
manager(s) that will administer the offering. The Company and the holders of
Registrable Securities whose shares are being registered shall enter into a
customary underwriting agreement with such investment banker(s) and manager(s).
Section 4. Holdback Agreements.
(a) Restrictions on Public Sale by Securities Holders. Each Stockholder
agrees not to make any public sale or distribution of equity securities of the
Company (except as part of the underwritten registration effected pursuant to a
Demand Registration or a Piggyback Registration or pursuant to registration on
Form S-8 or any successor form), including a sale pursuant to Rule 144, during
such customary period prior to and following the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration as
any managing underwriter(s) of such underwriting may reasonably request.
(b) Restrictions on Public Sale by the Company and Others. The Company
agrees not to make any public sale or distribution of its equity securities, or
any securities convertible into or exchangeable or exercisable for its equity
securities, including a sale under
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Regulation D under the Securities Act or under any other exemption of the
Securities Act (except as part of the underwritten registration effected
pursuant to a Demand Registration or a Piggyback Registration or pursuant to
registrations on Forms S-8 or S-4 or any successor form), during such customary
period prior to and following the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration as any managing
underwriter(s) of such underwriting may reasonably request. The Company also
agrees to use reasonable efforts to cause each holder of at least 5% (on a
fully-diluted basis) of its equity securities (other than Registrable
Securities) or any securities convertible into or exchangeable or exercisable
for its equity securities (other than Registrable Securities), purchased from
the Company at any time on or after the date of this Agreement (other than in a
registered public offering), to agree not to make any public sale or
distribution of those securities, including a sale pursuant to Rule 144 (except
as part of the underwritten registration, if permitted), during the seven (7)
days prior to and the 180 days after the effective date of the registration
unless the managing underwriter(s) agrees otherwise.
Section 5. Registration Procedures.
(a) Obligations of the Company. Whenever the holders of Registrable
Securities request the registration of any Registrable Securities pursuant to
this Agreement, the Company shall use its best efforts to register and to
permit the sale of the Registrable Securities in accordance with the intended
method of disposition. To carry out this obligation, the Company shall as
expeditiously as practicable:
(1) prepare and file with the SEC a registration statement on the
appropriate form and use commercially reasonable efforts to cause the
registration statement to become effective. At least ten (10) days before
filing a registration statement or prospectus or at least three (3)
business days before filing any amendments or supplements thereto, the
Company will furnish to the counsel of the holders of a majority of the
Registrable Securities being registered copies of all documents proposed
to be filed for that counsel's review and approval, which approval shall
not be unreasonably withheld or delayed;
(2) immediately notify each seller of Registrable Securities of any
stop order threatened or issued by the SEC and take all actions reasonably
required to prevent the entry of a stop order or if entered to have it
rescinded or otherwise removed;
(3) prepare and file with the SEC such amendments and supplements to
the registration statement and the corresponding prospectus necessary to
keep the registration statement effective for 180 days or such shorter
period as may be required to sell all Registrable Securities covered by
the registration statement; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered
by the registration statement during each period in accordance with the
sellers' intended methods of disposition as set forth in the registration
statement;
(4) furnish to each seller of Registrable Securities a sufficient
number of copies of the registration statement, each amendment and
supplement thereto
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(in each case including all exhibits), the corresponding prospectus
(including each preliminary prospectus), and such other documents as a
seller may reasonably request to facilitate the disposition of the
seller's Registrable Securities;
(5) use its best efforts to register or qualify the Registrable
Securities under securities or blue sky laws of jurisdictions in the
United States of America as any seller requests and do any and all other
reasonable acts and things that may be necessary or advisable to enable
the seller to consummate the disposition of the seller's Registrable
Securities in such jurisdiction; provided, however, that the Company shall
not be obligated to qualify as a foreign corporation to do business under
the laws of any jurisdiction in which it is not then qualified or to file
any general consent to service of process;
(6) notify each seller of Registrable Securities, at any time when a
prospectus is required to be delivered under the Securities Act, of any
event as a result of which the prospectus or any document incorporated
therein by reference contains an untrue statement of a material fact or
omits to state any material fact necessary to make the statements therein
not misleading in light of the circumstances under which such statements
were made, and prepare a supplement or amendment to the prospectus or any
such document incorporated therein so that thereafter the prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in
light of the circumstances under which such statements were made;
(7) cause all registered Registrable Securities to be listed on each
securities exchange, if any, on which similar securities issued by the
Company are then listed;
(8) provide an institutional transfer agent and registrar and a CUSIP
number for all Registrable Securities on or before the effective date of
the registration statement;
(9) enter into such customary agreements (including an underwriting
agreement in customary form) and take all other actions in connection with
those agreements as the holders of the Registrable Securities being
registered or the underwriters, if any, reasonably request to expedite or
facilitate the disposition of the Registrable Securities;
(10) make available for inspection by any seller of Registrable
Securities, 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
requested by any seller, underwriter, attorney, accountant, or other agent
in connection with the registration statement; provided that an
appropriate and customary confidentiality agreement is executed by any
such seller, underwriter, attorney, accountant or other agent;
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(11) 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
holders of Registrable Securities being registered or the managing
underwriter reasonably requests (and, if the Company is able after using
commercially reasonable efforts, the letter shall be addressed to holders
of the Registrable Securities, the Company and the underwriters);
(12) in connection with any underwritten offering, furnish, at the
request of any holder of Registrable Securities being registered or
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 holders of Registrable
Securities being registered and the underwriter(s) of the offering,
addressed to the underwriters and to the holders of the Registrable
Securities being registered;
(13) use its best efforts to comply with all applicable rules and
regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earnings statement complying with the
provisions of Section 11(a) of the Securities Act and covering the period
of at least twelve (12) months, but not more than eighteen (18) months,
beginning with the first month after the effective date of the
Registration Statement;
(14) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings
required to be made with the NASD; and
(15) take all other steps reasonably necessary to effect the
registration of the Registrable Securities contemplated hereby.
(b) Seller Information. In the event of any registration by the Company,
from time to time, the Company may require each seller of Registrable
Securities subject to the registration to furnish to the Company information
regarding such seller and the distribution of the securities subject to the
registration, and such seller shall furnish all such information requested by
the Company.
(c) Notice to Discontinue. Each holder of Registrable Securities agrees
by acquisition of such securities that, upon receipt of any notice from the
Company of any event of the kind described in Section 6(a)(6), the holder will
discontinue disposition of Registrable Securities until the holder receives
copies of the supplemented or amended prospectus contemplated by Section
6(a)(6). In addition, if the Company requests, the holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in the holder's possession, of the prospectus covering the Registrable
Securities current at the time of receipt of the notice. If the Company gives
any such notice, the time period mentioned in Section 6(a)(3) shall be extended
by the number of days elapsing between the date of notice and the date that
each seller receives the copies of the supplemented or amended prospectus
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contemplated in Section 6(a)(6).
(d) Notice by Holders. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Agreement, those holders shall notify the Company, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event, which as to any holder of Registrable
Securities is (i) to his or its respective knowledge, (ii) solely within his or
its respective knowledge and (iii) solely as to matters concerning that holder
of the Registrable Securities, as a result of which the prospectus included in
the registration statement contains an untrue statement of a material fact or
omits to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Section 6. Registration Expenses.
(a) Generally. All Registration Expenses incident to the Company's
performance of or compliance with this Agreement shall be paid as provided in
this Agreement. The term "Registration Expenses" includes without limitation
all registration filing fees, reasonable professional fees and other reasonable
expenses of the Company's compliance with federal, state and other securities
laws (including fees and disbursements of counsel for the underwriters in
connection with state or other securities law qualifications and
registrations), printing expenses, messenger, telephone and delivery expenses;
reasonable fees and disbursements of counsel for the Company; reasonable fees
and disbursement of all independent certified public accountants (including the
expenses of any audit or "comfort" letters required by or incident to
performance of the obligations contemplated by this Agreement); fees and
expenses of the underwriters (excluding discounts and commissions); fees and
expenses of any special experts retained by the Company at the request of the
managing underwriters in connection with the registration; and applicable stock
exchange and NASD registration and filing fees. The term "Registration
Expenses" does not include the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit and the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which similar securities issued by
the Company are then listed, all of which shall be paid by the Company, nor
does it include underwriting fees or commissions or transfer taxes, all of
which shall be paid by the sellers of Registrable Securities.
(b) Other Expenses. To the extent the Company is not required to pay
Registration Expenses, each holder of securities included in any registration
will pay those Registration Expenses allocable to the holder's securities so
included, and any Registration Expenses not allocable will be borne by all
sellers in proportion to the number of securities each registers.
Section 7. Indemnification.
(a) Indemnification by Company. In the event of any registration of
Registrable Securities under the Securities Act pursuant to this Agreement, to
the full extent permitted by law, the Company agrees to indemnify each holder
of Registrable Securities, its
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officers, directors, trustees, partners, employees, advisors and agents, and
each Person who controls the holder (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 such Registrable Securities
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
statements were made, except to the extent the untrue or allegedly untrue
statement or omission or alleged omission resulted from information that the
holder 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 Holders of Securities. In connection with any
registration statement, each participating holder of Registrable Securities
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 holder agrees 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 the holder
furnished in writing to the Company expressly for use therein and only in an
amount not exceeding the net proceeds received by the holder 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 participating holder of Registrable
Securities 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
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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 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 8(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 Company and the participating holders of Registrable Securities 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 Company and the
participating holders of Registrable Securities 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
participating holders of Registrable Securities and the parties' relative
intent and knowledge.
The parties hereto agree that it would not be just and equitable if
contribution pursuant this Section 8(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 participating holder of
Registrable Securities 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 participating holder exceeds the amount of
any damages that such participating holder 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. Rule 144. 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, and it will take such
further action as any holder of Registrable Securities reasonably may request,
all to the extent required from time to time, to enable such holder to sell
Registrable Securities 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 SEC. Upon the
request of any holder of Registrable Securities, the Company will deliver to
such holder a written statement as to whether it has complied with Rule 144's
or any successor rule's requirements. The Company also covenants that in such
event it will provide all such information and it will take such further action
as any holder of Registrable Securities reasonably may request to enable such
holder to sell Registrable
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Securities without registration under the Securities Act within the limitation
of Rule 144 under the Securities Act or any successor rule requirements.
Section 7. Participation in Underwritten Registration. No Person may
participate in any underwritten registration without (a) agreeing to sell
securities on the basis provided in underwriting arrangements approved by the
Persons entitled hereunder to approve such arrangements (the holders of the
Registrable Securities in a Demand Registration pursuant to Section 3(d) and
the Company in a Piggyback Registration pursuant to Section 4(d)), and (b)
completing and executing all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required by the underwriting
arrangements.
Section 8. Miscellaneous.
(a) Recapitalizations, Exchanges, etc. The provisions of this Agreement
shall apply to the full extent set forth herein with respect to (i) the shares
of Common Stock held by the Stockholders, (ii) any and all shares of voting
common stock of the Company into which the shares of such Common Stock are
converted, exchanged or substituted in any recapitalization or other capital
reorganization by the Company and (iii) 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 shares of Common
Stock and shall be appropriately adjusted for any stock dividends, splits,
reverse splits, combinations, recapitalizations and the like occurring after
the date hereof. The Company shall use its best efforts to cause any successor
or assign (whether by sale, merger or otherwise) to enter into a new
registration rights agreement with the holders of Registrable Securities on
terms substantially the same as this Agreement as a condition of any such
transaction.
(b) Amendment. This Agreement may be amended or modified only by a
written agreement executed by the Company and the Stockholders.
(c) Attorneys' Fees. In any legal action or proceeding brought to enforce
any provision of this Agreement, the prevailing party shall be entitled to
recover all reasonable expenses, charges, court costs and attorneys' fees in
addition to any other available remedy at law or in equity.
(d) 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. Without
limiting the generality of the foregoing, this Agreement and the rights and
obligations of a holder of Registrable Securities hereunder may be assigned, in
whole or in part, upon notice to the Company, to a Person who owns, or
simultaneously with the assignment of the rights under this Agreement to such
Person, will own, shares of capital stock of the Company.
(e) Captions. The captions of the sections and subsections of this
Agreement
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are solely for convenient reference and shall not be deemed to affect the
meaning or interpretation of any provision of this Agreement.
(f) 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.
(g) 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.
(h) 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.
(i) Governing Law. The internal law of the State of New York will govern
the interpretation, construction, and enforcement of this Agreement and all
transactions and agreements contemplated hereby, notwithstanding any state's
choice of law rules to the contrary.
(j) No Inconsistent Agreements. The Company represents and warrants that
it has not granted to any Person the right to request or require the Company to
register any securities issued by the Company other than the rights contained
herein. Except with the prior written consent of the holders of Registrable
Securities, the Company will not enter into any agreement with respect to its
securities that shall grant to any Person registration rights that in any way
conflict with or are prior in right to the rights provided under this
Agreement.
(k) 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 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.
(l) 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.
(m) 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
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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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
FUTURELINK CORP.
By: [signed: X. Xxxxxxx]
Name: X. Xxxxxxx
Title: C.F.O.
PEQUOT PRIVATE EQUITY FUND II, L.P.
By: Pequot Capital Management, Inc., as
investment manager
By: [signed: Xxxxx X. Xxxxx]
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
PEQUOT INTERNATIONAL FUND, INC.
By: Pequot Capital Management, Inc., as
investment advisor
By: [signed: Xxxxx X. Xxxxx]
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
PEQUOT PARTNERS FUND, L.P.
By: Pequot Capital Management, Inc., as
investment manager
By: [signed: Xxxxx X. Xxxxx]
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
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DIMENSIONAL PARTNERS LTD.
By: JDS Capital Management, Inc.,
its investment subadvisor
By: [signed: Xxxxxx Xxxxxxx]
Name: Xxxxxx Xxxxxxx
Title: President
DIMENSIONAL PARTNERS L.P.
By: JDS Capital Management, Inc.,
its investment manager
By: [signed: Xxxxxx Xxxxxxx]
Name: Xxxxxx Xxxxxxx
Title: President
[signed: Xxxx X. Xxxxxx]
________________________________________
XXXX X. XXXXXX
XXXXXX XXXXXX XXXXXXXX & CO., INC.
By: [signed: Xxxxx X. Xxxxxxx]
Name: Xxxxx X. Xxxxxxx
Title: Managing Director
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SCHEDULE I
Name and Address Number of Demand Other
of Stockholder Registrations Restrictions
1. Pequot Private Equity Fund II Two Demand No Demand
Pequot International Fund, Inc. Registrations on Registrations may
Pequot Partners Fund, L.P. Form S-1 in the be requested prior
Dimensional Partners Ltd. aggregate for all to April 15, 2000
Dimensional Partners L.P. Investors;
(collectively, the "Investors") Unlimited number of
Demand
Registrations on
Form S-3
2. Xxxx Xxxxxx None
3. Xxxxxx Xxxxxx Xxxxxxxx & Co.,
Inc. None
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