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EXHIBIT 10.62
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
February 22, 2001, is made and entered into by and between AppliedTheory
Corporation, a Delaware corporation (the "Company"), and Crescent International
Ltd., an entity organized and existing under the laws of Bermuda (the
"Investor").
WHEREAS, the Company and the Investor have entered into that certain
Stock Purchase Agreement, dated as of February 22, 2001 (the "Stock Purchase
Agreement"), pursuant to which the Company will issue, from time to time, to the
Investor and the Investor shall purchase up to $30,000,000 worth of shares of
common stock, par value $0.01 per share, of the Company (the "Common Stock");
WHEREAS, pursuant to the terms of and in partial consideration for
the Investor entering into the Stock Purchase Agreement, the Company may be
required to issue to the Investor an incentive warrant exercisable from time to
time within five years following the date of issuance (the "Incentive Warrant")
for the purchase of a number of shares of Common Stock at a price to be
determined as described in such Incentive Warrant;
WHEREAS, pursuant to the terms of and in partial consideration for
the Investor entering into the Stock Purchase Agreement, the Company may be
required to issue protective warrants to the Investor, each of which may become
exercisable from time to time as described in such warrants and in the Stock
Purchase Agreement (collectively, the "Protective Warrants" and together with
the Incentive Warrant, the "Warrants") for the purchase of a number of shares of
Common Stock at a price to be determined as described in each such Protective
Warrant;
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Stock Purchase Agreement, the Company
has agreed to provide the Investor with certain registration rights as described
herein;
NOW, THEREFORE, in consideration of the premises, the
representations, warranties, covenants and agreements contained herein, in the
Warrants, and in the Stock Purchase Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
intending to be legally bound hereby, the parties hereto agree as follows
(capitalized terms used herein and not defined herein shall have the respective
meanings ascribed to them in the Stock Purchase Agreement):
ARTICLE I
REGISTRATION RIGHTS
Section 1.1. REGISTRATION STATEMENTS.
a. Filing of Registration Statements. The Company shall
register for resale all Commitment Shares issued or issuable to the Investor
pursuant to the Stock Purchase Agreement and all Warrant Shares issued or
issuable upon full exercise of the Warrants. Subject to the
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terms and conditions of this Agreement, the Company shall effect such
registration in the manner provided below:
(i) First Registration Statement. On or
before the end of the 20 calendar day period
immediately following the First Sale, the
Company shall file with the SEC a
registration statement (the "First
Registration Statement") on Form S-3 if such
form is then available to the Company and,
if not, on such form promulgated by the SEC
for which the Company qualifies, that
counsel for the Company shall deem
appropriate and which form shall be
available for the sale of all First Sale
Shares, the Incentive Warrant Shares and any
Protective Warrant Shares, in accordance
with the intended method of distribution of
such securities. The aggregate number of
shares to be registered under the First
Registration Statement shall be equal to two
hundred percent (200%) of the First Sale
Shares plus the number of Incentive Warrant
Shares;
(ii) Subsequent Registration Statements.
(1) If the Company shall, pursuant to
any Subsequent Sale, require the
Investor to purchase shares of
Common Stock not previously
registered and not covered by an
effective Registration Statement
filed with the SEC and which is
not a Failed Registration
Statement (as hereinafter defined)
(an "Unregistered Sale"), then on
or before the end of a 10 calendar
day period immediately following
each Closing Date relating to each
such Subsequent Sale, the Company
shall file with the SEC a
registration statement (each a
"Subsequent Registration
Statement," and together with the
First Registration Statement and
any other registration statement
covering Registrable Securities or
otherwise required to be filed by
the Company with the SEC as
provided in this Agreement, the
"Registration Statements" or each,
a "Registration Statement") on
Form S-3 if such form is then
available to the Company and, if
not, on such form promulgated by
the SEC for which the Company
qualifies, that counsel for the
Company shall deem appropriate and
which form shall be available for
the sale of the Subsequent Sale
Shares purchased by the Investor
and any Warrant Shares that have
not been previously registered, in
accordance with the intended
method of distribution of such
securities. The aggregate number
of shares to be registered under
each Subsequent Registration
Statement shall be equal to two
hundred percent (200%) of the
number of Subsequent Sale Shares
purchased by the Investor on the
applicable Closing Date plus any
Warrant Shares not previously
registered;
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(2) Prior to any Subsequent Sale which
is not an Unregistered Sale, the
Company shall file with the SEC a
Subsequent Registration Statement
on Form S-3 if such form is then
available to the Company and, if
not, on such form promulgated by
the SEC for which the Company
qualifies, that counsel for the
Company shall deem appropriate and
which form shall be available for
the sale of the shares of Common
Stock to be purchased by the
Investor and any Warrant Shares
which have not previously been
registered, in accordance with the
intended method of distribution of
such securities. The aggregate
number of shares to be registered
under such Subsequent Registration
Statement shall be determined by
the Company.
b. Effectiveness of the Registration Statements. The
following conditions for effectiveness shall apply to the Registration
Statements required to be filed by the Company with the SEC pursuant to
paragraph (a) above, without limiting the Company's obligation to file such
Registration Statements. The Company shall use its best efforts: (i) to have the
First Registration Statement declared effective by the SEC in no event later
than 120 calendar days after the Closing Date relating to the First Sale, and
(ii) to have each Subsequent Registration Statement declared effective by the
SEC in no event later than 60 calendar days after the Closing Date relating to
each Unregistered Sale, and in any event prior to any further Subsequent Sales.
The Company shall ensure that all Registration Statements and any amendments
thereto remain in effect for a period ending 180 days following the later of (1)
the date of expiration of the Incentive Warrant Exercise Period (as such term is
defined in the Incentive Warrant) if the Incentive Warrant has not been
exercised in full and (2) the date all Registrable Securities issued or issuable
to the Investor pursuant to the Stock Purchase Agreement may be sold by the
Investor without registration and without any time, volume or manner limitations
pursuant to Rule 144(k) (or any similar provision then in effect) under the
Securities Act; provided that such period shall be extended one day for each day
after the applicable Effective Date that any Registration Statement covering
Registrable Securities is not effective during the period such Registration
Statement is required to be effective pursuant to this Agreement; and provided
further that the Company shall not be required to ensure that any Registration
Statement covering Registrable Securities remain in effect for such period if
the shares registered thereunder shall have become freely tradable pursuant to
Rule 144(k) of the Securities Act as such Rule may be amended from time to time,
or have otherwise been sold.
c. Failure to Obtain or Maintain Effectiveness of
Registration Statements.
(i) In the event the Company fails for any
reason to obtain the effectiveness of any Registration Statement within the time
periods set forth in Section 1.1(b) (a "Tardy Registration Statement") or in the
event that the Company fails for any reason to maintain the effectiveness of any
Registration Statement (or the underlying prospectus) covering Registrable
Securities for the time period set forth in Section 1.1(b) (an "Ineffective
Registration Statement" together with a Tardy Registration Statement, a "Failed
Registration Statement") or upon the occurrence of any event of the kind
described in Section 2.1(g)(iv) hereof (unless the Registrable Securities
covered by such Registration Statement shall have become freely tradable
pursuant to Rule 144(k) of the Securities Act or have been otherwise sold),
then, in either event
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an amount equal to two percent (2.0%) of the aggregate Purchase Price of all of
the Registrable Securities covered by any such Failed Registration Statement
then held by the Investor for each calendar month and for each portion of a
calendar month, pro rata, (the "Failed Registration Statement Fee") during any
period of such ineffectiveness or, in the case of the occurrence of an event of
the kind described in Section 2.1(g)(iv) hereof, until the Investor shall have
received copies of the supplemental or amended prospectus contemplated by
Section 2.1(g)(iv) hereof (an "Ineffective Period"), shall become due and
payable to Investor.
(ii) If Failed Registration Statement Fees
accrue with respect to any Ineffective Registration Statement, payment of such
Failed Registration Statement Fees shall be made on the third Trading Day after
the earlier to occur of (1) the expiration of the applicable Ineffective Period
and (2) the last day of each calendar month during an Ineffective Period.
d. Restricted Period. While in possession of material
non-public information received from the Company, the Investor shall not dispose
of any Registrable Securities until such information is disclosed to the public
(a "Restricted Period"); provided that, if such Restricted Period exceeds 120
days, the liquidated damages described in Section 1.1(c) hereof shall be
increased to three percent (3.0%) until such restricted Period shall have
elapsed.
e. Failure to Register Sufficient Number of Shares. If
the number of Protective Warrant Shares included in the First Registration
Statement or each Subsequent Registration Statement is less than the total
number of Protective Warrant Shares issuable upon exercise at the Exercise Price
(as such term is defined in each Protective Warrant) (such deficit in the number
of shares is referred to herein as the "Deficit Shares"), then (i) the Company
shall immediately amend such Registration Statement (or file a new Registration
Statement) to cover the Deficit Shares (such amended or new Registration
Statement is referred to herein as a "Deficit Shares Registration Statement")
and (ii) the Company shall pay to the Investor in immediately available funds
into an account designated by the Investor an amount equal to 2.0% of the
product of (x) the number of Deficit Shares multiplied by (y) the Closing Price
of the Common Stock on the applicable Effective Date, for each calendar month
and for each portion of a calendar month, pro rata, during the period from the
Effective Date of the applicable Registration Statement to the Effective Date of
the applicable Deficit Shares Registration Statement.
f. Liquidated Damages. The Company and the Investor
hereby acknowledge and agree that the sums payable under subsections 1.1(c),
1.1(d) and 1.1(e) hereof shall constitute liquidated damages and not penalties.
The parties further acknowledge that (i) the amount of loss or damages likely to
be incurred is incapable or is difficult to estimate precisely, (ii) the amounts
specified in such subsections bear a reasonable proportion and are not plainly
or grossly disproportionate to the probable loss likely to be incurred in
connection with any failure by the Company to obtain or maintain the
effectiveness of a Registration Statement, (iii) one of the reasons for the
Company and the Investor reaching an agreement as to such amounts was the
uncertainty and cost of litigation regarding the question of actual damages, and
(iv) the Company and the Investor are sophisticated business parties and have
been represented by sophisticated and able legal and financial counsel and
negotiated this Agreement at arm's length.
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ARTICLE II
REGISTRATION PROCEDURES
Section 2.1. FILINGS; INFORMATION. The Company will effect the
registration of the Registrable Securities in accordance with the intended
methods of disposition thereof as furnished to the Company by any proposed
seller of such Registrable Securities prior to the filing of a Registration
Statement therefor. Without limiting the foregoing, the Company in each such
case will do the following as expeditiously as possible, but in no event later
than the deadline, if any, prescribed therefor in this Agreement:
a. The Company shall (i) prepare and file with the SEC
the Registration Statement(s) covering the shares as described in subsection
1.1(a) above; (ii) use its best efforts to cause such filed Registration
Statement(s) to become and remain effective (pursuant to Rule 415 under the
Securities Act or otherwise) for the period prescribed by Section 1.1(b); (iii)
prepare and file with the SEC such amendments and supplements to each
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep each Registration Statement effective for the time period
prescribed by Section 1.1(b); and (iv) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by each
Registration Statement during such period in accordance with the intended
methods of disposition by the Investor set forth in each Registration Statement.
b. The Company shall file all necessary amendments to
each Registration Statement in order to effectuate the purpose of this
Agreement, the Stock Purchase Agreement, and the Warrants.
c. Five Trading Days prior to filing each Registration
Statement or prospectus, or any amendment or supplement thereto (excluding
amendments deemed to result from the filing of documents incorporated by
reference therein), the Company shall deliver to the Investor and one firm of
counsel representing the Investor, in accordance with the notice provisions of
Section 4.8, copies of such Registration Statement as proposed to be filed,
together with exhibits thereto, which documents will be subject to review and
comment by the Investor and such counsel, and thereafter deliver to the Investor
and such counsel, in accordance with the notice provisions of Section 4.8, such
number of copies of such Registration Statement, each amendment and supplement
thereto (in each case including all exhibits thereto), the prospectus included
in such Registration Statement (including each preliminary prospectus) and such
other documents or information as the Investor or counsel may reasonably request
in order to facilitate the disposition of the Registrable Securities.
d. The Company shall deliver, in accordance with the
notice provisions of Section 4.8, to each broker as directed by the Investor
such number of conformed copies of such Registration Statement and of each
amendment and supplement thereto (in each case including all exhibits and
documents incorporated by reference), such number of copies of the prospectus
contained in such Registration Statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424
promulgated under the Securities Act relating to the Registrable Securities, and
such other documents, as may be reasonably requested to facilitate the
disposition of the Registrable Securities.
e. After the filing of each Registration Statement, the
Company shall promptly notify the Investor of any stop order issued or
threatened by the SEC in connection therewith and
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take all commercially reasonable actions required to prevent the entry of such
stop order or to remove it if entered.
f. The Company shall use its best efforts to (i)
register or qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States as the Investor may
reasonably (in light of its intended plan of distribution) request, and (ii)
cause the Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable the
Investor to consummate the disposition of the Registrable Securities; provided,
however, that the Company will not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this paragraph (f), subject itself to taxation in any such jurisdiction,
or consent or subject itself to general service of process in any such
jurisdiction.
g. The Company shall immediately notify the Investor,
but in no event later than two (2) business days by facsimile and by overnight
courier, upon the occurrence of any of the following events in respect of a
Registration Statement or related prospectus in respect of an offering of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other federal or state governmental authority during the period
of effectiveness of the Registration Statement for amendments or supplements to
the Registration Statement or related prospectus; (ii) the issuance by the SEC
or any other federal or state governmental authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of a Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate, and the Company promptly shall make available to
the Investor any such supplement or amendment to the related prospectus.
h. The Company shall enter into customary agreements and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities (whereupon the
Investor, at its option, may require that any or all of the representations,
warranties and covenants of the Company also be made to and for the benefit of
the Investor).
i. The Company shall make available to the Investor (and
will deliver to Investor's counsel), subject to restrictions imposed by the
United States government or any
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agency or instrumentality thereof, copies of all correspondence between the SEC
and the Company, concerning any Registration Statement, and also will make
available for inspection by the Investor and any attorney, accountant or other
professional retained by the Investor (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company's
officers and employees to supply all information reasonably requested by any
Inspectors in connection with any Registration Statement. Records that the
Company determines, in good faith, to be confidential and that it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in any Registration Statement or (ii) the disclosure or release of
such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or other
order from a court of competent jurisdiction or other process; provided,
however, that prior to any disclosure or release pursuant to clause (ii), the
Inspectors shall provide the Company with prompt notice of any such request or
requirement so that the Company may seek an appropriate protective order or
waive such Inspectors' obligation not to disclose such Records; and, provided,
further, that if failing the entry of a protective order or the waiver by the
Company permitting the disclosure or release of such Records, the Inspectors,
upon advice of counsel, are compelled to disclose such Records, the Inspectors
may disclose that portion of the Records that counsel has advised the Inspectors
that the Inspectors are compelled to disclose. The Investor agrees that
information obtained by it solely as a result of such inspections (not including
any information obtained from a third party who, insofar as is known to the
Investor after reasonable inquiry, is not prohibited from providing such
information by a contractual, legal or fiduciary obligation to the Company)
shall be deemed confidential and, if material non-public information, the
Investor shall not while in possession of such information engage in market
transactions in the securities of the Company or its Affiliates unless and until
such information is made generally available to the public. The Investor further
agrees that, upon learning that disclosure of such Records is sought in a court
of competent jurisdiction, it will give notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent disclosure
of the Records deemed confidential.
j. To the extent required by law or reasonably necessary
to effect a sale of Registrable Securities in accordance with prevailing
business practices at the time of any sale of Registrable Securities pursuant to
a Registration Statement, the Company shall deliver to the Investor a signed
counterpart, addressed to the Investor, of (1) an opinion or opinions of counsel
to the Company and (2) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such matters
of the type customarily covered by opinions of comfort letters, as the case may
be, as the Investor therefor reasonably requests.
k. The Company otherwise shall comply with all
applicable rules and regulations of the SEC, including, without limitation,
compliance with applicable reporting requirements under the Exchange Act.
l. The Company may require the Investor to furnish
promptly in writing to the Company such information as may be legally required
in connection with any registration including, without limitation, all such
information as may be requested by the SEC or the
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National Association of Securities Dealers, Inc. (the "NASD"). The Investor
agrees to provide such information requested in connection with any registration
within ten Trading Days after receiving such written request and the Company
shall not be responsible for any delays in obtaining or maintaining the
effectiveness of a Registration Statement caused by the Investor's failure to
timely provide such information. Each seller of Registrable Securities shall
notify the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such seller to the Company or of the
occurrence of any event, in either case as a result of which any prospectus
relating to the Registrable Securities contains or would contain an untrue
statement of a material fact regarding such seller or its intended method of
disposition of such Registrable Securities or omits to state any material fact
regarding such seller or such seller's intended method of disposition of such
Registrable Securities required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and promptly furnish to the Company any additional
information required to correct and update any previously furnished information
or required so that such prospectus shall not contain, with respect to such
seller or the disposition of such Registrable Securities, an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
Section 2.2. REGISTRATION EXPENSES.
a. In connection with each Registration Statement, the
Company shall pay all registration expenses incurred in connection with the
registration thereunder (the "Registration Expenses"), including, without
limitation: (i) all registration, filing, securities exchange listing and fees
required by NASD, (ii) all registration, filing, qualification and other fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities required hereby), (iii) all of the
Company's word processing, duplicating, printing, messenger and delivery
expenses, (iv) the Company's internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), (v) the fees and expenses incurred by the Company in
connection with the listing of the Registrable Securities, (vi) reasonable fees
and disbursements of counsel for the Company and, subject to paragraph (b)
below, the Investor, and customary fees and expenses for independent certified
public accountants retained by the Company (including the expenses of any
special audits or comfort letters or costs associated with the delivery by
independent certified public accountants of such special audit(s) or comfort
letter(s) requested pursuant to Section 2.1(j) hereof), (vii) the fees and
expenses of any special experts retained by the Company in connection with such
registration, (viii) premiums and other costs of policies of insurance purchased
at the discretion of the Company against liabilities arising out of any public
offering of the Registrable Securities being registered, and (ix) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting fees, discounts, transfer taxes or
commissions, if any, attributable to the sale of Registrable Securities, which
shall be payable by each holder of Registrable Securities pro rata on the basis
of the number of Registrable Securities of each such holder that are included in
a registration under this Agreement.
b. In addition, the Company shall pay all reasonable
fees and expenses of counsel for the Investor incurred in connection with the
review, and assistance in preparation, of each Registration Statement up to
$5,000 per Registration Statement, unless a greater amount is
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required due to the nature of the review performed by Investor's counsel or the
extent of assistance provided by Investor's counsel (an estimate of such greater
fees and expenses of such firm of counsel to the Investor shall be provided to
the Company prior to the undertaking of such counsel's additional review or
assistance).
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
Section 3.1. INDEMNIFICATION BY THE COMPANY. The Company
agrees to indemnify and hold harmless the Investor, its partners, Affiliates,
officers, directors, employees and duly authorized agents, and each Person or
entity, if any, who controls the Investor within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, together with its
controlling persons from and against any and all losses, claims, damages,
liabilities, costs and expenses (including, without limitation, any and all
reasonable attorneys' fees and disbursements and costs and expenses of
investigating and defending any such claim and any and all amounts paid in
settlement of, any action, suit or proceeding between any of the indemnified
parties and any indemnifying parties or between any indemnified party and any
third party, or otherwise, or any claim asserted) (collectively, "Damages"),
joint or several, and any action in respect thereof to which the Investor, its
partners, Affiliates, officers, directors, employees and duly authorized agents,
and any such controlling person, becomes subject to under the Securities Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, as and when incurred, insofar as such Damages (or
actions or proceedings in respect thereof) (i) arise out of, or are based upon,
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement, or in any preliminary prospectus, final prospectus,
summary prospectus, documents filed under the Exchange Act and deemed to be
incorporated by reference into any Registration Statement, application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Registrable Securities under the securities or blue sky laws thereof
or filed with the SEC, amendment or supplement relating to the Registrable
Securities or (ii) arise out of, or are based upon, any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse the
Investor, its partners, Affiliates, officers, directors, employees and duly
authorized agents, and each such controlling person, for any legal and other
expenses reasonably incurred by the Investor, its partners, Affiliates,
officers, directors, employees and duly authorized agents, or any such
controlling person, as incurred, in investigating or defending or preparing to
defend against any such Damages or actions or proceedings; provided, however,
that the Company shall not be liable to the extent that any such Damages arise
out of the Investor's failure to send or give a copy of the final prospectus or
supplement at or prior to the written confirmation of the sale of Registrable
Securities to the persons asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such person if such
statement or omission was corrected in such final prospectus or supplement, and
provided that the Investor had been obligated under applicable law to deliver
such final prospectus or supplement to such person; provided, further, that the
Company shall not be liable to the extent that any such Damages arise out of or
are based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, or any
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such preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by the Investor or any other person who participates as a seller
or as an underwriter in the offering or sale of such securities, in either case,
in any questionnaire or other request by the Company, or otherwise specifically
stating that it is for use in the preparation thereof and provided that such
written information furnished to the Company by the Investor, or any other
person who participates as a seller or as an underwriter in the offering or sale
of such securities, is not materially altered by the Company. All claims for
indemnification shall be asserted and resolved as set forth in Section 9.2 of
the Stock Purchase Agreement.
Section 3.2. ARBITRATION. Any controversy, claim or dispute arising
out of or in connection with this Agreement, including any question regarding
its existence, validity, interpretation, breach, or termination, shall be
referred to and finally resolved in accordance with Section 9.3 of the Stock
Purchase Agreement.
Section 3.3. OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding paragraphs of this Article III (with appropriate
modifications) shall be given by the Company with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority other than the Securities Act. The
provisions of this Article III shall be in addition to any other rights to
indemnification, contribution or other remedies which an Indemnified Party may
have pursuant to law, equity, contract or otherwise.
Section 3.4. CONTRIBUTION. If the indemnification and reimbursement
obligations provided for in any section of this Article III is unavailable or
insufficient to hold harmless the Indemnified Parties in respect of any Damages
referred to herein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages as between the Company on the one
hand and the Investor or seller on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of the Investor or
seller in connection with such statements or omissions, as well as other
equitable considerations. The relative fault of the Company on the one hand and
of the Investor or seller on the other 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 relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this Section 3.4 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 3.4, the Investor or seller shall in no event be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities of the Investor or seller were sold to the public (less
underwriting discounts and commissions) exceeds the amount of any damages which
the
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Investor or seller has otherwise been required to pay 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
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
ARTICLE IV
MISCELLANEOUS
Section 4.1. OUTSTANDING REGISTRATION RIGHTS. Except as set forth on
Schedule 4.1 hereto, the Company represents and warrants to the Investor that
there is not in effect on the date hereof any agreement by the Company pursuant
to which any holders of securities of the Company have a right to cause the
Company to register or qualify such securities under the Securities Act or any
securities or blue sky laws of any jurisdiction. The Company hereby covenants
and agrees that until 60 calendar days after the Registration Statement has been
declared effective by the SEC it will not, without the prior written consent of
the Investor, enter into or amend any agreement by the Company pursuant to which
any holders of securities of the Company have a right to cause the Company to
register or qualify securities under the Securities Act or any securities or
blue sky laws of any jurisdiction; provided, however, that the foregoing shall
not apply (i) to a Third Party Sale (as such term is defined in the Stock
Purchase Agreement) for which the Investor has elected not to exercise its right
of first refusal pursuant to Section 6.12 of the Stock Purchase Agreement, (ii)
to a Third Party who is a Strategic Investor or (iii) in connection with an
acquisition of another entity or assets related to the Company's current or
future business
Section 4.2. TERM. The registration rights provided to the holders
of Registrable Securities hereunder shall terminate at such time as all
Registrable Securities have been issued and have ceased to be Registrable
Securities. Notwithstanding the foregoing, paragraphs (c) and (d) of Section
1.1, Article III, Section 4.8, and Section 4.9 shall survive the termination of
this Agreement.
Section 4.3. RULE 144. If the Company is required to file reports
under the Exchange Act, the Company will file in a timely manner, information,
documents and reports in compliance with the Securities Act and the Exchange Act
and, at its expense, promptly will take such further action as holders of
Registrable Securities reasonably may request to enable such holders of
Registrable Securities to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act ("Rule 144"), as such Rule may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted by the SEC. If
at any time the Company is not required to file such reports, it will, at its
expense, forthwith upon the written request of any holder of Registrable
Securities who intends to make a sale under Rule 144, make available adequate
current public information with respect to the Company within the meaning of
paragraph (c)(2) of Rule 144 or such other information as necessary to permit
sales pursuant to Rule 144. Upon the request of the Investor, the Company will
deliver to the Investor a written statement, signed by the Company's principal
financial officer, as to whether it has complied with such requirements. This
Section 4.3 shall terminate at the same time as the registration rights as
provided in Section 4.2.
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Section 4.4. CERTIFICATE. The Company will, at its expense,
forthwith upon the request of any holder of Registrable Securities, deliver to
such holder a certificate, signed by the Company's principal financial officer,
stating (a) the Company's name, address and telephone number (including area
code), (b) the Company's Internal Revenue Service identification number, (c) the
Company's SEC file number, (d) the number of shares of each class of stock
outstanding as shown by the most recent report or statement published by the
Company, and (e) whether the Company has filed the reports required to be filed
under the Exchange Act for a period of at least ninety (90) days prior to the
date of such certificate and in addition has filed the most recent annual report
required to be filed thereunder.
Section 4.5. AMENDMENT AND MODIFICATION. Any provision of this
Agreement may be waived, provided that such waiver is set forth in a writing
executed by both parties to this Agreement. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
holders of a majority of the then outstanding Registrable Securities.
Notwithstanding the foregoing, the waiver of any provision hereof with respect
to a matter that relates exclusively to the rights of holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of at least a majority of the
Registrable Securities being sold by such holders; provided that the provisions
of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence. No course
of dealing between or among any Person having any interest in this Agreement
will be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any person under or by reason of this
Agreement.
Section 4.6. SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, that the Investor may assign its rights under this Agreement to any
Affiliate of the Investor only; and provided further, that the Company shall
have the right to require such Affiliate to execute a counterpart of this
Agreement and agree to be bound by the provisions of this Agreement as a
condition to such Affiliate's claim to any rights hereunder. This Agreement,
together with the Stock Purchase Agreement, the Warrants and the exhibits and
schedules to such agreements together set forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.
Section 4.7. SEVERABILITY. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
Section 4.8. NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and shall be (i) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (ii) delivered by
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reputable air courier service with charges prepaid, or (iii) transmitted by hand
delivery, telegram or facsimile, addressed as set forth below or to such other
address as such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall
be deemed effective (a) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile machine, at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the third business
day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
AppliedTheory Corporation
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq., General Counsel
Telephone: (000) 000-0000, ext. 5229
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx XX, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
00, xx Xxxxx-Xxxxx
0000 Xxxxxx, Xxxxxxxx
Xxxxxxxxxxx
Attention: Xxx Xxxx/Maxi Brezzi
Telephone: x00 00 000 00 00
Facsimile: x00 00 000 00 00
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with a copy (which shall not constitute notice) to:
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq./Xxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party hereto may from time to time change its address or facsimile
number for notices under this Section 4.8 by giving at least 10 days'
prior written notice of such changed address or facsimile number to the
other party hereto.
Section 4.9. GOVERNING LAW. This Agreement shall be construed under
the laws of the State of New York.
Section 4.10. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.
Section 4.11. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute one and the same
instrument.
Section 4.12. FURTHER ASSURANCES. Each party shall cooperate and
take such action as may be reasonably requested by another party in order to
carry out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
Section 4.13. ABSENCE OF PRESUMPTION. This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
Section 4.14. REMEDIES. In the event of a breach or a threatened
breach by any party to this Agreement of its obligations under this Agreement,
any party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including monetary damages, for breach of any such provision may be inadequate
compensation for any loss.
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
CRESCENT INTERNATIONAL LTD.
By: /s/ Xxx Xxxx /s/ Xxxxxx Xxxxx
GreenLight (Switzerland) S.A. as
Investor's manager
Name: Xxx Xxxx / Xxxxxx Xxxxx
Title:
APPLIEDTHEORY CORPORATION
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Sr. VP / CFO
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