-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JsDpaCL0qPFhYEaGecW50SfndV5lwxhRhTQDH7B8a6nrawdG+gFNcXUs0XEMm7E+ GH+YLwsC7UM+VQj3/vinEA== 0001088771-99-000012.txt : 19991215 0001088771-99-000012.hdr.sgml : 19991215 ACCESSION NUMBER: 0001088771-99-000012 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991210 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LYNCH INTERACTIVE CORP CENTRAL INDEX KEY: 0001088771 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 061458056 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-15097 FILM NUMBER: 99774079 BUSINESS ADDRESS: STREET 1: 401 THEORDORE FREMD AVENUE CITY: RYE STATE: NY ZIP: 10580 BUSINESS PHONE: 9149217601 8-K 1 LYNCH INTERACTIVE FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8.-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 10, 1999 - ------------------------------------------------ ----------------- LYNCH INTERACTIVE CORPORATION ----------------------------- DELAWARE 1-15097 06-1458056 (State or other jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 401 THEODORE FREMD AVENUE, RYE, NEW YORK 10580 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 914/921-8821 ITEM 5. OTHER On December 10, 1999, Registrant completed the private placement of a $25 million Convertible Promissory Note to Cascade Investment LLC ("Cascade"). The Note matures on December 10, 2004, bears interest at 6% per annum, and is convertible into Registrant's Common Stock at the rate of one share for each $85 principal amount of the Note. Sale of the Note was exempt from registration under Securities Act of 1933, as amended, pursuant to Section 4(2) thereof. As part of the transaction, Registrant agreed to give the holders of the Note certain rights to have the shares of Common Stock into which the Note is convertible registered under the Securities Act of 1933, as amended. To assist the Registrant with the placement, the Chairman of Registrant agreed to give Cascade a one-time option to sell the Note to him at 105% of the principal amount thereof on December 15, 2000, secured by a letter of credit. Registrant had announced previously that it had planned to place the Note. The proceeds will be used for general corporate purposes, including possible acquisitions. For more detailed information, reference is made to the exhibits filed herewith. This report contains certain forward looking information, including without limitation use of proceeds and possible acquisitions. This information is based on certain assumptions, projections and estimates. As a result, it is subject to uncertainties, risks and inaccuracies, which could be material. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (C) EXHIBITS Exhibit 4.6 (i) Note Purchase Agreement dated as of December 10, 1999, between Registrant and Cascade Investment LLC ("Cascade"), a Washington limited liability company . Exhibit 4.6 (ii) Convertible Promissory Note dated December 10, 1999. Exhibit 4.6 (iii) Registration Rights Agreement dated as of December 10, 1999, between Registrant and Cascade. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. LYNCH INTERACTIVE CORPORATION DATE: DECEMBER 14, 1999 BY: /S/ROBERT E. DOLAN ----------------- ------------------------------- Robert E. Dolan Chief Financial Officer EXHIBITS Exhibit 4.6 (i) Note Purchase Agreement dated as of December 19, 1999, between Registrant and Cascade Investment LLC ("Cascade"). Exhibit 4.6 (ii) Convertible Promissory Note dated December 10, 1999. Exhibit 4.6 (iii) Registration Rights Agreement dated as of December 10, 1999, between Registrant and Cascade. EX-4.6(I) 2 NOTE PURCHASE AGREEMENT THIS NOTE PURCHASE AGREEMENT (THE "AGREEMENT") is made as of December 10, 1999, by and among Cascade INVESTMENT LLC, A WASHINGTON LIMITED LIABILITY COMPANY ("BUYER"), and Lynch Interactive Corporation, a Delaware CORPORATION ("SELLER") INTRODUCTION 1. Seller desires to sell to Buyer and Buyer and Buyer desires to purchase from Seller the CONVERTIBLE PROMISSORY NOTE (THE "NOTE") in the form attached as Exhibit A. 2. Buyer will, simultaneous upon entering into this Agreement, enter into an Option to Sell AGREEMENT (THE "OPTION") WITH MARIO J. GABELLI ("GABELLI") providing for the sale, at Buyer's option, of the Note to Gabelli. The Option is secured by an irrevocable standby letter of credit. NOW, THEREFORE, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: AGREEMENT 1. PURCHASE AND SALE. 1.1 PURCHASE AND SALE. At the Closing, as defined in Section 1.3 below, Buyer shall purchase from Seller and Seller shall issue to Buyer the Note. Buyer and Seller shall enter into a Registration Rights AGREEMENT IN THE FORM OF EXHIBIT B (THE "REGISTRATION RIGHTS AGREEMENT"). The Note is convertible into the NUMBER OF SHARES OF COMMON STOCK OF THE SELLER (THE "CONVERSION SHARES") and on the terms as provided in this Agreement. 1.2 PURCHASE PRICE. In consideration for the sale of the Note, Buyer shall pay to Seller, by wire transfer in immediately available funds, Twenty Five Million U.S. Dollars (U.S. $25,000,000) (the "Consideration"). 1.3 CLOSING. THE CLOSING OF THE PURCHASE AND SALE OF THE NOTE HEREUNDER (THE "CLOSING") shall be held by telephone among the parties and their respective legal counsel. The Closing shall be effective upon the receipt by all parties of facsimile signatures of the other parties to such agreements and the receipt of the Consideration; provided, that each party covenants to submit to the other party promptly by overnight delivery execution originals of counterpart signature pages. The Closing will be held at 10:00 A.M. on December 10, 1999, or at such other time and place upon which Seller and Buyer shall agree. 2. REPRESENTATIONS AND WARRANTIES. 2.1 SELLER'S REPRESENTATIONS AND WARRANTIES. Except as disclosed to Buyer in writing prior to the date hereof, Seller represents and warrants to Buyer as follows: 2.1.1 ORGANIZATION; STANDING AND POWER. The Seller is a corporation duly organized and validly existing under the laws of the State of Delaware, has all requisite power and authority to own, lease, and operate its properties and to carry on its business as now being conducted, and is duly qualified and in good standing to do business in each jurisdiction in which it is required to be so qualified by applicable laws. 2.1.2 CAPITAL STRUCTURE; OWNERSHIP OF SHARES. The authorized capital stock of the Seller CONSISTS OF TEN MILLION (10,000,000) SHARES OF COMMON STOCK (THE "SHARES"), of which 1,412,383 Shares are issued and outstanding. All of the Shares have been duly authorized and validly issued, are fully paid and nonassessable, and were issued in compliance with applicable federal and state securities laws. Other than as DISCLOSED IN SELLER'S SEC REPORTS (as defined below), there are not any options, warrants, calls, conversion rights, commitments, agreements, contracts, understandings, restrictions, arrangements, or rights of any character to which the Seller is a party or by which the Seller may be bound obligating the Seller to issue, deliver, or sell, or cause to be issued, delivered, or sold, additional shares of the capital stock of the Seller, or obligating the Seller to grant, extend, or enter into any such option, warrant, call, conversion right, commitment, agreement, restriction, or right. Delivery of the Shares to Buyer upon conversion of the Note will vest valid title thereto in Buyer, free and clear of all liens, encumbrances, claims, and limitations of every kind. 2.1.3 AUTHORITY. Seller has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by Seller of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate actions on the part of Seller. This Agreement has been duly executed and delivered by Seller and constitutes a valid and binding obligation of Seller enforceable in accordance with its terms, except that such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, or other similar laws relating to enforcement of creditors' rights generally, and (ii) general equitable principles. 2.1.4 NO CONFLICT. The execution and delivery of the Agreement and the performance of the transactions contemplated hereunder will not violate, conflict with, constitute a default or breach under, any material agreement, contract, or instrument to which Seller may be bound or of any judgment, order, decree to which Seller may be bound, nor will the execution, delivery and performance of this Agreement result in the creation of any mortgage, pledge, lien, encumbrance or charge upon the Shares. 2.1.5 LITIGATION. Except as disclosed in the SEC Reports, there is no pending or, to the best of Seller's knowledge, threatened lawsuit, administrative proceeding, arbitration, labor dispute or GOVERNMENTAL INVESTIGATION ("LITIGATION") to which the Seller is a party or by which any material portion of its assets, taken as a whole, may be bound, which Litigation, if adversely determined, would have a material adverse effect on the Seller. 2.1.6 ACCURACY OF REPORTS; FINANCIAL STATEMENTS. All reports required to be filed with the SEC by the Seller during the twelve month period preceding the date of this Agreement under the Securities EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), copies of which have been made available to the Buyer (the "SEC REPORTS"), have been duly and timely filed, were in substantial compliance with the requirements of their respective forms when filed, were complete and correct in all material respects as of the dates at which the information was furnished, and contained (as of such dates) no untrue statement of a material fact nor omitted to state material fact necessary in order to make the statements made therein in light of the circumstances in which MADE NOT MISLEADING. THE FINANCIAL STATEMENTS OF THE SELLER INCLUDED IN THE SEC REPORTS (THE "FINANCIAL STATEMENTS") comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto. The Financial Statements have been prepared in accordance with generally accepted accounting principles ("GAAP") consistently applied and fairly present the consolidated financial position of the Seller and any subsidiaries at the dates thereof and the consolidated results of operations and consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal, recurring adjustments). Except as set forth in the SEC Reports, the Seller does not have any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a balance sheet of the Seller or in the notes thereto which could reasonably be expected to have a material adverse effect on the Seller. 2.1.7 SOLVENCY; NO DEFAULT. The Seller has sufficient funds, assets and cash flow to pay its debts and other liabilities as they become due, and the Seller is not in default with respect to any material debt or liability. 2.1.8 DISCLOSURE. No representation or warranty of the Seller contained in this Agreement or the exhibits attached hereto (when read together and taken as a whole), contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein in light of the circumstances under which they were made not misleading. 2.2 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer makes the following representations and warranties. 2.2.1 INVESTMENT PURPOSE. The Buyer is purchasing the Note for its own account as principal for investment only and not with a present view towards the public sale or distribution thereof, except pursuant TO SALES REGISTERED OR EXEMPTED FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") . 2.2.2 ACCREDITED INVESTOR STATUS. The Buyer is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D and has such business and financial experience as is required to give it the capacity to protect its own interests in connection with the purchase of the Note. 2.2.3 RELIANCE ON EXEMPTIONS. The Buyer understands that the Note is being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Seller is relying upon the truth and accuracy of, and the Buyer's compliance with, the representations, warranties, agreements, covenants, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Note. 2.2.4 INFORMATION. The Buyer has been furnished with all materials relating to the business, finances and operations of the Seller and materials relating to the offer and sale of the Note which have been requested by the Buyer. Buyer has been afforded the opportunity to ask questions of the Seller and has received what the Buyer believes to be satisfactory answers to any such inquiries. Neither such inquiries nor any other due diligence investigation conducted by the Buyer or any of its advisors or representatives shall modify, amend or affect the Buyer's right to rely on the Seller's representations and warranties contained in Section 2.1 above. The Buyer understands that its investment in the Note involves a significant degree of risk. 2.2.5 GOVERNMENTAL REVIEW. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Note. 2.2.6 TRANSFER OR RESALE. The Buyer understands that (i) no public market now exists for the Note and that the Seller has made no assurances that a public market will ever exist for the Note, (ii) except as provided in the Registration Rights Agreement, the Note has not been and are not being registered under the 1933 Act or any applicable state securities laws, and may not be transferred unless (a) subsequently included in an effective registration statement thereunder, (b) the Buyer shall have delivered to the Seller an opinion of counsel (which opinion shall be reasonably satisfactory to the Seller) to the effect that the Note to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; (c) sold pursuant to Rule 144 promulgated under the 1933 Act (or a successor rule) ("Rule 144")) or (d) except in connection with the exercise of the Option, (iii) any sale of such Note made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if Rule 144 is not applicable, any resale of such Note under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations thereunder, and (iv) neither the Seller nor any other person is under any obligation to register such Note under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case, other than pursuant to the Registration Rights Agreement). 2.2.7 LEGENDS. The Buyer understands that the Note, and, until such time as the Conversion Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, the Conversion Shares, may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Note): (i) The following legend under the 1933 Act: "THE NOTE REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND EXCEPT FOR ANY TRANSFERS SPECIFICALLY AUTHORIZED UNER THE TERMS OF THE NOTE, MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED"; and (ii) Any other legend required by the laws of any state in which the Note will be issued. The legend set forth above shall be removed and the Seller shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act, or (b) such holder provides the Seller with an opinion of counsel, satisfactory to the Seller, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act and such sale or transfer is effected or (c) such holder provides the Seller with reasonable assurances that such Security can be sold pursuant to Rule 144 under the 1933 Act (or successor rule thereto) without restriction as to the number of Note acquired as of a particular date that can then be immediately sold. The Buyer agrees to sell all Conversion Shares, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. 2.2.8 AUTHORIZATION; ENFORCEMENT. The Buyer represents and warrants to the Seller that (i) the Buyer has all requisite legal and corporate or other power and capacity and has taken all requisite corporate or other action to execute and deliver this Agreement, to purchase the Note to be purchased by it and to carry out and perform all of its obligations under this Agreement, and (ii) this Agreement constitutes the legal, valid and binding obligation of the Buyer, enforceable in accordance with its terms, except (1) as limited by applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors' rights generally and (2) as limited by equitable principles generally and (iii) to the extent that indemnification provisions in the Registration Rights Agreement may be limited by applicable federal or state securities laws. 3. DELIVERIES AT CLOSING. 3.1 DELIVERIES BY BUYER. Buyer shall deliver the following items to Seller: 3.1.1 The Consideration, by wire transfer in immediately available funds . 3.1.2 An executed copy of this Agreement; 3.1.3 An executed copy of the Registration Rights Agreement. 3.2 DELIVERIES BY SELLER. Seller shall deliver the following items: 3.2.1 The executed Note; 3.2.2 An executed copy of this Agreement; 3.2.3 An executed copy of the Registration Rights Agreement ; and 3.2.4 An opinion of Seller's legal counsel, dated as of the Closing Date, in substantially the form as Exhibit C attached hereto 4. COVENANTS. 4.1 RESERVATION OF SHARES. Seller shall at all times have authorized and reserved for the purpose of issuance that number of shares of Common Stock equal to the Conversion Shares (as such number may be adjusted from time to time pursuant to the terms of the Note). If at any time the number of shares of Common Stock authorized and reserved for issuance is for any reason below the number of Conversion Shares, the Seller will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including without limitation calling a special meeting of shareholders to authorize additional shares to meet the Seller's obligations hereunder, and using its reasonable best efforts to obtain shareholder approval of an increase in such authorized number of shares. 4.2 AMEX LISTING. Seller shall promptly secure the listing of the Conversion Stock authorized to be issued upon conversion of the Note upon the American Stock Exchange or such other national securities exchange or over-the-counter market upon which shares of Common Stock are then listed, and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of such shares of Common Stock. 5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations, warranties and covenants contained in this Agreement shall survive the Closing; provided, however, that a claim for a breach of a representation or warranty (but not for a breach of a covenant or agreement) must be brought within one (1) year of the execution of this Agreement. In the event Investor brings a claim within the one (1) year period, such representations and warranties shall continue to survive solely with regard to such claim until such claim has been finally resolved and all indemnification rights with respect thereto have been satisfied. 6.. MISCELLANEOUS. 6.1 ENTIRE AGREEMENT. This Agreement and the documents listed in Section 3.2 (other than the opinion of Seller's legal counsel) represents the entire agreement among the parties with respect to the transactions contemplated herein and supersedes all prior agreements, written or oral, with respect thereto. This Agreement may be amended only by an instrument that is executed and authorized by all parties hereto. 6.2 EXPENSES. Buyer and Seller will pay their own respective expenses, including attorneys' fees, in connection with the negotiation of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated by this Agreement. 6.3 SUCCESSORS AND ASSIGNS. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by either party without the prior written consent of the other party. 6.4 GOVERNING LAW; CONSENT TO JURISDICTION. Except as stated below, this Agreement shall be governed by the laws of the State of Washington. The parties hereby irrevocably and unconditionally submit in any legal action or proceeding relating to this Agreement to the non-exclusive general jurisdiction of the courts of the United States located in the Western District of Washington and, in any such action or proceeding, consent to jurisdiction in such courts and waive any objection to the venue in any such court. In the event that the federal court selected by Cascade shall not have jurisdiction, Lynch agrees to submit to the jurisdiction of the courts of the State of Washington located in King County. In the event Investor transfers or assigns the Note to a person not an affiliate, then this Note shall be governed by and construed in accordance with the laws of the State of New York and the consent to jurisdiction in the State of Washington stated above is hereby revoked. 6.5 NONWAIVER. The failure of either party to insist upon strict adherence to any one or more of the covenants and restrictions in this Agreement, on one or more occasion, shall not be construed as a waiver, nor deprive either party of the right to require strict compliance thereafter with the same. 6.6 ATTORNEYS' FEES AND EXPENSES. In any suit or action brought to enforce this Agreement, or to obtain an adjudication, declaratory or otherwise, of rights hereunder, the losing party shall pay to the prevailing party reasonable attorneys' fees and all other costs and expenses that may be incurred by the prevailing party in such action. 6.7 PUBLICITY. Seller shall not issue any public statement (such as press releases, letters to shareholders, speeches and similar statements) concerning the beneficial owner of Buyer without the prior written consent of the Buyer; provided, however, that such disclosure may be made if such approval has been requested and not received and the Seller concludes (after consulting with counsel) that it is required by law or stock exchange regulation to make such disclosure in a press release or other public statement. With respect to any press release issued by Seller, Seller shall use reasonable efforts to provide copies to Buyer prior to public dissemination thereof and shall incorporate Buyer's comments to such press release, if any, in good faith. 6.8 NOTICES. Any notice required or permitted to be given under the terms of this Agreement shall be sent by certified or registered mail (return receipt requested) or delivered personally or by courier (including a recognized overnight delivery service) or by facsimile and shall be effective for five days after being placed in the mail, if mailed by regular U.S. mail, or upon receipt, if delivered personally or by courier (including a recognized overnight delivery service) or by facsimile, in each case addressed to a party. The addresses for such communications shall be: If to the Seller: Lynch Interactive Corporation 401Theodore Fremd Avenue Rye, NY 10580 Attn: Robert Dolan With copy to: Mario J. Gabelli One Corporate Center at Rye 555 Theodore Fremd Avenue Rye, NY 10580 If to Buyer: Cascade Investment LLC 2365 Carillon Point Kirkland, WA 98033 Attn: Michael Larson, Business Manager With copy to: Mark R. Beatty Preston Gates & Ellis LLP 701 Fifth Avenue Suite 5000 Seattle, WA 98104 Each party shall provide notice to the other of any changes in address. (THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK) SIGNATURE PAGE - NOTE PURCHASE AGREEMENT NOTICE: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first mentioned above. SELLER BUYER LYNCH INTERACTIVE CORPORATION CASCADE INVESTMENT LLC By ________________________________ By ____________________________ Robert Dolan, Chief Financial Officer Michael Larson, Business Manager EX-4.6(II) 3 CONVERTIBLE PROMISSORY NOTE NEITHER THE NOTE REPRESENTED HEREBY NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). EXCEPT FOR ANY TRANSFERS SPECIFICALLY AUTHORIZED UNDER THE TERMS OF THE NOTE, NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE MAY BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED CONVERTIBLE PROMISSORY NOTE $25,000,000.00 Dated: December 10, 1999 Rye, New York FOR VALUE RECEIVED, THE UNDERSIGNED, LYNCH INTERACTIVE CORPORATION, A DELAWARE CORPORATION. ("LYNCH"), promises TO PAY TO THE ORDER OF CASCADE INVESTMENT LLC, A WASHINGTON LIMITED LIABILITY COMPANY ("CASCADE"), at 2365 Carillon Point, Kirkland, WA 98033, or at such other place or places as the holder hereof may designate in writing, the principal sum of TWENTY-FIVE MILLION and NO/100 DOLLARS ($25,000,000), plus interest, in lawful, immediately available money of the United States of America. THIS CONVERTIBLE PROMISSORY NOTE ("NOTE") is issued by Lynch pursuant to that certain Note Purchase Agreement DATED AS OF DECEMBER 10, 1999 (THE "PURCHASE AGREEMENT") between Lynch and Cascade. Capitalized terms not otherwise defined in this Note shall have the meaning set forth in the Purchase Agreement, which definitions are incorporated herein. Cascade, and no other holder of this Note, has the right, expiring December 1, 2000, to SELL THIS NOTE PURSUANT TO THE OPTION TO SELL AGREEMENT (THE "OPTION") by and between Cascade Investment LLC and MARIO J. GABELLI ("GABELLI") dated as of December 10, 1999. The obligations of Gabelli under the Option are SECURED BY AN IRREVOCABLE STANDBY LETTER OF CREDIT (THE "LETTER OF CREDIT") issued by Morgan Guaranty Trust COMPANY OF NEW YORK (THE "LETTER OF CREDIT ISSUER"). Lynch further agrees as follows: 1. INTEREST RATE AND INTEREST PAYMENT. Interest on the outstanding principal balance of this Note shall accrue at the rate of six percent (6%) per annum, payable semiannually on each June 10 and December 10, commencing June 10, 2000. Upon the occurrence and during the continuance of an Event of Default, interest on the outstanding principal balance of this Note shall accrue at the rate of fifteen percent (15%) per annum (the "DEFAULT RATE") and shall also be compounded quarterly. However, in no event shall the interest rate exceed the maximum rate permitted by Washington law. Interest accrued but not otherwise paid shall in any event be payable on the Maturity Date specified below. 2. PAYMENT OF PRINCIPAL. The outstanding principal balance of this Note, together with all accrued but unpaid interest, shall be due and payable on December 10, 2004 or such earlier date upon which the Holder accelerates the date for which principal and interest are due as provided in this Note PURSUANT TO SECTION 4 HEREOF ("MATURITY DATE"). Any payment on this Note shall first be applied to costs and fees, if any, described in Section 11 of this Note, then to interest and then to principal. If it is ever determined that the rate of interest was in excess of any maximum rate (if any) prescribed by law, then that portion of interest payments representing any amounts in excess of said maximum shall be applied as provided in the preceding sentence. 3. PURCHASE AGREEMENT; NO PREPAYMENTS; CALL. This Note is issued pursuant to the terms of the Purchase Agreement. Lynch agrees and acknowledges that the conversion feature of this Note during the term of the Note is a valuable right and that Cascade would not have entered into this Note without assurances that the Note would not be called or prepaid by Lynch. Accordingly, Lynch acknowledges and agrees that it will not, without the consent of Cascade, except upon acceleration hereof, make any prepayments of principal on this Note. In the event Cascade assigns or transfers all or any portion of this Note, Lynch may call this Note to the extent so assigned or transferred by Cascade at par (without premium or penalty) upon ten (10) days written notice to such holder. 4. DEFAULT AND ACCELERATION. If Lynch fails to pay when due any amount of principal or interest due under this Note, or if an Event of Default described in Section 5 (c) - 5 (f)occurs and shall not be cured within the time period provided therein, then all amounts due or to become due under this Note shall, upon written notice to Lynch by the holder, become immediately due and payable and such amounts shall include principal and all interest accrued thereon; provided, however, that if Lynch cures a payment default, the holder shall have thirty (30) days from the date the cure is effected in which to accelerate all amounts due under this Note. The holder may, at its sole option, upon thirty days prior written notice given no later than thirty day following an event described below, also require that all amounts due or to become due under this Note shall become immediately due and payable (including interest) upon the occurrence of the closing date of the sale of all or substantially all of Lynch's assets, or the closing date of any merger or consolidation of or with Lynch, if Lynch's common stockholders immediately prior to such sale of assets, merger or consolidation do not own more than fifty percent (50%) of the outstanding common stock of the surviving or successor corporation. However, a transaction by Lynch solely to change the state of its incorporation from Delaware to another state of the United States shall not be deemed an event described in the preceding clause. 5. EVENT OF DEFAULT. THE TERMS "EVENT OF DEFAULT", "DEFAULT" OR "DEFAULT" shall mean any one or more of the following events: (A) PAYMENT DEFAULT. Lynch shall fail to pay or cause to be paid when due any portion of the Note; or (B) FAILURE UNDER LETTER OF CREDIT. The Letter of Credit Issuer shall fail to honor a conforming draw under the Letter of Credit. (C) BREACH OF OTHER COVENANTS OR FAILURE OF ANY CONDITION. Lynch shall fail to perform, keep or observe any agreement or covenant not involving the payment of principal or interest under this Note, contained in this Note or the Purchase Agreement and any such failure shall remain unremedied for thirty (30) days after written notification thereof shall have been given to Lynch by the holder; notwithstanding the preceding clause, if the Default is of a nature that is not susceptible to cure within 30 days and if Lynch commences to cure the Default within said 30-day period, Lynch shall not be deemed to be in Default if it diligently prosecutes said cure thereafter to completion and cures said Default by the sixtieth (60th) day after the date of said notice; or (D) BREACH OF REPRESENTATION OR WARRANTY. Any representation or warranty made by Lynch in the Purchase Agreement shall prove to have been untrue or misleading when made in any material respect; provided that Cascade has not transferred the Note in whole and declares the default during the period in which any such representation and warranty survives as provided in the Purchase Agreement; or (E) CROSS DEFAULTS (PAYMENT AND OTHER). Lynch shall be in default in a principal amount of ten million dollars ($10,000,000) or more in the payment of any indebtedness for borrowed money of Lynch to any person. Notwithstanding the foregoing, there shall not be an Event of Default under this section (e) until expiration of, without cure, any period for cure contained in any other agreement regarding such indebtedness. A default by Lynch in connection with such indebtedness to any person other than Cascade shall not be a default under this section (e), unless such default allows the person holding such indebtedness to accelerate the indebtedness; or (F) BANKRUPTCY ETC. Lynch shall dissolve or liquidate or take an equivalent action or an involuntary petition shall have been filed under any federal or state bankruptcy, reorganization, insolvency, moratorium or similar statute against Lynch, or, prior to expiration or termination of the Letter of Credit, the Letter of Credit Issuer, or a custodian, receiver, trustee, assignee for the benefit of creditors or other similar official shall be appointed to take possession, custody, or control of the property of Lynch, or, prior to expiration or termination of the Letter of Credit, the Letter of Credit Issuer, unless such petition or appointment is set aside or withdrawn or ceases to be in effect within ninety (90) days from the date of said filing or appointment; or Lynch or, prior to expiration or termination of the Letter of Credit, the Letter of Credit Issuer shall become insolvent or admit in writing generally its inability to pay its debts as they mature, or shall file any petition or action for relief relating to any bankruptcy, reorganization, insolvency or moratorium law, or any other law or laws for the relief of, or relating to, debtors; or Lynch or, prior to expiration or termination of the Letter of Credit, the Letter of Credit Issuer shall make an assignment generally for the benefit of creditors or enter into an agreement of composition generally with its creditors; or Lynch shall fail generally to pay its debts as they become due; or Lynch shall fail to promptly have discharged any judgment, execution, garnishment or attachment of such consequence as would reasonably be likely to impair the ability of Lynch to carry on its operations as presently conducted or to fulfill its obligations under this Note. 6. RIGHT OF CONVERSION. The holder shall have the right to convert the outstanding balance of the Note to common stock of Lynch under the terms and conditions specified in Exhibit A to this Note. 7. RIGHT TO PUT THE NOTE. During the period between December 1and December 10, 2000, Cascade, and no other holder of this Note, may, pursuant to the Option, require Gabelli to purchase this Note under the terms and conditions and for the purchase price specified in the Option. Lynch acknowledges and agrees that this Note may be transferred to Gabelli or the Letter of Credit Issuer pursuant to the Option or the Letter of Credit, respectively, without any registration of this Note under the Acts or any other restrictions. 8. WAIVERS BY LYNCH. Lynch waives presentment for payment, demand, notice of nonpayment, notice of protest and protest of this Note, and all notices in connection with the delivery, acceptance, or dishonor of this Note. Lynch agrees that (a) if for any reason any amount due hereunder is paid by cashier's, certified teller's check or other check, there shall be no discharge of Lynch's obligation until said check be finally paid by the issuer thereof; and (b) the provisions of RCW 62A.3-311 shall not entitle Lynch to any accord and satisfaction of any now or hereafter existing claim in dispute between Cascade and Lynch (or any of their respective successors and assigns), all of which provisions and rights are hereby waived. 9. NO WAIVER. THE HOLDER shall not by any act or omission or commission be deemed to waive any of its rights or remedies under this Note or the Purchase Agreement unless such waiver shall be in writing and signed by the holder, and then only to the extent specifically set forth therein. In the event this Note is transferred, no waiver shall be effective unless in writing and signed by the holders of a majority of the principal amount of the Note; provided, that no waiver may reduce the amount of, or delay payment of, principal and interest payable hereunder without the written consent or waiver of all holders of any portion of the Note. 10. COSTS AND FEES. Upon demand therefor, Lynch agrees to pay to the holder all costs and fees arising out of enforcing this Note, whether incurred in any court action, arbitration, or mediation, on appeal, in any bankruptcy (or state receivership or other insolvency or similar proceedings or circumstances), in any forfeiture, and for any post-judgment collection services. 11. APPLICATION OF ARTICLE 3. LYNCH AND CASCADE AGREE THAT, SUBJECT TO THE SPECIFIC TERMS HEREOF AND TO THE EXTENT THAT WASHINGTON LAW APPLIES, THE PROVISIONS OF ARTICLE 3 OF THE UNIFORM COMMERCIAL CODE OF WASHINGTON PERTAINING TO INSTRUMENTS SHALL BE APPLIED TO THIS NOTE, EVEN IF THIS NOTE IS NOT DEEMED TO BE AN "INSTRUMENT" OR A "NEGOTIABLE INSTRUMENT" THEREUNDER. 12. APPLICATION OF TRUST INDENTURE ACT. If this Note will at any time become subject to the Trust Indenture Act of 1939, Lynch will make appropriate revisions hereto and will enter into an indenture with an appropriate trustee so as to comply fully with such act. 13. TRANSFER. This Note may be transferred only in denominations of $1,000 or integral multiples thereof. Any holder hereof may obtain one or more new Notes at any time in any such denominations by surrendering this Note to Lynch with a written request therefor. 14. GOVERNING LAW; VENUE. Except as noted below, this Note shall be governed by and construed in accordance with the laws of the State of Washington. In any court proceeding, Lynch agrees to submit to the jurisdiction of the federal court selected by Cascade, and venue of any action concerning this Note shall be in King County, Washington state. In the event that the federal court selected by Cascade shall not have jurisdiction, Lynch agrees to submit to the jurisdiction of the Washington state court in King County selected by Cascade. Lynch hereby irrevocably waives to the fullest extent permitted by law any objection which it may now or hereafter have to the laying of such venue and any claim that any such forum is an inconvenient forum. Nothing in this Section shall impair the right of Cascade to bring any action or proceeding against Lynch or its property in the courts of any other county or jurisdiction and Lynch irrevocably submits to the nonexclusive jurisdiction of the appropriate courts (as selected by Cascade) of the jurisdiction in which Lynch is organized or any place where any property or any office of Lynch is located. In the event Investor transfers or assigns this Note to a person not an affiliate, then this Note shall be governed by and construed in accordance with the laws of the State of New York and the consent to jurisdiction in the State of Washington stated above is hereby revoked. NOTICE: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. LYNCH INTERACTIVE CORPORATION, a Delaware Corporation BY ITS EXHIBIT A CONVERSION RIGHTS A. CONVERSION FORMULA. Cascade or, upon transfer and assignment of this Note to one or more holders (each, including for purposes of this exhibit Cascade, a "Holder"), each Holder shall have the right (the "CONVERSION RIGHTS"), AT ITS OPTION, AT ANY TIME DURING THE TERM OF THIS NOTE (THE "CONVERSION PERIOD"), to convert the Note in accordance with the provisions of this Exhibit A, in whole or in part, into fully paid and nonassessable Conversion Shares. The number of Conversion Shares into which the Note may be converted shall be determined by dividing the aggregate principal amount by the Conversion Price (as defined below) in effect at the time of such conversion. B. CONVERSION PRICE. THE INITIAL "CONVERSION PRICE" shall be equal to Eighty Five Dollars ($85.00) per share. Upon the occurrence of any Extraordinary Event from and after the date of this Agreement, the Conversion Price shall be adjusted by multiplying the then current Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such Extraordinary Event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such Extraordinary Event, and the product so obtained shall thereafter be the then current Conversion Price. The Conversion Price, as so adjusted, shall be readjusted in the same manner upon the OCCURRENCE OF ANY SUCCESSIVE EXTRAORDINARY EVENT. THE PHRASE "EXTRAORDINARY EVENT" shall mean the occurrence of any of the following events: (i) the issuance of Common Stock as a dividend or other distribution on outstanding shares of Common Stock; (ii) a subdivision of outstanding Common Stock into a greater number of shares of Common Stock; or (iii) a combination of outstanding shares of Common Stock into a smaller number of shares of Common Stock. The Conversion Price will also be adjusted for issuance's of Common Stock or rights thereto at less than fair market value and for excess distribution payments. Accordingly, in the event Lynch issues any shares of Common Stock for cash or other securities at a price per share less than the market price per share at the earlier of the time such shares were issued or the time the rights to acquire such shares were issued, the Conversion Price will be adjusted by multiplying the Conversion Price in effect immediately prior to such issuance times a fraction the numerator of which is the number of shares outstanding immediately prior to such issuance plus the number of shares that would have been issued at the aggregate price if the price had been equal to the market price per share at the relevant time and the denominator of which is the number of shares outstanding immediately after such issuance. At the time of any conversion of all or any portion of the Note, the same adjustment shall be made with respect to any outstanding rights to acquire Common Stock at a price per shares less than the market price per share at the time such rights were issued except that the denominator shall be the number of shares that would be outstanding upon exercise of all such rights. Further, in the event Lynch distributes during any twelve month period any cash, securities or other property in respect of its Common Stock, or purchases any shares of Common Stock at a price greater than the market value thereof at the time of the purchase, and the sum of such cash, the value of such securities or other property (as determined in good faith by Lynch's Board of Directors) and the excess price per outstanding share of Common Stock, exceeds $1.50 per share of Common Stock (calculated on a cumulative basis immediately prior to the record date for each such distribution and at the time of each such purchase and adjusted for Extraordinary Events), the Conversion Price shall be reduced by the amount thereof per share of Common Stock during such year in excess of $1.50 per share. In the event Lynch merges or is consolidated with, or sells, leases or otherwise transfers all or substantially all of its assets to, any other entity (other than a merger in which the shares of Common Stock are not altered or exchanged for any other securities or property) or in the event the shares of Common Stock are exchanged for any other securities, the Note will thereafter be convertible into the amount of securities or other property that would have been received if the Note had been converted into Common Stock at the then effective Conversion Price immediately prior to such merger, consolidation, sale, lease, transfer or exchange and the Conversion Price shall be appropriately adjusted. C. NOTICE OF CONVERSION. To exercise the Conversion Rights, a Holder shall give written notice to Lynch at the address set forth in Section 6.8 of the Purchase Agreement of its election to convert the same (and, if the Note has not already been surrendered, should deliver the Note for cancellation to Lynch), and shall state in such notice the name or names in which the certificate or certificates for Conversion Shares are to be issued. The number of Conversion Shares shall be computed as specified in the preceding Section A. The conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender OF THE NOTE (THE "CONVERSION DATE"), and the Holder shall be treated for all purposes as the record holder of such Conversion Shares as of such date. D. MECHANICS AND EFFECT OF CONVERSION. (1) FRACTIONAL SHARES. No fractional shares of Stock shall be issued upon conversion of the Convertible Note. In lieu of the issuance of any fractional shares to a Holder by Lynch upon conversion of the Convertible Note, Lynch shall pay to such Holder the cash equivalent of any amount of outstanding principal and accrued interest that is not so converted, such payment to be in the form as provided below. (2) MECHANICS OF CONVERSION. A Holder shall surrender the Note (if not previously surrendered), duly endorsed without warranty, representation or recourse, except that the Note shall be transferred free and clear of all liens and encumbrances and no other party has any beneficial interest in the Note, at the principal office of Lynch set forth in Section 6.8 of the Purchase Agreement. At its expense, Lynch shall direct its transfer agent for the Common Stock to, as soon as practicable thereafter, issue and deliver to the Holder (i) a certificate or certificates for the number of Conversion Shares to which Holder shall be entitled upon such conversion (bearing such legends as are required by applicable state and federal securities laws in the opinion of counsel to Lynch), and (ii) any other securities and property to which Holder shall be entitled upon such conversion under the terms of the Note, including a check payable to Holder for any cash amounts payable as described in Section D(1). (3) EFFECT OF CONVERSION. On and after the Conversion Date Holder shall be treated for all purposes as the record holder of the Conversion Shares. If Holder shall convert less than the full amount of principal, interest and other amounts owing under the Note, such amounts not converted shall continue to be outstanding and payable by Lynch pursuant to the terms of the Convertible Note and this Agreement. Upon full conversion of the Note, Lynch shall be forever released from its obligations and liabilities under the Note. EX-4.6(III) 4 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (THIS "AGREEMENT") is made and entered into as of December 10, 1999 BY AND AMONG CASCADE INVESTMENT LLC, A WASHINGTON LIMITED LIABILITY COMPANY (THE "INVESTOR"), and Lynch INTERACTIVE CORPORATION, A DELAWARE CORPORATION (THE "COMPANY"). RECITALS A. Investor has agreed to purchase from the Company, and the Company has agreed to sell to the INVESTOR, A $25 MILLION CONVERTIBLE PROMISSORY NOTE (THE "NOTE") pursuant to a Note Purchase Agreement, dated of EVEN DATE HEREWITH BY AND AMONG THE COMPANY AND INVESTOR (THE "PURCHASE AGREEMENT"). The Note is convertible INTO COMMON STOCK ("COMMON STOCK") of the Company on the terms and conditions set forth in the Note. B. The Purchase Agreement provides that Investor shall be granted certain information and registration rights, all as more fully set forth herein. NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereto agree as follows: 1. INFORMATION 1.1 RULE 144 REPORTING. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Registrable Securities (as defined below) to the public without registration, the Company agrees to use all reasonable efforts to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act (as defined below), at all times after the date of this Agreement; (b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the 1934 Act (as defined below) (at any time after it has become subject to such reporting requirements); and (c) So long as any person owns all or any portion of the Note or any Registrable Securities, furnish to such holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144, and of the Securities Act and the 1934 Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as Investor may reasonably request in availing itself of any rule or regulation of the Commission allowing Investor to sell any such securities without registration. -1- 2. REGISTRATION RIGHTS. 2.1 DEFINITIONS. For purposes of this Section 2: (A) REGISTRATION. The terms "register," "registered," and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement. (B) REGISTRABLE SECURITIES. The term "Registrable Securities" means: (1) all the shares of Common Stock of the Company issued or issuable upon the conversion of the Note; and (2) all shares of Common Stock of the Company issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, all such shares of Common Stock described in clause (1) of this subsection (b); excluding in all cases, however, any Registrable Securities sold by a person pursuant to Rule 144 promulgated under the Securities Act or pursuant to a registration statement. (C) REGISTRABLE SECURITIES THEN OUTSTANDING. The number of shares of "Registrable Securities then Outstanding" shall mean the number of shares of Common Stock which are Registrable Securities and (1) are then issued and outstanding or (2) are then issuable pursuant to the exercise or conversion of the Note. (D) FORM S-3. The term "Form S-3" means such form under the Securities Act as is in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents fried by the Company with the SEC. (E) SEC. The term "SEC" or "Commission" means the U.S. Securities and Exchange Commission. (F) SECURITIES ACT. The term "Securities Act" means the Securities Act of 1933, as amended. (G) 1934 ACT. The term "1934 Act" means the Securities Exchange Act of 1934, as amended. 2.2 DEMAND REGISTRATION. (A) REQUEST BY HOLDERS. If the Company shall receive at any time after the first anniversary of this Agreement (but not within 12 months of the effective date of another demand registration statement effected by the Company on behalf of any holder of Registrable Securities pursuant to this Section 2.2, or within six months of the effective date of a registration statement effected on behalf of any holder of Registrable Securities pursuant to Section 2.4), a written request from any holder of Registrable Securities who holds Registrable Securities in excess of 1% of the then outstanding number of shares of Common Stock (each such PERSON ELIGIBLE TO MAKE A REQUEST, AN "ELIGIBLE HOLDER" AND EACH SUCH PERSON WHO MAKES A REQUEST, A "REQUESTOR") that the Company file a registration statement under the Securities Act covering the registration of Registrable Securities pursuant to this Section 2.2, then the Company shall, within ten (10) business days of the receipt of SUCH WRITTEN REQUEST, GIVE WRITTEN ACKNOWLEDGMENT OF SUCH REQUEST ("REQUEST ACKNOWLEDGMENT") to each Eligible Holder (if any). If an Eligible Holder desires to include in any such registration statement all or any part of the Registrable Securities then held, the Eligible Holder shall, within ten (10) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities the Eligible Holder wishes to include in such registration statement. Eligible Holders who elect to participate in an offering (including but not limited to a Requestor) ARE REFERRED TO COLLECTIVELY AS "SELLING SHAREHOLDERS". The Company shall effect, as soon as practicable, the registration under the Securities Act of all Registrable Securities which the Selling Shareholders request to be registered and included in such registration, subject only to the limitations of this Section 2.2; provided that the Registrable Securities requested by the Requestor(s) to be registered pursuant to such request must either: (i) be at least twenty five percent (25%) of all Registrable Securities then outstanding (but having an anticipated aggregate public offering price of at least $5,000,000) or (ii) have an anticipated aggregate public offering price (before any underwriting discounts and commissions) of not less than $10,000,000. (B) UNDERWRITING. If a Requestor initiates the registration request under this Section 2.2 and intends to distribute the Registrable Securities covered by its request by means of an underwriting, then the Requestor shall so advise the Company as a part of its request made pursuant to this Section 2.2. In such event, the right of the Selling Shareholders to include their Registrable Securities in such registration shall be conditioned upon each Selling Shareholder's participation in such underwriting and the inclusion of their Registrable Securities in the underwriting to the extent provided herein. If the Requestor proposes to distribute its securities through such underwriting, each Selling Shareholder shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting by the Company and the Requestor. Notwithstanding any other provision of this Section 2.2, if the underwriter(s) advise(s) the Company in writing that marketing factors require a limitation of the number of securities to be underwritten then the Company shall so advise the Selling Shareholders, and the managing underwriter(s) may exclude shares (including Registrable Securities) from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, first, to the Requestor, and second, to the Selling Shareholders based on the relative proportion of shares of all such Selling Shareholders requested to be so registered, and third, to the Company. If a Selling Shareholder disapproves of the terms of any such underwriting, the Selling Shareholder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the registration statement. Any Registrable Securities excluded and withdrawn from such underwriting shall be withdrawn from the registration. (C) MAXIMUM NUMBER OF DEMAND REGISTRATIONS. The Company is obligated to effect only two (2) such registrations pursuant to this Section 2.2. (D) DEFERRAL. Notwithstanding the foregoing, if the Company shall furnish to the Selling Shareholders, a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for such registration statement to be filed at that time and it is therefore essential to defer the filing of a registration statement pursuant to this Section 2.2, then the Company shall have the right to defer such filing for a period of not more than 180 days after receipt of the request of the Requestor; provided, however, that the Company may not utilize this right more than once in any twelve (12) month period. 2.3 PIGGYBACK REGISTRATIONS. The Company shall notify each Eligible Holder in writing at least twenty (20) business days prior to filing any registration statement under the Securities Act for purposes of effecting a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding registration statements relating to any registration under Section 2.2 or Section 2.4 of this Agreement, to any employee benefit plan or a corporate reorganization, business combination or other rule 145 transaction or to the extent prohibited by an agreement between the Company and other security holders) and will afford each Eligible Holder an opportunity to include in such registration statement all or any part of the Registrable Securities then held by each Eligible Holder. If an Eligible Holder of Registrable Securities desires to include in any such registration statement all or any part of the Registrable Securities then held, the Eligible Holder shall, within ten (10) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities the Eligible Holder wishes to include in such registration statement. If the Eligible Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, Eligible Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein. (A) UNDERWRITING. If a registration statement under which the Company gives notice under this Section 2.3 is for an underwritten offering, then the Company shall so advise Eligible Holders. In such event, the right of Eligible Holders to include Registrable Securities in a registration pursuant to this Section 2.3 shall be conditioned upon the Eligible Holder's participation in such underwriting and the inclusion of Eligible Holder's Registrable Securities in the underwriting to the extent provided herein. Each Selling Shareholder shall, in such event, enter into an underwriting agreement in customary form with the managing underwriter or underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Agreement, if the managing underwriter determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude shares (including Registrable Securities) from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, first, to the Company, and second, to any other shareholder who has exercised a demand registration right, and third, to all other Selling Shareholders (and any other shareholders with similar rights), based on the relative proportion of shares of all such Selling Shareholders or other shareholders requested to be so registered. If any Selling Shareholder who has elected to participate in the underwritten offering disapproves of the terms of any such underwriting, such Selling Shareholder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. 2.4 FORM S-3 REGISTRATION. In case the Company shall receive from a Requestor a written request that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by the Requestor, then the Company will as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of the Requestor's Registrable Securities as are specified in such request; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.4: (i) if Form S-3 is not available for such offering by the Requestor; (ii) if the Requestor proposes to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $5,000,000; (iii) if the Company shall furnish to the Requestor a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement no more than once during any twelve month period for a period of not more than 180 days after receipt of the request of the Requestor under this Section 2.4; (iv) if the Company has, within the twelve (12) month period preceding the date of such request, already effected two (2) registrations for the Requestor pursuant to Section 2.2 and Section 2.4; or (v) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance or become subject to taxation in any jurisdiction where it would be required to pay taxes solely as a result of such filing. (E) NOT DEMAND REGISTRATION. Form S-3 registrations shall not be deemed to be demand registrations as described in Section 2.2 above. 2.5 OBLIGATIONS OF THE COMPANY. (A) EXPENSES. All expenses incurred in connection with a registration pursuant to Sections 2.2, 2.3 and 2.4 including without limitation all registration and qualification fees, printers' and accounting fees, fees and disbursements of counsel for the Company, and the reasonable costs and expenses of one counsel for the Selling Shareholders, but in no event shall the aggregate cost of such counsel exceed $10,000 pursuant to this Agreement (but excluding underwriters' and brokers' discounts and commissions), shall be borne by the Company. Each Selling Shareholders shall bear its respective proportionate share (based on the total number of shares sold in such registration) of all underwriting discounts or commissions payable to underwriters or brokers in connection with such offerings. (B) REGISTRATION. Whenever required to effect the registration of any Registrable Securities under this Agreement, the Company shall, as expeditiously as reasonably possible: (i) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all reasonable efforts to cause such registration statement to become effective, and, upon the request of Requestor, (y) keep a registration statement requested pursuant to Section 2.2 effective for up to ninety (90) days and (z) keep a registration statement requested pursuant to Section 2.4 effective indefinitely pursuant to SEC Rule 415; provided, however, that the Selling Shareholders shall suspend use of a prospectus contained in any such registration statement immediately upon receipt of notice from the Company that the prospectus does not meet the requirements of the 1933 Act, 1934 Act or applicable regulations. In such event, the Company shall use all reasonable efforts to amend promptly the registration statement to confirm the prospectus to the requirements of the 1933 Act, 1934 Act and applicable regulations, unless the Company delivers a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for an amendment to such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the filing of the amendment to the Form S-3 registration statement for a period of not more than 60 days; provided that this deferral mechanism may not be exercised more than once during any twelve month period and the ninety day period referenced in clause (y) above shall be extended one day for each day that the Company elects to defer the filing under this sentence. (ii) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. (iii) Furnish to each Selling Shareholder or its agents such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of the Registrable Securities owned by them that are included in such registration. (iv) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Selling Shareholders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions or become subject to taxation in any jurisdiction where it would be required to pay taxes solely as a result of such filing. (v) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Selling Shareholder shall also enter into and perform its obligations under such an agreement. (vi) Notify each Selling Shareholder at any time when a prospectus relating to Registrable Securities is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (vii) Furnish, at the request of Requestor, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to Requestor, addressed to the underwriters, if any, and to the Selling Shareholders (ii) a "comfort" letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to Requestor, addressed to the underwriters, if any, and to Requestor. 2.6 FURNISH INFORMATION. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 2.2, 2.3 or 2.4 that each Selling Shareholder shall furnish to the Company such information regarding it, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to timely effect the registration of their Registrable Securities. 2.7 DELAY OF REGISTRATION. Neither Requestor nor any Eligible Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2. 2.8 INDEMNIFICATION. In the event any Registrable Securities are included in a registration statement under Sections 2.2, 2.3 or 2.4: (A) BY THE COMPANY. To the extent permitted by law, the Company will indemnify and hold harmless, each Selling Shareholder, and their respective members, officers, employees and agents, any underwriter (as defined in the Securities Act) for the Selling Shareholders and each person, if any, who controls any Selling Shareholder or underwriter within the meaning of the Securities Act or the 1934 Act against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the 1934 Act, any federal or state securities law or any role or regulation promulgated under the Securities Act, the 1934 Act or any federal or state securities law in connection with the offering covered by such registration statement; and the Company will reimburse each Selling Shareholder and their respective members, officers, employees and agents, underwriter or controlling person for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; provided however, that (A) the Company will not be liable, in an offering in which the Company did not execute an underwriting agreement or in which there was no underwriter, to any Selling Shareholder under this section with respect to any preliminary prospectus or the final prospectus to the extent that any such loss, liability, claim, damage or expense of such holder results from the fact that a Selling Shareholder sold Registrable Securities to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the final prospectus if the Company has previously and timely furnished copies thereof to such holder; (B) the indemnity agreement contained in this subsection 2.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the written consent of the Company (which consent shall not be unreasonably withheld), and (C) the Company shall not be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by a Selling Shareholder, or their respective members, officers, employees and agents, underwriter or controlling person thereof . In addition, the Company agrees that, as an interim measure during the pendency of any claim, action, investigation, inquiry or other proceeding arising out of or based upon any statement or omission, or any alleged statement or omission, described in this Section, the Company will reimburse each Selling Shareholder on a monthly basis for all reasonable legal fees or other expenses incurred in connection with investigating or defending any such claim, action, investigation, inquiry or proceeding, notwithstanding the absence of a judicial determination as to the propriety and enforceability of the Company's obligation to reimburse each Selling Shareholder for such expenses and the possibility that such payments might later be held to have been improper by a court of competent jurisdiction. To the extent that any such interim reimbursement payment is so held to have been improper, the person that received such payment shall promptly return it to the Company, together with interest, compounded daily, determined on the basis of the prime rate announced from time to time by Morgan Guaranty Trust Company of New York (or its successor) (the "Prime Rate"). Any such interim reimbursement payments which are not made to a Selling Shareholder or any person entitled to indemnity within 30 days of a request for reimbursement shall bear interest at the Prime Rate from the date of such request. (B) BY EACH SELLING SHAREHOLDER. To the extent permitted by law, each Selling Shareholder will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, and any underwriter against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling person, or underwriter may become subject under the Securities Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Selling Shareholder expressly for use in connection with such registration; and such Selling Shareholder will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, or underwriter in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 2.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such Selling Shareholder, which consent shall not be unreasonably withheld; and provided further, that the total amounts payable in indemnity by any Selling Shareholder under this Section 2.8(b) in respect of any Violation shall not exceed the proceeds (net of underwriters' and brokers' discounts and commissions) received by such Selling Shareholder in the registered offering out of which such Violation arises. For the avoidance of doubt, this provision shall not impose any indemnity obligation on a Selling Shareholder to the extent that the Violation did not occur in reliance upon and in conformity with written information furnished by such person. (C) NOTICE. Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that if the indemnifying party assumes such defense the indemnifying party shall have no further liability for the fees and expenses of counsel paid by the indemnified party, except that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflict of interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8. (D) CONTRIBUTION. If the indemnification provided in this section 2.8 is unavailable or insufficient to hold harmless an indemnified party under Section 2.8(a) or (b), then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Selling Shareholders on the other from the offering of the securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Selling Shareholder(s) on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other equitable considerations. The relative benefits received by the Company on the one hand and the Selling Shareholder(s) on the other shall be deemed to be in the same proportion as the total net proceeds from the offering received by the Company bear to the total net proceeds received by the Selling Shareholder(s). The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact related to information supplied by the Company or written information supplied by a Selling Shareholder, and the parties' relevant intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this paragraph (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim that is the subject of this section. Notwithstanding the provisions of this section, a Selling Shareholder shall not be required to contribute any amount in excess of the amount of the total net proceeds (net of commissions) received by such Selling Shareholder from the sale of the securities pursuant to this Agreement exceeds the amount of any damages or expenses that a Selling Shareholder has otherwise been required to pay, or has incurred, by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (F) SURVIVAL. The obligations of the Company and Eligible Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration statement, and otherwise. 2.9 "MARKET STAND-OFF" AGREEMENT. Each Eligible Holder hereby agrees that it shall not, if it beneficially owns more than 5% of the common stock of the Company and to the extent requested by the Company or an underwriter of securities of the Company, sell or otherwise transfer or dispose of any Registrable Securities or other shares of stock of the Company then owned (other than to donees, family members or affiliates of such Eligible Holder who agree to be similarly bound) for up to seven (7) days preceding the offering and up to ninety (90) days following the effective date of a registration statement of the Company filed under the Securities Act with respect to shares of common stock or securities exercisable for or convertible into shares of common stock; provided, however, that all officers and directors of the Company then holding Common Stock of the Company and all persons owning more than five percent (5%) of Common Stock of the Company or securities exercisable for or convertible into more than five percent (5%) of Common Stock of the Company shall be similarly restricted. 2.10 TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company shall have no obligations pursuant to Sections 2.2 through 2.4 with respect to: (i) any request or requests for registration made by a Requestor on a date more than five (5) years after the date of this Agreement at a time when such Requestor is not an affiliate of the Company; or (ii) any Registrable Securities proposed to be sold by a Requestor in a registration pursuant to Section 2.2, 2.3 or 2.4 if, in the opinion of counsel to the Company, all such Registrable Securities then requested to be registered by such Requestor may be sold in a three month period without registration under the Securities Act pursuant to Rule 144 under the Securities Act. 3. GENERAL PROVISIONS. 3.1 RIGHT TO DIRECTORSHIP/OBSERVER STATUS. The Investor shall have the right to have a person designated by it nominated to the Board of Directors of Lynch or, at any time Investor chooses, to attend and speak at meetings of the Board of Directors in an observer capacity (but in such case with no voting or other rights). At each meeting of shareholders at which any director of the class to which such director designee is assigned are to be elected during the period such holder continues to hold such principal amount or such shares and at least 10% of the fully diluted or outstanding shares, such designee shall be included in the Board of Directors' slate of nominees for election to the Board of Directors. Notwithstanding the foregoing, Lynch may refuse a request by Investor to designate (or continue to designate) a particular person if the Board of Directors determines that such person is subject to removal for cause or that such person's status as a director or observer would raise significant regulatory or competitive issues. In such case, Investor may designate a substitute person who would not be so disqualified. 3.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. This Agreement shall extend to all successive transferees of the Note and Registrable Securities, each of which persons are hereby made third party beneficiaries hereof and may enforce the terms of this Agreement as if such person was a direct party hereto. 3.3 THIRD PARTIES. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties hereto and their successors and assigns and third party beneficiaries hereof, any rights or remedies under or by reason of this Agreement. 3.4 GOVERNING LAW AND VENUE. Except as noted below, this Agreement shall be governed by and construed in accordance with the laws of the State of Washington. In any court proceeding, Lynch agrees to submit to the jurisdiction of the federal court selected by Investor, and venue of any action concerning this Note shall be in King County, Washington state. In the event that the federal court selected by Investor shall not have jurisdiction, Lynch agrees to submit to the jurisdiction of the Washington state court in King County selected by Investor. Lynch hereby irrevocably waives to the fullest extent permitted by law any objection which it may now or hereafter have to the laying of such venue and any claim that any such forum is an inconvenient forum. Nothing in this Section shall impair the right of Investor to bring any action or proceeding against Lynch or its property in the courts of any other county or jurisdiction and Lynch irrevocably submits to the nonexclusive jurisdiction of the appropriate courts (as selected by Investor) of the jurisdiction in which Lynch is organized or any place where any property or any office of Lynch is located. In the event Investor transfers or assigns this Note in whole, but not in part, to a person not an affiliate, then this Note shall be governed by and construed in accordance with the laws of the State of New York and the consent to jurisdiction in the State of Washington stated above is hereby revoked. 3.5 COUNTERPARTS. 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. 3.6 HEADINGS. The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. All references in this Agreement to sections, paragraphs, exhibits and schedules shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits and schedules attached hereto, all of which exhibits and schedules are incorporated herein by this reference. 3.7 NOTICES. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered, certified mail, Federal Express, or other express courier, postage prepaid and addressed to Investor at 2365 Carillon Point, Kirkland, Washington 98033, Attn: Michael Larson, and to Company, at 401 Theodore Fremd Avenue, Rye, NY 10580, Attn: Robert E. Dolan, or at such other address as any party or Company may designate by giving ten (10) days advance written notice to all other parties. 3.8 ATTORNEYS' FEES. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees, experts' fees and costs, including those for pretrial, trial, on appeal, in arbitration and in bankruptcy and all other costs and necessary disbursements associated with any such actions, in addition to any other relief to which such party may be entitled. 3.9 ADJUSTMENTS FOR STOCK SPLITS, ETC. Wherever in this Agreement there is a reference to a specific number of shares of Common Stock of the Company of any class or series, then, upon the occurrence of any subdivision, combination or stock dividend of such class or series of stock, the specific number of shares so referenced in this Agreement shall automatically be proportionally adjusted to reflect the affect on the outstanding shares of such class or series of stock by such subdivision, combination or stock dividend. 3.10 AGGREGATION OF STOCK. All shares held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 3.11 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of Company and Investor (or, following assignment and transfer of the Note, by those holders owning more than 50% of the principal amount of the Note). Any amendment or waiver effected in accordance with this Section shall be binding upon each future holder of Registrable Securities, and Company. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provisions hereof, whether or not similar, nor shall any such waiver constitute a continuing waiver. No waiver shall be binding unless expressed as such in a document executed by the party making the waiver. 3.12 SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms. 3.13 ENTIRE AGREEMENT. This Agreement, together with all exhibits and schedules hereto, constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements, understandings duties or obligations between the parties with respect to the subject matter hereof. [The balance of this page intentionally left blank] IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date and year first above written. "COMPANY": LYNCH INTERACTIVE CORPORATION, a Delaware corporation BY Robert E. Dolan Chief Financial Officer "INVESTOR": CASCADE INVESTMENT LLC, a Washington limited liability company BY Michael Larson, Business Manager -----END PRIVACY-ENHANCED MESSAGE-----