EXECUTION COPY
Exhibit 99.3
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SECURITYHOLDERS AGREEMENT
among
PRIVATE BUSINESS, INC.,
and
LIGHTYEAR PBI HOLDINGS, LLC
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dated as of January 20, 2004
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Table of Contents
Page
RECITALS ......................................................................1
ARTICLE I DEFINITIONS..........................................................1
SECTION 1.1. Certain Defined Terms...........................1
SECTION 1.2. Other Definitional Provisions...................1
ARTICLE II CORPORATE GOVERNANCE................................................8
SECTION 2.1. Board Representation............................8
SECTION 2.2. Committees......................................9
SECTION 2.3. Consent Rights..................................9
SECTION 2.4. Available Financial Information; Access........10
SECTION 2.5. Board Procedures...............................12
SECTION 2.6. Termination of Director Designees and Related
Rights.......................................12
SECTION 2.7. Director Elections.............................13
SECTION 2.8. Additional Directors...........................14
ARTICLE III TRANSFERS.........................................................14
SECTION 3.1. Lightyear Transferees..........................14
SECTION 3.2. Transfer Restrictions..........................15
SECTION 3.3. Legends........................................15
ARTICLE IV REGISTRATION RIGHTS................................................16
SECTION 4.1. Incidental Registrations.......................16
SECTION 4.2. Registration on Request........................17
SECTION 4.3. Registration Procedures........................20
SECTION 4.4. Information Supplied...........................24
SECTION 4.5. Restrictions on Disposition....................24
SECTION 4.6. Indemnification................................24
SECTION 4.7. Required Reports...............................27
SECTION 4.8. Selection of Counsel...........................27
SECTION 4.9. Holdback Agreement.............................27
SECTION 4.10. No Inconsistent Agreements.....................27
ARTICLE V EQUITY PURCHASE RIGHTS..............................................27
SECTION 5.1. Equity Purchase Rights.........................27
SECTION 5.2. Acquisition of Additional Shares of Common
Stock........................................28
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ARTICLE VI CERTAIN COVENANTS..................................................29
SECTION 6.1. HSR Approval...................................29
SECTION 6.2. Change in Control Transaction..................30
SECTION 6.3. Reservation of Shares..........................30
ARTICLE VII MISCELLANEOUS.....................................................30
SECTION 7.1. Lightyear Indemnification; Reimbursement of
Expenses.....................................30
SECTION 7.2. Termination....................................31
SECTION 7.3. Amendments and Waivers.........................31
SECTION 7.4. Successors, Assigns and Transferees............31
SECTION 7.5. Notices........................................31
SECTION 7.6. Further Assurances.............................32
SECTION 7.7. Entire Agreement...............................32
SECTION 7.8. Delays or Omissions............................32
SECTION 7.9. Governing Law; Jurisdiction; Waiver of Jury
Trial........................................32
SECTION 7.10. Severability...................................33
SECTION 7.11. Effective Date.................................33
SECTION 7.12. Enforcement....................................33
SECTION 7.13. Titles and Subtitles...........................33
SECTION 7.14. No Recourse....................................33
SECTION 7.15. Counterparts; Facsimile Signatures.............33
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PRIVATE BUSINESS, INC.
SECURITYHOLDERS AGREEMENT
THIS SECURITYHOLDERS AGREEMENT (this "Agreement") is entered into as
of January 20, 2004, among PRIVATE BUSINESS, INC., a Tennessee corporation
(the "Company") and LIGHTYEAR PBI HOLDINGS, LLC, a Delaware limited liability
company ("Lightyear").
RECITALS
WHEREAS, the Company and Lightyear have entered into an Amended and
Restated Securities Purchase Agreement, dated as of December 5, 2003, amended
and restated as of December 23, 2003 (as amended and restated, the "Securities
Purchase Agreement"), pursuant to which Lightyear will purchase (i) 20,000
newly issued shares of the Series A Preferred Stock, as defined below and (ii)
common stock purchase warrants (the "Warrants") to acquire 16,000,000 shares
(the "Warrant Shares") of the Company's Common Stock, as defined below;
WHEREAS, the parties hereto desire to enter into certain
arrangements relating to the Company, to be effective as of the Closing, as
defined below.
NOW, THEREFORE, in consideration of the foregoing recitals and of
the mutual promises hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used herein, the following
terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, for so
long as such Person remains so associated to the specified Person.
"as converted" means, with respect to any Warrants owned by
Lightyear and its Affiliates that are exercisable for Common Stock, such
Warrants on an as converted, exchanged or exercised basis.
"beneficial owner" or "beneficially own" has the meaning given such
term in Rule 13d-3 under the Exchange Act and a Person's beneficial ownership
of Common Stock or Preferred Stock or other Voting Securities of the Company
shall be calculated in accordance with the provisions of such Rule; provided,
however, that for purposes of determining beneficial ownership, (i) a Person
shall be deemed to be the beneficial owner of any security which may be
acquired by such Person whether within 60 days or thereafter, upon the
conversion, exchange or
exercise of any warrants, options, rights or other securities and (ii) no
Person shall be deemed to beneficially own any security solely as a result of
such Person's execution of this Agreement.
"Board" means the Board of Directors of the Company.
"Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in The
City of New York.
"Bylaws" means the Amended and Restated Bylaws of the Company, as in
effect on the date hereof and as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
the terms of the Charter.
"Capital Stock" means, with respect to any Person at any time, any
and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of capital stock, partnership
interests (whether general or limited) or equivalent ownership interests in or
issued by such Person, and with respect to the Company includes any and all
shares of Common Stock and Preferred Stock.
"Charter" means the Amended and Restated Charter of the Company, as
in effect on the date hereof, as amended and restated and supplemented to
date, and as the same may be amended, supplemented or otherwise modified from
time to time hereafter in accordance with the terms thereof and the terms of
this Agreement.
"Claims" has the meaning assigned to such term in Section 4.5(a).
"Change in Control Transaction" means a change in the beneficial
ownership of the Company's voting stock or a change in the composition of the
Board which occurs as follows:
(a) any "person" (as such term is used in section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934) is or becomes a beneficial owner,
directly or indirectly, of stock of the Company representing fifty percent
(50%) or more of the total voting power of the Company's then outstanding
stock (other than Lightyear and its Affiliates); or
(b) the Company's shareholders approve a plan of complete
liquidation of the Company or an agreement for the sale, lease or other
transfer by the Company of all or substantially all of the Company's assets
(or any transaction having similar effect).
"Closing" and "Closing Date" have the meanings assigned to such
terms in the Securities Purchase Agreement.
"Common Stock" means the common stock, no par value, of the Company
and any securities issued in respect thereof, or in substitution therefor, in
connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, consolidation, exchange or other
similar reorganization.
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"Continuing Directors" means the Directors nominated for election to
the Board by the Company and their successors, together with any Additional
Company Directors added to the Board pursuant to Section 2.8. The initial
Continuing Directors shall be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇.
"control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct
or cause the direction of the affairs or management of a Person, whether
through the ownership of voting securities, as trustee or executor, by
contract or otherwise.
"Demand Party" has the meaning assigned to such term in Section
4.2(a).
"Designations of Preferences" means the Designations of Preferences
with respect to the Series A Preferred Stock.
"Director" means any member of the Board.
"Equity Securities" means any and all shares of Capital Stock of the
Company, securities of the Company convertible into, or exchangeable or
exercisable for, such shares, and options, warrants or other rights to acquire
such shares.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Fair Market Value" means (A) with respect to any security that is
publicly held, listed or traded, the closing price of such security on a
specified date, which shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which the security is
listed or admitted to trading or, if the security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then
in use and (B) with respect to any other security or other property other than
cash, the fair value per share of such security or property as determined in
good faith by a majority of the disinterested members of the Board, based on
the advice of an independent financial advisor or valuation or appraisal
consultant, absent manifest error.
"Fully-Diluted Basis" with respect to Voting Securities means the
number of shares of Voting Securities which are issued and outstanding or
owned or held, as applicable, at the date of determination plus the number of
shares of Voting Securities issuable pursuant to any securities (other than
Voting Securities), warrants, rights or options then outstanding, convertible
into or exchangeable or exercisable for (whether or not subject to
contingencies or passage of time, or both), Voting Securities (including the
Warrants); provided, however, that for purposes of Section 6.2, such term
shall not include options, warrants or convertible securities having an
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exercise or strike price higher than the per share price to be paid in any
transaction subject to such section.
"GAAP" means generally accepted accounting principles, as in effect
in the United States of America from time to time.
"Group" has the meaning assigned to such term in Section 13(d)(3) of
the Exchange Act.
"Holder" means Lightyear, any other securityholder that purchased
shares of Series A Preferred Stock and Warrants from the Company on the
Closing Date and any transferee of any of the foregoing.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"incur" means, directly or indirectly, to incur, refinance, create,
assume, guarantee or otherwise become liable with respect to.
"Indemnified Parties" has the meaning assigned to such term in
Section 4.5(a).
"Issuance Notice" has the meaning assigned to such term in Section
5.1(b).
"Law" has the meaning assigned to such term in the Securities
Purchase Agreement.
"Lightyear Director" means any Director nominated for election to
the Board by Lightyear pursuant to Section 2.1 of this Agreement together with
any Additional Lightyear Directors added to the Board pursuant to Section 2.8.
"Lightyear Indemnitee" has the meaning assigned to such term in
Section 7.1.
"Losses" has the meaning assigned to such term in Section 7.1.
"Material Event" means (i) any voluntary or involuntary
reorganization, reclassification, dissolution, liquidation, or winding-up of
the affairs of the Company or any filing for bankruptcy or receivership, (ii)
any Person or Group other than Lightyear is or becomes the beneficial owner
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
more than 50% of the total Voting Securities of the Company, (iii) the Company
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person or Group (other than by way of
merger or consolidation), other than Lightyear, (iv) any transaction or series
of related transactions if, immediately following such transaction or series
of related transactions the holders of Common Stock and the Series A Preferred
Stock outstanding immediately prior to such transaction or series of
transactions own less than 50% of the outstanding Voting Securities of the
surviving or transferee corporation (and its ultimate parent corporation), (v)
any merger or consolidation in which the Company is not the survivor or (vi)
the adoption of a plan relating to the liquidation or dissolution of the
Company.
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"NASD" means the National Association of Securities Dealers, Inc.
"Nasdaq" means the Nasdaq National Market and the Nasdaq Small Cap
Market.
"New Securities" means Equity Securities of the Company (other than
(i) shares of Common Stock issuable upon the exercise of the Warrant and (ii)
shares of Common Stock issued upon the exercise of employee stock options in
connection with such option holder's participation in a Change of Control
Transaction). For the avoidance of doubt, New Securities would include shares
of Common Stock that may be purchased pursuant to rights, options or warrants
issued by the Company to holders of its Common Stock entitling them to
subscribe for, purchase or acquire shares of Common Stock.
"Other Holders" means Persons other than Holders who, by virtue of
agreements with the Company, are entitled to include their securities in
certain registrations hereunder.
"Other Securities" means securities of the Company, other than
Registrable Securities which, by virtue of agreements between Other Holders
and the Company, are entitled to be included in certain registrations
hereunder.
"Permitted Transferee" means, with respect to Lightyear (A)
Lightyear's officers, employees or consultants, (B) any corporation or
corporations, partnership or partnerships (or other entity for collective
investment, such as a fund) which is (and continues to be) an Affiliate of
Lightyear, (C) the partners of Lightyear and the general or limited partners
of such partners in the case of a distribution by Lightyear and (D) any other
Person to whom Lightyear transfers the Series A Preferred Stock, the Warrants
or the Warrant Shares.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, governmental
authority or other entity.
"Preferred Stock" means, collectively, the Series A Preferred Stock,
the Series B Preferred Stock, any other series of preferred stock of the
Company and any securities issued in respect thereof, or in substitution
therefor, in connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, consolidation, exchange or other
similar reorganization.
"Pro Rata Portion" means, on any issuance date for New Securities,
the number or amount of New Securities equal to the product of (i) the total
number or amount of New Securities to be issued by the Company on such date
and (ii) the fraction determined by dividing (A) the number of shares of
Common Stock into which the Warrants held by Lightyear and its Affiliates are
then exercisable by (B) the total number of shares of Common Stock outstanding
on such date (assuming, for the purposes of clause (B), that the Warrants have
been exercised in full).
"Registrable Securities" means (i) any shares of Common Stock
issuable upon exercise of the Warrants held by any Holder and (ii) any shares
of Common Stock (including any shares of Common Stock issuable upon the
exercise, exchange or conversion of Equity
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Securities) acquired by Lightyear pursuant to the exercise of its rights under
Section 5.1. As to any particular Registrable Securities, once issued, such
Registrable Securities shall cease to be Registrable Securities when (a) a
registration statement with respect to the sale by the Holder of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) such securities shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act, or
(c) such securities shall have ceased to be outstanding. For purposes of this
Agreement, any required calculation of the amount of, or percentage of,
Registrable Securities shall be based on the number of shares of Common Stock
which are Registrable Securities, including shares of Common Stock issuable
upon the exercise of the Warrants.
"Registration Expenses" means any and all expenses incident to
performance of or compliance with Article IV of this Agreement, including (a)
all SEC and securities exchange or NASD registration and filing fees
(including, if applicable, the fees and expenses of any "qualified independent
underwriter," as such term is defined in Schedule E to the bylaws of the NASD,
and of its counsel), (b) all fees and expenses of complying with securities or
blue sky laws (including fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities), (c) all printing, messenger and delivery expenses, (d) all fees
and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange or the Nasdaq Stock Market pursuant to
Section 4.3(h)(i) and all rating agency fees, (e) the fees and disbursements
of counsel for the Company and of its independent public accountants,
including the expenses of any special audits and/or "cold comfort" letters
required by or incident to such performance and compliance, (f) the reasonable
fees and disbursements of counsel selected pursuant to Section 4.8, (g) any
fees and disbursements of underwriters customarily paid by the issuers or
sellers of securities, including liability insurance if the Company so desires
or if the underwriters so require, and the reasonable fees and expenses of any
special experts retained by the Company in connection with the requested
registration, but excluding underwriting discounts and commissions (or the
equivalent thereof) and transfer taxes, if any, and (h) expenses incurred in
connection with any road show (including the reasonable out-of-pocket expenses
of Lightyear).
"SEC" means the U.S. Securities and Exchange Commission or any other
federal agency then administering the Securities Act or the Exchange Act and
other federal securities laws.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Series A Preferred Stock" means the 20,000 shares of series A
preferred stock, no par value, of the Company.
"Stockholder Approval" has the meaning assigned to such term in the
Securities Purchase Agreement.
"Subsidiary" means (i) any corporation of which a majority of the
securities entitled to vote generally in the election of directors thereof, at
the time as of which any
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determination is being made, are owned by another entity, either directly or
indirectly, and (ii) any joint venture, general or limited partnership,
limited liability company or other legal entity in which an entity is the
record or beneficial owner, directly or indirectly, of a majority of the
voting interests or the general partner.
"Transfer" means, directly or indirectly, to sell, transfer, assign,
pledge, encumber, hypothecate or similarly dispose of, either voluntarily or
involuntarily, or to enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, assignment, pledge,
encumbrance, hypothecation or similar disposition of, any shares of Equity
Securities beneficially owned by a Person or any interest in any shares of
Equity Securities beneficially owned by a Person.
"Transferee" means any Person to whom Lightyear or any of its
Affiliates or any Transferee thereof Transfers Equity Securities of the
Company, including Permitted Transferees, in accordance with the terms hereof.
"Voting Power" means, shall mean, with respect to any issued and
outstanding Voting Securities of the Company beneficially owned (within the
meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, by any
Person (including as beneficially owned for purposes of this calculation the
Warrant Shares underlying any portion of the Warrant held by such Person;
provided, however, that to the extent such Person also owns shares of Series A
Preferred Stock, the number of votes that may be cast by such Person in
respect of the Series A Preferred Stock shall be deemed to be reduced pursuant
to Section 5(b) hereof as if the Warrant Shares beneficially owned by such
Person were issued and outstanding), the aggregate number of votes that may be
cast in an election of Directors of the Company by all such Voting Securities
divided by the aggregate number of votes that may be cast in an election of
Directors of the Company by all shares of Voting Securities of the Company
then issued and outstanding (not counting shares held in the treasury of the
Company but including the Warrant Shares; provided that in making such
calculation the number of votes that may be cast by all holders of Series A
Preferred Stock shall be deemed to be reduced pursuant to Section 5(b) hereof
as if all Warrant Shares relating to the portion of the Warrant then
outstanding were outstanding); provided, that in the event any portion of the
Warrants shall have been transferred by Lightyear to a third party that is not
an Affiliate of Lightyear, the number of votes that may be cast by Lightyear
in respect of the Series A Preferred Stock shall be deemed to be reduced
pursuant to Section 5(b) hereof as if the shares of Common Stock represented
by the portion of the Warrant so transferred had been issued to the holder
thereof upon exercise of the Warrant for cash.
"Voting Securities" means, at any time, shares of any class of
Equity Securities of the Company which are then entitled to vote in the
election of Directors.
"Warrant" has the meaning assigned to such term in the Recitals.
"Warrant Agreement" means the Warrant Agreement by and between the
Company and Lightyear, dated as of the date hereof.
"Warrant Shares" has the meaning assigned to such term in the
Recitals.
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SECTION 1.2. Other Definitional Provisions. (a) The words "hereof",
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Article and Section references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Whenever the words "include", "including" or "includes" appear
in this Agreement, they shall be read to be followed by the words "without
limitation" or words having similar import.
ARTICLE II
CORPORATE GOVERNANCE
SECTION 2.1. Board Representation. (a) Effective as of the Closing,
the Board shall be comprised of seven (7) Directors. Three of the Directors
shall be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, each of which is
currently on the Company's Board of Directors. Upon Closing, resignations of
the Company's existing Directors other than the Continuing Directors shall
become effective. Immediately following the effectiveness of such
resignations, the Company shall take such actions as may be required under
applicable Law to cause the Board to consist of the number of Directors
specified in this Section 2.1(a) and to cause the Board to elect the four (4)
nominees identified by Lightyear to fill the vacancies on the Board.
Thereafter, the Company shall take such actions as may be required under
applicable Law to cause the Board to nominate the four (4) nominees identified
by Lightyear to serve as Directors. The Company shall also take such action as
may be required under applicable Law, the Charter and the Bylaws to cause the
nominees of Lightyear who are elected to the Board to be divided as equally as
practicable among each class of Directors.
(b) In the event that a vacancy in the Board is created at any time
by the death, disability, retirement, resignation or removal (with or without
cause) of any Lightyear Director, Lightyear may designate another individual
to be elected to fill the vacancy created thereby, and the Company shall cause
the vacancy created thereby to be filled by such new designee as soon as
possible, and the Company hereby agrees to take, at any time and from time to
time, all actions necessary to accomplish the same. In the event that a
vacancy in the Board is created at any time by the death, disability,
retirement, resignation or removal (with or without cause) of any Continuing
Director, the remaining Continuing Directors may designate another individual
to be elected to fill the vacancy created thereby, and the Company shall cause
the vacancy created thereby to be filled by such new designee as soon as
possible, and the Company hereby agrees to take, at any time and from time to
time, all actions necessary to accomplish the same.
(c) Without the prior written consent of Lightyear, the Company
agrees not to take any action that would cause the number of Directors
constituting the entire Board to be
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other than seven (7) at any time after the date of the Agreement, and
Lightyear agrees that neither it nor the Lightyear Directors will take any
such action (other than the resignation of any Director) without the consent
of a majority of the Continuing Directors.
(d) The Company agrees to use its best efforts to cause the election
of each nominee of Lightyear to the Board, including nominating such
individuals to be elected as Directors as provided herein. Lightyear agrees to
use its best efforts to cause the election of each nominee of the Continuing
Directors to the Board, including nominating such individuals to be elected as
Directors as provided herein.
(e) Lightyear agrees that any of the Continuing Directors or their
successors shall have the right to enforce, on behalf of the Company, this
Section 2.1 as it relates to Continuing Directors, without the consent of
Lightyear.
SECTION 2.2. Committees. If requested by Lightyear, the Company
shall cause any executive committee, compensation committee, audit committee,
investment committee, governance committee, nominating committee or other
committee of the Board to include at least one Lightyear Director, to the
extent consistent with applicable Law. To the extent that applicable Law would
preclude any Lightyear Director from serving on any such committee, the
Company shall consult with Lightyear to identify a suitable alternative
consistent with applicable Law that would as nearly as practicable effectuate
the intent of this provision, including having a representative of Lightyear
serve as an observer on such committee.
SECTION 2.3. Consent Rights. So long as Lightyear, together with its
Affiliates, shall own, directly or indirectly, (i) shares of Series A
Preferred Stock, (ii) Warrants (considered on an as converted basis assuming
an exercise for cash) or (iii) shares of Common Stock issued upon any exercise
of the Warrant (collectively, the "Lightyear Securities"), representing not
less than 10% (or, in the case of clauses (c), (d), (g), (h) and (i) below,
25%) of the Voting Power of the Company (provided, however, that for purposes
of the foregoing calculation, shares of Voting Securities of the Company (or
shares of Voting Securities of the Company issued upon the exercise of Equity
Securities) issued after the time that the Lightyear Directors shall cease to
represent a majority of the Board shall not be taken into account in
determining the Voting Power represented by the Lightyear Securities unless
Lightyear shall have exercised its rights under Section 5.1 in respect
thereof), in addition to any vote or consent of the Board or the shareholders
of the Company required by Law, the Charter or the Designations of
Preferences, the consent in writing of Lightyear shall be necessary for
authorizing, effecting or validating the following actions by the Company or
its Subsidiaries:
(a) any amendment, alteration or change to any provision of, or any
addition to or repealing of, any provision of the Charter, including the
Designations of Preferences for the Series B Preferred Stock, or the Bylaws so
as to adversely affect the rights, preferences, privileges or powers of the
holders of the Warrants (whether in respect of the Warrants or in respect of
the underlying shares of Common Stock);
(b) entering into any direct or indirect transaction by the Company
or any of its Subsidiaries with an Affiliate of the Company except (i)
transactions in the ordinary course of
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business that are on terms and conditions no less favorable to the Company or
such Subsidiary than could be obtained on an arm's length basis from unrelated
third parties or (ii) transactions between the Company and any of its
wholly-owned Subsidiaries not involving any other Affiliate;
(c) any acquisition of securities or assets of another Person by the
Company or any Subsidiary (whether any such acquisition was effectuated by
merger, consolidation or otherwise) whether in a single transaction or series
of related transactions, having an aggregate purchase price in excess of
$100,000;
(d) any sale, lease, transfer or disposition of securities or assets
of the Company or any of its Subsidiaries (including any spin-off or in-kind
distribution to shareholders of the Company), whether in a single transaction
or series of related transactions, having aggregate proceeds in excess of
$100,000;
(e) engaging in any transaction or series of related transactions
constituting a Material Event;
(f) any increase in the number of Directors or any change in the
structure of the Board;
(g) (A) the removal of the chief executive officer or president (or,
if there are no officers with such titles, the officers whose responsibility
is executive oversight of the Company's and its Subsidiaries' operations), or
the appointment of any person to fill a vacancy in any such office, or (B)
approval of any new, or modification of any existing compensation or benefit
plan, agreement or arrangement in which or to which the chief executive
officer or president (or other executive officer as aforesaid) or any member
of the Board is a participant or is a party, offered by the Company or any of
its Subsidiaries, including any stock option plan;
(h) any incurrence of additional indebtedness for borrowed money in
excess of $5 million, except (a) any refinancing of existing indebtedness or
existing commitments under the Company Credit Agreement; provided that (i) the
aggregate principal amount of "refinancing indebtedness" or commitments does
not exceed the principal amount or commitment amount of the indebtedness
refinanced and (ii) the "refinancing indebtedness" has a final maturity and
"average life" later than that of the indebtedness being refinanced;
(i) any amendment, alteration or change to the annual budget or
business plan of the Company as approved by the Board for the then current
fiscal year; or
(j) any arrangement or contract to do any of the foregoing.
SECTION 2.4. Available Financial Information; Access. (a) The
Company will deliver, or will cause to be delivered, the following to
Lightyear as promptly as they shall become available:
(i) as soon as practical after the end of each month and
in any event within thirty (30) days thereafter, a consolidated
balance sheet of the Company
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and its Subsidiaries as of the end of such month and consolidated
statements of income and cash flows of the Company and its
Subsidiaries, for each month and for the current fiscal year of the
Company to date, all subject to normal year-end audit adjustments,
prepared in accordance with GAAP and certified by the Company (by
the principal financial or accounting officer of the Company),
together with a comparison of such statements to the corresponding
periods of the prior fiscal year and to the Company's business plan
then in effect and approved by the Board; and
(ii) an annual budget, a business plan and financial
forecasts for the Company for the next fiscal year of the Company,
no later than thirty (30) days before the beginning of the Company's
next fiscal year, in such manner and form as approved by the Board
or, in the event that the Lightyear Directors constitute a majority
of the Board, if not so approved in such manner and form, as
submitted to the Board for approval, which shall include at least a
projection of income and a projected cash flow statement for each
fiscal quarter in such fiscal year and a projected balance sheet as
of the end of each fiscal quarter in such fiscal year. Any material
changes in such business plan shall be delivered to the Lightyear
Directors or Lightyear, as the case may be, as promptly as
practicable after such changes have been approved by the Board or
submitted to the Board for approval, as the case may be.
(b) The Company will promptly deliver to Lightyear when available
one copy of each annual report on Form 10-K and quarterly report on Form 10-Q
of the Company, as filed with the SEC. In the event the Company is not
required to file an annual report on Form 10-K or quarterly report on Form
10-Q, the Company may, in lieu of the requirements of the preceding sentence,
deliver, or cause to be delivered, the following to Lightyear:
(i) as soon as practicable after the end of each fiscal
year of the Company, and in any event within ninety (90) days
thereafter, a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such fiscal year, and consolidated
statements of income and cash flows of the Company and its
Subsidiaries for such year, prepared in accordance with GAAP and
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and accompanied by or
followed as promptly thereafter as practicable by (to the extent not
available) the opinion of independent public accountants of
recognized national standing selected by the Company, and a
Company-prepared comparison to the Company's business plan for such
year as approved by the Board; and
(ii) as soon as practicable after the end of the first,
second and third quarterly accounting periods in each fiscal year of
the Company, and in any event within forty-five (45) days
thereafter, a consolidated balance sheet of the Company and its
Subsidiaries as of the end of each such quarterly period, and
consolidated statements of income and cash flows of the Company and
its Subsidiaries for such period and for the current fiscal year to
date, prepared in
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accordance with GAAP and setting forth in comparative form the
figures for the corresponding periods of the previous fiscal year
and to the Company's business plan then in effect and approved by
the Board, subject to changes resulting from normal year-end audit
adjustments, all in reasonable detail and certified by the principal
financial or accounting officer of the Company, except that such
financial statements need not contain the notes required by GAAP.
(c) The Company shall, and shall cause its Subsidiaries, officers,
directors, employees, auditors and other agents to, (a) afford the officers,
employees, auditors and other agents of Lightyear and Affiliates, during
normal business hours reasonable access at all reasonable times to its
officers, employees, auditors, legal counsel, properties, offices, plants and
other facilities and to all books and records, (b) furnish Lightyear and its
Affiliates with all financial, operating and other data and information as
Lightyear and its Affiliates, through their officers, employees, agents or
representatives, may from time to time reasonably request and (c) afford
Lightyear and its Affiliates the opportunity to discuss the Company's affairs,
finances and accounts with the Company's officers from time to time as
Lightyear may reasonably request.
SECTION 2.5. Board Procedures. Unless otherwise agreed by the
parties hereto, or approved by the Board with the consent of at least one
Lightyear Director, the Board shall follow the following procedures:
(a) Meetings. Special Meetings of the Board may be held at any time
permitted pursuant to the Bylaws, by oral, telephonic, telegraphic or
facsimile notice duly given or sent, or by written notice sent by two-day
courier, in each case to be received at least two days before any actions to
be taken by written resolution, at least three days before any telephonic
meeting and at least seven days before any in-person meeting to each director.
Reasonable efforts shall be made to ensure that each Director actually
receives timely notice of any meeting.
(b) Agenda. A reasonably detailed agenda shall be supplied to each
Lightyear Director reasonably in advance of each meeting of the Board,
together with other appropriate documentation with respect to agenda items
calling for Board action, to inform adequately Lightyear Directors regarding
matters to come before the Board. Any Lightyear Director wishing to place a
matter on the agenda for any meeting of the Board may do so by communicating
with the chairman of the Board sufficiently in advance of the meeting of the
Board so as to permit timely dissemination to all directors of information
with respect to the agenda.
(c) Reimbursement of Expenses. The Company shall reimburse the
Directors for their reasonable out-of-pocket expenses incurred by them for the
purpose of attending meetings of the Board or committees thereof.
SECTION 2.6. Termination of Director Designees and Related Rights.
Notwithstanding Sections 2.1 and 2.3, at such time as Lightyear, together with
its Affiliates, shall own, directly or indirectly, in the aggregate:
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(a) Lightyear Securities representing less than 50% of the Voting
Power of the Company (subject to the proviso in the first sentence of Section
2.3), Lightyear and its Affiliates shall have the right to designate three (3)
nominees for election as Directors pursuant to Section 2.1;
(b) Lightyear Securities representing less than 28.6% of the Voting
Power of the Company (subject to the proviso in the first sentence of Section
2.3), Lightyear and its Affiliates shall have the right to designate two (2)
nominees for election as a Director pursuant to Section 2.1;
(c) Lightyear Securities representing less than 14.3% of the Voting
Power of the Company (subject to the proviso in the first sentence of Section
2.3), Lightyear and its Affiliates shall have the right to designate one (1)
nominee for election as a Director pursuant to Section 2.1;
(d) Lightyear Securities representing less than 10% of the Voting
Power of the Company (subject to the proviso in the first sentence of Section
2.3), Lightyear and its Affiliates shall have no right to consent to certain
corporate actions, as provided in Section 2.3; and
(e) Lightyear Securities representing less than 10% of the Voting
Power of the Company (subject to the proviso in the first sentence of Section
2.3), Lightyear and its Affiliates shall have no right to designate nominees
for election as Directors pursuant to Section 2.1.
Except as provided in the following sentence, no director nominated
by Lightyear shall be required to resign from the Board during such director's
term notwithstanding any reduction in the number of directors that Lightyear
shall have the right to nominate to the Board as set forth above. Such
reductions shall be effected by limiting the number of directors that
Lightyear may nominate in respect of the next annual meeting of shareholders
of the Company; provided, however, that to the extent that the number of
Lightyear Directors that are members of the class of directors whose terms
expire at the next annual meeting of shareholders of the Company is less than
the number of directors that Lightyear no longer has the right to nominate, a
number of Lightyear Directors shall tender their resignation effective at such
next annual meeting of shareholders such that immediately following such
annual meeting there shall be no more Lightyear Directors on the Board than
the number of nominations to which Lightyear is entitled pursuant to this
Section 2.6. The percentages set forth in this Section 2.6 may be increased by
mutual consent of the parties as necessary to obtain approval of the NASD of
the transactions contemplated by the Securities Purchase Agreement, in which
case such percentages shall be replaced by the percentages set forth in
Schedule 2.6 attached hereto.
SECTION 2.7. Director Elections. So long Lightyear has the right to
nominate at least three Directors to the Board, Lightyear agrees to cause its
Voting Securities to be voted for the nominees identified by the Continuing
Directors for election as Directors; provided that with respect to any
election of Directors in respect of which any Person other than the Company is
soliciting proxies, Lightyear shall cause its Voting Securities to be voted
for the
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nominees identified for election as Director by the Continuing Directors in
the same proportion as the votes cast by the other holders of Voting
Securities as between nominees for election as Director identified by
Lightyear and a comparable number of nominees for election as Director
identified by the Continuing Directors.
SECTION 2.8. Additional Directors. Notwithstanding anything herein
to the contrary, in the event that the Company is required to, or determines
to (other than as a result of the Company ceasing to be a "controlled company"
for purposes of the Nasdaq Marketplace Rules), add one or more Directors to
the Board in order to satisfy any requirement of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002, the federal securities laws, including the Securities Act and the
Exchange Act, the requirements of the NASD or the Nasdaq Small Cap Market or
any other exchange or quotation system on which the Company's Common Stock is
listed or quoted (the "Additional Company Directors"), Lightyear shall have
the right to nominate a number of additional Directors equal to the number of
Additional Company Directors so added to the Board (the "Additional Lightyear
Directors"). In the event Lightyear has the right to nominate two (2) or more
Additional Lightyear Directors, then the number of nominees in clauses 2.6(a),
2.6(b) and 2.6(c), respectively, shall be increased such that the proportion
of Lightyear Directors on the Board after the addition of such Additional
Directors shall reflect, as close as practicable, the same proportion of
Lightyear Directors on the Board prior to such addition of Additional
Directors. Any Additional Company Directors shall be selected by a committee
comprised of two Continuing Directors and two Lightyear Directors. The Company
shall take such action as may be required under applicable Law, the Charter
and the Bylaws to cause the Additional Company Directors and the Additional
Lightyear Directors to be divided as equally as practicable among each class
of Directors.
ARTICLE III
TRANSFERS
SECTION 3.1. Lightyear Transferees.
(a) Subject to Section 3.1(b), no Transferee of Lightyear shall be
obligated, or entitled to rights, under this Agreement.
(b) No Transferee shall have any rights or obligations under this
Agreement, except to the extent that Lightyear shall expressly assign all or a
portion of its rights and obligations hereunder (including under Article II
and Article IV) to such Transferee (and such rights shall be further
transferable to any further Transferee subject to this Section 3.1(b));
provided, that (and notwithstanding Section 2.6), with respect to the rights
granted to Lightyear pursuant to Article II, no Transferee shall be entitled
to such rights unless such Transferee shall hold Lightyear Securities (and/or
other Voting Securities) representing the applicable percentage of Voting
Power of the Company that would be required for Lightyear to continue to enjoy
such rights; provided, further, that only one of Lightyear or its Transferee
(or subsequent Transferee), and not more than one Person at any time, shall
have each consent right provided in Section 2.3; provided, further, that
subject to the requirement that any holder of rights meet the requisite
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Voting Power percentage, the total number of Director nominees (pursuant to
Section 2.1(a)) or Registrations on request (pursuant to Section 4.2(a)(ii))
may be allocated between Lightyear and its Transferee.
(c) Prior to the consummation of a Transfer from Lightyear, to the
extent rights and obligations are to be assigned, and as a condition thereto,
the applicable Transferee shall (i) agree in writing with the other parties
hereto to be bound by the terms and conditions of this Agreement to the extent
described in Section 3.1(b) and (ii) provide the Company and the other parties
to this Agreement at such time complete information for notices under this
Agreement.
SECTION 3.2. Transfer Restrictions. (a) Lightyear shall not Transfer
any shares of Series A Preferred Stock or Warrants if such transfer would
violate the terms and conditions of this Agreement or the Warrant Agreement,
as applicable. Any attempt to transfer any shares of Series A Preferred Stock
or Warrants in violation of the preceding sentence shall be null and void.
(b) Notwithstanding anything to the contrary in this Agreement or
the Warrant Agreement, any transfer permitted or required by this Agreement
shall be in compliance with federal and state securities laws, including the
Securities Act.
(c) Lightyear may Transfer any or all of its shares of Series A
Preferred Stock or Warrants, and assign its rights hereunder, to any Permitted
Transferee of Lightyear. As a condition precedent to any such transfer, the
Permitted Transferee shall execute an instrument pursuant to which such
Permitted Transferee agrees to be bound by and to comply with the terms of
this Agreement, and obtains the rights and benefits that inure to, the
transferor as though the Permitted Transferee were such transferor. Upon
execution of such instrument, the Permitted Transferee shall be deemed a
Holder hereunder. Any Transfer to a Permitted Transferee not made in full
compliance with this Section 3.2(c) shall be void and of no effect.
SECTION 3.3. Legends. (a) Each certificate representing shares of
Series A Preferred Stock and the Common Stock into which the Warrants are
exercisable will bear a legend on the face thereof substantially to the
following effect (with such additions thereto or changes therein as the
Company may be advised by counsel are required by law or necessary to give
full effect to this Agreement, the "Stock Legend"):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE
SECURITIES LAWS AND CANNOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION
FROM REGISTRATION UNDER THE ACT AND REGULATIONS PROMULGATED
THEREUNDER AND APPLICABLE STATE SECURITIES LAWS."
(b) The Warrant will bear a legend on the face thereof substantially
to the following effect (with such additions thereto or changes therein as the
Company may be advised
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by counsel are required by law or necessary to give full effect to this
Agreement, the "Warrant Legend"):
"THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED, NOR WILL ANY ASSIGNEE OR ENDORSEE HEREOF BE RECOGNIZED
AS AN OWNER OR HOLDER HEREOF BY THE COMPANY FOR ANY PURPOSE IN THE
ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND REGULATIONS PROMULGATED THEREUNDER AND
APPLICABLE STATE SECURITIES LAWS."
The Stock Legend or the Warrant Legend, as the case may be, will be removed by
the Company by the delivery of substitute certificates without such Legend
upon receipt of a legal opinion from counsel reasonably satisfactory to the
Company to the effect that the legend is no longer required for purposes of
applicable securities laws.
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.1. Incidental Registrations. (a) If the Company at any
time after the date hereof proposes to register Equity Securities under the
Securities Act (other than a registration on Form S-4 or S-8, or any successor
or other forms promulgated for similar purposes), whether or not for sale for
its own account, in a manner which would permit registration of Registrable
Securities for sale to the public under the Securities Act, it will, at each
such time, give prompt written notice to all Holders of its intention to do so
and of such Holders' rights under this Article IV. Upon the written request of
any such Holder made within 15 days after the receipt of any such notice
(which request shall specify the Registrable Securities intended to be
disposed of by such Holder), the Company will use its reasonable best efforts
to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the Holders
thereof; provided, that (i) if, at any time after giving written notice of its
intention to register any securities, the Company shall determine for any
reason not to proceed with the proposed registration of the securities to be
sold by it, the Company may, at its election, give written notice of such
determination to each Holder and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), and (ii) if such registration involves an underwritten
offering, all Holders requesting to be included in the Company's registration
must sell their Registrable Securities to the underwriters selected by the
Company on the same terms and conditions as apply to the Company, with such
differences, including any with respect to indemnification and liability
insurance, as may be customary or appropriate in combined primary and
secondary offerings. If a registration requested pursuant to this Section
involves an underwritten public offering, any Holder requesting to be included
in such registration may elect, in writing prior to the effective
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date of the registration statement filed in connection with such registration,
not to register all or any part of such securities in connection with such
registration. Nothing in this Section shall operate to limit the right of any
Holder to request the registration of Common Stock issuable upon conversion,
exchange or exercise of securities held by such Holder notwithstanding the
fact that at the time of request such Holder does not hold the Common Stock
underlying such securities. The registrations provided for in this Section 4.1
are in addition to, and not in lieu of, registrations made upon the request of
Lightyear in accordance with Section 4.2.
(b) Expenses. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 4.1.
(c) Priority in Incidental Registrations. If a registration pursuant
to this Section 4.1 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
Registrable Securities requested to be included in such registration would be
likely to have an adverse effect on the price, timing or distribution of the
securities to be offered in such offering as contemplated by the Company
(other than the Registrable Securities), then the Company shall include in
such registration (a) first, 100% of the securities the Company proposes to
sell, (b) second, any Other Securities requested to be registered by any Other
Holders exercising a demand registration right, and (c) third, to the extent
of the amount of Registrable Securities and Other Securities requested to be
included in such registration which, in the opinion of such managing
underwriter, can be sold without having the adverse effect referred to above,
the amount of Registrable Securities and Other Securities which the Holders
and the Other Holders have requested to be included in such registration, such
amount to be allocated pro rata among all requesting Holders and the Other
Holders on the basis of the relative amount of Registrable Securities and
Other Securities requested to be included in such registration by each such
Holder and Other Holder.
SECTION 4.2. Registration on Request. (a) At any time after the date
that is 180 days from the date hereof, upon the written request of Holders of
Registrable Securities representing at least 10% of the outstanding Common
Stock (provided that prior to the first anniversary of the date hereof, such
request must come from Holders of, and must be with respect to the
registration of, a number of Registrable Securities such that following such
registration, the Voting Power then represented by the Lightyear Securities
would represent less than 25% of the then outstanding Voting Power of the
Company) (provided that no Permitted Transferee of Lightyear or its Affiliates
or of any Permitted Transferee shall be permitted to request a registration
pursuant to this Section 4.2 unless the right to make such a request was
transferred to such Permitted Transferee pursuant to Section 3.2(c)) (the
"Demand Party") requesting that the Company effect the registration under the
Securities Act of all or part of such Demand Party's Registrable Securities
(provided that (i) the reasonably anticipated aggregate price to the public of
such Registrable Securities shall be at least $8 million or (ii) after the
first anniversary of the date hereof, the number of Registrable Securities
sought to be registered shall be equal to at least 10% of the outstanding
Common Stock of the Company) and specifying the amount and intended method of
disposition thereof, including pursuant to a shelf registration statement
utilizing Rule 415 under the Securities Act, the Company will promptly give
written notice of such requested registration to all other Holders, and
thereupon will, as expeditiously as possible, use its reasonable best efforts
to effect the registration under the Securities Act of:
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(i) the Registrable Securities which the Company has been
so requested to register by the Demand Party; and
(ii) all other Registrable Securities which the Company
has been requested to register by any other Holder thereof by
written request given to the Company within 15 days after the giving
of such written notice by the Company (which request shall specify
the amount and intended method of disposition of such Registrable
Securities), all to the extent necessary to permit the disposition
(in accordance with the intended method thereof as aforesaid) of the
Registrable Securities so to be registered; provided, that in no
event shall the Company be required to effect more than four
registrations pursuant to this Section 4.2 in respect of the Warrant
Shares; and provided, further, that the Company shall not be
obligated to file a registration statement relating to any
registration request under this Section 4.2 within a period of 180
days after the effective date of any other registration statement
relating to any registration request under this Section 4.2 or to
any registration effected under Section 4.1, in either case which
was not effected on Form S-3 (or any successor or similar short-form
registration statement). Nothing in this Section 4.2 shall operate
to limit the right of any Holder to request the registration of
Common Stock issuable upon exercise of the Warrants notwithstanding
the fact that at the time of request such Holder does not hold the
Common Stock underlying such securities.
(b) Top-Up Shares. In any registration pursuant to Section 4.2(a) in
which the aggregate price to the public of all Registrable Securities included
therein is not reasonably expected to exceed $25 million, the Company shall
add to such registration that number of shares of Registrable Securities as
would have an aggregate value, at the reasonably anticipated price per share,
such that the reasonably anticipated aggregate price to the public of all
Registrable Securities included therein shall equal $25 million (the "Top-Up
Shares") and shall cause such Top-Up Shares to be offered by the Company in
such registration together with the Registrable Securities offered by
Lightyear and any other Holders therein; provided, however, that the number of
Top-Up Shares shall be reduced on a share for share basis by up to 50% to the
extent other Holders or Other Holders exercise incidental registration rights
in connection with such registration.
(c) Registration Statement Form. The Company shall select the
registration statement form for any registration pursuant to this Section 4.2;
provided, that if any registration requested pursuant to this Section 4.2
which is proposed by the Company to be effected by the filing of a
registration statement on Form S-3 (or any successor or similar short-form
registration statement) shall be in connection with an underwritten public
offering, and if the managing underwriter shall advise the Company in writing
that, in its opinion, the use of another form of registration statement is of
material importance to the success of such proposed offering, then such
registration shall be effected on such other form.
(d) Expenses. The Company will pay all Registration Expenses in
connection with registrations of each class or series of Registrable
Securities pursuant to this Section 4.2.
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(e) Effective Registration Statement. A registration requested
pursuant to this Section 4.2 will not be deemed to have been effected unless
it has become effective and all of the Registrable Securities registered
thereunder have been sold or, in the case of a shelf registration statement,
can be sold thereunder.
(f) Selection of Underwriters. If a requested registration pursuant
to this Section 4.2 involves an underwritten offering, the investment
banker(s), underwriter(s) and manager(s) for such registration shall be
selected by the Holders of a majority of the Registrable Securities which the
Company has been requested to register; provided, however, that such
investment banker(s), underwriter(s) and manager(s) shall be reasonably
satisfactory to the Company.
(g) Priority in Requested Registrations. If a requested registration
pursuant to this Section 4.2 involves an underwritten offering and the
managing underwriter advises the Company in writing that, in its opinion, the
number of securities to be included in such registration (including securities
of the Company which are not Registrable Securities) would be likely to have
an adverse effect on the price, timing or distribution of the securities to be
offered in such offering as contemplated by the Holders (an "Adverse Effect"),
then the Company shall include in such registration (a) first, 100% of the
Registrable Securities requested to be included in such registration by the
Demand Party and all other Holders of Registrable Securities pursuant to this
Section 4.2 (to the extent that the managing underwriter believes that all
such Registrable Securities can be sold in such offering without having an
Adverse Effect; provided, that if the managing underwriter does not so believe
and the Demand Party does not exercise its right set forth in the second
succeeding sentence of this clause (f), such lesser number of Registrable
Securities as specified by the Demand Party) and (b) second, to the extent the
managing underwriter believes additional securities can be sold in the
offering without having an Adverse Effect, the amount of Other Securities
requested to be included by Other Holders in such registration, allocated pro
rata among all requesting Other Holders on the basis of the relative amount of
all Other Securities requested to be included in such registration. In the
event that the number of Registrable Securities and Other Securities to be
included in such registration is less than the number which, in the opinion of
the managing underwriter, can be sold without having an Adverse Effect, the
Company may include in such registration the securities the Company proposes
to sell up to the number of securities that, in the opinion of such managing
underwriter, can be sold without having an Adverse Effect. If the managing
underwriter of any underwritten offering shall advise the Holders
participating in a registration pursuant to this Section 4.2 that the
Registrable Securities covered by the registration statement cannot be sold in
such offering within a price range acceptable to the Demand Party, then the
Demand Party shall have the right to notify the Company that it has determined
that the number of shares to be included in such registration shall be reduced
to a number that allows an offering in the price range or that the
registration statement be abandoned or withdrawn, in which event the Company
shall effect the reduction, or abandon or withdraw such registration
statement; provided, however, that if (i) Holders of Registrable Securities
other than the Demand Party are participating in such registration pursuant to
Section 4.2(a) or (ii) the Company has included Top-Up Shares in such
registration pursuant to Section 4.2(b) and the Demand Party shall have
exercised its right to reduce the number of shares to be included or to
abandon or withdraw such registration, such
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other Holders or the Company, as the case may be, shall be permitted to
proceed with such registration and its offering of shares thereunder. Any
registration attempted to be withdrawn by a Demand Party pursuant to the
preceding sentence shall not be counted as one of such Demand Party's
registration demands provided in Section 4.2(a)(ii) and the Company shall pay
all Registration Expenses in connection therewith.
(h) Postponements in Requested Registrations. Notwithstanding any
other provision contained herein, (i) if the Board determines, in its good
faith judgment, that the registration and offering otherwise required by this
Section 4.2 would have an adverse effect on a then contemplated public
offering of the Company's Equity Securities, the Company may postpone the
filing (but not the preparation) of a registration statement required by this
Section 4.2, during the period starting with the 30th day immediately
preceding the date of the anticipated filing of, and ending on a date 60 days
following the effective date of, the registration statement relating to such
other public offering and (ii) if the Company shall at any time furnish to the
Holders a certificate signed by its chairman of the board, chief executive
officer or president or any other of its authorized officers stating that the
Company or any Subsidiary of the Company has pending or in process a material
transaction, the disclosure of which would, in the good faith judgment of the
Board, after consultation with its outside securities counsel, materially and
adversely affect the Company or such Subsidiary, the Company may postpone the
filing (but not the preparation) of a registration statement required by this
Section 4.2 for up to 90 days; provided, that, the Company shall at all times
in good faith use its reasonable best efforts to cause any registration
statement required by this Section 4.2 to be filed as soon as possible
thereafter and; provided, further, that, the Company shall not be permitted to
postpone registration pursuant to this Section 4.2(g) more than twice in any
360-day period; provided, however, that there shall be a minimum of 90 days
between the end of one such postponement and the start of the next such
postponement. The Company shall promptly give the Holders requesting
registration thereof pursuant to this Section 4.2 written notice of any
postponement made in accordance with the preceding sentence. If the Company
gives the Holders such a notice, the Holders shall have the right, within 15
days after receipt thereof, to withdraw their request in which case, such
request will not be counted for purposes of this Section 4.2.
(i) Additional Rights. If the Company at any time grants to any
other holders of Capital Stock any rights to request the Company to effect the
registration under the Securities Act of any such shares of Capital Stock on
terms more favorable to such holders than the terms set forth in this Article
IV, the terms of this Article IV shall be deemed amended or supplemented to
the extent necessary to provide the Holders such more favorable rights and
benefits. The Company shall provide the Holders prior written notice of any
such deemed amendment or supplement to the terms of this Article IV.
SECTION 4.3. Registration Procedures. If and whenever the Company is
required to effect or use its reasonable best efforts to effect or cause the
registration of any Registrable Securities under the Securities Act as
provided in this Agreement, the Company will promptly:
(a) prepare and, in any event within 45 days after the end of the
period within which a request for registration may be given to the Company,
file with the SEC a registration
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statement with respect to such Registrable Securities and use its reasonable
best efforts to cause such registration statement to become effective within
90 days of the initial filing;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement (including Exchange Act documents incorporated by
reference into the registration statement) and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for a period not in excess of 90 days (or such longer period not to
exceed two years as may be requested by the Holders in the event of a shelf
registration statement) and to comply with the provisions of the Securities
Act and the Exchange Act with respect to the disposition of all securities
covered by such registration statement during such period in accordance with
the intended methods of disposition by the seller or sellers thereof set forth
in such registration statement; provided, that before filing a registration
statement or prospectus, or any amendments or supplements thereto in
accordance with Sections 4.3(a) or (b), the Company will furnish to counsel
selected pursuant to Section 4.8 hereof copies of all documents proposed to be
filed, which documents will be subject to the review of such counsel;
(c) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits filed therewith,
including any documents incorporated by reference), such number of copies of
the prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registrable Securities by such seller;
(d) use its reasonable best efforts to register or qualify such
Registrable Securities covered by such registration in such jurisdictions as
each seller shall reasonably request, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such seller, except that the Company shall not for any such purpose
be required to qualify generally to do business as a foreign corporation in
any jurisdiction where, but for the requirements of this subsection (d), it
would not be obligated to be so qualified, to subject itself to taxation in
any such jurisdiction or to consent to general service of process in any such
jurisdiction;
(e) use its reasonable best efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(f) notify each seller of any such Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the Company's becoming
aware that the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the request of any such
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seller, prepare and furnish to such seller a reasonable number of copies of an
amended or supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(g) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable (but not more than 18
months) after the effective date of the registration statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the
Securities Act;
(h) (i) use its reasonable best efforts to list such Registrable
Securities on any securities exchange on which the Common Stock is then listed
if such Registrable Securities are not already so listed and if such listing
is then permitted under the rules of such exchange; and (ii) use its best
efforts to provide a transfer agent and registrar for such Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement;
(i) enter into such customary agreements (including an underwriting
agreement in customary form), which may include indemnification provisions in
favor of underwriters and other Persons in addition to, or in substitution for
the provisions of Section 4.5 hereof, and take such other actions as sellers
of a majority of shares of such Registrable Securities or the underwriters, if
any, reasonably requested in order to expedite or facilitate the disposition
of such Registrable Securities;
(j) in the case of an underwritten registration, obtain a "cold
comfort" letter or letters from the Company's independent public accounts in
customary form and covering matters of the type customarily covered by "cold
comfort" letters as the seller or sellers of a majority of shares of such
Registrable Securities shall reasonably request;
(k) make available for inspection by any seller of such Registrable
Securities covered by such registration statement, by any underwriter
participating in any disposition to be effected pursuant to such registration
statement and by any attorney, accountant or other agent retained by any such
underwriter and by counsel selected pursuant to Section 4.8 hereof, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers, directors
and employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(l) notify counsel (selected pursuant to Section 4.8 hereof) for the
Holders of Registrable Securities included in such registration statement and
the managing underwriter or agent, immediately, and confirm the notice in
writing (i) when the registration statement, or any post-effective amendment
to the registration statement, shall have become effective, or any supplement
to the prospectus or any amendment to the prospectus shall have been filed,
(ii) of the receipt of any comments from the SEC, (iii) of any request of the
SEC to amend the
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registration statement or amend or supplement the prospectus or for additional
information, and (iv) of the issuance by the SEC of any stop order suspending
the effectiveness of the registration statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the registration statement for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for any
of such purposes;
(m) make reasonable best efforts to prevent the issuance of any stop
order suspending the effectiveness of the registration statement or of any
order preventing or suspending the use of any preliminary prospectus and, if
any such order is issued, to obtain the withdrawal of any such order as soon
as practicable;
(n) if requested by the managing underwriter or agent or any Holder
of Registrable Securities covered by the registration statement, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or agent or such Holder reasonably
requests to be included therein, including, with respect to the number of
Registrable Securities being sold by such Holder to such underwriter or agent,
the purchase price being paid therefor by such underwriter or agent and with
respect to any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
being notified of the matters incorporated in such prospectus supplement or
post-effective amendment;
(o) cooperate with the Holders of Registrable Securities covered by
the registration statement and the managing underwriter or agent, if any, to
facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing securities to be sold under the
registration statement, and enable such securities to be in such denominations
and registered in such names as the managing underwriter or agent, if any, or
such Holders may request;
(p) obtain for delivery to the Holders of Registrable Securities
being registered and to the underwriter or agent an opinion or opinions from
counsel for the Company in customary form and in form, substance and scope
reasonably satisfactory to such Holders, underwriters or agents and their
counsel;
(q) cooperate with each seller of Registrable Securities and each
underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings
required to be made with the NASD;
(r) use its reasonable best efforts to make available the executive
officers of the Company to participate with the Holders of Registrable
Securities and any underwriters in any "road shows" or other selling efforts
that may be reasonably requested by the underwriters in connection with the
methods of distribution for the Registrable Securities; and
(s) if at any time a shelf registration statement requested to be
used by the Holders to dispose of the Registrable Securities ceases to be
effective before the end of the two year effective period for shelf
registration statements set forth in Section 4.3(b), the Company
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shall use its reasonable best efforts to file and cause to become effective a
new shelf registration statement to remain effective for a two year period
plus an additional period equal to the period during which a registration
statement was not effective.
SECTION 4.4. Information Supplied. The Company may require each
seller of Registrable Securities as to which any registration is being
effected to furnish the Company with customary information regarding such
seller and pertinent to the disclosure requirements relating to the
registration and the distribution of such securities as the Company may from
time to time reasonably request. Each seller of Registrable Securities shall
provide such information as a condition precedent to the Company's obligations
under Article IV hereof.
SECTION 4.5. Restrictions on Disposition. Each Holder agrees that,
upon receipt of any notice from the Company of the happening of any event of
the kind described in Section 4.3(f), such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 4.3(f), and,
if so directed by the Company, such Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the period mentioned in Section 4.3(b) shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 4.3(f) and to and including the date
when each seller of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 4.3(f).
SECTION 4.6. Indemnification. (a) In the event of any registration
of any securities of the Company under the Securities Act pursuant to Section
4.1 or 4.2, the Company shall, and it hereby does, indemnify and hold
harmless, to the extent permitted by law, the seller of any Registrable
Securities covered by such registration statement, each Affiliate of such
seller and their respective directors, officers, members or general and
limited partners (and any director, officer, and controlling Person of any of
the foregoing), each Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who controls such
seller or any such underwriter within the meaning of the Securities Act
(collectively, the "Indemnified Parties"), against any and all losses, claims,
damages or liabilities, joint or several, actions or proceedings (whether
commenced or threatened) in respect thereof ("Claims") and expenses (including
reasonable attorney's fees and reasonable expenses of investigation) to which
such Indemnified Party may become subject under the Securities Act, common law
or otherwise, insofar as such Claims or expenses arise out of, relate to or
are based upon (a) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement thereto,
or (b) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a prospectus, in light of the circumstances under which they were
made) not misleading; provided, that the Company shall not be liable to any
Indemnified Party in any such case to the extent that any such Claim or
expense arises out of, relates to or is based upon any untrue statement or
alleged untrue statement
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or omission or alleged omission made in such registration statement or
amendment or supplement thereto or in any such preliminary, final or summary
prospectus in reliance upon and in conformity with written information
furnished to the Company by or behalf of such seller specifically for use in
the preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any Indemnified Party
and shall survive the transfer of securities by any seller.
(b) The Company may require, as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 4.2 or 4.3 herein, that the Company shall have received an undertaking
reasonably satisfactory to it from the prospective seller of such Registrable
Securities or any underwriter to indemnify and hold harmless (in the same
manner and to the same extent as set forth in Section 4.6(a)) the Company and
all other prospective sellers or any underwriter, as the case may be, with
respect to any untrue statement or alleged untrue statement in or omission or
alleged omission from such registration statement, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement thereto,
if such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such seller or underwriter
specifically for use in the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or supplement, or a
document incorporated by reference into any of the foregoing. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of the Company or any of the prospective sellers, or any of their
respective Affiliates, directors, officers or controlling Persons and shall
survive the transfer of securities by any seller. In no event shall the
liability of any selling Holder of Registrable Securities hereunder be greater
in amount than the dollar amount of the proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Promptly after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Section 4.6,
such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action or proceeding; provided, that the failure of the
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Section 4.6, except to the extent
that the indemnifying party is materially prejudiced by such failure to give
notice. In case any such action or proceeding is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist in respect of such action or proceeding (in which case the indemnified
party shall have the right to assume or continue its own defense and the
indemnifying party shall be liable for any reasonable expenses therefor, but
in no event will bear the expenses for more than one firm of counsel for all
indemnified parties in each jurisdiction who shall be approved in the event
the Company is the indemnifying party by the majority of the participating
Holders in the registration in respect of which such indemnification is
sought), the indemnifying party will be entitled to participate in and to
assume the defense thereof (at its expense), jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party,
-25-
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation and shall have no liability for any
settlement made by the indemnified party without the consent of the
indemnifying party, such consent not to be unreasonably withheld. No
indemnifying party will settle any action or proceeding or consent to the
entry of any judgment without the prior written consent of the indemnified
party, unless such settlement or judgment (i) includes as an unconditional
term thereof the giving by the claimant or plaintiff of a release to such
indemnified party from all liability in respect of such action or proceeding
and (ii) does not involve the imposition of equitable remedies or the
imposition of any obligations on such indemnified party and does not otherwise
adversely affect such indemnified party, other than as a result of the
imposition of financial obligations for which such indemnified party will be
indemnified hereunder.
(d) (i) If the indemnification provided for in this Section 4.6 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any Claim or expenses referred to herein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Claim or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified party in connection with the actions
which resulted in such Claim or expenses, 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 any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party under this Section 4.6(d) as a
result of the Claim and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any action or proceeding.
(ii) The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 4.6(d) were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in Section 4.6(d)(i). 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.
(e) Indemnification similar to that specified in this Section 4.6
(with appropriate modifications) shall be given by the Company and each seller
of Registrable Securities with respect to any required registration or other
qualification of securities under any Law or with any governmental authority
other than as required by the Securities Act.
(f) The obligations of the parties under this Section 4.6 shall be
in addition to any liability which any party may otherwise have to any other
party.
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SECTION 4.7. Required Reports. The Company covenants that it will
file the reports required to be filed by it under the Securities Act and the
Exchange Act (or, if the Company is not required to file such reports, it
will, upon the request of any Holder, make publicly available such
information), and it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
such Holder to sell shares of Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
(a) Rule 144 under the Securities Act, as such Rule may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted by the SEC.
Upon the request of any Holder, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
SECTION 4.8. Selection of Counsel. In connection with any
registration of Registrable Securities pursuant to Sections 4.1 and 4.2
hereof, the Holders of a majority of the Registrable Securities covered by any
such registration may select one counsel to represent all Holders of
Registrable Securities covered by such registration; provided, however, that
in the event that the counsel selected as provided above is also acting as
counsel to the Company in connection with such registration, the remaining
Holders shall be entitled to select one additional counsel to represent all
such remaining Holders.
SECTION 4.9. Holdback Agreement. If any registration hereunder shall
be in connection with an underwritten public offering, each Holder agrees not
to effect any public sale or distribution, including any sale pursuant to Rule
144 under the Securities Act, of any Equity Securities of the Company (in each
case, other than as part of such underwritten public offering), within 10 days
before, or subject to Section 4.2(g) in the case of a requested registration
that has been postponed pursuant to clause (i) thereof, 180 days (or such
lesser period as the managing underwriters may require or permit) after, the
effective date of such registration (except as part of such registration), and
the Company hereby also agrees to use its reasonable best efforts to have each
other holder of 5% or more of Equity Securities of the Company purchased from
the Company (at any time other than in a public offering) to so agree.
SECTION 4.10. No Inconsistent Agreements. The Company represents and
warrants that it is not a party to, will not enter into, or cause or permit
any of its Subsidiaries to enter into, any agreement which conflicts with or
limits or prohibits the exercise of the rights granted to the Holders of
Registrable Securities in this Article IV.
ARTICLE V
EQUITY PURCHASE RIGHTS
SECTION 5.1. Equity Purchase Rights
(a) The Company hereby grants to Lightyear, so long as Lightyear
continues to hold any shares of Series A Preferred Stock, all or any portion
of its rights under the Warrant Agreement or any shares of Common Stock issued
pursuant to an exercise of the Warrants, the right to purchase its Pro Rata
Portion of all or any part of New Securities which the Company
-27-
may, from time to time, propose to sell or issue. The amount of New Securities
which Lightyear may purchase pursuant to this Section 5.1(a) shall be referred
to as the "Equity Purchase Shares". The equity purchase right provided in this
Section 5.1(a) shall apply at the time of issuance of any right, warrant or
option or convertible or exchangeable security and not to the conversion,
exchange or exercise thereof.
(b) The Company shall give written notice of a proposed issuance or
sale described in Section 5.1(a) to Lightyear within two Business Days
following any meeting of the Board at which any such issuance or sale is
approved. Such notice (the "Issuance Notice") shall set forth the material
terms and conditions of such proposed transaction, including the name of any
proposed purchaser(s), the proposed manner of disposition, the number or
amount and description of the shares proposed to be issued and the proposed
purchase price per share, including a description of any non-cash
consideration sufficiently detailed to permit valuation thereof. Such notice
shall also be accompanied by any written offer from the prospective purchaser
to purchase such New Securities. The Issuance Notice shall be received by
Lightyear at least 20 days prior to the proposed issuance or sale or as soon
as thereafter as practicable.
(c) At any time during the 20-day period following the receipt of an
Issuance Notice, Lightyear shall have the right to irrevocably elect to
purchase up to the number of the Equity Purchase Shares at the purchase price
set forth in the Issuance Notice (or if such price includes property other
than cash, the amount in cash equal to the Fair Market Value of such other
property) and upon the other terms and conditions specified in the Issuance
Notice by delivering a written notice to the Company; provided, however, that
in the case of New Securities which are shares of Common Stock issued upon the
exercise of employee stock options outstanding as of the date hereof which
have an exercise price less than $1.25 per share, the purchase price per share
for such shares shall be $1.25 per share. Except as provided in the following
sentence, such purchase shall be consummated concurrently with the
consummation of the issuance or sale described in the Issuance Notice. The
closing of any purchase by Lightyear may be extended beyond the closing of the
transaction described in the Issuance Notice to the extent necessary to obtain
required governmental approvals and other required approvals and the Company
and Lightyear shall use their respective reasonable best efforts to obtain
such approvals.
(d) If Lightyear does not elect pursuant to Section 5.1(c) to
purchase any of the Equity Purchase Shares, the Company shall be free to
complete the proposed issuance or sale described in the Issuance Notice on
terms no less favorable to the Company than those set forth in the Issuance
Notice; provided, that (x) such issuance or sale is closed within 90 days
after the expiration of the 20-day period described in Section 5.1(c) and (y)
the price at which the New Securities are transferred must be equal to or
higher than the purchase price described in the Issuance Notice. Such periods
within which such issuance or sale must be closed shall be extended to the
extent necessary to obtain required governmental approvals and other required
approvals and the Company shall use its commercially reasonable efforts to
obtain such approvals.
SECTION 5.2. Acquisition of Additional Shares of Common Stock.
Lightyear hereby agrees that, from the Closing Date until the date which is one
year after the Closing Date,
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none of it nor its controlled Affiliates will directly or indirectly acquire
beneficial ownership of Common Stock from any Person, or encourage or
facilitate such a purchase by a third party, at a price equal to or less than
$1.85 per share; provided, however, that nothing in this Section 5.2 shall
restrict Lightyear and its Affiliates from (x) purchasing its Pro Rata Portion
of New Securities pursuant to Section 5.1 or (y) selling Common Stock owned by
it in an unsolicited, third-party tender offer made for all the outstanding
Common Stock of the Company.
ARTICLE VI
CERTAIN COVENANTS
SECTION 6.1. HSR Approval. (a) To the extent required under
applicable Law, the Company shall promptly make any and all filings which it
is required to make under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act"), for the issuance of the Warrant Shares, and
the Company agrees to furnish Lightyear or any Permitted Transferee with such
necessary information and reasonable assistance as Lightyear or any Permitted
Transferee may reasonably request in connection with its preparation of any
necessary filings or submissions to the Federal Trade Commission ("FTC") or
the Antitrust Division of the U.S. Department of Justice (the "Antitrust
Division"), including any filings or notices necessary under the HSR Act. Any
such actions, if necessary, with respect to the exercise of the Warrants into
Warrant Shares shall be taken by the Company at such times as Lightyear or any
Permitted Transferee shall reasonably request. The Company shall, at its own
expense, use all reasonable efforts to respond to any request for additional
information, or other formal or informal request for information, witnesses or
documents which may be made by any governmental authority pertaining to the
Company with respect to the issuance of the Warrant Shares and shall keep
Lightyear and any relevant Permitted Transferee fully apprised of its actions
with respect thereto.
(b) Each of Lightyear and any relevant Permitted Transferee shall
promptly make any and all filings which it is required to make under the HSR
Act with respect to the issuance of the Warrant Shares and Lightyear agrees
(and any relevant Permitted Transferee will agree) to furnish the Company with
such necessary information and reasonable assistance as it may request in
connection with its preparation of any necessary filings or submissions to the
FTC or the Antitrust Division, including, without limitation, any filings or
notices necessary under the HSR Act. Lightyear and the relevant Permitted
Transferees shall, at their own expense, use all reasonable efforts to respond
promptly to any request for additional information, or other formal or
informal request for information, witnesses or documents which may be made by
any governmental authority pertaining to Lightyear or the relevant Permitted
Transferee, as case may be, with respect to the issuance of the Warrant Shares
and shall keep the Company fully apprised of its actions with respect thereto.
(c) Each of the parties hereto shall use their commercially
reasonable efforts to give such notices and obtain all other authorizations,
consents, orders and approvals of all governmental authorities and other third
parties that may be or become necessary for its execution and delivery of, and
the performance of its obligations pursuant to this Agreement and
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will cooperate fully with the other parties hereto in promptly seeking to
obtain all such authorizations, consents, orders and approvals.
(d) The Company shall pay all expenses and fees payable to
governmental authorities in connection with filings made pursuant to this
Section 6.1.
SECTION 6.2. Change in Control Transaction. Lightyear hereby agrees
that, from the Closing Date until the date which is one year after the Closing
Date, neither it nor any of its controlled Affiliates will vote in favor of
(a) any sale of all or substantially all the assets of the Company, or (b) any
sale by the Company of its capital stock or any merger, consolidation,
reorganization or similar transaction that would constitute a Change in
Control Transaction, at a price that would result in the Company's
shareholders receiving a price per share (or in the case of a sale of assets,
would result in the Company receiving an amount) equal to or less than $1.85
per share on a Fully-Diluted Basis unless as a condition to the consummation
of such transaction, such transaction must be approved by a majority of the
shareholders of the Company other than Lightyear or its Affiliates; provided,
however, that nothing in this Section 6.2 shall restrict Lightyear and its
Affiliates from (x) purchasing its Pro Rata Portion of New Securities pursuant
to Section 5.1 or (y) selling Common Stock owned by it in an unsolicited,
third-party tender offer made for all the outstanding Common Stock of the
Company.
SECTION 6.3. Reservation of Shares. The Company shall take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, the number of shares of Common Stock needed to provide for the
issuance upon full exercise of the Warrants.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Lightyear Indemnification; Reimbursement of Expenses.
The Company agrees to indemnify and hold harmless (and will assume the defense
of, except to the extent that Lightyear reasonably believes that a conflict of
interests exists or that there are one or more material legal defenses
available to Lightyear that conflict with those available to the Company)
Lightyear, its respective directors and officers and its Affiliates (and the
directors, officers, partners, Affiliates and controlling persons thereof,
each, a "Lightyear Indemnitee") from and against any and all liability,
including all obligations, costs, fines, claims, actions, injuries, demands,
suits, judgments, proceedings, investigations, arbitrations (including
shareholder claims, actions, injuries, demands, suits, judgments, proceedings,
investigations or arbitrations) and expenses, including accountant's and
attorney's fees and expenses (together the "Losses"), incurred by Lightyear or
a Lightyear Indemnitee before or after the date of this Agreement and arising
out of, resulting from, or relating to (i) any third party claims (other than
third party claims by an Affiliate, partner, director, officer or employee of
Lightyear) in connection with (a) Lightyear's purchase of the Series A
Preferred Stock and the Warrant and (b) the execution and delivery by the
Company of the Securities Purchase Agreement, the Warrant Agreement and this
Agreement or (ii) any franchise taxes imposed on Lightyear in connection with
such purchase. The Company also agrees to reimburse each Lightyear Indemnitee
for any
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reasonable expenses incurred by such Lightyear Indemnitee in connection with
the maintenance of its books and records, preparation of tax returns and
delivery of tax information to its partners in connection with Lightyear's
investment in the Company. All decisions and actions of the Company with
respect to this Section 7.1 shall be made or taken by a majority of the
Continuing Directors or their successors.
SECTION 7.2. Termination. (a) Except as provided in Section 7.2(b):
(i) the provisions of Article II of this Agreement shall terminate as provided
in Section 2.6; (ii) the provisions of Article V of this Agreement shall
terminate simultaneously with the termination of the provisions of Article II
of this Agreement; (iii) the provisions of Article IV of this Agreement (other
than Section 4.6 thereof) shall terminate at such time as there shall be no
Registrable Securities outstanding; (iv) the obligations of the respective
parties under Section 4.6 shall terminate in respect of any shelf registration
statement at the time the applicable statute of limitations expires and
otherwise, at such time as the corresponding indemnification obligations in
the underwriting agreement in respect of any demand registration expires; (v)
the provisions of Articles I, III, VI and VII of this Agreement shall not
terminate until this Agreement has terminated pursuant to clause (vi) below;
and (vi) this Agreement shall terminate in full upon the last to occur of the
terminations set forth in clauses (i) through (iv) and the exercise in full of
the Warrant.
(b) No termination of this Agreement shall by virtue of such
termination relieve any party from any liability existing at the time of such
termination for the breach of any of the agreements set forth in this
Agreement.
SECTION 7.3. Amendments and Waivers. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this
Agreement shall be effective against the Company or any Holder unless such
modification, amendment or waiver is approved in writing by the Company (and,
with respect to material modifications, amendments or waivers, with the
approval of a majority of the Continuing Directors and Lightyear (so long as
it or its Affiliates is entitled to its rights under Article II hereof). The
failure of any party to enforce any of the provisions of this Agreement shall
in no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
SECTION 7.4. Successors, Assigns and Transferees. This Agreement
shall bind and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns. This Agreement
may not be assigned by any party hereto (except as described in the next
sentence) without the prior written consent of the other parties. Lightyear
and its Affiliates may assign their respective rights and obligations
hereunder to any Affiliate or Affiliates thereof and, subject to the
provisions of Section 3.1 and 3.2, to any other third party or Permitted
Transferee.
SECTION 7.5. Notices. All notices required or permitted hereunder
that shall be hand delivered, sent, mailed, faxed (in the manner described in
the Securities Purchase Agreement), shall be deemed sufficiently given,
served, sent, received or delivered for all purposes at such time as it is
delivered to the addressee (with the return receipt or the delivery
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receipt being deemed conclusive, but not exclusive, evidence of such delivery)
or at such time as delivery is refused by the addressee upon presentation. All
communications shall be sent, with respect to the Company and Lightyear, to
their respective addresses specified in the Securities Purchase Agreement (or
at such other address as any such party may specify by like notice) and, with
respect to any other Holder, to the address of such Holder as shown in the
stock record books of the Company (or at such other address as any such Holder
may specify to all of the above by like notice).
SECTION 7.6. Further Assurances. At any time or from time to time
after the date hereof, the parties agree to cooperate with each other, and at
the request of any other party, to execute and deliver any further instruments
or documents and to take all such further action as the other party may
reasonably request in order to evidence or effectuate the consummation of the
transactions contemplated hereby and to otherwise carry out the intent of the
parties hereunder.
SECTION 7.7. Entire Agreement. Except as otherwise expressly set
forth herein, this Agreement, the Designations of Preferences, the Warrant
Agreement and the Securities Purchase Agreement embody the complete agreement
and understanding among the parties hereto with respect to the subject matter
hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, that may have
related to the subject matter hereof in any way.
SECTION 7.8. Delays or Omissions. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to any party, upon
any breach, default or noncompliance by another party under this Agreement,
shall impair any such right, power or remedy, nor shall it be construed to be
a waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of or in any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent or approval
of any kind or character on the part of any party hereto of any breach,
default or noncompliance under this Agreement or any waiver on such party's
part of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement, by law, or otherwise afforded to
any party, shall be cumulative and not alternative.
SECTION 7.9. Governing Law; Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed in all respects by the laws of the State of
Tennessee. No suit, action or proceeding with respect to this Agreement may be
brought in any court or before any similar authority other than in a court of
competent jurisdiction in the State of Tennessee, and the parties hereto
hereby submit to the exclusive jurisdiction of such courts for the purpose of
such suit, proceeding or judgment. The parties hereto hereby irrevocably
waives any right which they may have had to bring such an action in any other
court, domestic or foreign, or before any similar domestic or foreign
authority. Each of the parties hereto hereby irrevocably and unconditionally
waives trial by jury in any legal action or proceeding in relation to this
Agreement and for any counterclaim therein.
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SECTION 7.10. Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to
be invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision or any other jurisdiction, but this
Agreement shall be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.
SECTION 7.11. Effective Date. This Agreement shall become effective
immediately upon the Closing.
SECTION 7.12. Enforcement. Each party hereto acknowledges that money
damages would not be an adequate remedy in the event that any of the covenants
or agreements in this Agreement are not performed in accordance with its
terms, and it is therefore agreed that in addition to and without limiting any
other remedy or right it may have, the non-breaching party will have the right
to an injunction, temporary restraining order or other equitable relief in any
court of competent jurisdiction enjoining any such breach and enforcing
specifically the terms and provisions hereof.
SECTION 7.13. Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
SECTION 7.14. No Recourse. Notwithstanding anything that may be
expressed or implied in this Agreement, the Company and each Holder covenant,
agree and acknowledge that no recourse under this Agreement or any documents
or instruments delivered in connection with this Agreement shall be had
against any current or future director, officer, employee, general or limited
partner or member of Lightyear or of any Affiliate or assignee thereof,
whether by the enforcement of any assessment or by any legal or equitable
proceeding, or by virtue of any statute, regulation or other applicable law,
it being expressly agreed and acknowledged that no personal liability
whatsoever shall attach to, be imposed on or otherwise be incurred by any
current or future officer, agent or employee of Lightyear or any current or
future member of Lightyear or any current or future director, officer,
employee, partner or member of Lightyear or of any Affiliate or assignee
thereof, as such for any obligation of Lightyear under this Agreement or any
documents or instruments delivered in connection with this Agreement for any
claim based on, in respect of or by reason of such obligations or their
creation.
SECTION 7.15. Counterparts; Facsimile Signatures. This Agreement may
be executed in any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument. This Agreement may
be executed by facsimile signature(s).
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IN WITNESS WHEREOF, the parties hereto have executed this
Securityholders Agreement as of the date set forth in the first paragraph
hereof.
PRIVATE BUSINESS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
LIGHTYEAR PBI HOLDINGS, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Manager