EXHIBIT 2.2
PCTEL, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is entered into as of
March 12, 2003, by and between PCTEL, Inc., a Delaware corporation ("Parent"),
and Dynamic Telecommunications, Inc., a Maryland corporation ("Seller").
RECITALS
A. Contemporaneously with the execution and delivery of this Agreement,
Parent, PCTEL Maryland, Inc., a Delaware corporation and wholly-owned subsidiary
of Parent, Seller and DTI Holdings, Inc., a Delaware corporation and parent
corporation of Seller, are entering into an Asset Purchase Agreement, dated as
of an even date herewith (the "Purchase Agreement"), pursuant to which Parent
may issue the Earn-Out Shares (as defined in the Purchase Agreement).
B. In connection with the Purchase Agreement, Parent and Seller are
entering into this Agreement under which Parent is granting Seller certain
resale registration rights with respect to the Earn-Out Shares.
NOW, THEREFORE, in consideration of the promises, mutual covenants and
terms hereof, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
AGREEMENT
1. Definitions. Any capitalized term not otherwise defined herein shall
have the meanings ascribed to such term in the Purchase Agreement. As used in
this Agreement:
(a) "Issue Date" shall mean the date(s) on which the Earn-Out Shares
become issuable to Seller as provided in Section 12.4 of the Purchase Agreement.
The Purchase Agreement provides that there may be two (2) Issue Dates for the
Earn-Out Shares. If there is more than one Issue Date, the registration
obligations of Parent pursuant to Section 2 below shall pertain to the Earn-Out
Shares issued at each Issue Date (in other words, Parent would be obligated to
file two S-3 registration statements, one for the Earn-Out Shares issued at the
first Issue Date and one for the Earn-Out Shares issued on the second Issue
Date).
(b) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(c) "Registration Expenses" shall mean all expenses incurred in
complying with Section 2 of this Agreement, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for Parent, blue sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration; provided, however, Registration Expenses shall not include
any selling commissions, transfer taxes or fees and disbursements of Seller's
counsel (which expenses shall be borne by Seller and not Parent).
(d) "Registrable Securities" shall mean the Earn-Out Shares issued
to Seller pursuant to the Purchase Agreement; provided, however, that the
Earn-Out Shares shall cease to be Registrable Securities at such time as (i)
they have been registered for resale pursuant to a prospectus included in an
effective Registration Statement on Form S-3 and such securities shall have been
disposed of in accordance with such registration statement and with Section 2
hereof or (ii) they are otherwise available for resale under Rule 144 of the
Securities Act within a single 90-day period.
2. Seller Registration.
(a) Parent shall use its best efforts to cause the Registrable
Securities to be registered under the Securities Act so as to permit the resale
thereof, and in connection therewith shall prepare and file with the SEC within
10 days following the Issue Date a registration statement on Form S-3 covering
the Registrable Securities; provided, however, if Parent shall furnish to Seller
a certificate signed by the an executive officer of Parent stating that, in the
good faith judgment of the Board of Directors of Parent, it would be seriously
detrimental to Parent or its stockholders for registration statements to be
filed within such 10 day period, then Parent's obligation to use its best
efforts to file a registration statement shall be deferred for a period not to
exceed 90 days from the Issue Date. The offerings made pursuant to such
registration shall not be underwritten.
(b) Parent shall (i) prepare and file with the SEC the registration
statement in accordance with Section 2 hereof with respect to the Registrable
Securities and shall use its commercially reasonable best efforts to cause such
registration statement to become effective as promptly as practicable after
filing and to keep such registration statement effective until the sooner to
occur of (A) the date on which all Registrable Securities included within such
registration statement have been sold or (B) the expiration of 90 days after the
day on which such registration statement has been declared effective; (ii)
prepare and file with the SEC such amendments to such registration statement and
amendments or supplements to the prospectus used in connection therewith as may
be necessary to comply with the provisions of the Securities Act with respect to
the sale or other disposition of all securities registered by such registration
statement; (iii) furnish to Seller such number of copies of any prospectus
(including any amended or supplemented prospectus) in conformity with the
requirements of the Securities Act, and such other documents, as Seller may
reasonably request in order to effect the offering and sale of the Registrable
Securities to be offered and sold, but only while Parent shall be required under
the provisions hereof to cause the registration statement to remain effective;
(iv) use its best efforts to register or qualify the Registrable Securities
covered by such registration statement under the securities or blue sky laws of
such jurisdictions as Seller shall reasonably request (provided that Parent
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such jurisdiction where it has not been qualified), and do any and all other
acts or things which may be necessary or advisable to enable Seller to
consummate the public sale or other disposition of such Registrable Securities
in such jurisdictions; and (v) notify Seller, promptly after it shall receive
notice thereof, of the date and time the registration statement and each post-
-2-
effective amendment thereto has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed.
3. Suspension of Prospectus. Under any registration statement filed
pursuant to Section 2 hereof, Parent may restrict the disposition of the
Registrable Securities, and Seller will not be able to dispose of such
Registrable Securities, if Parent shall have delivered a notice in writing to
Seller stating that a delay in the disposition of such Registrable Securities is
necessary because Parent, in its reasonable judgment, has determined that such
sales would require public disclosure by Parent of material nonpublic
information that is not included in such registration statement. In the event of
the delivery of the notice described above by Parent, Parent shall use its best
efforts to amend such registration statement and/or amend or supplement the
related prospectus if necessary and to take all other actions necessary to allow
the proposed sale to take place as promptly as possible, subject, however, to
the right of Parent to delay further sales of Registrable Securities until the
conditions or circumstances referred to in the notice have ceased to exist or
have been disclosed. Such right to delay sales of Registrable Securities shall
not exceed 90 days. Any such delay shall result in a corresponding extension of
the period of time that Parent is required to maintain the effectiveness of the
registration statement under Section 2.
4. Indemnification.
(a) Parent will indemnify and hold harmless Seller, each of its
officers and directors, and each person controlling Seller within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement against
all expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by Parent of any rule or regulation promulgated
under the Securities Act applicable to Parent or any state securities law
applicable to Parent in connection with any such registration, qualification or
compliance, and Parent will reimburse (on an as incurred basis), Seller, each of
its officers and directors and each person controlling Seller, for any
reasonable legal and other expenses incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action;
provided, however, that Parent will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to Parent by Seller; and provided, further, that Parent will not be
liable to any such person or entity with respect to any such untrue statement or
omission or alleged untrue statement or omission made in any preliminary
prospectus that is corrected in the final prospectus filed with the SEC pursuant
to Rule 424(b) promulgated under the Securities Act (or any amendment or
supplement to such prospectus) if the person asserting any such loss, claim,
damage or liability purchased securities but was not sent or given a copy of the
prospectus (as amended or supplemented) at or prior to the written confirmation
of the sale of such securities to such person in any case where such delivery of
the prospectus (as amended or
-3-
supplemented) is required by the Securities Act, unless such failure to deliver
the prospectus (as amended or supplemented) was a result of Parent's failure to
provide such prospectus (as amended or supplemented).
(b) Seller shall indemnify Parent, each of its directors and
officers and each person who controls Parent within the meaning of Section 15 of
the Securities Act against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, and will reimburse Parent and such
directors, officers or control persons of Parent for any reasonable legal or
other expenses incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to Parent by Seller; provided,
however, that the liability of Seller for indemnification under this Section
4(b) shall not exceed the proceeds from the offering received by Seller, prior
to deducting any commissions, transfer taxes or other selling expenses incurred
with respect to such sale.
(c) Each party entitled to indemnification under this Section 4 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 4 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to 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 claim or litigation. Any
Indemnified Party shall reasonably cooperate with the Indemnifying Party in the
defense of any claim or litigation brought against such Indemnified Party.
(d) If the indemnification provided for in this Section 4 is for any
reason not available to an Indemnified Party with respect to any loss,
liability, claim, damage or expense referred to therein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage or expense as
will as any other relevant equitable considerations. The relative fault of the
Indemnifying
-4-
Party and of the Indemnified Party shall be determined by reference to, among
other things, whether the untrue or the alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied by
the Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The liability of Seller under this Section 4(d)
shall not exceed the proceeds from the offering received by Seller, prior to
deduction of any commissions, transfer taxes or other selling expenses incurred
with respect to such sale.
5. Information of Seller. Seller shall furnish to Parent such information
regarding Seller, the manner in which Seller holds any securities of Parent and
the distribution proposed by Seller as Parent may request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to in this Agreement.
6. Repurchase of Earn-Out Shares; Termination of Registration Rights. In
the event that a registration statement has not been declared effective by the
SEC within 60 days of an applicable Issue Date (the "Termination Date"), unless
otherwise mutually agreed by Parent and Seller, all obligations under this
Agreement for Parent to register the Earn-Out Shares covered by such
registration statement shall terminate. In such event, Seller shall have the
right to require that Parent repurchase such Earn-Out Shares from Seller at the
per share price equal to the fair market value of such shares on the Issue Date
as determined pursuant to Section 12.4(b)(ii) of the Purchase Agreement (the
"Repurchase Amount"). Seller shall request in writing that Parent repurchase
such Earn-Out Shares and shall accompany such request by tendering the stock
certificate(s) representing such Earn-Out Shares together with a duly executed
stock power in the form attached hereto as Exhibit A (or, in the event that any
such stock certificate is lost, stolen or destroyed, an affidavit of that fact
by Seller in a form acceptable to Parent and a bond in such sum as Parent may
reasonably require as indemnity against any claim that may be made against
Parent with respect to the stock certificate alleged to have been lost, stolen
or destroyed) within 30 days of the Termination Date. Within three business days
of Parent's receipt of the stock certificate(s), Parent shall deliver the
Repurchase Amount by wire transfer in accordance with written instructions
delivered by Seller to Parent. If Seller does not tender the certificate(s)
representing the applicable Earn-Out shares (or, the affidavit of lost, stolen
or destroyed certificate and the related bond described above) within the
above-referenced 30 day period, Parent shall have no further repurchase
obligation with respect to such shares under this Section 6.
7. Miscellaneous.
(a) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if upon receipt delivered personally or by
commercial delivery service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
-5-
(i) if to Parent, to:
PCTEL, Inc.
8725 West Higgins Road, Suite 400
Chicago, Illinois 60631
Attention: Martin H. Singer
Telephone No.: (773) 243-3001
Facsimile No.: (773) 243-3050
with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attention: Douglas H. Collom
Telephone No.: (650) 493-9300
Facsimile No.: (650) 845-5000
(ii) if to Seller, to:
Dynamic Telecommunications, Inc.
12810 Wisteria Drive, Third Floor
Germantown, Maryland 20874
Telephone No.: (301) 515-0036
Facsimile No.: (301) 515-0037
with a copy (which shall not constitute notice) to:
Lerch, Early & Brewer, Chartered
3 Bethesda Metro Center, Suite 460
Bethesda, Maryland 20814-5367
Attention: Paul J. DiPiazza, Esq.
Telephone No.: (301) 657-0172
Facsimile No.: (301) 986-0332
(b) No Assignment of Registration Rights. The rights to cause Parent
to register Registrable Securities under Section 2 of this Agreement may not be
assigned by Seller.
(c) Expenses. All Registration Expenses incurred in connection with
any registration pursuant to Section 2 shall be borne by Parent.
(d) No Third Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended to confer upon any party, other than the parties to this
Agreement, any rights or remedies hereunder.
(e) Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware without giving effect to the conflicts
of laws principles thereof.
-6-
(f) Severability. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
(g) Amendment. Except as is otherwise required by applicable law,
this Agreement may be amended by the parties hereto at any time by execution of
an instrument in writing signed by Parent and Seller.
(h) Entire Agreement. This Agreement constitutes the full and entire
understanding among the parties regarding the subject matter herein.
(i) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
-7-
IN WITNESS WHEREOF, Parent and Seller have caused this Registration Rights
Agreement to be signed as of the date first written above.
"PARENT" PCTEL, INC.
a Delaware corporation
By: /s/ JOHN SCHOEN
---------------------------------------
John Schoen, Chief Financial Officer
"SELLER" DYNAMIC TELECOMMUNICATIONS, INC.
a Maryland corporation
By: /s/ PAUL A. KLINE
---------------------------------------
Paul A. Kline, President
EXHIBIT A
STOCK POWER AND ASSIGNMENT
SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to the repurchase of Earn-Out Shares in
connection with Section 6 of the Registration Rights Agreement dated as of March
12, 2003, the undersigned hereby sells, assigns and transfers unto PCTEL, Inc. a
Delaware corporation (the "Company"), ______________________ (______) shares of
Common Stock of the Company, standing in the undersigned's name on the books of
said corporation represented by certificate number _______ delivered herewith,
and does hereby irrevocably constitute and appoint Wells Fargo Bank Minnesota,
N.A. as attorney-in-fact, with full power of substitution, to transfer said
stock on the books of said corporation.
Dated: _____________, ______
________________________________________
(Signature)
________________________________________
(Please Print Name)
INSTRUCTION: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINES.