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EXHIBIT 2.3
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PUT OPTION AGREEMENT
among
APPLIEDTHEORY CORPORATION
and
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and
OTHER STOCKHOLDERS
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THIS PUT OPTION AGREEMENT, dated as of December , 1999 (this
"Agreement"), by and between AppliedTheory Corporation, a Delaware corporation
(together with its subsidiaries "Parent"), ▇▇▇▇▇ ▇. ▇▇▇▇▇ and other holders of
capital stock of CRL Network Services, Inc. (each a "Stockholder" and
collectively the "Stockholders").
W I T N E S S E T H:
WHEREAS, the Stockholders will acquire shares of Parent common
stock, par value $.01 per share (the "Parent Common Stock"), in connection with
that certain Agreement and Plan of Merger dated as of the date hereof between,
among others, the parties hereto (the "Merger Agreement"); and
WHEREAS, as a condition to the Merger Agreement, the Parent has
agreed to enter into this Agreement whereby, inter alia, the Parent is granting
an option to the Stockholders such that they can require the Parent to purchase
the Parent Common Stock from the Stockholders at specified times and in
specified circumstances, all as set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the
representations, warranties and agreements contained herein and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
Section 1.1. Definitions.
All capitalized terms used herein shall, unless defined herein,
have the respective meanings set forth herein or, in the absence of such a
definition, in the Merger Agreement.
Section 1.2. Rules of Interpretation.
In this Agreement, unless the context shall otherwise require:
(a) the headings are inserted for convenience only and shall not
define or limit the provisions nor affect the interpretation hereof;
(b) words denoting the singular only shall include the plural and
vice versa;
(c) "include" and "including" are not limiting;
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(d) "Proportionate Share" shall mean that proportion of the total
Parent Common Stock delivered at the Closing of the Merger Agreement which the
respective Stockholder shall have received from Parent in connection with such
Closing; and
(e) all references to documents are to those documents as amended,
modified and supplemented from time to time.
ARTICLE II
FIRST PUT OPTION
Section 2.1. Granting of First Put Option.
For good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Parent grants to each Stockholder an option
which shall be exercisable only on the one year anniversary of the date hereof
(the "First Put Exercisability Date") and under which such Stockholder may
require Parent to purchase Parent Common Stock from such Stockholder for the
Exercise Price (as hereinafter defined) in accordance with the terms of this
Agreement (the "First Put Option"). Subject to the limitation set forth in the
last sentence of this Section 2.1, the First Put Option may be exercised by each
such Stockholder in accordance with the provisions of this Agreement with
respect to any number of shares of Parent Common Stock up to such Stockholder's
Proportionate Share of $5,000,000 in value (based on the Exercise Price as
hereinafter defined) of Parent Common Stock. For purposes of this Section 2.1,
the purchase price payable by Parent for such Parent Common Stock shall be
$16.00 per share (the "Exercise Price"). The amount of shares available under
the First Put Option shall be reduced on a one-for-one basis in respect of any
shares of Parent Common Stock which are sold by such Stockholder prior to the
First Put Exercisability Date over and above an aggregate of 10% of the Parent
Common Stock received by such Stockholder as Stock Consideration under the
Merger Agreement.
Section 2.2. Expiration of First Put Option.
(a) In the event that the average of the closing prices for the
Parent Common Stock as reported on the Nasdaq-NMS for any period of at least 30
consecutive days commencing 180 days after the date hereof shall exceed 125% of
the per share Exercise Price (the "First Put Option Target"), the First Put
Option shall terminate and shall no longer be exercisable; provided, however
that on such date when the foregoing condition shall have been satisfied, if (i)
a Required Registration Notice (as defined in the Registration Rights Agreement)
shall have been delivered to the Company pursuant to the Registration Rights
Agreement at least 30 days before such date, and (ii) a registration statement
filed pursuant to such Required Registration Notice shall not have been
effective for at least eighteen (18) days within the 30-day period referred to
above, then the First Put Option shall not terminate and shall remain
outstanding and exercisable until such time as the First Put Option Target is
met and a registration statement shall have been in effect for at least eighteen
(18) days.
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(b) If the First Put Option shall not have otherwise expired,
terminated or been exercised, such First Put Option shall expire and terminate
on the day following the one year anniversary of the date hereof.
Section 2.3. Exercise of First Put Option.
The First Put Option may be exercised by the applicable
Stockholder serving a notice upon Parent (a "First Put Option Notice") at any
time up to and including the First Put Exercisability Date; provided, that the
First Put Option may not be exercised until the First Put Exercisability Date.
Section 2.4. Completion of Sale of Parent Common Stock.
(a) If there is to be a sale and purchase of Parent Common Stock
pursuant to the exercise of the First Put Option under Section 2.3, the
completion of the sale and purchase shall take place on the First Put
Exercisability Date (or, if such date is not a Business Day, on the next
Business Day) at 10:00 a.m. New York time (or at such other time to be mutually
agreed upon by the parties hereto) at such place to be mutually agreed upon by
the parties hereto.
(b) At the completion of any sale and purchase of the Parent
Common Stock pursuant to the exercise of the First Put Option on the First Put
Exercisability Date:
(i) the respective Stockholder shall deliver to
Parent or its nominee a duly executed stock certificate (the
"Certificate"), completed in the name of such Stockholder, in respect
of the Parent Common Stock against payment of the Exercise Price by
Parent; and
(ii) Parent shall accept (or cause its nominee to
accept) delivery of such Certificate and effect payment of the
applicable consideration to an account identified by such Stockholder
in writing to Parent. For the avoidance of doubt, it is hereby
understood and agreed that receipt of the Exercise Price shall be
confirmed by such Stockholder prior to the delivery by such
Stockholder to Parent of the Certificate.
(c) The parties hereto agree to do such further things and to
execute such further documents as may be necessary so that Parent or its nominee
may obtain on payment of the Exercise Price title to the applicable Parent
Common Stock free of any liens, encumbrances or other security interests.
ARTICLE III
SECOND PUT OPTION
Section 3.1. Granting of Second Put Option.
For good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Parent grants to each Stockholder an option
which shall be
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exercisable only on the two year anniversary of the date hereof (the "Second Put
Exercisability Date") and under which such Stockholder may require Parent to
purchase Parent Common Stock from such Stockholder for the Exercise Price in
accordance with the terms of this Agreement (the "Second Put Option"). Subject
to the limitation set forth in the last sentence of this Section 3.1, the Second
Put Option may be exercised by each such Stockholder in accordance with the
provisions of this Agreement with respect to any number of shares of Parent
Common Stock up to such Stockholder's Proportionate Share of $5,000,000 in value
(based on the Exercise Price) of Parent Common Stock. The amount of shares
available under the Second Put Option shall be reduced on a one-for-one basis in
respect of any shares of Parent Common Stock which are sold by such Stockholder
prior to the Second Put Exercisability Date over and above an aggregate of 50%
of the Parent Common Stock received by such Stockholder as Stock Consideration
under the Merger Agreement.
Section 3.2. Expiration of Second Put Option.
(a) In the event that the average of the closing prices for the
Parent Common Stock as reported on the Nasdaq-NMS for any period of at least 30
consecutive days commencing 180 days after the date hereof shall exceed 150% of
the per share Exercise Price, the Second Put Option shall terminate and shall no
longer be exercisable; provided, that at that time a registration statement
filed pursuant to a Required Registration Notice shall have been effective for
at least eighteen (18) days within the 30-day period referred to above beginning
on the 180th day after the date hereof.
(b) If the Second Put Option shall not have otherwise expired,
terminated or been exercised, such Second Put Option shall expire and terminate
on the day following the two year anniversary of the date hereof.
Section 3.3. Exercise of Second Put Option.
The Put Option may be exercised by the applicable Stockholder
serving a notice upon Parent (a "Second Put Option Notice") at any time up to
and including the Second Put Exercisability Date; provided, that the Second Put
Option may not be exercised until the Second Put Exercisability Date.
Section 3.4. Completion of Sale of Parent Common Stock.
(a) If there is to be a sale and purchase of Parent Common Stock
pursuant to the exercise of the Second Put Option under Section 3.3, the
completion of the sale and purchase shall take place on the Second Put
Exercisability Date (or, if such date is not a Business Day, on the next
Business Day) at 10:00 a.m. New York time (or at such other time to be mutually
agreed upon by the parties hereto) at such place to be mutually agreed upon by
the parties hereto.
(b) At the completion of any sale and purchase of the Parent
Common Stock pursuant to the exercise of the Second Put Option on the Second Put
Exercisability Date:
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(i) the respective Stockholder shall deliver to Parent
or its nominee a duly executed stock certificate, completed in the
name of such Stockholder, in respect of the Parent Common Stock
against payment of the Exercise Price by Parent; and
(ii) Parent shall accept (or cause its nominee to
accept) delivery of such Certificate and effect payment of the
applicable consideration to an account identified by such Stockholder
in writing to Parent. For the avoidance of doubt, it is hereby
understood and agreed that receipt of the Exercise Price shall be
confirmed by such Stockholder prior to the delivery by such
Stockholder to Parent of the Certificate.
(c) The parties hereto agree to do such further things and to
execute such further documents as may be necessary so that Parent or its nominee
may obtain on payment of the Exercise Price title to the applicable Parent
Common Stock.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Counterparts.
This Agreement may be executed in one or more counterparts, each
of which shall be an original but all of which together shall constitute but one
and the same agreement.
Section 4.2. Further Assurances.
Each of the parties hereto agrees to cooperate and take such
further action and to execute and deliver such additional instruments and
documents as any other party hereto may from time to time reasonably request for
the purposes of giving effect to the terms of this Agreement or any other
document or agreement arising under the Merger Agreement.
Section 4.3. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS.
Section 4.4. Notices.
Any notice, request, demand or other communication under this
Agreement shall be in writing or by facsimile transmission (provided that in the
case of facsimile transmission it shall be confirmed in writing simultaneously
dispatched) addressed to the relevant party for the attention of the appropriate
person and once given or made shall (except as otherwise specified herein) be
irrevocable. Without prejudice to
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any other effective mode of service, the same shall be deemed to have been
sufficiently served:
in the case of notice to each Stockholder if sent to the applicable
Stockholder at:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
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Tel.:
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Fax:
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and to such other address, marked for the attention of the
applicable Stockholder, as each Stockholder may from time to time
notify in writing to Parent;
in the case of a notice to Parent if sent to it at:
AppliedTheory Corporation
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, VP Corporate
Development & Western Operations
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address and/or marked for the attention of such
other person as Parent may from time to time notify in writing
the Stockholders; and
Any facsimile transmission (in respect of which receipt has been
acknowledged by telephone or facsimile transmission) shall be deemed to have
been received at the time of dispatch provided that dispatch occurred between
9.00 a.m. and 5.00 p.m. on a Business Day in the place of receipt of the
relevant notice, failing which it shall be deemed to have been received if
dispatched prior to 9.00 a.m. on a Business Day at the commencement of business
on that Business Day, and if dispatched after 5.00 p.m. on a Business Day or at
any time on a day that is not a Business Day, at the commencement of business on
the next Business Day in the place of receipt of the relevant notice. A written
notice shall be treated as received when actually received (without reference to
time of receipt of any copies, provided such copies have been sent).
Section 4.5. Amendments.
This Agreement may be amended only by a written instrument
executed by the parties hereto or their respective successors or permitted
assigns.
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Section 4.6. Assignment.
The Stockholders agree and confirm that they may not assign, sell,
transfer or otherwise dispose of any or all of the Parent Common Stock held by
them (or any beneficial interest therein) or all or any part of their rights and
obligations under any of the documents or agreements arising under the Merger
Agreement, except to the extent not prohibited by such documents or agreements,
including the Lock-Up.
Section 4.7. Severability.
Each of the provisions in this Agreement shall be severable and
distinct from the others and the illegality, invalidity or unenforceability of
any provision under the law of any jurisdiction shall not affect or impair the
legality, validity or enforceability of any other provision in that jurisdiction
nor the legality, validity or enforceability of any provision under the law of
any other jurisdiction.
Section 4.8. Waiver.
The failure of any party hereto to enforce at any time any of the
provisions of this Agreement shall in no way be construed to be a waiver of any
such provision, nor in an way to affect the validity of this Agreement or any
part hereof or the right of such party thereafter to enforce each and every such
provisions. No waiver of any breach hereof or non-compliance herewith shall be
held to be a waiver of any other or subsequent breach hereof or non-compliance
herewith.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective duly authorized officers as of the date
first above written.
APPLIEDTHEORY CORPORATION
By:
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President - Corporate Development
Development and Western Operations
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