Exhibit 10.10
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PARTICIPATION AGREEMENT
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This Participation Agreement (this "Agreement") dated as of June 30, 1999
is entered into by and among Switchboard Incorporated, a Delaware corporation
(the "Company"), Banyan Systems Incorporated, a Massachusetts corporation
("Banyan"), and CBS Corporation, a Pennsylvania corporation ("CBS"). Banyan and
CBS are together referred to herein as the "Purchasers," and are sometimes
individually referred to herein each as a "Purchaser."
Recitals
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WHEREAS, the Company, Banyan and CBS are parties to a Common Stock and
Warrant Purchase Agreement of even date herewith (the "Purchase Agreement")
pursuant to which CBS is acquiring certain shares of Common Stock and a warrant
to purchase shares of Common Stock;
WHEREAS, Banyan is a stockholder of the Company; and
WHEREAS, the parties desire to provide for certain arrangements with
respect to CBS' and Banyan's right to purchase shares of Common Stock of the
Company simultaneously with the Company's initial public offering;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Certain Definitions.
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As used in this Agreement, the following terms shall have the following
respective meanings:
"Commission" means the Securities and Exchange Commission, or any
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other federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $.01 par value per share, of
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the Company.
"Initial Public Offering" means an initial underwritten public
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offering of shares of Common Stock pursuant to an effective Registration
Statement under the Securities Act in which the Company, prior to giving effect
to the proceeds of such offering, is valued at at least $135,000,000 (determined
by multiplying the number of outstanding shares of capital stock of the Company
on a fully diluted basis by the per
share initial public offering price) and resulting in at least $15,000,000 of
net proceeds (determined by subtracting underwriters' discounts and commissions
from gross proceeds) to the Company.
"Registration Statement" means a registration statement filed by the
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Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Securities Act" means the Securities Act of 1933, as amended, or any
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successor federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
2. Participation Right.
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2.1 Rights of CBS.
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(a) Except as (and to the extent) prohibited by law, the Company
shall (i) provide CBS with written notice pursuant to Rule 134 or Rule 135
promulgated under the Securities Act (or any successor rule thereto) of the
Company's proposed Initial Public Offering (the "Notice") and (ii) use its
reasonable best efforts to issue and sell to CBS, simultaneously with the
closing of the Initial Public Offering, such whole number of shares of Common
Stock, if any, as would be necessary to increase CBS' ownership of Common Stock,
warrants and other securities of the Company to an amount that would most
closely result in CBS owning 37.5% of the outstanding Common Stock on a fully
diluted basis upon the closing of the Initial Public Offering (after taking into
account whether any other person with rights similar to the rights granted
herein to CBS, including, without limitation, Banyan, elects to purchase shares,
and taking into account any shares issued by the Company in the Initial Public
Offering to persons without such rights). For purposes of this Agreement, "fully
diluted" shall mean assuming the conversion into Common Stock of all convertible
securities and the exercise of all outstanding vested and unvested options and
warrants. The Notice shall be given no later than ten (10) days after the filing
with the Commission of the Registration Statement for the Initial Public
Offering.
(b) CBS must notify the Company within ten (10) days of the date
of the Notice if CBS has a non-binding interest in purchasing any shares. If CBS
remains interested in purchasing shares, CBS and the Company will execute a
stock purchase agreement in substantially the form attached hereto as Exhibit A
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on the date the Company enters into an underwriting agreement relating to the
Initial Public
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Offering. If CBS informs the Company that it does not have an interest in
purchasing any shares or fails to respond within such 10 day period, then CBS'
rights under this Agreement shall expire.
(c) If CBS has executed with the Company such a stock purchase
agreement, upon the closing of the Initial Public Offering, CBS shall purchase
from the Company, and the Company shall issue and sell to CBS, the number of
shares of Common Stock that CBS is entitled to purchase pursuant thereto.
2.2 Rights of Banyan.
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(a) Except as (and to the extent) prohibited by law, the Company
shall (i) provide Banyan with the Notice and (ii) use its reasonable best
efforts to issue and sell to Banyan, simultaneously with the closing of the
Initial Public Offering, such whole number of shares of Common Stock, if any, as
would be necessary to increase the Banyan's ownership of Common Stock, warrants
and other securities of the Company to an amount that would most closely result
in Banyan owning 37.5% of the outstanding Common Stock on a fully diluted basis
upon the closing of the Initial Public Offering (after taking into account
whether any other person with rights similar to the rights granted herein to
Banyan, including, without limitation, CBS, elects to purchase shares, and
taking into account any shares issued by the Company in the Initial Public
Offering to persons without such rights). The Notice shall be given no later
than ten (10) days after the filing with the Commission of the Registration
Statement for the Initial Public Offering.
(b) Banyan must notify the Company within ten (10) days of the
date of the Notice if Banyan has a non-binding interest in purchasing any
shares. If Banyan remains interested in purchasing shares, Banyan and the
Company will execute a stock purchase agreement in substantially the form
attached hereto as Exhibit A on the date the Company enters into an underwriting
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agreement relating to the Initial Public Offering. If Banyan informs the Company
that it does not have an interest in purchasing any shares or fails to respond
within such 10 day period, then Banyan's rights under this Agreement shall
expire.
(c) If Banyan has executed with the Company such a stock
purchase agreement, upon the closing of the Initial Public Offering, Banyan
shall purchase from the Company, and the Company shall issue and sell to Banyan,
the number of shares of Common Stock that Banyan is entitled to purchase
pursuant thereto.
2.3 Limitations. The Company's obligations in Sections 2.1 and 2.2
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of this Agreement, including any obligations to provide the Notice and issue and
sell
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shares of Common Stock to CBS and/or Banyan, are subject in all respects to the
managing underwriter of the Initial Public Offering determining in its sole
discretion that the Company's fulfillment of such obligations will have no
adverse impact on the Initial Public Offering, including, without limitation,
the offering price, offering size, likelihood of completion or completion date.
2.4 Termination. This Agreement shall terminate upon the first to
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occur of the following events:
(a) The sale of all or substantially all of the assets or
business of the Company, by merger, sale of assets or otherwise;
(b) The termination of the Advertising and Promotion Agreement
dated the date hereof between the Company and CBS by the Company by reason of a
breach by CBS of such agreement;
(c) The termination of the Licensing Agreement dated the date
hereof between the Company and CBS by the Company by reason of a breach by CBS
of such agreement; or
(d) The consummation by the Company of an initial public
offering of shares of Common Stock pursuant to an effective Registration
Statement under the Securities Act in which the Company, prior to giving effect
to the proceeds of such offering, is valued at less than $135,000,000
(determined by multiplying the number of outstanding shares of capital stock of
the Company on a fully diluted basis by the per share initial public offering
price) and/or resulting in less than $15,000,000 of net proceeds (determined by
subtracting underwriters' discounts and commissions from gross proceeds) to the
Company.
2.5 Private Placement. To the extent permitted by law, at the
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request of a Purchaser, the Company will use its reasonable best efforts to
structure the issuance and sale of Common Stock contemplated by this Agreement
as a private placement transaction.
3. Transfers of Rights. This Agreement, and the rights and obligations
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of CBS and Banyan hereunder, may not be assigned by CBS or Banyan; provided,
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however, that, notwithstanding the foregoing, a Purchaser may assign its rights
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and obligations under the Agreement to any entity controlling, controlled by or
under common control of such Purchaser if (1) written notice of such action is
provided to the Company and the other Purchaser, (2) the transferee agrees in
writing as part of such notice to be bound by this Agreement.
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4. General.
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(a) Severability. The invalidity or unenforceability of any
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provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(b) Specific Performance. In addition to any and all other
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remedies that may be available at law in the event of any breach of this
Agreement, each Purchaser shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other injunctive
or other equitable relief as may be granted by a court of competent
jurisdiction.
(c) Governing Law. This Agreement shall be governed by and
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construed in accordance with the internal laws of the State of New York (without
reference to the conflicts of law provisions thereof).
(d) Notices. All notices, requests, consents, and other
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communications under this Agreement shall be in writing and shall be deemed
delivered (i) two business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (ii) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:
If to the Company, at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
Chief Financial Officer, or at such other address or addresses as may have been
furnished in writing by the Company to the Purchasers, with a copy to the
Company at the foregoing address, Attention: General Counsel, and with a copy to
▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇, Esq.;
If to Banyan, at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chief
Financial Officer, or at such other address or addresses as may have been
furnished to the Company and the Purchaser in writing by Banyan, with a copy to
▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇, Esq.; or
If to CBS, at CBS Corporation, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Chief Financial Officer, or at such other address or addresses as may
have been furnished to the Company in writing by CBS, with a copy to CBS
Corporation, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: General
Counsel.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such
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notice, request, consent or other communication shall be deemed to have been
duly given unless and until it is actually received by the party for whom it is
intended. Any party may change the address to which notices, requests, consents
or other communications hereunder are to be delivered by giving the other
parties notice in the manner set forth in this Section.
(e) Complete Agreement. This Agreement constitutes the entire
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agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.
(f) Amendments and Waivers. Any term of this Agreement may be
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amended or terminated and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the Purchasers. No
waivers of or exceptions to any term, condition or provision of this Agreement,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such term, condition or provision.
(g) Pronouns. Whenever the context may require, any pronouns
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used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural, and vice versa.
(h) Counterparts; Facsimile Signatures. This Agreement may be
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executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the same document.
This Agreement may be executed by facsimile signatures.
(i) Section Headings. The section headings are for the
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convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
[signatures on following page]
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Executed as of the date first written above.
SWITCHBOARD INCORPORATED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
BANYAN SYSTEMS INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President & CFO
CBS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
(signature page to participation agreement)
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