Registration Rights Agreement - Rackspace Ltd.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into effective as of the 30th day of November, 1999, by and among
Rackspace, Ltd., a Texas limited partnership (the "Company"), and the
securities holders of the Company set forth on EXHIBIT A attached hereto
(such persons being referred to herein as the "Investors" and individually as
an "Investor").
WITNESSETH:
WHEREAS, each investor is acquiring Units of Limited Partners Interest
("Units") in the Company in accordance with the Second Amendment to Agreement
of Limited Partnership of the Company, dated effective November 30, 1999 (the
"Second Amendment"); and
WHEREAS, one of the Investors, First Inning Investors, L.P. ("First
Inning"), has the right to acquire additional Units pursuant to an Option
Agreement ("Option Agreement") to be entered into in accordance with the
Second Amendment; and
WHEREAS, another investor, The Hamilton Companies LLC ("Hamilton"), has
the right to acquire additional Units pursuant to an option ("Hamilton
Option") granted in the Second Amendment: and
WHEREAS the execution of this Agreement by the Investors is a condition
to the closing of the transactions contemplated by the Second Amendment; and
WHEREAS the Company has agreed to provide the Investors with certain
registration rights with respect to the Registrable Securities.
NOW THEREFORE, in consideration of the mutual covenants herein contained
and for other good and valuable consideration, the parties hereto hereby
agree as follows:
Section 1. CERTAIN DEFINITIONS. As used in this Agreement, the
following definitions shall apply:
"AFFILIATE" means a Person who directly or indirectly controls, is
controlled by, or is under common control with, the Person referred to. For
this purpose, "control" means the ability to direct or cause the direction of
the management or affairs of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"COMMISSION" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute, and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
"FAMILY AFFILIATE" means, with respect to any Investor, (i) a
natural Person who is a spouse, lineal descendent or spouse of a lineal
descendent, or any trust or family trust of which the investor or any of such
Persons is the trustee or a beneficiary (ii) a corporation, partnership,
limited partnership, limited liability company or other business entity if
and for so long as the Investor holds, directly or indirectly, equity
securities or interests in such entity having the right to elect a majority
of the members of the board of directors or other governing body or to
otherwise manage the affairs of the entity.
"HOLDER" means any holder of outstanding Registrable Securities;
provided, however, that for all purposes under this Agreement, the holder of
any Registrable Securities shall be deemed to be the Holder of the
Registrable Securities into which such Registrable Securities are then
convertible.
"PERSON" means any natural Person, any unincorporated organization
or association, and any partnership limited liability company, corporation,
estate, trust, nominee, custodian or other individual or entity.
The terms "REGISTER", REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments thereto
filed or required to be filed), and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRABLE SECURITIES" means: (i) the Units held by the Investors
issued pursuant to the Second Amendment, including any additional Units
acquired by the Investors by exercise of any preemptive rights or rights of
first refusal, (ii) the Units, if any, issued to First Inning pursuant to the
Option Agreement, (iii) the Units, if any, issued to Hamilton pursuant to the
Hamilton Option, and (iv) any securities of the Company issued or issuable,
directly or indirectly, in respect of by way of exchange for such Units held
by the Investors, together with any other securities which are issued with
respect thereto by way of any stock split, stock dividend, recapitalization,
reorganization, or similar event; PROVIDED, HOWEVER, that Registrable
Securities shall not include any Registrable Securities which have previously
been registered or sold to the public or which are eligible for sale to the
public under paragraph (k) of Rule 144 as defined below.
"REGISTRATION DATE" means the effective date of the first
registration statement filed by the Company for an offering of its securities
to the general public, or the date on which the Company first becomes subject
to the registration requirements of Section 12(b) or Section 12(h) of the
Securities Exchange Act, whichever first occurs.
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"REGISTRATION EXPENSES" means all expenses incurred by the Company
in complying with registration obligations hereunder, including, without
limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company and
the reasonable fees and disbursements of not more than one counsel chosen by
the Holders who are the holders of a majority of Registrable Securities being
registered, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company). Registration Expenses shall not include fees of
counsel for the Holders other than of one counsel as set forth above or
Selling Expenses as defined below.
"REQUISITE HOLDERS" means Holders of not less than 50% of the
Registrable Securities; except in the case of a Demand Registration for the
first registered offering of the Company's securities it means holders of not
less than 40% of the then outstanding equity securities of the Company.
"RESTRICTED SECURITIES" means the securities of the Company
required to bear the legend set forth in Section 2 hereof.
"RULE 144" means Rule 144 promulgated under the Securities Act, or
any similar successor rule, as the same shall be in effect from time to time.
"RULE 145" means Rule 145 promulgated under the Securities Act, or
any similar successor rule, as the same shall be in effect from time to time.
"RULE 415" means Rule 415 promulgated under the Securities Act, or
any similar successor rule, as the same shall be in effect from time to time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of Registrable
Securities.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, as shall be in effect at the time.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the rules, regulations and interpretations promulgated
thereunder.
Section 2. DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. If, at any time after the first to
occur of (i) 180 days following the Registration Date or (ii) the third
anniversary of this Agreement, the Company shall receive from the Requisite
Holders a written request that the Company effect the registration under the
Securities Act of the resale of Registrable Securities held by such Requisite
Holders (a "Demand Registration"), then The Company shall:
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(i) promptly give written notice of the proposed registration
to all other Holders; and
(ii) use its best efforts to effect, as soon as practicable,
the registration under the Securities Act (including, without limitation, by
means of a shelf registration pursuant to Rule 415 under the Securities Act
if so requested and if the Company is then eligible to use such a
registration) of the Registrable Securities which the Company has been so
requested to register, together with all or such portion of the Registrable
Securities of any Holders joining in such request as are specified in a
written request received by the Company within 20 days after the Company
mails such written notice in accordance with the registration procedures set
forth in Section 7 hereof;
PROVIDED, HOWEVER, that the Company shall not be obligated to take any action
to effect any such registration under the Securities Act:
(A) after the Company has effected one such registration
pursuant to this Section 2 which have been declared or ordered
effective and pursuant to which securities have been sold; or
(B) if such request is for a shelf registration pursuant to Rule
415 of the Securities Act and is in connection with the first
registration statement filed by the Company.
Subject to the foregoing clauses (A) and (B) the Company shall file
a registration statement covering the Registrable Securities so requested to
be registered as soon as practicable, and in any event within 120 days, after
receipt of the request or requests of the Requisite Holders; PROVIDED,
HOWEVER, that if the Company shall furnish to such Holder a certificate
signed by the president 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 or its shareholders for such registration
statement to be filed on or before the date filing would be required and it
is therefore essential to defer the filing of such registration statement,
the Company shall have the right to defer such filing for a reasonable period
not to exceed 90 days. The Company's right to delay such registration as set
forth in the previous sentence may only be exercised one time during any
twelve month period.
(b) PRIORITY ON UNDERWRITTEN DEMAND REGISTRATIONS. If the
Requisite Holders so elect, the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of an underwritten
offering. In such event, if the managing underwriter or underwriters of the
Demand Registration advise the Company and the Requisite Holders in writing
that the total amount of Registrable Securities requested to be included in
such offering would exceed the maximum amount of securities which can be
marketed at a price reasonably related to the current fair market value of
such securities without adversely affecting such offering (the "Underwriters
Maximum Number"), the Company will be required to include in such
registration to the extent of the Underwriters Maximum Number: FIRST, the
Registrable Securities requested to be included in such registration by the
Holders thereof, allocated PRO RATA among such Holders on the basis of the
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number of Registrable Securities requested to be included therein by each
such Holder; and SECOND, any equity securities requested to be included in
such registration by the Company and any other holders of such securities,
allocated as determined by the Company subject to any agreements between the
Company and any such holders.
(c) SELECTION OF UNDERWRITERS. The managing underwriter or
underwriters to be used in connection with such registration shall be
selected by the Requisite Holders holding a majority of the Registrable
Securities being registered. The Company shall have the right to approve the
selection of any such underwriters, which approval shall not be unreasonably
withheld.
(d) UNDERWRITING AGREEMENTS. The Company shall (together with all
Holders selling Registrable Securities) enter into an underwriting agreement
in customary form with the managing underwriter selected for such
underwriting by a majority in interest of the Requisite Holders, and each
Holder selling Registrable Securities shall participate in such underwriting.
(e) WITHDRAWAL FROM UNDERWRITING. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to the Company, the managing
underwriter and the Requisite Holders. The Registrable Securities and/or
other securities so withdrawn shall also be withdrawn from registration, and
such Registrable Securities shall not be transferred in a public distribution
prior to 90 days after the effective date of such registration, or such other
shorter period of time as the underwriters may require. If by the withdrawal
of such Registrable Securities a greater number of Registrable Securities
held by other Holders may be included in such registration (up to the maximum
of any limitation imposed by the underwriters), then the Company shall offer
to all Holders who have included Registrable Securities in the registration
the right to include additional Registrable Securities in the same proportion
and manner used in determining the underwriter limitation in this Section 2.
(f) INCLUSION AS A DEMAND REGISTRATION. For purposes of this
Section 2, a registration will not count as a Demand Registration until it
has become effective; PROVIDED, HOWEVER, if the Requisite Holders withdraw
their Registrable Securities (whether before or after the effectiveness of
such registration), such demand will count as a Demand Registration for
purposes of this Section 2 unless the Requisite Holders pay all of the
Registration Expenses associated with such attempted registration.
(g) RIGHTS OF OTHER SECURITIES HOLDERS JOINING DEMAND. In order
for the Requisite Holders to make a Demand Registration that would result in
the First public offering of the securities of the Company, it will be
necessary to have other equity securities holders of the Company (as selected
in the discretion of the Investors) join the Investors in making such demand.
In such event, the holders of Company securities joining the Investors in
that Demand Registration shall be entitled to participate in that particular
registration on the same basis as the Investors.
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Section 3. PIGGYBACK REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. Whenever the Company
proposes to register the sale of any of its equity securities under the
Securities Act other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any similar form then in effect, the Company shall give
written notice thereof to each Holder as soon as practicable (but in any
event at least 30 days before such filing), offering such Holder the
opportunity to register on such registration statement such number of
Registrable Securities as such Holder may request in writing, subject to the
provisions of section 3(b), not later than 20 days after the date of the
giving of such notice (a "Piggyback Registration"). Upon receipt by the
Company of any such request, the Company shall use reasonable efforts to, or
in the case of an underwritten offering, to cause the managing underwriter or
underwriters to, include such Registrable Securities in such registration
statement (or in a separate registration statement concurrently filed) and to
cause such registration statement to become effective with respect to such
Registrable Securities in accordance with the registration procedures set
forth in Section 7 hereof. If the Company's registration is to be effected
pursuant to an underwritten offering, Registrable Securities registered
pursuant to this Section 3 shall be distributed in accordance with such
offering. Notwithstanding the foregoing, if at any time after giving written
notice of its intention to register its equity securities and before the
effectiveness of the registration statement filed in connection with such
registration, the Company determines for any reason either not to effect such
registration or to delay such registration, the Company may, at its election,
by delivery of written notice to each Holder (A) in the case of a
determination not to effect registration, relieve itself of its obligation to
register the Registrable Securities in connection with such registration or
(B) in the case of a determination to delay registration, delay the
registration of such Registrable Securities for the same period as the delay
in the registration of such other equity securities. Each Holder requesting
inclusion in a registration pursuant to this Section 3 may, at any time
before the effective date of the registration statement relating to such
registration, revoke such request by delivering written notice of such
revocation to the Company (which notice shall be effective only upon receipt
by the Company); PROVIDED, HOWEVER, that if the Company, in consultation with
its financial and legal advisors, determines that such revocation would
materially delay the registration or otherwise require a recirculation of the
prospectus contained in the registration statement, then such holder shall
have no right to so revoke its request.
(b) PRIORITY IN PIGGYBACK REGISTRATION. Notwithstanding the
foregoing, with respect to any primary registration that is underwritten and
with respect to which the managing underwriter or underwriters advise the
Company of an Underwriters Maximum Number, then the Company will so notify
all Holders requesting inclusion in such registration and will be required to
include in such registration, to the extent of the Underwriters Maximum
Number: FIRST, any equity securities that the Company proposes to sell for
its own account (up to the Underwriters Maximum Number); SECOND, the
Registrable Securities requested by Holders to be included in such
registration allocated PRO RATA with any other holders of equity securities
having piggyback registration rights on the basis of the number of securities
requested to be included therein by each such holder; and THIRD, to the
extent that the Underwriters Maximum Number has not been filled by the
application of the preceding clauses, any further equity securities that the
Company proposes to sell for its own account and/or
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any equity securities requested to be included in such registration by other
holders of such securities, allocated as determined by the Company subject to
agreements between the Company and any such holders.
(c) SELECTION OF UNDERWRITERS. If any Piggyback Registration is in
the form of an underwritten offering, the managing underwriter or
underwriters and any additional investment bankers and managers to be used in
connection with such registration shall be selected by the Company (subject
to any separate agreement with the holders on behalf of which a secondary
underwritten offering is being made). The selection of such underwriters
shall also be subject to the approval by the Holders participating in such
underwritten offering holding a majority of the Registrable Securities being
registered, which approval shall not be unreasonably withheld.
(d) UNDERWRITING AGREEMENTS. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the managing underwriter
selected for such underwriting by the Company, and each Holder selling
Registrable Securities shall participate in such underwriting.
(e) WITHDRAWAL FROM UNDERWRITING. If any Holder or other holder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the managing underwriter. Any
securities excluded or withdrawn from such underwriting shall be withdrawn
from such registration, and shall not be transferred in a public distribution
prior to 180 days after the effective date of the registration statement
relating thereto, or such other shorter period of time as the underwriters
may require.
(f) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
Section 4. MARKET STANDOFF. If the Company at any time shall
register the offer and sale of shares of Common Stock to the public under the
Securities Act (including any registration pursuant to Sections 2 or 3), the
Holders shall not sell publicly, make any short sale of, grant any option for
the purchase of, or otherwise dispose publicly of, any Registrable Securities
(other than those shares of Common Stock included in such registration
pursuant to Sections 2 or 3) without the prior written consent of the Company
for a period designated by the Company in writing to the Holders, which
period shall begin not more than 10 days prior to the effectiveness of the
registration statement pursuant to which such public offering shall be made
and shall not last more than 180 days after the effective date of such
registration statement. The Company shall obtain the agreement of any person
permitted to sell shares of stock in a registration to be bound by and to
comply with this Section 4 as if such person was a Holder hereunder.
Section 5. EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with the one Demand Registration and the Piggyback
Registrations shall be borne by the Company. All
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Selling Expenses relating to securities so registered as well as all
Registration Expenses relating to Demand Registrations and Piggyback
Registrations not required to be borne by the Company shall be borne by the
holders of such securities pro rata on the basis of the number of shares of
securities so registered on their behalf.
Section 6. REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of Section 2 or 3 hereof to use its best efforts
to effect promptly the registration of Registrable Securities, the Company
shall:
(a) Prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become and remain effective as provided herein;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and current and to comply with the provisions of the Securities Act
with respect to the sale of or other disposition of all Registrable
Securities covered by such registration statement, including such amendments
and supplements as may be necessary to reflect the intended method of
disposition of the prospective seller or sellers of such Registrable
Securities, but for no longer than one hundred eighty (180) days subsequent
to the effective date of such registration in the case of a registration
statement on Form S-1 (or any similar form of registration statement required
to set forth substantially identical information) and for no longer than one
hundred twenty (120) days in the case of a registration statement on Form
S-3; PROVIDED, HOWEVER, that (i) such 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; and (ii) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415 permits an offering
on a continuous or delayed basis, and provided further that applicable rules
under the Securities Act governing the obligation to file a post-effective
amendment permit, in lieu of filing a post-effective amendment that (I)
includes any prospectus required by Section 10(a)(3) of the Securities Act or
(II) reflects facts or events representing a material or fundamental change
in the information set forth in the registration statement, the incorporation
by reference of information required to be included in (I) and (II) above to
be contained in periodic reports filed pursuant to Section 13 or 15(d) of the
Exchange Act in the registration statement;
(c) Furnish to each prospective seller of Registrable Securities
such number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities of such seller;
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(d) Notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of 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 or incomplete in the light of
the circumstances then existing, and at the request of any such seller,
prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such shares, such prospectus
shall not include 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 not misleading or incomplete in the light of the
circumstances then existing;
(e) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or approved for quotation
on any inter-dealer quotation system on which similar securities issued by
the Company are then listed or quoted;
(f) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP
number of all such Registrable Securities, in each case not later than the
effective date of such registration;
(g) Use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions
as any Holder may reasonably request and do any and all other acts and things
which may be reasonably necessary or advisable to enable any Holder to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Holder; PROVIDED, HOWEVER, that the Company will not
be required to qualify generally to do business, subject itself to general
taxation or consent to general service of process in any jurisdiction where
it would not otherwise be required to do so but for this paragraph (g);
(h) Use its best efforts to cause such Registrable Securities to
be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of
the Company to enable each Holder holding such Registrable Securities to
consummate the disposition of such Registrable Securities;
(i) Subject to the execution of confidentiality agreements in form
and substance satisfactory to the Company, make available upon reasonable
notice and during normal business hours, for inspection by each Holder
holding such Registrable Securities, any underwiter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any Holder or underwriter
(collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspector in
connection with such registration statement;
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(j) Use its best efforts to obtain from its independent certified
public accountants "cold comfort" letters in customary form and at customary
times and covering matters of the type customarily covered by cold comfort
letters;
(k) Use its best efforts to obtain from its counsel an opinion or
opinions in customary form;
(l) Issue to any underwriter to which any Holder holding such
Registrable Securities may sell shares in such offering certificates
evidencing such Registrable Securities;
(m) 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 twelve months, but not more than eighteen months,
beginning with the first month after the effective date of the Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act;
(n) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 2 hereof, enter into an
underwriting agreement reasonably necessary to effect the offer and sale of
Common Stock, provided such underwriting agreement contains customary
underwriting provisions and provided further that if the underwriter so
requests the underwriting agreement will contain customary contribution
provision; and
(o) Use its best efforts to take all other steps necessary to
effect the registration of such Registrable Securities contemplated hereby.
Section 7. INDEMNIFICATION. In the event any of the Registrable
Securities are included in a registration statement under this Section:
(a) The Company will indemnify each Holder, each of such Holder's
officers and directors and partners (and each partner's officers, directors
and partners) and such Holder's separate legal counsel and independent
accountants, and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, and each underwriter, if any, and each
person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities
(or actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or
based on any untrue statement (or alleged untrue statement) of a material
fact contained, on the effective date thereof, in any registration statement,
any prospectus contained therein, or any amendment or supplement there to, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a prospectus, in the light of the circumstances under which they
were made) not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse each such Holder, each of its officers, directors and
partners (and each partner's
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officers, directors and partners) and such Holders' separate legal counsel
and independent accountants and each person controlling such Holder, each
such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability
or action, provided that the Company will not be liable in any such case to
the extent that any such claim, loss, damage, liability or expense arises out
of or is based on any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and its legal counsel and independent accountants,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities
Act, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained, on the effective date thereof
in any such registration statement, any prospectus contained therein, or any
omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case of
a prospectus, in the light of the circumstances under which they were made)
not misleading, and will reimburse the Company, such Holders, such directors,
officers, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement or prospectus in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder and stated to be specifically for use therein; provided, however, that
the obligations of any such Holder hereunder shall be limited to an amount
equal to the proceeds to each such Holder of Registrable Securities sold as
contemplated herein.
(c) Each party entitled to indemnification under this Section (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 8 to the extent such
failure is not prejudicial. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any
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judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in this Section 8 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 the
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party with respect to such loss, liability, claim, damage or
expense in the proportion that is appropriate to reflect the relative fault
of the Indemnifying Party and the Indemnified Party 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 the Indemnified Party shall he
determined by reference to, among other things, whether the untrue or alleged
untrue statement of material fact or the omission (or alleged 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.
Section 8. INFORMATION BY HOLDER. The Holder or Holders of
Registrable Securities included in any registration shall furnish to the
Company such information regarding such Holder or Holders and the
distribution proposed by such Holder or Holders as the Company may request in
writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section.
Section 9. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock
of the Company, the Company shall use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, beginning 90
days after (i) the Registration Date, or (ii) the Company issues an offering
circular meeting the requirements of Regulation A under the Securities Act;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Securities Exchange Act (at any time after it has become subject to such
reporting requirements); and
(c) Furnish to any Holder promptly upon request a written
statement as to its compliance with the reporting requirements of Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the
general public), and of the Securities Act and the Securities Exchange Act
(at any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report
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<PAGE>
of the Company, and such other reports and documents of the Company and other
information in the possession of or reasonably obtainable by the Company as a
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing a Holder to sell any such securities without
registration.
Section 10. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause
the Company to register securities granted under this Agreement may be
assigned to a transferee or assignee in connection with the transfer or
assignment of shares of Registrable Securities (i) to a Family Affiliate of
the Holder, (ii) to Affiliates of the Holder, (iii) to the Company, (iv) to
Persons to whom the Registrable Securities are transferred by reason of the
Holder's death or involuntarily by operation of law, (v) pursuant to a
transfer approved by the Company in its sole and absolute discretion, or (vi)
to Persons to whom the Registrable Securities are transferred in accordance
with the transfer restriction provisions, if any, in the limited partnership
agreement, regulations, bylaws or other documents or agreements of Holder;
provided, however, that the Company is given written notice thereof.
Section 11. SUBSEQUENT PURCHASERS. Without the affirmative vote of
the Holders of at least 66-2/3% of the Registrable Securities, the Company
shall not grant to any purchaser of the Company's securities any demand
registration rights, or any piggyback registration rights that, with respect
to underwriters cutbacks, would be inconsistent or in conflict with the
provisions hereof. Moreover, for so long as the holders of the Registrable
Securities are entitled to exercise the registration rights described herein,
they shall receive the benefit of any and all registration rights granted by
the Company to any other person who is as of the date of this Agreement
securities holder in the Company (or any affiliate of such existing
securities holder) which are more favorable than the registration rights
granted to the Investors herein.
Section 12. TERM. This Agreement and all rights granted to the
investors hereunder shall expire on the seventh anniversary of the date on
which the first registration statement by the Company for an offering of its
securities to the general public is declared effective by the Commission.
Section 13. MISCELLANEOUS.
(a) NOTICES. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient if contained in a
written instrument delivered in person or by nationally-recognized overnight
courier or duly sent by First Class certified mail, postage prepaid, or by
telecopy addressed to such party at the address or telecopy number set forth
below or such other address or telecopy number as may hereafter be designated
in writing by the addressee to the addressor listing all parties:
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<PAGE>
If to the Company: Rackspace, Ltd.
112 E. Pecan Street, Suite 600
San Antonio, Texas 78205
Telephone: (210) 892-4000
Facsimile: (210) 892-4329
Attn: Morris A. Miller
If to the Investors: Those addresses set forth next to each
Investor's name, as set forth in EXHIBIT A
(b) ENTIRE AGREEMENT; AMENDMENTS. This Agreement represents the
entire agreement of the parties hereto, and supersedes any other agreements
among the parties with respect to the subject matter hereof the terms and
provisions of this Agreement may not be modified or amended, or any of the
provisions hereof waived, except pursuant to the written consent of the
Company and holders of a majority of the Registrable Securities.
(c) ASSIGNMENT. This Agreement may not be assigned by any party
without the prior written consent of the other parties, except by a Holder in
accordance with Section 10 above. Any assignment which contravenes this
Section shall be void AB INITIO.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.
(e) HEADINGS; INTERPRETATIONS. The headings of the various
sections of this Agreement have been inserted for convenience of reference
only and shall not be deemed to be a part of this Agreement. Whenever the
context requires, references in this Agreement to the singular number shall
include the plural and, likewise, the plural number shall include the
singular, and words denoting gender shall include the masculine, feminine and
neuter.
(f) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without regard to
the principles of conflicts of law thereof.
(g) SEPARABILITY. In case any one or more of the provisions
contained in this Agreement or any application thereof shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and other
applications thereof shall not in any way be affected or impaired thereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Registration
Rights Agreement to be executed the day and date above written.
RACKSPACE, LTD.
By: Macroweb, LC
By: /s/ Graham M. Weston
-----------------------------
Graham M. Weston, Member
By: /s/ Morris A. Miller
-----------------------------
Morris A. Miller, Member
INVESTORS:
MACROWEB, LC
By: /s/ Graham M. Weston
------------------------------
Graham M. Weston, Member
By: /s/ Morris A. Miller
------------------------------
Morris A. Miller, Member
ISOM CAPITAL PARTNERS I, LTD.
By: BESK Funding Inc., General Partner
By: /s/ S. James Bishkin
------------------------------
S. James Bishkin, President
FIRST INNING INVESTORS, L.P.
By: Trango Capital L.L.C., General Partner
By: /s/ Quincy J. Lee
------------------------------
Quincy J. Lee, Manager
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<PAGE>
MINIPAT & COMPANY, LTD.
By: /s/ Patrick Condon
----------------------------------
Title: President
-------------------------------
THE HAMILTON COMPANIES, LLC
By: /s/ Frederic Hamilton
----------------------------------
Title: President
-------------------------------
WESTON INVESTMENT INTERESTS, LLC
By: /s/ Graham M. Weston
----------------------------------
Title: member
-------------------------------
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<PAGE>
MINIPAT & COMPANY, LTD.
By: /s/ Patrick Condon
----------------------------------
THE HAMILTON COMPANIES, LLC
By: /s/ Fredric C. Hamilton
----------------------------------
Title: President and Manager
-------------------------------
WESTON INVESTMENT INTERESTS, LLC
By: /s/ Graham Weston
----------------------------------
Title: Member
-------------------------------
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<PAGE>
EXHIBIT A
INVESTORS
1. Macroweb LC
111 Soledad, Suite 1100
San Antonio, TX 78205
Attn.: Graham Weston
2. Isom Capital Partners I, Ltd.
c/o BESK Funding, Inc., its General Partner
970 Isom Road
San Antonio, TX 78216
Attn.: S. James Bishkin, President
3. First Inning Investors, L.P.
c/o Trango Capital L.L.C., its General Partner
970 Isom Road
San Antonio, TX 78216
Attn.: Quincy J. Lee
4. MiniPat & Company, Ltd.
13515 West Avenue, No. 236
San Antonio, TX 78216
Attn.: Patrick Condon
5. The Hamilton Companies LLC
1560 Broadway, Suite 2200
Denver, CO 80202
Attn.: Lisa Ireland
6. Weston Investment Interests, LLC
111 Soledad, Suite 1100
San Antonio, TX 78205
Attn.: Graham Weston
<PAGE>
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
This Amendment to Registration Rights Agreement is made this 22nd day
of February, 2000, by and among Rackspace, Ltd., a Texas limited partnership,
Macroweb, LC, Trout, Ltd., Isom Capital Partners I, Ltd., First Inning
Investors, L.P., MiniPat & Company, Ltd., The Hamilton Companies LLC, Weston
Investment Interest, L.L.C., and 2M Technology Ventures, L.P.
The parties hereby amend the Registration Rights Agreement dated
November 30, 1999 to include as an "Investor", Hamilton that has acquired an
additional 238,095.24 Class C Units, and 2M Technology Ventures, L.P. that has
acquired 119,047.62 Class C Units. In addition, as specified by the Second
Amendment to the Agreement of Limited Partnership of Rackspace, Ltd., the
parties acknowledge that Trout, Ltd. is also included as an Investor rather than
Macroweb, LC.
RACKSPACE, LTD.
By: Macroweb, LC, general partner
By: /s/ Graham M. Weston
--------------------------------
By: /s/ Morris A. Miller
--------------------------------
Member
Macroweb, LC
/s/ Morris A. Miller
--------------------------------------------
Morris A. Miller, Member
/s/ Graham M. Weston
--------------------------------------------
Graham M. Weston, Member
<PAGE>
Trout, Ltd.
By: Knightsbridge, L.C.,General Partner
By: /s/ Graham Weston
--------------------------------
Its: Member
-------------------------------
CLASS C LIMITED PARTNERS
Isom Capital Partners I, L.P.
By: BESK Funding, Inc., General Partner
By: /s/ S. James Bishkin
--------------------------------
S. James Bishkin
President
First Inning Investors, L.P.
By: Trango Capital L.L.C., General
Partner
By: /s/ Quincy J. Lee
--------------------------------
Quincy J. Lee, Manager
The Hamilton Companies LLC
By: /s/ Frederic Hamilton
-----------------------------------------
Weston Investment Interest, L.L.C.
By: /s/ Graham Weston
-----------------------------------------
Title: Member
--------------------------------------
<PAGE>
MiniPat & Company, Ltd.
By: /s/ Patrick Condon
-----------------------------------------
Title: President
--------------------------------------
2M Technology Ventures, L.P.
By: 2M Technology Group, L.L.C.
Its: General Partner
By: /s/ Steven D. Leeke
------------------------------