1
Exhibit 2.2
REGISTRATION RIGHTS AGREEMENT
November 7, 2000
To: Xxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
(individually, a "Selling Stockholder" and together the "Selling Stockholders")
RECITALS
WHEREAS: The Selling Stockholders will receive from AppliedTheory
Corporation (the "Parent") shares of common stock, par value
$.01 per share, of the Parent pursuant to that certain
Agreement and Plan of Merger, dated as of November 7, 2000, by
and among the Parent and the Selling Stockholders, among
others; and
WHEREAS: As a condition to the Closing of the merger contemplated by
the Merger Agreement, the Parent has agreed to grant to the
Stockholders certain registration rights in accordance with
this Registration Rights Agreement (the "Agreement") with
respect to certain securities of the Parent held by the
Stockholders.
AGREEMENT
NOW, THEREFORE, it is agreed as follows:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Authorized Transferee" shall mean a relative or
spouse of a Stockholder, or a relative of such Stockholder's
spouse if such relative shares a home with the Stockholder.
"Common Stock" shall mean all shares of Common Stock,
par value $.01 per share of the Parent.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any similar federal statute, and the
rules and regulations of the SEC thereunder, all as the same
shall be in effect at the time.
"Merger Agreement" shall mean the Agreement and Plan
of Merger dated as of November 7, 2000 by and among the
Parent, the Selling Stockholders, and certain other parties.
"Parent" shall mean AppliedTheory Corporation.
2
"Registrable Stock" shall mean those shares of Common
Stock that are issued to the Selling Stockholders in
connection with the Closing of the Merger, as of the
applicable time are held by the Stockholders and as of such
time are not held in the Escrow Fund.
"Registration Expenses" shall mean the expenses so
described in Section 5 of this Agreement.
"SEC" shall mean the United States Securities and
Exchange Commission, or any other federal agency at the time
administering the Securities Act.
"Securities Act" shall mean the Securities Act of
1933, as amended, or any similar federal statute, and the
rules and regulations of the SEC thereunder, all as the same
shall be in effect at the time.
"Selling Expenses" shall mean the expenses so
described in Section 5 of this Agreement.
"Stockholders" shall mean Xxxxx Xxxxx, Xxxxxx Xxxxx,
Xxxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx and, subject to section
8(a) hereof, any Authorized Transferee. "Stockholder" shall
mean any of such persons.
"Unregistered Common Stock" shall mean all shares of
Common Stock which are beneficially owned by a Stockholder as
of the date hereof which have not been registered under the
Securities Act.
All other capitalized terms used herein shall, unless defined,
have the respective meanings set forth herein or, in the absence of such a
definition, in the Merger Agreement.
2. Restrictive Legend. Each certificate representing Common
Stock shall, except as otherwise provided in this Section 2, be stamped or
otherwise imprinted with a legend substantially in the following form:
"THIS SECURITY IS SUBJECT TO RESTRICTIONS REGARDING THE SALE
THEREOF UNDER AN AGREEMENT AND PLAN OF MERGER DATED NOVEMBER
7, 2000 BETWEEN THE HOLDER THEREOF AND PARENT CORPORATION, HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER
ANY STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THAT
ACT AND THE APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE."
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Parent the securities represented thereby may be publicly
sold without registration under the Securities Act.
3
3. Required Registration:
(a) At any time during the period beginning 120 days following
the Closing and ending 180 days following the Closing, Stockholders who
are holders of a majority of the Registrable Stock may deliver a
written request (a "Required Registration Notice") to the Parent
demanding registration under the Securities Act of the shares of
Registrable Stock delivered by the Parent as Merger Consideration under
the Merger Agreement and held by such requesting holder or holders for
sale in the manner specified in such notice.
(b) Following the receipt of any notice under this Section 3,
the Parent shall promptly give written notice of the request for
registration to all Stockholders who hold Registrable Stock and who
were not included in the Required Registration Notice. The Parent shall
then use its best efforts to include in a registration statement under
the Securities Act for public sale in accordance with the method of
disposition specified in the Required Registration Notice, the number
of shares of Registrable Stock specified in such notice from each such
requesting Stockholder and in all responses from other Stockholders
which are received within 30 days of the Parent's notifying such
Stockholders of the Required Registration Notice. Upon its receipt of a
Required Registration Notice, the Parent shall take commercially
reasonable efforts to file a registration statement relating to such
notice within 60 days following the Parent's receipt of such notice;
provided, however, that the Parent may, in its sole discretion, defer
the filing of such registration statement for an additional 30 days
beyond the expiration of such 60-day period in order to determine,
based upon the advice of its underwriters and counsel, and avail itself
of appropriate market timing for the filing of such registration
statement.
(c) Prior to the effective date of any registration made by
the Parent under this Section 3, such registration will be withdrawn if
the Parent receives a written notice to that effect, signed by all
holders of Registrable Stock who made a request for registration under
paragraphs (a) and (b) of this Section 3. If such a notice is
delivered, the withdrawn registration will not qualify as the occasion
where the Parent is obligated to make a registration under paragraph
(b) of this Section 3. If a registration is so withdrawn, the holders
of Registrable stock who made such request for registration shall be
jointly and severally obligated to pay all Registration Expenses
incurred in connection with or as a result of the compliance with the
request for and the withdrawal of such registration.
(d) The Parent shall be entitled to include in any
registration statement referred to in this Section 3, for sale in
accordance with the method of disposition specified in the Required
Registration Notice, shares of Common Stock to be sold by the Parent
for its own account or for sale by others, except as and to the extent
that, in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering) such inclusion
would adversely affect the marketing of the Registrable Stock to be
sold.
4. Registration Procedures. With respect to the registration
arising under Section 3 hereof, the Parent will, as expeditiously as possible:
4
(a) prepare and file with the SEC within the period set forth
in Section 3(b) hereof a registration statement with respect to such
securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the
distribution contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period specified in paragraph (a) above and
comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Stock covered by such registration
statement in accordance with the sellers' intended method of
disposition as set forth in such registration statement for such
period;
(c) furnish each seller of Registrable Stock and any
applicable underwriter with such number of copies of the registration
statement and the prospectus included therein (including each
preliminary prospectus) as such parties reasonably may request in order
to facilitate the public sale or other disposition of the Registrable
Stock covered by such registration statement;
(d) use its best efforts to register or qualify the
Registrable Stock covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the sellers of
Registrable Stock or, in the case of an underwritten public offering,
the managing underwriter, reasonably shall request; provided, however,
that the Parent shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general
service of process in any such jurisdiction;
(e) use its best efforts to list the Registrable Stock covered
by such registration statement with any securities exchange on which
the Common Stock of the Company is then listed;
(f) immediately notify each seller of Registrable Stock and
any applicable underwriter under such registration statement, at any
time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event of which the
Parent has knowledge as a result of which the prospectus contained 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 light of the circumstances then existing;
(g) if the offering is underwritten and at the request of any
seller of Registrable Stock, use its best efforts to furnish on the
date that such Registrable Stock is delivered to the underwriters for
sale pursuant to such registration: (i) an opinion dated as of such
date of counsel representing the Parent for the purposes of such
registration, addressed to the underwriters and to such seller, stating
that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no
stop order suspending the effectiveness thereof has been issued and no
proceeding for that purpose have been instituted or are pending or
contemplated under
5
the Securities Act, (B) the registration statement, the related
prospectus and each amendment or supplement thereof comply as to form
in all material respects with the requirements of the Securities Act,
(except that such counsel need not express any opinion as to financial
statements or other financial data contained therein) and (C) to such
other effects as reasonably may be requested by counsel for the
underwriter or by such seller or its counsel and (ii) a letter dated
such date from the independent public accountants retained by the
Parent, addressed to the underwriters and to such seller, stating that
they are independent public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the
financial statements of the Parent included in the registration
statement or the prospectus, or any amendment or supplement thereof,
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information
as to the period ending no more than five business days prior to the
date of such letter) with respect tot such registration as such
underwriters reasonably may request;
(h) immediately after the Parent determines that any of the
matters discussed in Section 5(g) are not true, provide the holders of
Registrable Stock with notice to that effect; and
(i) make available for inspection by each seller of
Registrable Stock, any underwriter participating in any distribution
pursuant to such registration statement, and any attorney, accountant
or other agent retained by such seller or underwriter, all financial
and other records, pertinent corporate documents and properties of the
Parent, and cause the Parent's officers, directors and employees to
supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such
registration statement.
For purposes of Section 4(a), the period of distribution of Registrable
Stock shall be deemed to extend until the earlier of the sale of all
Registrable Stock covered thereby and 120 days after the effective date
thereof.
In connection with each registration hereunder, the
Stockholder sellers of Registrable Stock will furnish to the Parent in writing
such information with respect to themselves and the proposed distribution by
them as reasonably shall be necessary in order to assure compliance with federal
and applicable state securities laws.
In connection with each registration pursuant to Sections 3
and 4 covering an underwritten public offering, the Parent and each seller agree
to enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Parent's size and investment stature.
5. Expenses. All expenses incurred by the Parent in complying
with Section 3, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Parent, fees and expenses (including counsel fees) incurred,
in respect of the Parent's obligations under this Agreement or
6
of the rights under this Agreement of the Stockholder, in connection with
complying with state securities or "blue sky" laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents
and registrars and costs of insurance, but excluding any Selling Expenses, are
called "Registration Expenses". All underwriting discounts and selling
commissions applicable to the sale of Registrable Stock and any fees and
disbursements of counsel to the Stockholder are called "Selling Expenses".
Except as set forth in Section 3(c), the Parent will pay all
Registration Expenses in connection with each registration statement under
Section 3. All Selling Expenses in connection with each registration statement
under Section 3 shall be borne by the participating sellers in proportion to the
number of shares sold by each, or by such participating sellers other than the
Parent (except to the extent the Parent shall be a seller) as they may agree.
6. Indemnification and Contribution.
(a) In the event of a registration of any of the Registrable
Stock under the Securities Act pursuant to Section 3, the Parent will
indemnify and hold harmless the Stockholder, if he shall have included
shares for sale thereunder, each underwriter of such Registrable Stock
thereunder and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such
seller, underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such
Registrable Stock was registered under the Securities Act pursuant to
Section 3, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are
based upon 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, and will reimburse each such seller, each such
underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that the Parent will not be liable in any such case
if and to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with
information furnished by any such seller, any such underwriter or any
such controlling person in writing specifically for use in such
registration statement or prospectus.
(b) In the event of a registration of any of the Registrable
Stock under the Securities Act pursuant to Section 3, each seller of
such Registrable Stock thereunder, severally and not jointly, will
indemnify and hold harmless the Parent, each person, if any, who
controls the Parent within the meaning of the Securities Act, each
officer of the Parent who signs the registration statement, each
director of the Parent, each underwriter and each person who controls
any underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which the
Parent or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or
7
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registrable Stock was
registered under the Securities Act pursuant to Section 3, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Parent and each such officer,
director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that such seller will be liable hereunder in any
such case if and only to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information pertaining to such
seller, as such, furnished in writing to the Parent by such seller
specifically for use in such registration statement or prospectus;
provided, further, that the liability of each seller hereunder shall be
limited to the proportion of any such loss, claim, damage, liability or
expense which is equal to the proportion that the public offering price
of the shares sold by such seller under such registration statement
bears to the total public offering price of all securities sold
thereunder, but not in any event to exceed the net proceeds received by
such seller from the sale of Registrable Stock covered by such
registration statement.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing
thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified
party other than under this Section 6 and shall only relieve it from
any liability which it may have to such indemnified party under this
Section 6 if and to the extent the indemnifying party is prejudiced by
such omission. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to
such indemnified party, and, after notice from the indemnifying party
to such indemnified party of its election so to assume and undertake
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under this Section 6 for any legal expenses
subsequently incurred by such indemnified party in connection with the
defense thereof; provided, however, that, if the defendants in any such
action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there
may be reasonable defenses available to it which are different from or
additional to those available to the indemnifying party or if the
interests of the indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such
legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the
indemnifying party as incurred. No indemnifying party, in defense of
any such action, shall, except with the consent of each
8
indemnified party, consent to the entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof
the giving, by the claimant or plaintiff, to such indemnified party of
a release from all liability in respect to such action.
(d) In order to provide just and equitable contribution to
joint liability under the Securities Act in any case in which either
(i) the Stockholder as a party exercising rights under this Agreement,
or any controlling person of the Stockholder, makes a claim for
indemnification pursuant to this Section 6 but it is judicially
determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not
be enforced in such case notwithstanding the fact that this Section 6
provides for indemnification in such case, or (ii) contribution under
the Securities Act may be required on the part of any such selling
holder or any such controlling person in circumstances for which
indemnification is provided under this Section 6; then, each
indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or actions in such
proportion as appropriate to reflect the relative fault of the Parent,
on the one hand, and the holders of such Registrable Stock, as the case
may be, on the other, in connection with the statements and omissions
which resulted in such losses, claims, damages, liabilities or actions
as well as any other relevant equitable considerations, including,
without limitation, the failure to give any notice under the third
paragraph of this Section 6. The relative fault shall be determined by
reference to, among other things, whether the untrue and alleged untrue
statement of a material fact relates to information supplied by the
Parent, on the one hand, or the sellers of such Registrable Stock, as
the case may be, on the other, and to the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Parent and the sellers of Registrable
Stock agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) of Section 6 were determined by pro rata
allocation (even if all of the sellers of such Registrable Stock, as
the case may be, were treated as one entity for such purpose) or by any
other method of allocation which did not take account of the equitable
considerations referred to above in this paragraph (d) of Section 6.
The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or action in respect thereof,
referred to above in this paragraph (d) of Section 6, shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim; provided, however, that, in any such case, (A) no
such holder will be required to contribute any amount in excess of the
public offering price of all such Registrable Stock offered by it
pursuant to such registration statement; and (B) no person or entity
guilty of fraudulent misrepresentation (within the meaning of Section
12(f) of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation.
7. Changes in Common Stock. If, and as often as, there is any
change in the Common Stock by way of a stock split, stock dividend, combination
or reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
9
8. Miscellaneous.
(a) All representations, warranties, covenants and agreements
made to the Parent contained in this Agreement by or on behalf of any
of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the Parent, whether so expressed
or not and the Stockholders hereby covenant and agree that any such
successor or assign of Parent shall be entitled to rely upon and
enforce all representations, warranties, covenants and agreements of
the Stockholders.
(b) In the event that a Stockholder shall transfer any shares
of Registrable Stock, the registration rights conferred herein shall
not inure to the benefit of the transferee who receives such
Registrable Stock unless such transferee is an Authorized Transferee
who shall not have delivered consideration in exchange for such shares,
in which case the Authorized Transferee must execute this Agreement and
agree to be bound by the terms hereof in order to have the benefit of
any registration rights conferred herein. In the event that the
foregoing conditions shall have been satisfied, such Authorized
Transferee shall then be considered a Stockholder for purposes of this
Agreement.
(c) Subject to the foregoing paragraphs (a) and (b) of this
Section 8, all covenants and agreements contained in this Agreement by
or on behalf of any of the parties hereto shall otherwise bind the
respective successors and assigns of such parties (including, without
limitation, transferees of any Registrable Stock), whether so expressed
or not.
(d) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by certified or
registered mail, return receipt requested, postage pre-paid, or
telexed, in the case of non-U.S. residents, addressed as follows:
if to the Parent or Stockholder, at the address of
such party as set forth in the Merger Agreement;
if to any subsequent holder of Registrable Shares, to
it at such address as may have been furnished to the Parent in
writing by such holder;
or, in any case, at such other address or addresses
as shall have been furnished in writing to the Parent (in the case of a
holder of Registrable Stock) or to the holders of Registrable Stock (in
the case of the Parent) in accordance with the provisions of this
paragraph.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(f) 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.
10
(g) The obligations of the Parent to register shares of
Registrable Stock under Section 3 shall terminate one year after the
Closing, unless such obligations terminate earlier in accordance with
the terms of this Agreement.
(h) Whenever used herein, the singular shall include the
plural, the plural the singular and the use of any gender shall be
applicable to all genders.
(i) If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in
any manner affect or render illegal, invalid or unenforceable any other
provision of this Agreement, and this Agreement shall be carried out as
if any such illegal, invalid or unenforceable provision were not
contained herein.
(j) Neither this Agreement nor any provision hereof can be
modified, changed, discharged or terminated except upon the written
agreement of all parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be effective as of this 7th day of November, 2000.
AppliedTheory Corporation
By: /s/ Xxxxx X. Xxxxxx
------------------------------
------------------------------
------------------------------
SELLING STOCKHOLDERS:
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxx Xxxxxxx Xxxxx
----------------------------------------
Xxxxxx Xxxxxxx Xxxxx
/s/ Xxxxx Xxxxxxxx
----------------------------------------
Xxxxxxx Xxxxxxxx by Xxxxx Xxxxxxxx, POA
/s/ Xxxxxx Xxxxxxxx
----------------------------------------
Xxxxxx Xxxxxxxx
