Document:

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                                                                    EXHIBIT 4.06

                          Exodus Communications, Inc.

            4 3/4% Convertible Subordinated Notes due July 15, 2008

                               ________________

                              Purchase Agreement
                              ------------------

                                                     December 2, 1999

Goldman, Sachs & Co.,
Donaldson, Lufkin & Jenrette
 Securities Corporation
Morgan Stanley & Co. Incorporated
 As representative of the several Purchasers
 named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004.

Ladies and Gentlemen:

     Exodus Communications, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$400,000,000 principal amount of the 4 3/4% Convertible Subordinated Notes due
July 15, 2008, convertible into Common Stock, $0.001 par value per share
("Stock") of the Company, specified above (the "Firm Securities") and, at the
election of the Underwriters, up to an aggregate of $100,000,000 additional
aggregate principal amount of Securities (the "Optional Securities") (the Firm
Securities and the Optional Securities which the Underwriters elect to purchase
pursuant to Section 2 hereof are herein collectively called the "Securities").

     1.   The Company represents and warrants to, and agrees with, each of the
Purchasers that:

          (a)  A preliminary offering circular, dated November 24, 1999 (the
     "Preliminary Offering Circular") and an offering circular, dated December
     2, 1999 (the "Offering Circular"), have been prepared in connection with
     the offering of the Securities and shares of the Stock issuable upon
     conversion thereof.  Additionally, the Company has previously prepared the
     following documents: the Company's Special Preliminary Proxy Statements
     filed pursuant to Section 14(a) of the United States Securities Exchange
     Act of 1934, as amended (the "Exchange Act"), filed January 29, 1999 and
     April 23, 1999, the Company's Special Definitive Proxy Statements, pursuant
     to Section 14(a) of the Exchange Act, filed February 9, 1999 and May 4,
     1999, the Company's Annual Report on Form 10-K for the fiscal year ended
     December
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     31, 1998, the Company's Quarterly Reports on Form 10-Q for the quarters
     ended March 31, 1999, June 30, 1999 and September 30, 1999, each of the
     Company's Current Reports on Form 8-K, and any amendments thereto, filed
     January 29, 1999, February 22, 1999, March 2, 1999, June 18, 1999, August
     11, 1999, October 12, 1999 and November 29, 1999 and the amendment to the
     Company's registration statement on Form 8A filed November 29, 1999
     (together the "Exchange Act Reports"). Any reference (other than in Section
     7(a) hereof) to the Preliminary Offering Circular or the Offering Circular
     shall be deemed to refer to and include the Exchange Act Reports, and any
     reference (other than in Sections 7(a) hereof) to the Preliminary Offering
     Circular or the Offering Circular as amended or supplemented as of any
     specified date after the date hereof shall be deemed to include (i) the
     Exchange Act Reports and all subsequent documents filed with the United
     States Securities and Exchange Commission (the "Commission") pursuant to
     Section 13(a), 13(c) or 15(d) of the Exchange Act, after the date of the
     Offering Circular and prior to such specified date and (ii) any Additional
     Issuer Information (as defined in Section 5(f)) furnished by the Company,
     prior to the completion of the distribution of the Securities. The Exchange
     Act Reports, when they were filed with the Commission, conformed in all
     material respects to the applicable requirements of the Exchange Act and
     the applicable rules and regulations of the Commission thereunder. The
     Preliminary Offering Circular, the Offering Circular and the Exchange Act
     Reports did not, as of their respective dates, contain an untrue statement
     of a material fact or omit to state a material fact necessary in order to
     make the statements therein, in the light of the circumstances under which
     they were made, not misleading; provided, however, that this representation
     and warranty shall not apply to any statements or omissions made in
     reliance upon and in conformity with information furnished in writing to
     the Company by a Purchaser through Goldman, Sachs & Co. expressly for use
     therein. Since September 30, 1999, the Company has not filed any documents
     with the Commission pursuant to Section 13(a), 13(c) or 15(d) of the
     Exchange Act other than the Exchange Act Reports;

         (b)   Neither the Company nor any of its subsidiaries has sustained
     since the date of the latest audited financial statements included in the
     Offering Circular any material loss or interference with its business from
     fire, explosion, flood or other calamity, whether or not covered by
     insurance, or from any labor dispute or court or governmental action, order
     or decree, otherwise than as set forth or contemplated in the Offering
     Circular; and, since the respective dates as of which information is given
     in the Offering Circular, there has not been any change in the capital
     stock or long-term debt of the Company or any of its subsidiaries or any
     material adverse change, or any development that is reasonably likely to
     result in a material adverse change, in or affecting the general affairs,
     management, financial position, stockholders' equity or results of
     operations of the Company and its subsidiaries, otherwise than as set forth
     or contemplated in the Offering Circular;

         (c)   The Company has no subsidiary that is a "Significant Subsidiary"
     of the Company within the meaning of Regulation S-X under the Securities
     Act of 1933, as amended (the "Securities Act"), other than Cohesive
     Technology Solutions, Inc. ("Cohesive");

         (d)   The Company and its subsidiaries own no real property. The
     Company and its subsidiaries have good and marketable title to all personal
     property owned by them, in each case free and clear of all liens,
     encumbrances and defects except such as are described in

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     the Offering Circular or such as do not materially affect the value of such
     property and do not interfere with the use made and proposed to be made of
     such property by the Company and its subsidiaries; and any real property
     and buildings held under lease by the Company and its subsidiaries are held
     by them under valid, subsisting and enforceable leases with such exceptions
     as are not material and do not interfere with the use made and proposed to
     be made of such property and buildings by the Company and its subsidiaries;

         (e)   The Company has been duly incorporated and is validly existing as
     a corporation in good standing under the laws of Delaware, with power and
     authority (corporate and other) to own its properties and conduct its
     business as described in the Offering Circular, and has been duly qualified
     as a foreign corporation for the transaction of business and is in good
     standing under the laws of each other jurisdiction where the failure to be
     so qualified could be reasonably expected to have a material adverse effect
     on the business, financial condition or results of operations of the
     Company, and each subsidiary of the Company has been duly incorporated and
     is validly existing as a corporation in good standing under the laws of its
     jurisdiction of incorporation;

         (f)   The Company has an authorized capitalization as set forth in the
     Offering Circular, and all of the issued shares of capital stock of the
     Company have been duly and validly authorized and issued and are fully paid
     and non-assessable; the shares of Stock initially issuable upon conversion
     of the Securities have been duly and validly authorized and reserved for
     issuance and, when issued and delivered in accordance with the provisions
     of the Securities and the Indenture referred to below, will be duly and
     validly issued, fully paid and non-assessable and will conform to the
     description of the Stock contained in the Offering Circular; and all of the
     issued and outstanding shares of capital stock of each subsidiary of the
     Company have been duly and validly authorized and issued, are fully paid
     and non-assessable and (except for directors' qualifying shares and except
     as otherwise set forth in the Offering Circular) are owned directly or
     indirectly by the Company, free and clear of all liens, encumbrances,
     equities or claims;

         (g)   The Securities have been duly authorized and, when issued and
     delivered pursuant to this Agreement, will have been duly executed,
     authenticated, issued and delivered and will constitute valid and legally
     binding obligations of the Company entitled to the benefits provided by the
     Indenture to be dated as of December 1, 1999  (the "Indenture") between the
     Company and Chase Manhattan Bank and Trust Company, National Association,
     as Trustee (the "Trustee"), under which they are to be issued, which will
     be substantially in the form previously delivered to you; the Indenture has
     been duly authorized and, when executed and delivered by the Company and
     the Trustee, the Indenture will constitute a valid and legally binding
     instrument, enforceable in accordance with its terms, subject, as to
     enforcement, to bankruptcy, insolvency, reorganization and other laws of
     general applicability relating to or affecting creditors' rights and to
     general equity principles; and the Securities and the Indenture conform to
     the descriptions thereof in the Offering Circular and are in substantially
     the form previously delivered to you;

         (h)   That certain Registration Rights Agreement among the Company and
     the Purchasers to be dated as of December 1, 1999 (the "Registration Rights
     Agreement") has

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     been duly authorized and, when executed and delivered by the Company, the
     Registration Rights Agreement will constitute a valid and legally binding
     instrument, enforceable in accordance with its terms;

         (i)   None of the transactions contemplated by this Agreement
     (including, without limitation, the use of the proceeds from the sale of
     the Securities) will violate or result in a violation of Section 7 of the
     Exchange Act, or any regulation promulgated thereunder, including, without
     limitation, Regulations T, U, and X of the Board of Governors of the
     Federal Reserve System;

         (j)   Prior to the date hereof, neither the Company nor any of its
     affiliates (as such term is defined in Rule 144 promulgated under the
     Securities Act) has taken any action which is designed to or which has
     constituted or which might have reasonably been expected to cause or result
     in stabilization or manipulation of the price of any security of the
     Company in connection with the offering of the Securities;

         (k)   In the event that the outstanding principal amount of the
     Securities exceeds $400,000,000, the Company agrees that it will use the
     net proceeds of the sale of the Securities in excess of such amount to
     finance the purchase or other acquisition of any property, inventory, asset
     or business directly or indirectly, by the Company or any Restricted
     Subsidiary used in, or to be used in, the System and Network Management
     Business or for such other purposes permitted by the Senior Note Indenture
     (as defined below).  Neither the Company nor any of its Restricted
     Subsidiaries has, as of the date hereof, incurred any Debt under Section
     1008(11) of the Senior Notes Indenture.  "Debt" has the meaning given
     thereto in the Senior Notes Indenture.  "Restricted Subsidiary" shall mean
     any subsidiary of the Company that has not been designated an "Unrestricted
     Subsidiary" pursuant to the Indenture dated as of July 1, 1998 between the
     Company and the Chase Manhattan Bank and Trust Company, National
     Association, as trustee governing the Company's 11 1/4% Senior Notes due
     2008 (as amended or supplemented from time to time, the "Senior Notes
     Indenture").  "System and Network Management Business" means:  (i) server
     and other hardware hosting; (ii) connectivity, data networking,
     telecommunications or content for computer or data networks or systems;
     (iii) management of computer or data networks or systems; (iv) technology
     services, equipment sales or leasing or software licensing for computer or
     data networks or systems (including Internet Protocol and any successor
     protocol(s) based networks); and (v) businesses reasonably related,
     complementary or incidental thereto;

         (l)   The issue and sale of the Securities and the compliance by the
     Company with all of the provisions of the Securities, the Indenture, the
     Registration Rights Agreement and this Agreement and the consummation of
     the transactions herein and therein contemplated will not conflict with or
     result in a breach or violation of any of the terms or provisions of, or
     constitute a default under, any indenture, mortgage, deed of trust, loan
     agreement or other agreement or instrument to which the Company or any of
     its subsidiaries is a party or by which the Company or any of its
     subsidiaries is bound or to which any of the property or assets of the
     Company or any of its subsidiaries is subject, nor will such action result
     in any violation of the provisions of the Certificate of Incorporation or
     By-laws of the Company or any statute or any order, rule or regulation of
     any court or governmental agency or body having jurisdiction over

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     the Company or any of its subsidiaries or any of their properties; and no
     consent, approval, authorization, order, registration or qualification of
     or with any such court or governmental agency or body is required for the
     issue and sale of the Securities or the consummation by the Company of the
     transactions contemplated by this Agreement, the Indenture or the
     Registration Rights Agreement except such consents, approvals,
     authorizations, registrations or qualifications as may be required under
     state securities or Blue Sky laws in connection with the purchase and
     distribution of the Securities by the Purchasers;

         (m)   Neither the Company nor any of its subsidiaries is in violation
     of its Certificate of Incorporation or By-laws or in default in the
     performance or observance of any material obligation, covenant or condition
     contained in any indenture, mortgage, deed of trust, loan agreement, lease
     or other agreement or instrument to which it is a party or by which it or
     any of its properties may be bound;

         (n)   The statements set forth in the Offering Circular under the
     caption "Description of Notes" and "Description of Common Stock", insofar
     as they purport to constitute a summary of the terms of the Securities, the
     Indenture, the Registration Rights Agreement and the Stock, under the
     caption "Certain United States Federal Income Tax Considerations", and
     under the caption "Underwriting", insofar as they purport to describe the
     provisions of the laws and documents referred to therein, are accurate,
     complete and fair;

         (o)   Other than as set forth in the Offering Circular, there are no
     legal or governmental proceedings pending to which the Company or any of
     its subsidiaries is a party or of which any property of the Company or any
     of its subsidiaries is the subject which, if determined adversely to the
     Company or any of its subsidiaries, would individually or in the aggregate
     have a material adverse effect on the current or future financial position,
     stockholders' equity or results of operations of the Company and its
     subsidiaries; and, to the best of the Company's knowledge, no such
     proceedings are threatened or contemplated by governmental authorities or
     threatened by others;

         (p)   When the Securities are issued and delivered pursuant to this
     Agreement, the Securities  will not be of the same class (within the
     meaning of Rule 144A under the Securities Act as securities which are
     listed on a national securities exchange registered under Section 6 of the
     Exchange Act or quoted in a U.S. automated inter-dealer quotation system;

         (q)   The Company is subject to Section 13 or 15(d) of the Exchange
Act;

         (r)   The Company is not, and after giving effect to the offering and
     sale of the Securities, will not be an "investment company", as such term
     is defined in the United States Investment Company Act of 1940, as amended
     (the "Investment Company Act");

         (s)   Neither the Company nor any of its subsidiaries, nor any person
     acting on its or their behalf has offered or sold the Securities by means
     of any general solicitation or general advertising within the meaning of
     Rule 502(c) under the Securities Act;

         (t)   Within the preceding six months, neither the Company nor any
     other person acting on behalf of the Company has offered or sold to any
     person any Securities, or any securities

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     of the same or a similar class as the Securities, other than Securities
     offered or sold to the Purchasers hereunder. The Company will take
     reasonable precautions designed to insure that any offer or sale, direct or
     indirect, in the United States or to any U.S. person (as defined in Rule
     902 under the Securities Act) of any Securities or any substantially
     similar security issued by the Company, within six months subsequent to the
     date on which the distribution of the Securities has been completed (as
     notified to the Company by Goldman, Sachs & Co.), is made under
     restrictions and other circumstances reasonably designed not to affect the
     status of the offer and sale of the Securities in the United States and to
     U.S. persons contemplated by this Agreement as transactions exempt from the
     registration provisions of the Securities Act;

         (u)   Neither the Company nor any of its affiliates does business with
     the government of Cuba or with any person or affiliate located in Cuba
     within the meaning of Section 517.075, Florida Statutes; and

         (v)   KPMG LLP, who have certified certain financial statements of the
     Company and its subsidiaries, are independent public accountants as
     required by the Securities Act and the rules and regulations of the
     Commission thereunder;

         (w)   The Company owns or possesses, or can acquire on reasonable
     terms, adequate patents, patent rights, licenses, inventions, copyrights,
     know-how (including trade secrets and other unpatented and/or unpatentable
     proprietary or confidential information, systems or procedures),
     trademarks, service marks, trade names or other intellectual property
     (collectively, "Intellectual Property") necessary to carry on the business
     now operated by it, and the Company has not received any notice of, and is
     not otherwise aware of, any infringement of or conflict with asserted
     rights of others with respect to any Intellectual Property or of any facts
     or circumstances which would render invalid, or otherwise prevent or
     materially inhibit the Company from utilizing, any Intellectual Property
     necessary to carry on the business now conducted by the Company, and which
     infringement or conflict (if the subject of any unfavorable decision,
     ruling or finding), invalidity, prevention or inhibition, singly or in the
     aggregate, is reasonably likely to result in a material adverse change in
     the general affairs, management, financial position, stockholders' equity
     or results of operations of the Company;

         (x)   Except as described in the Offering Circular and except as would
     not, singly or in the aggregate, result in a material adverse change in or
     affecting the general affairs, management, financial position,
     stockholders' equity or results of operations of the Company, (A) the
     Company is not in violation of any federal, state, local or foreign
     statute, law, rule, regulation, ordinance, code, policy or rule of common
     law or any judicial or administrative interpretation thereof, including any
     judicial or administrative order, consent, decree or judgment, relating to
     pollution or protection of human health, the environment (including,
     without limitation, ambient air, surface water, groundwater, land surface
     or subsurface strata) or wildlife, including, without limitation, laws and
     regulations relating to the release or threatened release of chemicals,
     pollutants, contaminants, wastes, toxic substances, hazardous substances,
     petroleum or petroleum products (collectively "Hazardous Materials") or to
     the manufacture, processing, distribution, use, treatment, storage,
     disposal, transport or

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     handling of Hazardous Materials (collectively, "Environmental Laws"), (B)
     the Company has all permits, authorizations and approvals required under
     any applicable Environmental Laws and is in compliance with their
     requirements, (C) there are no pending or, to the best of the Company's
     knowledge, threatened administrative, regulatory or judicial action, suits,
     demands, demand letters, claims, liens, notices of noncompliance or
     violation, investigation or proceedings relating to any Environmental Law
     against the Company and (D) to the best of the Company's knowledge, there
     are no events or circumstances that might reasonably be expected to form
     the basis of an order for clean-up or remediation, or an action, suit or
     proceeding by any private party or government body or agency, against or
     affecting the Company relating to Hazardous Materials or any Environmental
     Laws;

         (y)   The Company has reviewed its operations and that of its
     subsidiaries and any third parties with which the Company or any of its
     subsidiaries has a material relationship to evaluate the extent to which
     the business or operations of the Company or any of its subsidiaries will
     be affected by the Year 2000 Problem.  Based on such review, the Company
     has no reason to believe, and does not believe, that the Year 2000 Problem
     will have a material adverse effect on the general affairs, management, the
     current or future consolidated financial position, stockholders' equity or
     results of operations of the Company and its subsidiaries or result in any
     material loss or interference with the Company's business or operations.
     The "Year 2000 Problem" as used herein means any significant risk that
     computer hardware or software used in the receipt, transmission,
     processing, manipulation, storage, retrieval, retransmission or other
     utilization of data or in the operation of mechanical or electrical systems
     of any kind will not, in the case of dates or time periods occurring after
     December 31, 1999, function at least as effectively as in the case of dates
     or time periods occurring prior to January 1, 2000.

     2.   Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Purchasers, and each of the Purchasers
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 97.25% of the principal amount thereof, plus accrued interest, if any,
from December 8, 1999 to the First Time of Delivery hereunder, the principal
amount of Firm Securities set forth opposite the name of such Purchaser in
Schedule I hereto, and (b) in the event and to the extent that the Underwriters
shall exercise the election to purchase Optional Securities as provided below,
the Company agrees to issue and sell to each of the Purchasers, and each of the
Purchasers agrees, severally and not jointly, to purchase from the Company, at
the same purchase price set forth in clause (a) of this Section 2, that portion
of the aggregate principal amount of the Optional Securities as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractions) determined by multiplying such aggregate principal amount of Optional
Securities by a fraction, the numerator of which is the maximum aggregate
principal amount of Optional Securities which such Purchaser is entitled to
purchase as set forth opposite the name of such Purchaser in Schedule I hereto
and the denominator of which is the maximum aggregate principal amount of
Optional Securities which all of the Purchasers are entitled to purchase
hereunder.

     The Company hereby grants to the Purchasers the right to purchase at their
election up to $100,000,000 aggregate principal amount of Optional Securities,
at the same principal amount purchase price set forth in clause (a) of the first
paragraph of this Section 2, for the sole purpose of

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covering sales of Securities in excess of the aggregate principal amount of Firm
Securities. Any such election to purchase Optional Securities may be exercised
by written notice from Goldman, Sachs & Co. to the Company, given within a
period of 30 calendar days after the date of this Agreement, setting forth the
aggregate principal amount of Optional Securities to be purchased and the date
on which such Optional Securities are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section (4)
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.

     3.   Upon the authorization by you of the release of the Firm Securities,
the several Purchasers propose to offer the Firm Securities for sale upon the
terms and conditions set forth in this Agreement and the Offering Circular and
each Purchaser hereby represents and warrants to, and agrees with the Company
that:

     (a)  It will offer and sell the Securities only to persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A under the Securities Act in transactions meeting the
requirements of Rule 144A;

     (b)  It is an Institutional Accredited Investor;

     (c)  Upon request of the Company, it will notify the Company upon
completion of the distribution of the Securities; and

     (d)  It has not offered and will not offer or sell the Securities by any
form of general solicitation or general advertising, including but not limited
to the methods described in Rule 502(c) under the Securities Act.

     4.   (a)  The Securities to be purchased by each Purchaser hereunder will
be represented by one or more definitive Securities in book entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or other appropriate depository, or its designated custodian.
The Company will deliver the Securities to Goldman, Sachs & Co. for the account
of each Purchaser, against payment by or on behalf of such Purchaser of the
purchase price therefor by wire transfer, payable to the order of the Company in
Federal (same day) funds, by causing DTC or other appropriate depository to
credit the Securities to the account of Goldman, Sachs & Co. at DTC or other
appropriate depository. The Company will cause the certificates representing the
Securities to be made available to Goldman, Sachs & Co. for checking at least
twenty-four hours prior to the Time of Delivery (as defined below) at the office
of DTC or other appropriate depository or its designated custodian (the
"Designated Office"). The time and date of such delivery and payment shall be,
with respect to the Firm Securities, 9:30 a.m., New York City time, on December
8, 1999 or at such other time and date as you and the Company may agree upon in
writing, and, with respect to the Optional Securities, 9:30 a.m., New York City
time, on the date specified by you in the written notice given by you of the
Purchasers' election to purchase the Optional Securities, or at such other time
and date as you and the Company may agree upon in writing. Such time and date
for delivery of the Firm Securities is herein called the "First Time of
Delivery", such time and date for delivery of the Optional Securities, if not
the First Time of Delivery,

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is herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".

     (b)  The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Purchasers
pursuant to Section 7(i) hereof, will be delivered at such time and date at the
offices of Fenwick & West LLP, Two Palo Alto Square, Palo Alto, California 94034
(the "Closing Location"), and the Securities will be delivered at the Designated
Office, all at such Time of Delivery.  A meeting will be held at the Closing
Location at 6:00 p.m., New York City time, on the New York Business Day next
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto.  For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.

     5.   The Company agrees with each of the Purchasers:

     (a)  To prepare the Offering Circular in a form approved by you; to make no
amendment or any supplement to the Offering Circular which shall be disapproved
by you promptly after reasonable notice thereof; and to furnish you with copies
thereof;

     (b)  Promptly from time to time to take such action as you may reasonably
request to qualify the Securities and the shares of Stock issuable upon
conversion of the Securities for offering and sale under the securities laws of
such jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;

     (c)  To furnish the Purchasers with five copies of the Offering Circular
and each amendment or supplement thereto signed by an authorized officer of the
Company with the independent accountants' report(s) in the Offering Circular,
and any amendment or supplement containing amendments to the financial
statements covered by such report(s), signed by the accountants, and additional
copies thereof in such quantities as you may from time to time reasonably
request, and if, at any time prior to the expiration of nine months after the
date of the Offering Circular, any event shall have occurred as a result of
which the Offering Circular as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made when such Offering Circular is delivered, not misleading,
or, if for any other reason it shall be necessary or desirable during such same
period to amend or supplement the Offering Circular, to notify you and upon your
request to prepare and furnish without charge to each Purchaser and to any
dealer in securities as many copies as you may from time to time reasonably
request of an amended Offering Circular or a supplement to the Offering Circular
which will correct such statement or omission or effect such compliance;

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     (d)  During the period beginning from the date hereof and continuing until
the date ninety days after the date of the Offering Circular, not to offer,
sell, contract to sell or otherwise dispose of, except as provided hereunder any
securities of the Company that are substantially similar to the Securities or
the Stock, including but not limited to any securities that are convertible into
or exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than (i) pursuant to employee stock and
option plans and agreements existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the date of this
Agreement, or (ii) pursuant to stock option agreements entered into after the
date of this Agreement, provided that no shares shall vest under such new stock
option agreements until after the date ninety days after the date of the
Offering Circular), without your prior written consent; provided, however, that
the Company may issue shares of Stock as consideration for acquisitions of
businesses occurring after the date of the Offering Circular, provided that each
recipient of any such shares agrees in writing for the benefit of the Purchasers
that all such shares shall remain subject to restrictions identical to those
contained in this paragraph.

     (e)  Not to be or become, at any time prior to the expiration of three
years after the date of the latest Time of Delivery, an open-end investment
company, unit investment trust, closed-end investment company or face-amount
certificate company that is or is required to be registered under Section 8 of
the Investment Company Act;

     (f)  At any time when the Company is not subject to Section 13 or 15(d) of
the Exchange Act, for the benefit of holders from time to time of Securities, to
furnish at its expense, upon request, to holders of Securities and prospective
purchasers of securities information (the "Additional Issuer Information")
satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the
Securities Act;

     (g)  If requested by you, to use its best efforts to cause Securities to be
eligible for the PORTAL trading system of the National Association of Securities
Dealers, Inc.;

     (h)  To furnish to the holders of the Securities as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flows of the Company and
its consolidated subsidiaries certified by independent public accountants) and,
as soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date of the
Offering Circular), to make available to its stockholders consolidated summary
financial information of the Company and its subsidiaries for such quarter in
reasonable detail;

     (i)  During a period of five years from the date of the Offering Circular,
to furnish to you copies of all reports or other communications (financial or
other) furnished to stockholders of the Company, and to deliver to you (i) as
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any securities exchange on which
the Securities or any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders

                                       10
<PAGE>

generally or to the Commission) provided that you agree to hold in confidence
any confidential or nonpublic information so provided;

     (j)  During the period of two years after the date of the Offering
Circular, the Company will not, and will use all reasonable efforts to ensure
that its "affiliates" (as defined in Rule 144 under the Securities Act) do not,
resell any of the Securities which constitute "restricted securities" under Rule
144 that have been reacquired by any of them;

     (k)  To reserve and keep available at all times, free of preemptive rights,
shares of Stock for the purpose of enabling the Company to satisfy any
obligations to issue shares of its Stock upon conversion of the Securities; and

     (l)  To use its best efforts to list, subject to notice of issuance, the
shares of Stock issuable upon conversion of the Securities on the Nasdaq
National Market.

     6.   The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
issue of the Securities and the shares of Stock issuable upon conversion of the
Securities and all other expenses in connection with the preparation, printing
and filing of the Preliminary Offering Circular and the Offering Circular and
any amendments and supplements thereto and the mailing and delivering of copies
thereof to the Purchasers and dealers; (ii) the cost of printing or producing
any Agreement among Purchasers, this Agreement, the Indenture, the Blue Sky and
Legal Investment Memoranda, closing documents (including any compilations
thereof) and any other documents in connection with the offering, purchase, sale
and delivery of the Securities; (iii) all expenses in connection with the
qualification of the Securities and the shares of Stock issuable upon conversion
of the Securities for offering and sale under state securities laws as provided
in Section 5(b) hereof, including the fees and disbursements of counsel for the
Purchasers in connection with such qualification and in connection with the Blue
Sky and legal investment surveys; (iv) any fees charged by securities rating
services for rating the Securities; (v) the cost of preparing the Securities;
(vi) the fees and expenses of the Trustee and any agent of the Trustee and the
fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Securities; (vii) any cost incurred in connection with the
designation of the Securities for trading in PORTAL and the listing on the
Nasdaq National Market of the shares of Stock issuable upon conversion of the
Securities; and all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section.  It is understood, however, that, except as provided in this Section,
and Sections 8 and 11 hereof, the Purchasers will pay all of their own costs and
expenses, including the fees of their counsel, transfer taxes on resale of any
of the Securities by them, and any advertising expenses connected with any
offers they may make.

                                       11
<PAGE>

     7.   The obligations of the Purchasers hereunder shall be subject, as to
the Securities to be delivered at each Time of Delivery, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:

     (a)  Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel
for the Purchasers, shall have furnished to you such opinion or opinions, dated
such Time of Delivery, with respect to the matters covered in paragraphs (i),
(ii), (vi), (vii), (viii), (xii), (xiii), (xiv) and (xv) of subsection (b) below
as well as such other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;

     (b)  Fenwick & West LLP, counsel for the Company (or such other counsel as
the Company shall deem appropriate) shall have furnished to you their written
opinion, dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:

          (i)    The Company has been duly incorporated and is validly existing
     as a corporation in good standing under the laws of the state of Delaware,
     with corporate power and corporate authority to own its properties and
     conduct its business as described in the Offering Circular;

          (ii)   The Company had, as of the dates specified in the Offering
     Circular, duly authorized capital stock as set forth under the caption
     "Capitalization" in the Offering Circular, and all of the issued and
     outstanding shares of capital stock of the Company described therein have
     been duly and validly authorized and issued, are non-assessable and to such
     counsel's knowledge, are fully paid, and the shares of Stock initially
     issuable upon conversion of the Securities have been duly and validly
     authorized and reserved for issuance and, when issued and delivered in
     accordance with the provisions of the Securities and the Indenture, will be
     duly and validly issued and fully paid and non-assessable, and will conform
     to the description of the Stock contained in the Offering Circular;

          (iii)  The Company has been duly qualified as a foreign corporation
     for the transaction of business and is in good standing under the laws of
     each jurisdiction within the United States in which it owns or leases
     properties or employs personnel, where the failure to be so qualified would
     have a material adverse effect on the business, financial condition or
     results of operations of the Company;

          (iv)   Each significant subsidiary of the Company has been duly
     incorporated and is validly existing as a corporation in good standing
     under the laws of its jurisdiction of incorporation; and all of the issued
     shares of capital stock of each such significant subsidiary have been duly
     and validly authorized and issued, are fully paid and non-assessable, and
     (except for directors' qualifying shares and except as otherwise set forth
     in the Offering Circular) are owned directly or indirectly by the Company,
     free and clear of all liens, encumbrances, equities or claims (such counsel
     being entitled to rely in respect of the opinion in this clause upon
     opinions of local counsel and in respect of matters of fact upon
     certificates of officers of the Company or its significant subsidiaries);

                                       12
<PAGE>

          (v)    To such counsel's knowledge and other than as set forth in the
     Offering Circular, there are no legal or governmental proceedings pending
     to which the Company or any of its significant subsidiaries is a party or
     of which any property of the Company or any of its significant subsidiaries
     is the subject which, if determined adversely to the Company or any of its
     significant subsidiaries, would individually or in the aggregate have a
     material adverse effect on the current or future consolidated financial
     position, stockholders' equity or results of operations of the Company and
     its significant subsidiaries; and, to such counsel's knowledge, no such
     proceedings are threatened by governmental authorities or threatened by
     others;

          (vi)   This Agreement has been duly authorized and duly executed and
     delivered by the Company to you;

          (vii)  The Securities have been duly authorized, executed,
     authenticated, issued and delivered and constitute valid and legally
     binding obligations of the Company;

          (viii) The Indenture and the Registration Rights Agreement have been
     duly authorized, executed and delivered by the Company and each constitutes
     a valid and legally binding instrument, enforceable in accordance with its
     terms, subject, as to enforcement, to bankruptcy, insolvency,
     reorganization and other laws of general applicability relating to or
     affecting creditors' rights and to general equity principles;

          (ix)   The issue and sale of the Securities being delivered at such
     Time of Delivery and the compliance by the Company with all of the
     provisions of the Securities, the Indenture, the Registration Rights
     Agreement and this Agreement and the consummation of the transactions
     herein and therein contemplated were they to be completed on or prior to
     the date of such opinion and assuming the absence of any applicable cure
     period, waiting period or other similar provision, do not conflict with or
     result in a breach or violation of any of the terms or provisions of, or
     constitute a default under, any of the agreements listed as exhibits to the
     Company's or any of its significant subsidiaries' Annual Report on Form 10-
     K for the year ended December 31, 1998 or any agreements entered into by
     the Company or any of its significant subsidiaries after September 30, 1999
     that would be required to be filed as a material agreement exhibit on Form
     10-Q or any other Exchange Act Report (collectively, the "Material
     Agreements") (provided that in determining which documents would be
     required to be so filed, such counsel may rely on an officer's certificate
     that specifies agreements that the Company or any of its significant
     subsidiaries has entered into since September 30, 1999) nor does such
     action result in any violation of the provisions of the Certificate of
     Incorporation or Bylaws of the Company or any of its significant
     subsidiaries or any statute or any order, rule or regulation known to such
     counsel of any court or governmental agency or body having jurisdiction
     over the Company or any of its significant subsidiaries or any of their
     properties;

          (x)    No consent, approval, authorization, order, registration or
     qualification of or with any such court or governmental agency or body is
     required for the issue and sale of the Securities or the consummation by
     the Company of the transactions contemplated by this Agreement, the
     Indenture or the Registration Rights Agreement, except (A) such as may be
     required under the Securities Act in connection with the shares of Stock
     issuable upon conversion of the Securities and such consents, approvals,
     authorizations, registrations or

                                       13
<PAGE>

     qualifications as may be required under state securities or Blue Sky laws
     in connection with the purchase and distribution of the Securities by the
     Purchasers (as to which such counsel renders no opinion) or (B) such
     consents, approvals, authorizations, orders, registrations or
     qualifications as are referenced in the Offering Circular;

          (xi)    Neither the Company nor any of its significant subsidiaries is
     in violation of its Certificate of Incorporation or By-laws or, to such
     counsel's knowledge, in default in the performance or observance of any
     material obligation, agreement, covenant or condition contained in any of
     the Material Agreements;

          (xii)   The statements set forth in the Offering Circular under the
     caption "Description of Notes", and "Description of Capital Stock", insofar
     as they purport to constitute a summary of the terms of the Securities, the
     Indenture, the Registration Rights Agreement and the Stock, under the
     caption "Certain United States Federal Income Tax Considerations", and
     under the caption "Underwriting", insofar as they purport to describe the
     provisions of the laws and documents referred to therein, are accurate and
     complete in all material respects;

          (xiii)  The Exchange Act Reports (other than the financial statements
     and related notes and schedules (and financial data) therein, as to which
     such counsel need express no opinion), when they were filed with the
     Commission, complied as to form in all material respects with the
     requirements of the Exchange Act, and the rules and regulations of the
     Commission promulgated thereunder;

          (xiv)   No registration of the Securities under the Securities Act,
     and no qualification of an indenture under the United States Trust
     Indenture Act of 1939 with respect thereto, is required for the offer and,
     sale to, and initial resale of the Securities by, the Purchasers in the
     manner contemplated by this Agreement; and

          (xv)    The Company is not an "investment company", as such term is
     defined in the Investment Company Act.

                  In addition, such counsel shall state that, although they are
     not passing upon and do not assume any responsibility for, nor have they
     independently verified, the accuracy, completeness or fairness of the
     statements contained in the Preliminary Offering Circular and the Offering
     Circular, except for and to the extent of those referred to in the opinion
     in subsection (xii) of this Section 7(b), they have participated in certain
     conferences with officers and other employees of the Company,
     representatives of the Company's independent certified public accountants
     and representatives of the Purchasers with respect to the preparation of
     the Preliminary Offering Circular and the Offering Circular, and no facts
     have come to the attention of attorneys devoting attention to the
     representation of the Company in its preparation of the Preliminary
     Offering Circular and the Offering Circular that have caused them to
     believe that, as of their respective dates and as of such Time of Delivery,
     the Preliminary Offering Circular and the Offering Circular or any further
     amendments thereto made by the Company prior to such Time of Delivery
     (other than the financial statements and related notes, related schedules
     and financial data included therein, as to which such counsel need

                                       14
<PAGE>

     express no opinion) contained an untrue statement of a material fact or
     omitted to state a material fact required to be stated therein or necessary
     to make the statements therein, in light of the circumstances under which
     they were made, not misleading. Further, such counsel shall state that,
     although they are not passing upon and do not assume any responsibility
     for, nor have they independently verified, the accuracy, completeness or
     fairness of the statements contained in the Exchange Act Reports, they have
     participated in certain conferences with officers and other employees of
     the Company, and representatives of the Company's independent certified
     public accountants with respect to the preparation of the respective
     Exchange Act Reports, and no facts have come to the attention of attorneys
     devoting attention to the representation of the Company in its preparation
     of the respective Exchange Act Reports that have caused them to believe
     that as of the dates on which the respective Exchange Act Reports were
     filed with the Commission, the Exchange Act Reports (other than the
     financial statements and related notes, related schedules and financial
     data included therein, as to which such counsel need express no opinion)
     contained an untrue statement of material fact or omitted to state a
     material fact required to be stated therein or necessary to make the
     statements therein, in light of the circumstances under which they were
     made when such documents were so filed, not misleading.

     (c)  On the date of the Offering Circular prior to the execution of this
Agreement and also at each Time of Delivery, KPMG LLP shall have furnished to
you a letter or letters, dated the respective dates of delivery thereof, in form
and substance satisfactory to you, to the effect set forth in Annex I hereto;

     (d)  (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Circular any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Circular, and (ii) since the
respective dates as of which information is given in the Offering Circular there
shall not have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Offering
Circular, the effect of which, in any such case described in Clause (i) or (ii),
is in the judgment of the Purchasers so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities being delivered at such Time of Delivery on the terms and in
the manner contemplated in this Agreement and  in the Offering Circular;

     (e)  On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization," as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities;

     (f)  On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or

                                       15
<PAGE>

the Nasdaq National Market; (ii) a suspension or material limitation in trading
in the Company's securities on the Nasdaq National Market; (iii) a general
moratorium on commercial banking activities declared by either Federal or New
York or California State authorities; (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war, if the effect of any such event specified in
this Clause (iv) in the judgment of the Purchasers makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Offering Circular; or (v) the occurrence of any
material adverse change in the existing financial, political or economic
conditions in the United States or elsewhere which, in the judgment of the
Purchasers, would materially and adversely affect the financial markets or
markets for the Securities or other debt securities;

     (g)  The Securities have been designated for trading on PORTAL;

     (h)  At such Time of Delivery, a Listing of Additional Shares Application
shall have been previously received by the Nasdaq National Market for the
purpose of duly listing the shares of Stock issuable upon conversion of the
Securities being delivered at such Time of Delivery;

     (i)  The Company shall have furnished to you executed copies of the
Indenture and the Registration Rights Agreement; and

     (j)  The Company shall have furnished or caused to be furnished to you at
such Time of Delivery certificates of officers of the Company satisfactory to
you as to the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as to the performance by the Company
of all of its obligations hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsection (d) of this Section and as
to such other matters as you may reasonably request.

     8.   (a)  The Company will indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
such Purchaser may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering Circular or
the Offering Circular, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact necessary to make the statements therein not misleading, and will reimburse
each Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Purchaser through Goldman, Sachs & Co. expressly for use therein.

     (b)  Each Purchaser will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Securities Act or

                                       16
<PAGE>

otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Offering Circular or the Offering Circular, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Preliminary Offering Circular or the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Purchaser through Goldman, Sachs &
Co. expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.

     (c)  Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection.  In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation.  No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party.

     (d)  If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchasers on the other from the offering
of the Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Purchasers on the other in connection with the statements or omissions which
resulted in such

                                       17
<PAGE>

losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Purchasers on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Purchasers, in each case as set forth
in the Offering Circular. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the Purchasers
on the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to
investors were offered to investors exceeds the amount of any damages which such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Purchasers' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.

     (e)  The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Securities Act; and the obligations of the
Purchasers under this Section 8 shall be in addition to any liability which the
respective Purchasers may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company and to each person,
if any, who controls the Company within the meaning of the Securities Act.

     9.   (a)  If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Securities on the terms contained herein.  If within thirty-six
hours after such default by any Purchaser you do not arrange for the purchase of
such Securities, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Securities on such terms.  In the event
that, within the respective prescribed periods, you notify the Company that you
have so arranged for the purchase of such Securities, or the Company notifies
you that it has so arranged for the purchase of such Securities, you or the
Company shall have the right to postpone such Time of Delivery for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Offering Circular, or in any other documents or
arrangements, and the Company agrees to prepare promptly any amendments to the
Offering Circular which in your opinion may thereby be made necessary.  The term
"Purchaser" as used in this Agreement shall include any

                                       18
<PAGE>

person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Securities.

     (b)  If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities to be purchased at such Time of
Delivery, then the Company shall have the right to require each non-defaulting
Purchaser to purchase the principal amount of Securities which such Purchaser
agreed to purchase hereunder at such Time of Delivery and, in addition, to
require each non-defaulting Purchaser to purchase its pro rata share (based on
the principal amount of Securities which such Purchaser agreed to purchase
hereunder) of the Securities of such defaulting Purchaser or Purchasers for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Purchaser from liability for its default.

     (c)  If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of Securities
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Securities to be purchased at such Time of Delivery, or if the
Company shall not exercise the right described in subsection (b) above to
require non-defaulting Purchasers to purchase Securities of a defaulting
Purchaser or Purchasers, then this Agreement (or, with respect to the Second
Time of Delivery, the obligation of the Purchasers to purchase and of the
Company to sell the Optional Securities) shall thereupon terminate, without
liability on the part of any non-defaulting Purchaser or the Company, except for
the expenses to be borne by the Company and the Purchasers as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Purchaser from liability
for its default.

     10.  The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Purchasers, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.

     11.  If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Purchasers through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Purchasers in making preparations for the
purchase, sale and delivery of the Securities not so delivered but the Company
shall then be under no further liability in respect of the Securities not so
delivered to any Purchaser except as provided in Sections 6 and 8 hereof.

     12.  In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.

                                       19
<PAGE>

     All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 32 Old Slip, 21st Floor, New York, New York 10005, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the Offering
Circular, Attention: Secretary; provided, however, that any notice to a
Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Purchaser at its address set forth in
its Purchasers' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by you upon request.  Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.

     13.  This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.

     14.  Time shall be of the essence of this Agreement.

     15.  This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.

     16.  This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.

                                       20
<PAGE>

     If the foregoing is in accordance with your understanding, please sign and
return to us ten (10) counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers and the
Company.  It is understood that your acceptance of this letter on behalf of each
of the Purchasers is pursuant to the authority set forth in a form of Agreement
among Purchasers, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.

                                    Very truly yours,

                                    EXODUS COMMUNICATIONS, INC.

                                    By:     /s/ Ellen M. Hancock
                                         ---------------------------------------
                                         Name:  Ellen M. Hancock
                                         Title: President and
                                                Chief Executive Officer

Accepted as of the date hereof:

Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette
 Securities Corporation
Morgan Stanley & Co. Incorporated

By:      /s/ Goldman, Sachs & Co.
   -------------------------------------
            (Goldman, Sachs & Co.)

      On behalf of each of the Purchasers

<PAGE>

                                   SCHEDULE I

<TABLE>
<CAPTION>
                                                                                  Principal Amount of
                                                                                  Optional Securities
                                                          Principal Amount of       to be Purchased
                                                            Firm Securities            if Maximum
                     Purchaser                              to be Purchased         Option Exercised
                     ---------                              ---------------         ----------------
<S>                                                       <C>                     <C>
Goldman, Sachs & Co................................           $240,000,000             $ 60,000,000
Donaldson, Lufkin & Jenrette Securities
 Corporation.......................................           $ 80,000,000             $ 20,000,000
Morgan Stanley & Co. Incorporated..................           $ 80,000,000             $ 20,000,000
                                                              ------------             ------------
               Total                                          $400,000,000             $100,000,000
                                                              ============             ============
</TABLE>

<PAGE>

                                                                         ANNEX I

     Pursuant to Section 7(d) of the Purchase Agreement, the accountants shall
furnish letters to the Purchasers to the effect that:

          (i)    They are independent certified public accountants with respect
     to the Company and its subsidiaries within the meaning of Section 101 of
     the AICPA Code of Professional Conduct;

          (ii)   In our opinion, the consolidated financial statements and
     financial statement schedules audited by us and included in the Offering
     Circular comply as to form in all material respects with the applicable
     requirements of the Exchange Act and the related published rules and
     regulations;

          (iii)  The unaudited selected financial information with respect to
     the consolidated results of operations and financial position of the
     Company for the four most recent fiscal years included in the Offering
     Circular agrees with the corresponding amounts (after restatements where
     applicable) in the audited consolidated financial statements for such four
     fiscal years;

          (iv)   On the basis of limited procedures not constituting an audit in
     accordance with generally accepted auditing standards, consisting of a
     reading of the unaudited financial statements and other information
     referred to below, a reading of the latest available interim financial
     statements of the Company and its subsidiaries, inspection of the minute
     books of the Company and its subsidiaries since the date of the latest
     audited financial statements included in the Offering Circular, inquiries
     of officials of the Company and its subsidiaries responsible for financial
     and accounting matters and such other inquiries and procedures as may be
     specified in such letter, nothing came to their attention that caused them
     to believe that:

                 (A) the unaudited consolidated statements of income,
          consolidated balance sheets and consolidated statements of cash flows
          included in the Offering Circular are not in conformity with generally
          accepted accounting principles applied on the basis substantially
          consistent with the basis for the audited condensed consolidated
          statements of income, consolidated balance sheets and consolidated
          statements of cash flows included in the Offering Circular;

                 (B) any other unaudited income statement data and balance sheet
          items included in the Offering Circular do not agree with the
          corresponding items in the unaudited consolidated financial statements
          from which such data and items were derived, and any such unaudited
          data and items were not determined on a basis substantially consistent
          with the basis for the corresponding amounts in the audited
          consolidated financial statements included in the Offering Circular;

                 (C) the unaudited financial statements which were not included
          in the Offering Circular but from which were derived any unaudited
          condensed financial statements

<PAGE>

          referred to in Clause (A) and any unaudited income statement data and
          balance sheet items included in the Offering Circular and referred to
          in Clause (B) were not determined on a basis substantially consistent
          with the basis for the audited consolidated financial statements
          included in the Offering Circular;

                 (D) any unaudited pro forma consolidated condensed financial
          statements included in the Offering Circular do not comply as to form
          in all material respects with the applicable accounting requirements
          or the pro forma adjustments have not been properly applied to the
          historical amounts in the compilation of those statements;

                 (E) as of a specified date not more than five days prior to the
          date of such letter, there have been any changes in the consolidated
          capital stock (other than issuances of capital stock upon exercise of
          options and stock appreciation rights, upon earn-outs of performance
          shares and upon conversions of convertible securities, in each case
          which were outstanding on the date of the latest financial statements
          included in the Offering Circular or any increase in the consolidated
          long-term debt of the Company and its subsidiaries, or any decreases
          in consolidated net current assets or stockholders' equity or other
          items specified by the Purchasers, or any increases in any items
          specified by the Purchasers, in each case as compared with amounts
          shown in the latest balance sheet included in the Offering Circular
          except in each case for changes, increases or decreases which the
          Offering Circular discloses have occurred or may occur or which are
          described in such letter; and

                 (F) for the period from the date of the latest financial
          statements included in the Offering Circular to the specified date
          referred to in Clause (E) there were any decreases in consolidated net
          revenues or operating profit or the total or per share amounts of
          consolidated net income or other items specified by the Purchasers, or
          any increases in any items specified by the Purchasers, in each case
          as compared with the comparable period of the preceding year and with
          any other period of corresponding length specified by the Purchasers,
          except in each case for decreases or increases which the Offering
          Circular discloses have occurred or may occur or which are described
          in such letter; and

          (v)    In addition to the examination referred to in their report(s)
     included in the Offering Circular and the limited procedures, inspection of
     minute books, inquiries and other procedures referred to in paragraphs
     (iii) and (iv) above, they have carried out certain specified procedures,
     not constituting an audit in accordance with generally accepted auditing
     standards, with respect to certain amounts, percentages and financial
     information specified by the Purchasers, which are derived from the general
     accounting records of the Company and its subsidiaries, which appear in the
     Offering Circular, and have compared certain of such amounts, percentages
     and financial information with the accounting records of the Company and
     its subsidiaries and have found them to be in agreement.

<PAGE>

                                                               ___________, 1999

Dear KPMG:

     Goldman, Sachs & Co., as representatives of the Purchasers of 4 3/4%
Convertible Subordinated Notes due July 15, 2008 to be issued by Exodus
Communications, Inc. (the "Company"), will be reviewing certain information
relating to the Company that will be included (incorporated by reference) in the
Offering Circular.  This review process, applied to the information relation to
the issue, is (will be) substantially consistent with the due diligence review
process that we would perform if this placement of securities were being
registered pursuant to the Securities Act of 1933 (the Act).  It is recognized
however that what is "substantially consistent" may vary from situation to
situation and may not be the same as that done in a registered offering of the
same securities for the same issuer and whether the procedures being, or to be,
followed will be "substantially consistent" will be determined by us on a case-
by-case basis.  We are knowledgeable with respect to the due diligence review
process that would be performed if this placement of securities were being
registered pursuant to the Act.  We hereby request that you deliver to us a
"comfort" letter concerning the financial statements of the issuer and certain
statistical and other data included in the offering document.  We will contact
you to identify the procedures we wish you to follow and the form we wish the
comfort letter to take.

                                    Very truly yours,

                                    ________________________________________
                                             (Goldman, Sachs & Co.)

                                       25<PAGE>

                                                                    EXHIBIT 4.07

                          EXODUS COMMUNICATIONS, INC.
                     4 3/4% CONVERTIBLE SUBORDINATED NOTES
                               DUE JULY 15, 2008

                         REGISTRATION RIGHTS AGREEMENT

                          Dated as of December 1, 1999

Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette
 Securities Corporation
Morgan Stanley & Co. Incorporated
 As representatives of the several Purchasers
 Named in Schedule I hereto
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004

Ladies and Gentlemen:

     Exodus Communications, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the Purchasers (as defined herein) upon the terms
set forth in a Purchase Agreement (as defined herein) its 4 3/4% Convertible
Subordinated Notes due July 15, 2008 (the "Securities").  As an inducement to
the Purchasers to enter into the Purchase Agreement and in satisfaction of a
condition to the obligations of the Purchasers thereunder, the Company agrees
with the Purchasers, for the benefit of the Holders (as defined herein) from
time to time of the Registrable Securities (as defined herein), as follows:

     1.   Definitions.  Capitalized terms used herein without definition shall
have their respective meanings set forth in or pursuant to the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:

     "Act" or "Securities Act" means the United States Securities Act of 1933,
as amended.

     "Affiliate" of any specified person means any other person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with such specified person.  For purposes of this definition, control of a
person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

     "Common Stock" means the Company's Common Stock, par value $0.001 per
share.

     "Commission" means the United States Securities and Exchange Commission.

     "DTC" means The Depository Trust Company.
<PAGE>

     "Effective Failure" has the meaning assigned thereto in Section 7 hereof.

     "Effective Time" means the date on which the Commission declares the Shelf
Registration Statement effective or on which the Shelf Registration Statement
otherwise becomes effective.

     "Effectiveness Period" has the meaning set forth in Section 2(b)(i) hereof.

     "Electing Holder" has the meaning assigned thereto in Section 3(a)(3)
hereof.

     "Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.

     "Expedited Filing" has the meaning assigned thereto in Section 3(a)(1)
hereof.

     "Expedited Filing Questionnaire Deadline" has the meaning assigned thereto
in Section 3(a)(1) hereof.

     "Holder" means any Person that has a beneficial interest in any Restricted
Global Security or any beneficial interest in a global security representing
shares of Common Stock issuable upon conversion of a Security.

     "Indenture" means the Indenture dated as of December 1, 1999 between the
Company and Chase Manhattan Bank and Trust Company, National Association, as
Trustee, as amended and supplemented from time to time.

     "Liquidated Damages" has the meaning assigned thereto in Section 7 hereof.

     "Managing Underwriters" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering, if any,
as set forth in Section 6 hereof.

     "NASD Rules" means the Rules of the National Association of Securities
Dealers, Inc., as amended from time to time.

     "Notice and Questionnaire" means a Notice of Registration Statement and
Selling Securityholder Questionnaire substantially in the form of Exhibit A
hereto.

     "Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.

     "Press Release" shall have the meaning given thereto in the Indenture.

     "Prospectus" means the prospectus included in any Shelf Registration
Statement (including, without limitation, any preliminary prospectus, any final
prospectus and any prospectus that discloses information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A under the Act), included in the Shelf Registration Statement, as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering

                                      -2-
<PAGE>

of any portion of the Registrable Securities covered by the Shelf Registration
Statement and by all other amendments and supplements to such prospectus,
including all material incorporated by reference in such prospectus and all
documents filed after the date of such prospectus by the Company under the
Exchange Act and incorporated by reference therein.

     "Purchase Agreement" means the purchase agreement dated December 2, 1999
between the Company and the Purchasers.

     "Purchasers" means you, as the Purchasers named in Schedule I to the
Purchase Agreement.

     "Registrable Securities" means all or any portion of the Securities issued
from time to time under the Indenture in registered form and the Common Stock
issuable upon conversion or repurchase of such Securities; provided, however,
that a security ceases to be a Registrable Security when it is no longer a
Restricted Security.

     "Registration Default" has the meaning assigned thereto in Section 7
hereof.

     "Restricted Security" means any Security or share of Common Stock issuable
upon conversion or repurchase thereof except any such Security or such share of
Common Stock which (i) has been effectively registered under the Securities Act
and sold in a manner contemplated by the Shelf Registration Statement, (ii) has
been transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto) or is transferable pursuant to paragraph (k) of
such Rule 144 (or any successor provision thereto), or (iii) has otherwise been
transferred and a new Security or share of Common Stock not subject to transfer
restrictions under the Securities Act has been delivered by or on behalf of the
Company in accordance with Section 3.5 of the Indenture.

     "Shelf Registration" means a registration effected pursuant to Section 2
hereof.

     "Shelf Registration Statement" means a shelf registration statement of the
Company pursuant to the provisions of Section 2 hereof filed with the Commission
which covers some or all of the Registrable Securities, as applicable, on an
appropriate form under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.

     "Underwriter" means any underwriter of Registrable Securities in connection
with an offering thereof under a Shelf Registration Statement.

     2.   Shelf Registration.

          (a)  The Company shall, within 90 calendar days following the First
Time of Delivery (as defined in the Purchase Agreement), file with the
Commission a Shelf Registration Statement relating to the offer and sale of the
Registrable Securities by the Holders and, thereafter, shall use all reasonable
efforts to cause such Shelf Registration Statement to be declared effective
under the Securities Act within 180 calendar days after the First Time of
Delivery (as defined in the Purchase

                                      -3-
<PAGE>

Agreement); provided, however, that the Company may, upon written notice to all
the Holders, postpone having the Shelf Registration Statement declared effective
for a reasonable period not to exceed 90 days if the Company possesses material
non-public information, the disclosure of which would have a material adverse
effect on the Company and its subsidiaries taken as a whole; provided, further,
however, that no Holder shall be entitled to have the Registrable Securities
held by it covered by such Shelf Registration unless such Holder is an Electing
Holder.

          (b)  The Company shall use all reasonable efforts:

               (i)    To keep the Shelf Registration Statement continuously
effective in order to permit the Prospectus forming part thereof to be usable by
Electing Holders for a period of two years from the date it is declared
effective, or such shorter period that will terminate when there are no
Registrable Securities outstanding (in either case, such period being referred
to herein as the "Effectiveness Period");

               (ii)   After the Effective Time of the Shelf Registration
Statement, promptly upon the request of any Holder of Registrable Securities
that is not then an Electing Holder, to take any action reasonably necessary to
enable such Holder to use the Prospectus forming a part thereof for offers and
resales of Registrable Securities, including, without limitation, any action
reasonably necessary to identify such Holder as a selling securityholder in the
Shelf Registration Statement; provided, however, that nothing in this
subparagraph shall relieve such Holder of the obligation to return a completed
and signed Notice and Questionnaire to the Company in accordance with Sections
3(a)(1) or 3(a)(2) hereof; and

               (iii)  If at any time, the Securities, pursuant to Article XII of
the Indenture, are convertible into securities other than shares of Common
Stock, the Company shall, or shall cause any successor under the Indenture to,
cause such securities to be included in the Shelf Registration Statement no
later than the date on which the Securities may then be convertible into such
securities.

     The Company shall be deemed not to have used all reasonable efforts to keep
the Shelf Registration Statement effective during the Effectiveness Period if
the Company voluntarily takes any action that would result in Electing Holders
not being able to offer and sell any of their Registrable Securities during such
period, unless (i) such action is required by applicable law or regulation, (ii)
the Company determines based on the advice of counsel that it is advisable to
disclose in the Shelf Registration Statement a financing, acquisition or other
corporate transaction or other material event or circumstance affecting the
Company or its securities, and the Board of Directors of the Company (or an
executive officer of the Company duly authorized for such purpose) shall have
determined in good faith that such disclosure at such time is not in the best
interests of the Company and its stockholders, and, in the case of clause (i)
above, the Company thereafter promptly complies with the requirements of
paragraph 3(h) below.

     3.  Registration Procedures.  In connection with any Shelf Registration
Statement, the following provisions shall apply:

                                      -4-
<PAGE>

          (a)  (1) If the Company expects to file and obtain the effectiveness
of a Shelf Registration Statement within 30 days of the date hereof (an
"Expedited Filing"), it shall (x) mail, as promptly as reasonably practicable
after the date hereof to the Holders of Registrable Securities, a Notice and
Questionnaire with a response deadline of 30 days from the date of such Notice
(the "Expedited Filing Questionnaire Deadline"), and (y) as promptly as
reasonably practicable after the response deadline but in any event no later
than 10 days thereafter, prepare a Prospectus supplement (and if required file
an amendment or a supplement to the Shelf Registration Statement) or take such
other measures, if any, as are necessary to include in the Shelf Registration
Statement the Registrable Securities of Electing Holders. If the Company does
not intend to make an Expedited Filing, it shall mail the Notice and
Questionnaire to the Holders of Registrable Securities not less than 30 calendar
days prior to the time the Company intends in good faith to have the Shelf
Registration Statement declared effective. Subject to Section 3(a)(2) hereof, no
Holder of Registrable Securities shall be entitled to be named as a selling
securityholder in the Shelf Registration Statement as of the Effective Time (or
in the first Prospectus supplement filed thereafter in the case of an Expedited
Filing), and no Holder of Registrable Securities shall be entitled to use the
Prospectus forming a part thereof for offers and resales of Registrable
Securities at any time, unless such Holder has returned a completed and signed
Notice and Questionnaire to the Company by the deadline for response set forth
therein; provided, however, that Holders of Registrable Securities shall have at
least 28 calendar days from the date on which the Notice and Questionnaire is
first mailed to such Holders to return a completed and signed Notice and
Questionnaire to the Company.

               (2)  After the Effective Time of the Shelf Registration Statement
(or the Expedited Filing Questionnaire Deadline in the case of an Expedited
Filing), the Company shall, upon the request of any Holder of Registrable
Securities that is not then an Electing Holder, as promptly as reasonably
practicable, send a Notice and Questionnaire to such Holder. The Company shall
not be required to take any action to name such Holder as a selling
securityholder in the Shelf Registration Statement until such Holder has
returned a completed and signed Notice and Questionnaire to the Company.
Following its receipt of such Notice and Questionnaire, the Company will
reasonably promptly include the Registrable Securities covered thereby in the
Shelf Registration Statement (if not previously included).

               (3)  The term "Electing Holder" shall mean any Holder of
Registrable Securities that has returned a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(a)(1) or 3(a)(2)
hereof.

          (b)  The Company shall, as promptly as reasonably practicable, take
such action as may be necessary so that (i) each of the Shelf Registration
Statement and any amendment thereto and any Prospectus forming part thereof and
any amendment or supplement thereto (and each report or other document
incorporated therein by reference in each case) complies in all material
respects with the Securities Act and the Exchange Act and the respective rules
and regulations thereunder, (ii) each of the Shelf Registration Statement and
any amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(iii) each of the Prospectus

                                      -5-
<PAGE>

forming part of the Shelf Registration Statement, and any amendment or
supplement to such Prospectus, does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

          (c)  (i)  The Company shall, as promptly as reasonably practicable,
advise each Electing Holder and shall confirm such advice in writing if so
requested by any such Electing Holder:

                    (1)  when a Shelf Registration Statement and any amendment
thereto has been filed with the Commission and when the Shelf Registration
Statement or any post-effective amendment thereto has become effective and issue
a Press Release indicating the same;

                    (2)  of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus included
therein or for additional information;

                    (3)  of the issuance by the Commission of any stop order
suspending effectiveness of the Shelf Registration Statement or the initiation
of any proceedings for that purpose; and

                    (4)  of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities included in the
Shelf Registration Statement for sale in any jurisdiction or the initiation of
any proceeding for such purpose.

               (ii) The Company shall, as promptly as reasonably practicable,
advise DTC and the trustee under the Indenture of the happening of any event or
the existence of any state of facts that requires the making of any changes in
the Shelf Registration Statement or the Prospectus included therein so that, as
of such date, the Shelf Registration Statement and the Prospectus do not contain
an untrue statement of a material fact and do not omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in light of the circumstances under which they were
made) not misleading (which advice shall be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have been made).

          (d)  The Company shall use all reasonable efforts to prevent the
issuance, and if issued to obtain the withdrawal, of any order suspending the
effectiveness of any Shelf Registration Statement at the earliest possible time.

          (e)  The Company shall furnish to each Electing Holder, without
charge, at least one copy of such Shelf Registration Statement and any post-
effective amendment thereto, including financial statements and schedules, and,
if the Electing Holder so requests in writing, all reports, other documents and
exhibits that are filed with or incorporated by reference in the Shelf
Registration Statement. The Company shall use all reasonable efforts to take
into account and, if appropriate, reflect in an amendment to the Shelf
Registration Statement such comments on the Shelf

                                      -6-
<PAGE>

Registration Statement as initially filed as the Electing Holders and their
counsel may reasonably propose.

          (f)  The Company shall, during the Effectiveness Period, deliver to
each Electing Holder, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in the Shelf Registration
Statement and any amendment or supplement thereto as such Electing Holder may
reasonably request; and the Company consents (except during the continuance of
any event described in Section 3(c)(ii)) to the use of the Prospectus or any
amendment or supplement thereto by each of the Electing Holders in connection
with the offering and sale of the Registrable Securities covered by the
Prospectus or any amendment or supplement thereto during the Effectiveness
Period. The Company shall use all reasonable efforts to take into account and,
if appropriate, reflect in a Prospectus supplement or amendment such comments as
the Electing Holders and their counsel may reasonably propose.

          (g)  Prior to any offering of Registrable Securities pursuant to the
Shelf Registration Statement, the Company shall (i) register or qualify or
cooperate with the Electing Holders and their respective counsel in connection
with the registration or qualification of such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions as any such
Electing Holders reasonably request, (ii) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers and sales in such jurisdictions for so long as may be
necessary to enable any Electing Holder or underwriter, if any, to complete its
distribution of Registrable Securities pursuant to the Shelf Registration
Statement and (iii) take any and all other actions necessary or advisable to
enable the disposition in such jurisdictions of such Registrable Securities;
provided, however, that in no event shall the Company be obligated to (a)
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to so qualify but for this
Section 3(g), or (b) file any general consent to service of process in any
jurisdiction where it is not as of the date hereof then so subject.

          (h)  Upon the occurrence of any event contemplated by paragraph
3(c)(ii) above, the Company shall as promptly as reasonably practicable prepare
a post-effective amendment or supplement to the Shelf Registration Statement or
the Prospectus, or any document incorporated therein be reference, or file any
other required document so that, as thereafter delivered to purchasers of the
Registrable Securities included therein, the Prospectus will not include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, if the Company determines
based upon the advice of counsel that it is advisable to disclose in the Shelf
Registration Statement a financing, acquisition or other corporate transaction
or other material event affecting the Company or its securities, and the Board
of Directors of the Company (or an executive officer of the Company duly
authorized for such purpose) shall have determined in good faith that such
disclosure would not be in the best interests of the Company and its
stockholders, the Company shall not be required to prepare and file such
amendment, supplement or document for such period as the Board of Directors of
the Company shall have determined in good faith is in the best interests of the
Company and its stockholders. If the Electing Holders are notified of the
occurrence of any

                                      -7-
<PAGE>

event contemplated by paragraph 3(c)(ii) above, the Electing Holders shall
suspend the use of the Prospectus until the requisite changes to the Prospectus
have been made.

          (i)  Not later than the Effective Time of the Shelf Registration
Statement, the Company shall provide a CUSIP number for the Registrable
Securities that are debt securities.

          (j)  The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable, but in any event not
later than eighteen months after (i) the effective date (as defined in Rule
158(c) under the Securities Act) of the Shelf Registration Statement and (ii)
the effective date of each post-effective amendment to the Shelf Registration
Statement and (iii) the date of each filing by the Company with the Commission
of an Annual Report on Form 10-K or 10-KSB that is incorporated by reference in
the Shelf Registration Statement, an earnings statement of the Company and its
subsidiaries satisfying the provisions of Section 11(a) of the Securities Act.

          (k)  The Company shall cause the Indenture and the Securities to be
qualified under the Trust Indenture Act in a timely manner; and in connection
with such qualification, the Company shall cooperate with the Trustee under the
Indenture and the Holders (as defined in the Indenture) to effect such changes
to the Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the Trust Indenture Act; and the Company shall
execute and use all reasonable efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such Indenture to
be so qualified in a timely manner.

          (l)  In the event of an underwritten offering conducted pursuant to
Section 6 hereof, the Company shall, if requested, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to the Shelf
Registration Statement such information as the Managing Underwriters reasonably
agree should be included therein and to which the Company does not reasonably
object and shall make all required filings of such Prospectus supplement or
post-effective amendment as soon as reasonably practicable after it is notified
of the matters to be included or incorporated in such Prospectus supplement or
post-effective amendment.

          (m)  Upon request, the Company shall enter into such customary
agreements (including underwriting agreements in customary form) and take all
other appropriate actions in order to expedite or facilitate the registration
and disposition of the Registrable Securities, and in connection therewith, if
an underwriting agreement is entered into, cause the same to contain
indemnification and contribution provisions and procedures substantially
identical to those set forth in Section 5 (or such other provisions and
procedures acceptable to the Managing Underwriters, if any) with respect to all
parties to be indemnified pursuant to Section 5 hereof.

          (n)  The Company shall, upon request:

               (i)  make reasonably available for inspection by one
representative of the Electing Holders designated in writing by the Holders of a
majority of the Registrable Securities to

                                      -8-
<PAGE>

be registered thereunder, any underwriter participating in any underwritten
offering pursuant to Section 6 hereof, and any attorney, accountant or other
agent retained by such representative or any such underwriter all relevant
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries, as is customary for similar due diligence
examinations;

               (ii)   cause the Company's officers, directors and employees to
make reasonably available for inspection all relevant information reasonably
requested by such representative or any such underwriter, attorney, accountant
or agent in connection with any such Shelf Registration Statement, in each case,
as is customary for similar due diligence examinations; provided, however, that
any information that is designated in writing by the Company, in good faith, as
confidential at the time of delivery of such information shall be kept
confidential by such representative, any Holders or any such underwriter,
attorney, accountant or agent, unless (x) such disclosure is made in connection
with a court proceeding or required by law, or (y) such information becomes
available to the public generally or through a third party without an
accompanying obligation of confidentiality; and provided, further, that as
promptly as reasonably practicable before disclosure is made pursuant to clause
(x) above, the Company is given prior written notice.

               (iii)  in connection with any underwritten offering conducted
pursuant to Section 6 hereof, make such representations and warranties to the
Electing Holders and the underwriters, if any, in form, substance and scope as
are customarily made by the Company to underwriters in primary underwritten
offerings and covering matters including, but not limited to, those set forth in
the Purchase Agreement;

               (iv)   in connection with any underwritten offering conducted
pursuant to Section 6 hereof, obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the Managing Underwriters, if any) addressed to
each Electing Holder and the underwriters, if any, covering such matters as are
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Electing Holders and
underwriters (it being agreed that the matters to be covered by such opinion or
written statement by such counsel delivered in connection with such opinions
shall include in customary form, without limitation, as of the date of the
opinion and as of the effective date of the Shelf Registration Statement or most
recent post-effective amendment thereto, as the case may be, the absence from
such Shelf Registration Statement and the Prospectus included therein, as then
amended or supplemented, including the documents incorporated by reference
therein, of an untrue statement of a material fact or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading);

               (v)    in connection with any underwritten offering conducted
pursuant to Section 6 hereof, obtain "cold comfort" letters and updates thereof
from the independent public accountants of the Company (and, if necessary, any
other independent public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and financial
data are, or are required to be, included in the Shelf Registration Statement),

                                      -9-
<PAGE>

addressed to each Electing Holder and the underwriters, if any, in customary
form and covering matters of the type customarily covered in "cold comfort"
letters in connection with primary underwritten offerings;

               (vi) in connection with any underwritten offering conducted
pursuant to Section 6 hereof, deliver such documents and certificates as may be
reasonably requested by any such Electing Holders and the Managing Underwriters,
if any, including those to evidence compliance with Section 3(h) hereof and with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.

          (o)  The Company will use all reasonable efforts to cause the shares
of Common Stock issuable upon conversion of the Securities to be quoted on the
Nasdaq National Market or other trading system or stock exchange on which the
Common Stock primarily trades on or prior to the Effective Time of any Shelf
Registration Statement hereunder.

          (p)  In the event that any broker-dealer registered under the Exchange
Act shall be an "affiliate" (as defined in Rule 2720(b)(1) of the NASD Rules (or
any successor provision thereto)) of the Company or has a "conflict of interest"
(as defined in Rule 2720(b)(7) of the NASD Rules (or any successor provision
thereto)) and such broker-dealer shall underwrite, participate as a member of an
underwriting syndicate or selling group or assist in the distribution of any
Registrable Securities covered by the Shelf Registration Statement, whether as a
Holder of such Registrable Securities or as an underwriter, a placement or sales
agent or a broker or dealer in respect thereof, or otherwise, assist such broker
or dealer in respect thereof, or otherwise, the Company shall assist such
broker-dealer in complying with the requirements of the NASD Rules, including,
without limitation, by (A) engaging a "qualified independent underwriter" (as
defined in Rule 2720(b)(15) of the NASD Rules (or any successor provision
thereto)) to participate in the preparation of the Shelf Registration Statement
relating to such Registrable Securities, to exercise usual standards of due
diligence in respect thereto and to recommend the public offering price of such
Registrable Securities, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided in
Section 5 hereof, and (C) providing such information to such broker- dealer as
may be required in order for such broker-dealer to comply with the requirements
of the NASD Rules.

          (q)  The Company shall use all reasonable efforts to take all other
steps necessary to effect the registration, offering and sale of the Registrable
Securities covered by the Shelf Registration Statement contemplated hereby.

     4.   Registration Expenses. The Company shall bear all fees and expenses
incurred in connection with the performance of its obligations under Sections 2,
3 and 6 hereof and shall bear or reimburse the Electing Holders for the
reasonable fees and disbursements of one firm of counsel designated by the
Company and reasonably acceptable to the Holders of a majority of the
Registrable Securities covered by the Shelf Registration Statement to act as
counsel therefor in connection therewith, subject to the provisions of Section 6
with respect to the payment of fees and expenses in connection with an
underwritten offering.

                                      -10-
<PAGE>

     5.   Indemnification and Contribution.

          (a)  Indemnification by the Company. In connection with any Shelf
Registration Statement, the Company shall indemnify and hold harmless each
Electing Holder and each underwriter, selling agent or other securities
professional, if any, who facilitates the disposition of Registrable Securities,
and each of their respective officers and directors and each person, if any, who
controls such Electing Holder, underwriter, selling agent or other securities
professional within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act (each such person being sometimes referred to herein as
an "Indemnified Person") against any losses, claims, damages or liabilities,
joint or several, to which such Indemnified Person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based on any
untrue statement or alleged untrue statement of a material fact contained in any
Shelf Registration Statement (or any amendment thereto) under which such
Registrable Securities are registered under the Securities Act, or any
Prospectus contained therein or furnished by the Company to any Indemnified
Person, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not misleading (in
the case of the Prospectus, in light of the circumstances under which they were
made), and the Company hereby agrees to reimburse such Indemnified Person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable to any such
Indemnified Person in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such Shelf
Registration Statement or Prospectus, or any amendment or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Company by such Indemnified Person expressly for use therein.

          (b)  Indemnification by the Holders and Any Agents and Underwriters.
Each Electing Holder agrees, as a consequence of the inclusion of any such
holder's Registrable Securities in such Shelf Registration Statement, and each
underwriter, selling agent or other securities professional, if any, who
facilitates the disposition of Registrable Securities shall agree, as a
consequence of facilitating such disposition of Registrable Securities,
severally and not jointly, to (i) indemnify and hold harmless the Company, its
directors, officers who sign any Shelf Registration Statement and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses, claims,
damages or liabilities to which the Company or such other persons may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in such Shelf Registration Statement or Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon an omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case of the
Prospectus, in light of the circumstances under which they were made), in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was

                                      -11-
<PAGE>

made in reliance upon and in conformity with written information furnished to
the Company by such Electing Holder, underwriter, selling agent or other
securities professional expressly for use therein and (ii) reimburse the Company
for any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such action or claim as such expenses are
incurred.

          (c)  Notices and Claims. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under this Section 5, notify such
indemnifying party in writing of the commencement thereof; but the omission to
so notify the indemnifying party shall not relieve it from any liability which
it may have to the indemnified party otherwise than under this Section 5. In
case any such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, such indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party) and, after notice from the indemnifying party
of its election so to assume the defense thereof, such indemnifying party shall
not be liable to such indemnified party under this Section 5 for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.

          (d)  Contribution. If the indemnification provided for in this Section
5 is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) of this Section 5 in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses, claims, damages
and liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such indemnifying party or by such indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section 5(d)
were determined by pro rata allocation (even if the Electing Holders or any

                                      -12-
<PAGE>

underwriters, selling agents or other securities professionals or all of them
were treated as one entity for such purpose) or by any other method of
allocation that does not take into account the equitable considerations referred
to in this Section 5(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. 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. The obligations of the Electing
Holders and any underwriters, selling agents or other securities professionals
in this Section 5(d) to contribute shall be several in proportion to the
percentage of principal amount of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.

          (e)  Notwithstanding any other provision of this Section 5, in no
event shall any Electing Holder be required to undertake liability to any person
under this Section 5 for any amounts in excess of the dollar amount of the
proceeds received by such Electing Holder from the sale of such Electing
Holder's Registrable Securities (after deducting any fees, discounts and
commissions applicable thereto) pursuant to any Shelf Registration Statement
under which such Registrable Securities are registered under the Securities Act.

          (f)  The obligations of the Company under this Section 5 shall be in
addition to any liability which the Company may otherwise have to any
Indemnified Person and the obligations of any Electing Holder, underwriter,
selling agent or other securities professional under this Section 5 shall be in
addition to any liability which any such Electing Holder, underwriter, selling
agent or other securities professional shall otherwise have to the Company. The
remedies provided in this Section 5 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to an indemnified party at
law or in equity.

     6.   Underwritten Offering. Any Electing Holder who desires to do so may
sell Registrable Securities (in whole or in part) in an underwritten offering,
provided that (i) the Electing Holders of at least 25% in aggregate principal
amount of the Registrable Securities then covered by the Shelf Registration
Statement shall request such an offering and (ii) at least such aggregate
principal amount of such Registrable Securities shall be included in such
offering, and provided, further, that the Company shall not be obligated to
cooperate with more than one underwritten offering. Upon receipt of such a
request, the Company shall provide all Holders of Registrable Securities written
notice of the request, which notice shall inform such Holders that they have the
opportunity to participate in the offering. In any such underwritten offering,
the investment banker or bankers and manager or managers that will administer
the offering will be selected by, and the underwriting arrangements with respect
thereto will be approved by the Holders of a majority of the Registrable
Securities to be included in such offering; provided, however, that such
investment bankers and managers and underwriting arrangements must be reasonably
satisfactory to the Company. No Holder may participate in any underwritten
offering contemplated hereby unless (a) such Holder agrees to sell such Holder's
Registrable Securities to be included in the underwritten offering in

                                      -13-
<PAGE>

accordance with any approved underwriting arrangements, (b) such Holder
completes and executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other documents
required under the terms of such approved underwriting arrangements, and (c) if
such Holder is not then an Electing Holder, such Holder returns a completed and
signed Notice and Questionnaire to the Company in accordance with Section
3(a)(2) hereof within a reasonable amount of time before such underwritten
offering. The Holders participating in any underwritten offering shall be
responsible for any underwriting discounts and commissions and fees and expenses
of their own counsel. The Company shall pay all expenses customarily borne by
issuers in an underwritten offering, including but not limited to filing fees,
the fees and disbursements of its counsel and accountants and any printing
expenses incurred in connection with such underwritten offering. Notwithstanding
the foregoing or the provisions of Sections 3(l) and 3(m) hereof, upon receipt
of a request from the Managing Underwriter or a representative of Holders of a
majority of the Registrable Securities to be included in an underwritten
offering to prepare and file an amendment or supplement to the Shelf
Registration Statement and Prospectus in connection with an underwritten
offering, the Company may delay the filing of any such amendment or supplement
for up to 60 days if the Board of Directors of the Company (or an executive
officer of the Company duly authorized for such purpose) shall have determined
in good faith that the Company has a valid business reason for such delay.

     7.   Liquidated Damages. Pursuant to Section 2(a) hereof, the Company may,
upon written notice to all the Holders, postpone having the Shelf Registration
Statement declared effective for a reasonable period not to exceed 90 days if
the Company possesses material non-public information, the disclosure of which
would have a material adverse effect on the Company and its subsidiaries taken
as a whole. Notwithstanding any such postponement, if (i) on or prior to the
90th day following the date of the First Time of Delivery (as defined in the
Purchase Agreement), a Shelf Registration Statement has not been filed with the
Commission or (ii) on or prior to the 180th day following the date of the First
Time of Delivery (as defined in the Purchase Agreement), such Shelf Registration
Statement is not declared effective by the Commission (each, a "Registration
Default"), the Company shall be required to pay liquidated damages ("Liquidated
Damages"), from and including the day following such Registration Default until
such Shelf Registration Statement is either so filed or so filed and
subsequently declared effective, as applicable. Such Liquidated Damages shall be
paid semi-annually in arrears, with the first semi-annual payment due on the
first Interest Payment Date (as defined in the Indenture), as applicable,
following the date of such Registration Default, and will accrue at a rate per
annum equal to an additional one-quarter of one percent (0.25%) of the principal
amount of Restricted Securities, to and including the 90th day following such
Registration Default and one-half of one percent (0.5%) thereof from and after
the 91st day following such Registration Default. In the event that the Shelf
Registration Statement ceases to be effective (or the Holders of Registrable
Securities are otherwise prevented or restricted by the Company from effecting
sales pursuant thereto) (an "Effective Failure") for more than 45 days, whether
or not consecutive, in any 90 day period, and 90 days, whether or not
consecutive, during any twelve-month period, then the Company shall pay
Liquidated Damages in the amount of one-half of one percent (0.5%) per annum
from the 46th day of the applicable 90 day period or the 90th day of the
applicable twelve-month period, as the case may be, that such Shelf Registration

                                      -14-
<PAGE>

Statement ceases to be effective (or the Holders of Registrable Securities are
otherwise prevented or restricted by the Company from effecting sales pursuant
thereto) until such time as the Effective Failure is cured. For the purpose of
determining an Effective Failure, days on which the Company has been obligated
to pay Liquidated Damages in accordance with the foregoing in respect of a prior
Effective Failure within the applicable 90 day or twelve-month period, as the
case may be, shall not be included. The Liquidated Damages as set forth in this
Section 7 shall be the exclusive monetary remedy available to the Holders of
Registrable Securities for such Registration Default or Effective Failure. In no
event shall the Company be required to pay Liquidated Damages in excess of the
applicable maximumamount of one-half of one percent (0.5%) set forth above,
regardless of whether one or multiple Registration Defaults exist.

     8.   Miscellaneous.

          (a)  Other Registration Rights. The Company may grant registration
rights that would permit any Person that is a third party the right to piggy-
back on any Shelf Registration Statement, provided that if the Managing
Underwriter, if any, of any underwritten offering conducted pursuant to Section
6 hereof notifies the Company and the Electing Holders that the total amount of
securities which the Electing Holders and the holders of such piggy-back rights
intend to include in any Shelf Registration Statement is so large as to
materially threaten the success of such offering (including the price at which
such securities can be sold), then the amount, number or kind of securities to
be offered for the account of holders of such piggy-back rights will be reduced
to the extent necessary to reduce the total amount of securities to be included
in such offering to the amount, number or kind recommended by the Managing
Underwriter prior to any reduction in the amount of Registrable Securities to be
included in such Shelf Registration Statement.

          (b)  Amendments and Waivers. The provisions of this Agreement,
including the provisions of this Section 8(b), may be amended, and waivers or
consents to departures from the provisions hereof may be given, only by a
written instrument duly executed by the Company and the Holders of a majority in
aggregate principal amount of Registrable Securities then outstanding. Each
Holder of Registrable Securities outstanding at the time of any such amendment,
waiver or consent or thereafter shall be bound by any amendment, waiver or
consent effected pursuant to this Section 8(b), whether or not any notice,
writing or marking indicating such amendment, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.

          (c)  Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:

                    (1)  if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this Section
8(c);

                    (2)  if to the Purchasers, initially at the address set
forth in the Purchase Agreement; and

                                      -15-
<PAGE>

                    (3)  if to the Company, initially at its address set forth
in the Purchase Agreement.

     All such notices and communications shall be deemed to have been duly given
when received.

     The Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.

          (d)  Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties and the
Holders, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Registrable Securities. The Company
hereby agrees to extend the benefits of this Agreement to any Holder of
Registrable Securities and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.

          (e)  Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

          (f)  Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

          (g)  Governing Law. This agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
any provisions relating to conflicts of laws.

          (h)  Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.

          (i)  Survival. The respective indemnities, agreements,
representations, warranties and other provisions set forth in this Agreement or
made pursuant hereto shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Electing Holder, any director, officer or partner of such Electing
Holder, any agent or underwriter, any director, officer or partner of such agent
or underwriter, or any controlling person of any of the foregoing, and shall
survive the transfer and registration of the Registrable Securities of such
Holder.

                                      -16-
<PAGE>

     Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.

                                    Very truly yours,

                                    Exodus Communications, Inc.

                                    By:  /s/ Ellen M. Hancock
                                        -------------------------------------
                                    Name:    Ellen M. Hancock
                                    Title:   President and CEO

     The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written.

                                    Goldman, Sachs & Co.
                                    Donaldson, Lufkin & Jenrette
                                     Securities Corporation
                                    Morgan Stanley & Co. Incorporated

                                    By:   /s/ Goldman, Sachs & Co.
                                        -------------------------------------
                                        (Goldman, Sachs & Co.)

                                    On behalf of each of the Purchasers

               [Signature Page to Registration Rights Agreement]
<PAGE>

                                   Exhibit A

                          EXODUS COMMUNICATIONS, INC.
                        INSTRUCTION TO DTC PARTICIPANTS

                               (DATE OF MAILING)

                    URGENT -- IMMEDIATE ATTENTION REQUESTED

                         DEADLINE FOR RESPONSE: (DATE)

     The Depository Trust Company ("DTC") has identified you as a DTC
Participant through which beneficial interests in Exodus Communications, Inc.
(the "Company") 4 3/4% Convertible Subordinated Notes due July 15, 2008 (the
"Securities") are held.

     The Company is in the process of registering the Securities under the
Securities Act of 1933, as amended, for resale by the beneficial owners thereof.
In order to have their Securities included in the registration statement,
beneficial owners, INCLUDING BENEFICIAL OWNERS RESIDENT OUTSIDE THE UNITED
STATES, must complete and return the enclosed Notice of Registration Statement
and Selling Securityholder Questionnaire.

     IT IS IMPORTANT THE BENEFICIAL OWNERS OF THE SECURITIES RECEIVE A COPY OF
THE ENCLOSED MATERIALS AS SOON AS POSSIBLE as their rights to have the
Securities included in the registration statement depend upon their returning
the Notice and Questionnaire [DEADLINE FOR RESPONSE].  Please forward a copy of
the enclosed materials to each beneficial owner that holds interests in the
Securities through you.  If you require more copies of the enclosed materials or
have any questions regarding this matter, please contact [Name, address and
telephone number of contact at the Company].
<PAGE>

                          EXODUS COMMUNICATIONS, INC.

  NOTICE OF REGISTRATION STATEMENT AND SELLING SECURITY HOLDER QUESTIONNAIRE

                                    (DATE)

     Exodus Communications, Inc. (the "Company") has filed or intends shortly to
file with the United States Securities and Exchange Commission (the
"Commission") a registration statement on form S-3 (the "Shelf Registration
Statement") for the registration and resale under the United States Securities
Act of 1933, as amended (the "Securities Act"), of the Company's 4  3/4%
Convertible Subordinated Notes due July 15, 2008 (CUSIP No. 0________) (the
"Notes"), and Common Stock, par value $0.001 per share, of the Company issuable
upon conversion or repurchase thereof, in accordance with the terms of the
Registration Rights Agreement dated as of December 1, 1999 (the "Registration
Rights Agreement") between the Company and the purchasers named therein (the
"Purchasers").  A copy of the Registration Rights Agreement is attached hereto.
All capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Registration Rights Agreement.

     In order to have Registrable Securities included in the Shelf Registration
Statement (or a supplement or amendment thereto), this Notice of Registration
Statement and Selling Securityholder Questionnaire ("Notice and Questionnaire")
must be completed, executed and delivered to the Company at the address set
forth herein for receipt ON OR BEFORE [insert date that is 30 days from the
Notice Date] (the "Questionnaire Deadline").  Unless the Company otherwise
consents, beneficial owners of Registrable Securities who do not complete,
execute and return this Notice and Questionnaire by such date (i) will not be
named as selling securityholders in the Shelf Registration Statement (or a
supplement or amendment thereto) and related Prospectus and (ii) may not sell
their Registrable Securities pursuant thereto.  Beneficial owners of Registrable
Securities not having returned a Notice and Questionnaire by the Questionnaire
Deadline may, however, receive another Notice and Questionnaire from the Company
upon request.  Following its receipt of a completed Notice and Questionnaire in
return, the Company will reasonably promptly include the Registrable Securities
covered thereby in the Shelf Registration Statement.

     Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
Accordingly, Holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and related Prospectus.

     The term "Registrable Securities" is defined in the Registration Rights
Agreement to mean all or any portion of the Notes issued under the Indenture and
the Common Stock issuable upon conversion or repurchase thereof; provided,
however, that a security ceases to be a Registrable Security when it is no
longer a Restricted Security.
<PAGE>

     The term "Restricted Security" is defined in the Registration Rights
Agreement to mean any Note or share of Common Stock issuable upon conversion or
repurchase thereof except any such Note or share of Common Stock which (i) has
been effectively registered under the Securities Act and sold in a manner
contemplated by the Shelf Registration Statement, (ii) has been transferred in
compliance with Rule 144 under the Securities Act (or any successor provision
thereto) or is transferable pursuant to paragraph (k) of such Rule 144 (or any
successor provision thereto), or (iii) has otherwise been transferred and a new
Security or share of Common Stock not subject to transfer restrictions under the
Securities Act has been delivered by or on behalf of the Company in accordance
with Section 3.5 of the Indenture.

                                      -2-
<PAGE>

                                   ELECTION

     The undersigned holder (the "Selling Securityholder") of Registrable
Securities hereby elects to include in the Shelf Registration Statement the
Registrable Securities beneficially owned by it and listed below in Item (3)
(unless otherwise specified under Item (3).  The undersigned, by signing and
returning this Notice and Questionnaire, agrees to be bound with respect to such
Registrable Securities by the terms and conditions of this Notice and
Questionnaire and the Registration Rights Agreement, including, without
limitation, Section 5 of the Registration Rights Agreement, as if the
undersigned Selling Securityholder were an original party thereto.

     Upon any sale of Registrable Securities pursuant to the Shelf Registration
Statement, the undersigned Selling Securityholder will be required to deliver to
the Company and the Trustee under the Indenture the Notice of Transfer completed
and signed set forth in Appendix I to the Notice and Questionnaire and hereby
undertakes to do so.

     The undersigned Selling Securityholder hereby provides the following
information to the Company and represents and warrants that such information is
accurate and complete:
<PAGE>

                                 QUESTIONNAIRE

(1)  (a)  Full Legal Name of Selling Securityholder:

          ______________________________________________________________________

     (b)  Full Legal Name of Registered Holder (if not the same as in (a) above)
          of Registrable Securities Listed in (3) Below:

          ______________________________________________________________________

     (c)  Full Legal Name of DTC Participant (if applicable and if not the same
          as (b) above) Through Which Registrable Securities Listed in (3) Below
          are Held:

          ______________________________________________________________________

(2)  Address for Notices to Selling Securityholder:

          ______________________________________________________________________

          ______________________________________________________________________

          ______________________________________________________________________

     Telephone:_________________________________________________________________

     Fax:_______________________________________________________________________

     Contact:___________________________________________________________________

(3)  Beneficial Ownership of Registrable Securities:

     Except as set forth below, the undersigned Selling Securityholder does not
     beneficially own any Notes or Common Stock previously issued upon
     conversion or repurchase of any Note.

     Principal amount of Notes beneficially owned:______________________________

     Number of shares of Common Stock beneficially owned and issued to date upon
     conversion or repurchase of Notes (if any):________________________________

     Principal amount of Notes which the undersigned wishes to be included in
     the Shelf Registration Statement:__________________________________________

     Number of shares of Common Stock (if any) issued upon conversion or
     repurchase of Registrable Securities which are to be included in the Shelf
     Registration Statement:____________________________________________________

(4)  Other shares of Common Stock or other Notes of the Company Owned by the
     Selling Securityholder:
<PAGE>

     Except as set forth below, and under Item (3) above, the undersigned
     Selling Securityholder is not the beneficial or registered owner of any
     shares of Common Stock or any other securities of the Company.

     State any exceptions here:

(5)  Relationships with the Company:

     Except as set forth below, neither the Selling Securityholder nor any of
     its affiliates, officers, directors or principal equity holders (5% or
     more) has held any position or office or has had any other material
     relationship with the Company (or its predecessors or affiliates) during
     the past three years.

State any exceptions here:

(6)  Plan of Distribution:

     Except as set forth below, the undersigned Selling Securityholder intends
     to distribute the Registrable Securities listed above in Item (3) only as
     follows (if at all): Such Registrable Securities may be sold from time to
     time directly by the undersigned Selling Securityholder or, alternatively,
     through underwriters, broker-dealer or agents.  Such Registrable Securities
     may be sold in one or more transactions at fixed prices, at prevailing
     market prices at the time of sale, at varying prices determined at the time
     of sale, or at negotiated prices.  Such sales may be effected in
     transactions (which may involve crosses or block transactions) (i) on any
     national securities exchanges or U.S. inter-dealer quotation system of a
     registered national securities association on which the Registrable
     Securities may be listed or quoted at the time of sale, (ii) in the over-
     the-counter market, (iii) in transactions otherwise than on such exchanges
     or services or in the over-the-counter market, or (iv) through the writing
     of options.  In connection with sales of the Registrable Securities or
     otherwise, the Selling Securityholder may enter into hedging transactions
     with broker-dealers, which may in turn engage in short sales of the
     Registrable Securities in the course of hedging the positions they assume.
     The Selling Securityholder may also sell Registrable Securities short and
     deliver Registrable Securities to close out such short position, or loan or
     pledge Registrable Securities to broker-dealers that in turn may sell such
     securities.

State any exceptions here:

     Note:  In no event may such method(s) of distribution take the form of an
     underwritten offering of the Registrable Securities without the prior
     agreement of the Company.

     By signing below, the Selling Securityholder acknowledges that it
     understands its obligation to comply, and agrees that it will comply, with
     the prospectus delivery and other provisions of the Securities Act and
     Exchange Act and the respective rules thereunder, particularly Regulation
     M.
<PAGE>

     In the event that the Selling Securityholder transfers all or any portion
     of the Registrable Securities listed in Item (3) above after the date on
     which such information is provided to the Company, the Selling
     Securityholder agrees to notify the transferee(s) at the time of the
     transfer of its rights and obligations under this Notice and Questionnaire
     and the Registration Rights Agreement.

     By signing below, the Selling Securityholder consents to the disclosure of
     the information contained herein in its answers to Items (1) through (6)
     above and the inclusion of such information in the Shelf Registration
     Statement and related Prospectus.  The Selling Securityholder understands
     that such information will be relied upon by the Company in connection with
     the preparation of the Shelf Registration Statement and related Prospectus.

     In accordance with the Selling Securityholder's obligation under the
     Registration Rights Agreement to provide such information as may be
     required by law for inclusion in the Self Registration Statement, the
     Selling Securityholder agrees to promptly notify the Company of any
     inaccuracies or changes in the information provided herein which may occur
     subsequent to the date hereof at any time while the Self Registration
     Statement remains in effect.  All notices hereunder and pursuant to the
     Registration Rights Agreement shall be made in writing by hand delivery,
     first-class mail, or air courier guaranteeing overnight delivery as
     follows:

     To the Company:

     Exodus Communications, Inc.
     2831 Mission College Blvd.
     Santa Clara, CA 95054
     Attention: General Counsel and Secretary

     Once this Notice and Questionnaire is executed by the Selling
     Securityholder and received by the Company, the terms of this Notice and
     Questionnaire, and the representations and warranties contained herein,
     shall be binding on, shall inure to the benefit of and shall be enforceable
     by the respective successors, heirs, personal representatives and assigns
     of the Company and the Selling Securityholder with respect to the
     Registrable Securities beneficially owned by such Selling Securityholder
     and listed in Item (3) above.  This Agreement shall be governed in all
     respects by the laws of the State of New York.
<PAGE>

     IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.

Dated:______________________________

____________________________________
Selling Securityholder
(Print/type full legal name of beneficial owner of Registrable Securities)

By:_________________________________
Name:
Title:

     PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR
RECEIPT ON OR BEFORE (DEADLINE FOR RESPONSE) TO THE COMPANY AT:

     Exodus Communications, Inc.
     2831 Mission College Blvd.
     Santa Clara, CA 95054
     Attention: General Counsel and Secretary
<PAGE>

                                  APPENDIX I

             NOTICE TO TRANSFER PURSUANT TO REGISTRATION STATEMENT

Chase Manhattan Bank and Trust Company,
National Association
101 California Street, Suite 2725
San Francisco, CA 94111

Exodus Communications, Inc.
2831 Mission College Blvd.
Santa Clara, CA 95054
Attention: General Counsel and Secretary

     Re  Exodus Communications, Inc. 4  3/4% Convertible Subordinated Notes
         due July 15, 2008 (the "Notes")

Dear Sirs:

     Please be advised that _________________________________  has transferred
$_____ aggregate principal amount of the above-referenced notes or ______ shares
of the Company's Common Stock, issued on conversion, repurchase or redemption of
Notes, pursuant to the Registration Statement Form S-3 (File No. 333-_________)
filed by the Company.

     We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied with respect to the
transfer described above and that the above-named beneficial owner of the Notes
of Common Stock is named as a selling security holder in the Prospectus dated
____________ or in amendments or supplements thereto, and that the aggregate
principal amount of the Notes of number of Common Stock transferred are [a
portion of] the Notes or Common Stock listed in such Prospectus as amended or
supplemented opposite such owner's name.

Dated:_____________________

                               Very truly yours,

                              _________________________________
                                          (Name)

                              By:______________________________
                                     (Authorized Signature)

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