EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
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REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of July 31, 1997
by and among Preferred Payment Systems, Inc., a Delaware corporation (including
its successors by merger, acquisition, reorganization or otherwise, the
"Company") and the current and prospective shareholders of About Health, Inc.
("AHI") named on Schedule A attached hereto (the "Shareholders").
WHEREAS, the Shareholders, the Company, AHI and Preferred Payment Systems,
L.L.C. (the "LLC") entered into a Contribution Agreement dated as of July 31,
1997 pursuant to which AHI and the Company contributed all of their respective
assets to the LLC.
WHEREAS, under the terms of the Amended and Restated Limited Liability
Company Operating Agreement dated as of July 31, 1997 by and among the
shareholders of the Company and AHI, the Shareholders have the right, and under
certain circumstances shall have the obligation, to exchange their shares of AHI
Common Stock for shares of Company Common Stock.
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the transactions contemplated by the Contribution Agreement.
NOW, THEREFORE, in consideration of the premises, as an inducement to the
Shareholders to consummate the transactions contemplated by the Contribution
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company hereby covenants and
agrees with each Investor as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"Common Stock" shall mean (i) the Company's common stock, par value $.01
per share, as authorized on the date of this Agreement, (ii) any other capital
stock of any class or classes (however designated) of the Company, authorized on
or after the date hereof, the holders of which shall have the right, without
limitation as to amount per share, either to all or to a share of the balance of
current dividends and liquidating distributions after the payment of dividends
and distributions on any shares entitled to preference in the payment thereof,
and the holders of which shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of directors of the Company (even though the
right so to vote has been suspended by the happening of such a contingency), and
(iii) any other securities
into which or for which any of the securities described in (i) or (ii) above may
be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any similar successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Person" shall mean an individual, a corporation, a partnership, a joint
venture, a trust, an unincorporated organization, a limited liability company or
partnership, a government and any agency or political subdivision thereof.
"Registrable Securities" shall mean (i) all securities issued or issuable
upon a merger involving AHI and the Company, (ii) any securities of the Company
issued in exchange for securities of AHI, (iii) any securities of the Company
held by the Shareholders or their assigns, and (iv) any other securities issued
and issuable with respect to any such shares described in clauses (i) through
(iii) above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization (it being understood that for purposes of this Agreement, a
Person will be deemed to be a holder of Registrable Securities whenever such
Person has the right to then acquire or obtain from the Company any Registrable
Securities, whether or not such acquisition has actually been effected).
"Registration Expenses" shall mean the expenses so described in Section 5.
"1996 Registration Rights Agreement" shall mean the Registration Rights
Agreement dated as of August 30, 1996, as amended as of July 31, 1997, by and
among the Company, the holders of convertible subordinated notes of the Company
and all of the then holders of Common Stock and options to acquire Common Stock.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
2. Demand Registration.
(a) At any time after 180 days after the date on which the Company
becomes subject to Section 13 or Section 15(d) of the Exchange Act, the holders
of at least fifty percent (50%) of the
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Registrable Securities may request the Company register under the Securities Act
the Registrable Securities held by such requesting holders in a firm commitment
underwritten public offering or any other method of distribution (including
offerings involving a delayed or continuous offering pursuant to Rule 415 under
the Securities Act); provided, however, that the holders of Registrable
Securities shall be entitled under this Section 2 to no more than the number of
shares of Common Stock sufficient to yield net proceeds equal to the aggregate
number of Registrable Securities multiplied by the per share initial public
offering price multiplied by 0.33 ("Minimum Demand Proceeds"); provided further
however, that if the underwritten public offer (or other method of distribution)
does not yield the Minimum Demand Proceeds, the holders of Registrable
Securities shall be entitled to request additional registrations until the
holders of Registrable Securities shall have yielded the Minimum Demand
Proceeds. Upon receipt of such request, the Company shall promptly deliver
notice of such request to all Persons holding Registrable Securities who shall
then have thirty (30) days to notify the Company in writing of their desire to
be included in such registration. The right of any Person to participate in
such registration shall be conditioned upon their participation in such
underwritten public offering (or such other method of distribution) and the
inclusion of their Registrable Securities in the underwritten public offering
(or such other method of distribution) to the extent provided herein. The
Company will use its best efforts to expeditiously effect the registration of
all Registrable Securities whose holders request participation in such
registration under the Securities Act and shall keep such registration effective
until the Registrable Securities thereunder shall have been sold, but only to
the extent provided for in the following provisions of this Agreement; provided,
however, that the Company shall not be required to effect registration pursuant
to a request under this Section 2 more than one (1) time for the holders of the
Registrable Securities as a group; provided further however, that if a
registration statement does not include the number of Registrable Securities
requested by the holders thereof to be included in such registration statement,
it shall not be counted as a registration statement initiated pursuant to this
Section 2. Notwithstanding anything to the contrary contained herein, no
request may be made under this Section 2 within 180 days after the effective
date of a registration statement filed by the Company covering a firm commitment
underwritten public offering in which the holders of Registrable Securities
shall have been entitled to join pursuant to Section 3 and in which there shall
have been effectively registered all Registrable Securities as to which
registration shall have been requested.
(b) With respect to a request for registration pursuant to this
Section 2 involving an underwritten public
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offering, the Company may include in each such requested registration any
authorized but unissued shares of Common Stock (or authorized treasury shares)
for sale by the Company and the Shareholders may include in each such requested
registration shares of Common Stock held by such Shareholders; provided,
however, that any such shares of Common Stock shall not be included to the
extent that the managing underwriter of the offering (if the offering is
underwritten) or the holders of a majority of the shares of Registrable
Securities who requested the registration (if the offering is not underwritten),
determine(s) in good faith that the inclusion of such shares will interfere with
the successful marketing of the shares of Registrable Securities to be included
in the registration. If the managing underwriter of such offering determines in
good faith that the number of securities sought to be offered should be limited
due to market conditions, then the number of securities to be included in such
underwritten public offering shall be reduced to a number deemed satisfactory by
such managing underwriter, provided that the shares to be excluded shall be
determined in the following order of priority: (i) securities held by any other
Persons (other than the holders of Registrable Securities) having a contractual,
incidental "piggy back" right to include such securities in the registration
statement, (ii) securities offered on behalf of the Company, (iii) Registrable
Securities of holders who did not make the original request for registration
and, if necessary, and (iv) Registrable Securities of holders who requested such
registration pursuant to Section 2. If there is a reduction of the number of
Registrable Securities pursuant to clauses (iii) or (iv), such reduction shall
be made on a pro rata basis (based upon the aggregate number of Registrable
Securities held by such holders).
(c) The Company shall have the right to approve the managing
underwriter chosen by the holders of a majority of the Registrable Securities to
be sold in such offering (which approval will not be unreasonably withheld or
delayed). The Company may not cause any other registration of securities for
sale for its own account (other than a registration effected solely to implement
an employee benefit plan or a transaction to which Rule 145 of the Commission is
applicable) to become effective within 90 days following the effective date of
any registration required pursuant to this Section 2.
(d) If, at the time of any request to register Registrable Securities
pursuant to Section 2(a), the Company is preparing a registration statement for
a public offering (other than a registration effected solely to implement an
employee benefit plan or a transaction to which Rule 145 of the Commission is
applicable) which in fact is filed and becomes effective within ninety (90) days
after the request, or is engaged in any activity (including a concurrent or
proposed security issuance or
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acquisition) which, in the good faith determination of the Company's board of
directors, would be adversely affected by the requested registration to the
material detriment of the Company, then the Company may at its option direct
that such request be delayed for a period (the "Black-Out Period") not in excess
of 120 days from the effective date of such offering or the date of commencement
of such other activity, as the case may be. The aggregate amount of Black-Out
Periods in any consecutive twelve month period shall not exceed 120 days.
Nothing in this Section 2(d) shall preclude a holder of Registrable Securities
from enjoying registration rights which it might otherwise possess under Section
3 hereof.
3. Piggyback Registration. If the Company at any time proposes to
register any securities under the Securities Act (including, without limitation,
pursuant to a demand of any stockholder of the Company exercising registration
rights) for sale to the public (except with respect to registration statements
on Forms X-0, X-0 or another form not available for registering the Registrable
Securities for sale to the public), each such time it will give written notice
at the applicable address of record to each holder of Registrable Securities of
its intention to do so. Upon the written request of any of such holders of the
Registrable Securities given within twenty (20) days after receipt by such
Person of such notice, the Company will, subject to the limits contained in this
Section 3, use its best efforts to cause all such Registrable Securities of said
requesting holders to be registered under the Securities Act and qualified for
sale under any state blue sky law, all to the extent required to permit such
sale or other disposition of said Registrable Securities and Common Stock so
registered; provided, however, that if the Company is advised in writing in good
faith by any managing underwriter of the securities being offered in a public
offering pursuant to such registration statement that the amount to be sold is
greater than the amount which can be offered without adversely affecting the
offering, the Company may reduce the amount offered to a number deemed
satisfactory by such managing underwriter; provided that the shares to be
excluded shall be determined in the following order of priority: (i) securities
held by any Persons not having any such contractual, incidental registration
rights, (ii) securities held by any Persons having contractual, incidental
registration rights pursuant to an agreement which is neither this Agreement nor
the 1996 Registration Rights Agreement, (iii) securities held by the holders of
Registrable Securities (as such term is defined hereunder) and the persons
defined as "Shareholders" under the 1996 Registration Rights Agreement on a pro
rata basis (based upon the aggregate number of securities held by such holders),
and (iv) the securities sought to be included by the persons defined as
"Investors" under the 1996 Registration Rights Agreement as determined on a pro
rata basis (based upon the
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aggregate number of securities held by such holders); provided further however,
that in the event the persons defined as the "Investors" under the 1996
Registration Rights Agreement shall have received in the aggregate net proceeds
of at least $30 million from previous sales of securities, then the securities
sought to be included by the Shareholders and the persons defined as the
"Shareholders" and "Investors" under the 1996 Registration Rights Agreement the
holders shall be reduced on a pro rata basis notwithstanding clauses (iii) and
(iv) above.
4. Registration Procedures. If and whenever the Company is required by
the provisions of this Agreement to use its best efforts to effect the
registration of any of its securities under the Securities Act, the Company
will, as expeditiously as possible:
(i) use its best efforts diligently to prepare and file with the
Commission a registration statement on the appropriate form under the
Securities Act with respect to such securities, which form shall comply as
to form in all material respects with the requirements of the applicable
form and include all financial statements required by the Commission to be
filed therewith, and use its best efforts to cause such registration
statement to become and remain effective until completion of the proposed
offering;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all securities covered by
such registration statement whenever the seller or sellers of such
securities shall desire to sell or otherwise dispose of the same, but only
to the extent provided in this Agreement;
(iii) furnish to each selling holder and the underwriters, if any,
such number of copies of such Registration Statement, any amendments
thereto, any documents incorporated by reference therein, the prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as such selling holder may
reasonably request in order to facilitate the public sale or other
disposition of the securities owned by such selling holder;
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(iv) use every reasonable effort to register or qualify the
securities covered by such registration statement under such other
securities or state blue sky laws of such jurisdictions as each selling
holder shall reasonably request, and do any and all other acts and things
which may be necessary under such securities or blue sky laws to enable
such selling holder to consummate the public sale or other disposition in
such jurisdictions of the securities owned by such selling holder, except
that the Company shall not for any such purpose be required to qualify to
do business as a foreign corporation in any jurisdiction wherein it is not
so qualified;
(v) within a reasonable time before each filing of the registration
statement or prospectus or amendments or supplements thereto with the
Commission (or any materials to be provided to the staff of the
Commission), furnish to counsel selected by the holders of Registrable
Securities copies of such documents proposed to be filed (or provided to
the staff of the Commission), which documents shall be subject to the
reasonable approval of such counsel;
(vi) promptly notify each selling holder of Registrable Securities,
such selling holders' counsel and any underwriter and (if requested by any
such Person) confirm such notice in writing, of the happening of any event
which makes any statement made in the registration statement or related
prospectus untrue or which requires the making of any changes in such
registration statement or prospectus so that they will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
in light of the circumstances under which they were made not misleading;
and, as promptly as practicable thereafter, prepare and file with the
Commission and furnish a supplement or amendment to such prospectus so
that, as thereafter deliverable to the purchasers of such securities
covered by such prospectus, such prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading;
(vii) use its best efforts to prevent the issuance of any order
suspending the effectiveness of a registration statement, and if one is
issued use its best efforts to obtain the withdrawal of any order
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suspending the effectiveness of a registration statement at the earliest
possible moment;
(viii) if requested by the managing underwriter or underwriters (if
any), any selling holder, or such selling holder's counsel, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as such Person requests to be included therein, including,
without limitation, with respect to the securities being sold by such
selling holder to such underwriter or underwriters, the purchase price
being paid therefor by such underwriter or underwriters and with respect to
any other terms of an underwritten offering of the securities to be sold in
such offering, and promptly make all required filings of such prospectus
supplement or post-effective amendment;
(ix) make available to each selling holder, any underwriter
participating in any disposition pursuant to a registration statement, and
any attorney, accountant or other agent or representative retained by any
such selling holder or underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties
of the Company (collectively, the "Records"), as shall be reasonably
necessary to enable them to exercise their due diligence responsibility,
and cause the Company's officers, directors and employees to supply all
information requested by any such Inspector in connection with such
registration statement;
(x) enter into any reasonable underwriting agreement required by the
proposed underwriter(s) for the selling holders, if any, and use its best
efforts to facilitate the public offering of the securities;
(xi) furnish to each prospective selling holder a signed counterpart,
addressed to the prospective selling holder, of (A) an opinion of counsel
for the Company, dated the effective date of the registration statement,
and (B) a "comfort" letter signed by the independent public accountants who
have certified the Company's financial statements included in the
registration statement, covering substantially the same matters with
respect to the registration statement (and the prospectus included therein)
and (in the case of the accountants' letter) with respect to events
subsequent to the date of the financial statements, as are customarily
covered (at the time of such registration) in opinions of the Company's
counsel and
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in accountants' letters delivered to the underwriters in underwritten
public offerings of securities;
(xii) use its best efforts to cause the securities covered by such
registration statement to be listed on the securities exchange or quoted on
the quotation system on which the Common Stock of the Company is then
listed or quoted (or if the Common Stock is not yet listed or quoted, then
on such exchange or quotation system as the selling holders and the Company
shall determine);
(xiii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make generally available to its
security holders, in each case as soon as practicable, but not later than
45 days after the close of the period covered thereby (90 days in case the
period covered corresponds to a fiscal year of the Company), an earnings
statement of the Company which will satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 thereunder (or any comparable successor
provisions); and
(xiv) otherwise cooperate with the underwriters), the Commission and
other regulatory agencies and take all actions and execute and deliver or
cause to be executed and delivered all documents necessary to effect the
registration of any securities under this Agreement.
5. Expenses. All of the expenses incurred in effecting the registration
provided for in Section 2 if a request for registration pursuant to Section 2 is
made at least 365 days after the date on which the Company becomes subject to
Section 13 or Section 15(d) of the Exchange Act and all of the expenses incurred
in effecting the registration provided for in Section 3, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company and fees of one counsel for the selling
holders of Registrable Securities (which counsel shall be selected by the
holders of not less than a majority of the Registrable Securities to be included
in any such registration), underwriting expenses (other than fees, commissions
or discounts), expenses of any audits incident to or required by any such
registration and expenses of complying with the securities or blue sky laws of
any jurisdictions pursuant to Section 4(iv) hereof (all of such expenses
referred to as "Registration Expenses"), shall be paid by the Company. The
Company and the Shareholders shall each pay 50% of the Registration Expenses
incurred in effecting the registration provided for in Sections 2 if the
registration is
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effective pursuant to Section 2 between 180 and 270 days after the date on which
the Company becomes subject to Section 13 or Section 15(d) of the Exchange Act;
provided, however, that if the percentage of Registrable Securities included in
the registration provided for in Section 2 is less than 50% of the total number
of shares of Common Stock included in such registration then the Shareholders
shall pay that lesser percentage of the Registration Expenses incurred in
effecting such registration; and provided further, however, that the
Shareholders shall not be required to pay in excess of $75,000 of Registration
Expenses in connection with such request. If a request for registration
pursuant to Section 2 is effective between 270 and 365 days after the date on
which the Company becomes subject to Section 13 or Section 15(d) of the Exchange
Act, the Company and the Shareholders will share the Registration Expenses 75%
and 25%, respectively; provided, however, that the Shareholders shall not be
required to pay in excess of $37,500 of Registration Expenses in connection with
such request.
6. Indemnification. (a) The Company shall indemnify and hold harmless
the selling holder of such securities, each underwriter (as defined in the
Securities Act), and each other Person who participates in the offering of such
securities and each other Person, if any, who controls (within the meaning of
the Securities Act) such seller, underwriter or participating Person
(individually and collectively, the "Indemnified Person") against any losses,
claims, damages or liabilities (collectively the "liability"), joint or several,
to which such Indemnified Person may become subject under the Securities Act or
any other statute or at common law, insofar as such liability (or action in
respect thereof) arises out of or is based upon (i) any untrue statement or
alleged untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading.
Except as otherwise provided in Section 6(d), the Company shall reimburse each
such Indemnified Person in connection with investigating or defending any such
liability; provided, however, that the Company shall not be liable to any
Indemnified Person in any such case to the extent that any such liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, preliminary or
final prospectus, or amendment or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by such Person
specifically for use therein, or upon such statement or omission therein based
on the authority of an expert within the meaning of that term as defined
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in the Securities Act (but only if the Company had no reasonable ground to
believe, and did not believe, that the statements made on the authority of an
expert were untrue or that there was an omission to state a material fact); and
provided further, that the Company shall not be required to indemnify any Person
against any liability arising from any untrue or misleading statement or
omission contained in any preliminary prospectus if such deficiency is corrected
in the final prospectus or for any liability which arises out of the failure of
any Person to deliver a prospectus as required by the Securities Act regardless
of any investigation made by or on behalf of such Indemnified Person and shall
survive transfer of such securities by such seller.
(b) Each selling holder of any securities included in such
registration being effected, shall indemnify and hold harmless each other
selling holder of any securities, the Company, its directors and officers, each
underwriter and each other Person, if any, who controls the Company or such
underwriter (individually and collectively also the "Indemnified Person"),
against any liability, joint or several, to which any such Indemnified Person
may become subject under the Securities Act or any other statute or at common
law, insofar as such liability (or actions in respect thereof) arises out of or
is based upon (i) any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which securities were registered under the Securities Act at the
request of such selling holder, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or (ii) any omission
or alleged omission by such selling holder to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in the case of (i) and (ii) to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement, preliminary or final
prospectus, amendment or supplement thereto in reliance upon and in conformity
with information furnished in writing to the Company by such selling holder
specifically for use therein, and then only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission by the
selling holder was not based on the authority of an expert as to which the
selling holder had no reasonable ground to believe, and did not believe, that
the statement made on the authority of such expert was untrue or that there was
an omission to state a material fact. Such selling holder shall reimburse any
Indemnified Person for any legal fees incurred in investigating or defending any
such liability; provided, however, that such selling holder's obligations
hereunder shall be limited to an amount equal to the proceeds to such selling
holder of the securities sold in any such registration; and provided further,
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however, that no selling holder shall be required to indemnify any Person
against any liability arising from any untrue or misleading statement or
omission contained in any preliminary prospectus if such deficiency is corrected
in the final prospectus or for any liability which arises out of the failure of
any Person to deliver a prospectus as required by the Securities Act.
(c) Indemnification similar to that specified in Sections 6(a) and
(b) shall be given by the Company and each selling holder (with such
modifications as may be appropriate) with respect to any required registration
or other qualification of their securities under any federal or state law or
regulation of governmental authority other than the Securities Act.
(d) In the event the Company, any selling holder or other Person
receives a complaint, claim or other notice of any liability or action, giving
rise to a claim for indemnification under Sections 6(a), (b) or (c), the Person
claiming indemnification under such paragraphs shall promptly notify the Person
against whom indemnification is sought of such complaint, notice, claim or
action, and such indemnifying Person shall have the right to investigate and
defend any such loss, claim, damage, liability or action. The Person claiming
indemnification shall have the right to employ separate counsel in any such
action and to participate in the defense thereof but the fees and expenses of
such counsel shall not be at the expense of the Person against whom
indemnification is sought (unless the indemnifying party fails to promptly
defend, in which case the fees and expenses of such separate counsel shall be
home by the Person against whom indemnification is sought). In no event shall a
Person against whom indemnification is sought be obligated to indemnify any
Person for any settlement of any claim or action effected without the
indemnifying Person's prior written consent.
7. Compliance with Rule 144. In the event that the Company (i) registers
a class of securities under Section 12 of the Exchange Act or (ii) shall
commence to file reports under Section 13 or 15(d) of the Exchange Act,
thereafter, the Company will use its best efforts thereafter to file with the
Commission such information as is required under the Exchange Act for so long as
there are holders of Registrable Securities; and in such event, the Company
shall use its best efforts to take all action as may be required as a condition
to the availability of Rule 144 under the Securities Act (or any comparable
successor rules). The Company shall furnish to any holder of Registrable
Securities upon request a written statement executed by the Company as to the
steps it has taken to comply with the current public information requirement of
Rule 144 (or such comparable successor rules). After the occurrence of the first
underwritten public offering of Common Stock of the Company pursuant to an
offering
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registered under the Securities Act on Form S-1 or Form SB-1 (or any comparable
successor forms), subject to the limitations on transfers imposed by this
Agreement, the Company shall use its best efforts to facilitate and expedite
transfers of Registrable Securities pursuant to Rule 144 under the Securities
Act, which efforts shall include timely notice to its transfer agent to expedite
such transfers of Registrable Securities.
8. "Market Stand-off" Agreement. In connection with the Company's
initial underwritten public offering, the holders of Registrable Securities, if
requested in good faith by the Company and the managing underwriter of the
Company's securities, shall agree not to sell or otherwise transfer or dispose
of any securities of the Company held by them (except for any securities sold
pursuant to such registration statement) for a period following the effective
date of the applicable registration statement as agreed to by such parties,
provided, however, that in no event shall such period exceed 180 days. In
connection with any other underwritten public offering by the Company, to the
extent holders of not less than a majority of the Registrable Securities have
agreed with the managing underwriter(s) not to sell or otherwise transfer or
dispose of any of the Registrable Securities held by each of them for a period
of time after the effective date of any such registration statement in order to
effect an orderly public distribution thereof, then each holder of Registrable
Securities, if requested in good faith by the Company and the managing
underwriter, shall enter into and execute such an agreement with such managing
underwriter(s) and the Company pertaining to a restriction on the transfer of
any securities of the Company then held by them (and not included in such
registration) during such same time period and on the same terms and conditions
as the agreement made by said holders of a majority of the Registrable
Securities.
9. Amendments. The provisions of this Agreement may be amended, and the
Company may take any action herein prohibited or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the holders of at least sixty-seven percent (67%) of the Registrable
Securities.
10. Transferability of Registration Rights. The registration rights set
forth in this Agreement are transferable to each transferee of Registrable
Securities, other than a transferee whose activities, products or services are
competitive with the activities, products or services of the Company as of the
date of such transfer. Each subsequent holder of Registrable Securities must
consent in writing to be bound by the terms and conditions of this Agreement in
order to acquire the rights granted pursuant to this Agreement.
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11. Rights Which May Be Granted to Subsequent Investors. Other than
permitted transferees of Registrable Securities under Section 10 hereof, the
Company shall not, without the prior written consent of holders of at least
fifty-one percent (51%) of the Registrable Securities grant any other demand
registration rights to any third parties which could be exercised by such third
party within the twelve months following the initial public offering of the
Common Stock; provided that if third parties are granted more than one demand
right that can be exercised after such period the holders of Registrable
Securities shall be granted one additional demand registration right. The
Company shall not amend the 1996 Registration Rights Agreement in any manner or
grant any piggy-back registration rights which would adversely affects the
holders of Registrable Securities without the prior written consent of the
holders of Registrable Securities.
12. Damages. The Company recognizes and agrees that each holder of
Registrable Securities will not have an adequate remedy if the Company fails to
comply with the terms and provisions of this Agreement and that damages will not
be readily ascertainable, and the Company expressly agrees that, in the event of
such failure, it shall not oppose an application by any holder of Registrable
Securities or any other Person entitled to the benefits of this Agreement
requiring specific performance of any and all provisions hereof or enjoining the
Company from continuing to commit any such breach of this Agreement.
13. Miscellaneous.
(a) All notices, requests, demands and other communications provided
for hereunder shall be in writing and mailed (by first class registered or
certified mail, postage prepaid), telegraphed, sent by express overnight courier
service or electronic facsimile transmission (with a copy by mail), or delivered
to the applicable party at the addresses indicated below:
If to the Company:
Preferred Payment Systems, Inc.
0000 Xxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
With a copy to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
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Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to the Shareholders:
Xxx X. Xxxxxxxxx
00 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
With a copy to:
Xxxxxx, Flyer & Xxxxx
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to any other holder of Registrable Securities:
At such Person's address for notice as set forth in the books and records
of the Company
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to other parties complying as to delivery with
the terms of this subsection (a). All such notices, requests, demands and other
communications shall, when mailed, telegraphed or sent, respectively, be
effective (i) two days after being deposited in the mail or (ii) one day after
being delivered to the telegraph company, deposited with the express overnight
courier service or sent by electronic facsimile transmission, respectively,
addressed as aforesaid.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
(c) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(d) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed as of the date first set forth above.
PREFERRED PAYMENT SYSTEMS, INC.
By: ----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
SHAREHOLDERS:
--------------------------------------------
Xxx X. Xxxxxxxxx
Trust FBO Xxxxxx Xxxxxxxxx
By: ----------------------------------------
Trustee
Trust FBO Xxx Xxxxxxxxx
By: ----------------------------------------
Trustee
Trust FBO Xxxxxx Xxxxxxxxx
By: ----------------------------------------
Trustee
Trust FBO Xxxxx Xxxxxxxxx
By: ---------------------------------------
Trustee
Trust FBO Xxxxxx Xxxxxxxxx
By: ----------------------------------------
Trustee
---------------------------------------------
Xxxxx Xxxxx
---------------------------------------------
Xxxxxxx X. Xxxxx
SCHEDULE A
----------
to
Registration Rights Agreement
List of Shareholders
--------------------
Xxx X. Xxxxxxxxx
Trust FBO Xxxxxx Xxxxxxxxx
Trust FBO Xxx Xxxxxxxxx
Trust FBO Xxxxxx Xxxxxxxxx
Trust FBO Xxxxx Xxxxxxxxx
Trust FBO Xxxxxx Xxxxxxxxx
Xxxxx Xxxxx
Xxxxxxx X. Xxxxx
