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Exhibit 2.17
REGISTRATION RIGHTS AGREEMENT
June 29, 2000
To Tim Blackwood, Art Borrego and Roger
Lewis, holders of capital stock of Team Tech
International, Inc.
RECITALS
WHEREAS: The Stockholders will receive from AppliedTheory Corporation shares
of common stock, par value $.01 per share, of the Parent pursuant to
that certain Agreement and Plan of Merger, dated as of June 10,
2000, by and among the Parent and the Stockholders, among others;
and
WHEREAS, as a condition to such merger, the Parent has agreed to grant to the
Stockholders certain registration rights in accordance with the
Registration Rights Agreement (the "Agreement") with respect to
certain securities of the Parent held by the Stockholders.
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 June 10, 2000 by and among the Parent, the Stockholders and certain other
parties.
"Parent" shall mean AppliedTheory Corporation.
"Registrable Stock" shall mean those shares of Common Stock that:
(i) are issued to the Stockholders in connection with the Closing of the
Merger, (ii) as of the applicable time are held by a Stockholder or an
Authorized Transferee and (iii) as of such time are not held in the Escrow
Fund.
"Registration Expenses" shall mean the expenses described in Section
5 of this Agreement.
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"Requesting Holders" shall mean those Stockholders who request a
registration of some or all of their Registrable Stock pursuant to Section 3
herein.
"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 described in Section 5 of
this Agreement.
"Stockholders" shall mean Tim Blackwood, Art Borrego and Roger Lewis
and, subject to Section 8 of this Agreement, any Authorized Transferee.
All other capitalized terms 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 JUNE 10,
2000 BETWEEN THE HOLDER THEREOF AND
APPLIEDTHEORY CORPORATION, HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS IT HAS BEEN REGISTERED
UNDER THAT ACT 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 being sold thereby may be publicly
sold without registration under the Securities Act.
3. Incidental Registration.
(a) Beginning on the Closing and until 365 days following the
Closing, if the Parent proposes to register under the Securities Act
any of its securities for its own account (except with respect to
registration statements on Forms S-4, S-8 or another form not
available for registering the Registerable Stock for sale to the
public), each such time it will give written notice to all holders of
outstanding Registerable Stock of its intention so to do. Upon the
written request of any Requesting Holder, received by the Parent
within 15 days after the giving of any such notice by the Parent, to
register any of its Registerable Stock (which request shall state the
intended method of disposition thereof), the Parent will use its best
efforts to cause the Registerable Stock as to which registration
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shall have been so requested to be included in the securities to be
covered by the registration statement proposed to be filed by the
Parent, all to the extent requisite to permit the registration by the
Requesting Holder (in accordance with its written request) of such
Registerable Stock. In the event that any registration pursuant to
this Section 3 shall be, in whole or in part, an underwritten public
offering of Common Stock, the number of shares of Registerable Stock
to be included in such an underwriting may be reduced if and to the
extent that the managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the securities to be
sold by the Parent therein; provided, that in the event of such a
reduction, the Parent will include shares of Common Stock in such a
registration in accordance with the following priorities:
(i) first, the Parent will register all shares of
Common Stock proposed to be registered on such
registration statement by the Parent for its own
account;
(ii) second, the Parent will register all shares of
Common Stock requested to be registered on such
registration statement by holders of Common Stock
who effect such a request pursuant to that certain
Registration Rights Agreement, dated as of January
5, 2000, between, among others, James G. Couch and
the Parent, or pursuant to that certain
Registration Rights Agreement, dated as of August
4, 1998, by and among IXC Internet Services, Inc.,
Grumman Hill Investments III, L.P., the Parent and
certain other parties;
(iii) third, the Parent will register, pro rata, all
shares of Common Stock that are requested to be
registered by Requesting Holders hereunder and any
other shares of Common Stock that are proposed to
be included in such registration by any parties
whose shares are not subject to the foregoing
paragraphs (i) and (ii), based upon the proportion
of shares of Common Stock that each such party
proposes to register.
(b) Notwithstanding the foregoing provisions, the Parent may
withdraw any registration statement referred to in this Section 3
without thereby incurring any liability to the holders of Registerable
Stock except that, subject to Section 5 hereof, the Parent will bear
the obligation to pay any registration expenses incurred in relation
to such a withdrawn registrations.
(c) Notwithstanding the foregoing provisions, the Merger
Consideration held by any Stockholder will be subject to the
restrictions on sale described in Section 5.11 of the Merger
Agreement.
4. Registration Procedures. With respect to the registration
arising under Section 3 hereof, the Parent will, as expeditiously as possible:
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(a) prepare and file with the SEC a registration statement with
respect to such Registrable Stock 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 set forth in such registration statement for such period;
(c) furnish to each seller of Registrable Stock and to each
underwriter such number of copies of the registration statement and
the prospectus included therein (including each preliminary
prospectus) as such persons 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) immediately notify each seller of Registrable Stock and each
underwriter under such registration statement (if there shall be any),
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;
In connection with each registration hereunder, the 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 Section 3 covering
an underwritten public offering, the Parent and each seller of Registrable
Stock 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.
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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 of the
rights under this Agreement of the Stockholders, 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, selling commissions
applicable to the sale of Registrable Stock and any fees and disbursements of
counsel to the Stockholders are called "Selling Expenses".
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 of Registrable Stock in proportion to the number of
shares sold by each, or by such participating sellers of Registrable Stock
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 each seller of such Registrable Stock
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 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 actions in respect
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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 to so 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 indemnified party, consent to the
entry of any judgment or enter into any settlement
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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 for just and equitable contribution to
joint liability under the Securities Act in any case in which either
(i) any holder of Registrable Stock exercising rights under this
Agreement, or any controlling person of any such holder, 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.
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8. Miscellaneous.
(a) All representations, warranties, covenants and agreements of
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 any 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.
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(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 shall include 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be effective as of this 29th day of June, 2000.
<TABLE>
<S> <C>
APPLIEDTHEORY CORPORATION
By: /s/ Danny E. Stroud
------------------------------------------
Title: Vice President - Corporate
------------------------------
Development and Western Operations
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Name: Danny E. Stroud
------------------------------------
STOCKHOLDERS:
/s/ Art Borrego
--------------------------------
Art Borrego
/s/ Roger Lewis
--------------------------------
Roger Lewis
/s/ Tim Blackwood
--------------------------------
Tim Blackwood
</TABLE>
