Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of April 20, 2004, by and among Internet Commerce Corporation (the
"Company"), and the investors signatory hereto (each a "Purchaser" and
collectively, the "Purchasers").
This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof by and among the Company and the Purchasers (the
"Purchase Agreement").
The Company and the Purchasers hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given such terms in
the Purchase Agreement. As used in this Agreement, the following terms shall
have the following meanings:
"Effectiveness Date" means, with respect to the Registration Statement
required to be filed pursuant to Section 2(a), the earlier of (a) the 120th
calendar day from the Closing Date, and (b) the date on which the Commission
declares the effectiveness of the Registration Statement.
"Effectiveness Period" shall have the meaning set forth in Section 2(a).
"Filing Date" means, with respect to the Registration Statement required
to be filed hereunder, the date thirty (30) calendar days from the Closing Date.
"Holder" or "Holders" means the holder or holders, as the case may be,
from time to time of Registrable Securities (including any permitted assignee).
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means the Shares, the Warrant Shares and any
shares of Common Stock issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the
foregoing or in connection with any provisions in the Warrants.
"Registration Statement" means the registration statements required to be
filed hereunder, including (in each case) the Prospectus, amendments and
supplements to the registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in the registration
statement.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 424" means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrants" shall mean the Common Stock purchase warrants issued to the
Purchasers pursuant to the Purchase Agreement.
2. Registration.
(a) Mandatory Registration. No later than the Filing Date, the Company
shall prepare and file with the Commission the Registration Statement covering
the resale of all of the Registrable Securities which a Holder has requested to
be included in such Registration Statement and for which such Holder has
provided the Company with a completed Selling Securityholder Questionnaire,
which offering shall be made on a continuous basis pursuant to Rule 415. The
Registration Statement required hereunder shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in
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which case the Registration shall be on another appropriate form in accordance
herewith). The Registration Statement required hereunder shall contain (except
if otherwise directed by the Holders) the "Plan of Distribution" attached hereto
as Annex A (which may be modified to respond to comments, if any, received by
the Commission). The Company shall use its commercially reasonable efforts to
cause the Registration Statement to be declared effective under the Securities
Act as promptly as possible after the filing thereof and shall use its
commercially reasonable efforts to keep the Registration Statement continuously
effective under the Securities Act until the date when all Registrable
Securities covered by the Registration Statement (a) have been sold pursuant to
the Registration Statement or an exemption from the registration requirements of
the Securities Act or (b) may be sold without any volume or other restrictions
pursuant to Rule 144(k) (the "Effectiveness Period").
(b) Filing Default Liquidation Damages. If a Registration Statement is
not filed on or prior to the Filing Date, then the Company shall pay to each
Holder an amount in cash until the earlier of the date a Registration Statement
is filed and the Registrable Securities may be sold pursuant to Rule 144(k), as
liquidated damages and not as a penalty, equal to (i) one (1%) percent of the
aggregate purchase price paid by such Holder pursuant to the Purchase Agreement
for the first thirty (30) days (or a pro rata portion of one (1%) percent for
any part thereof) following the Company's failure to file, and (ii) an
additional one (1%) percent of the aggregate purchase paid by such Holder
thereunder for each thirty (30) day period subsequent thereto (or a pro rata
portion of one (1%) percent for any part thereof), such payment(s) to be made in
immediately available funds no later than five (5) days after the first date of
each 30 day period (or any part thereof), as the case may be, during the
Company's failure to file.
(c) Effectiveness Default Liquidation Damages. In addition to any
liquidated damages paid, accrued and/or to be paid pursuant to Section 2(b), if
(1) a Registration Statement is not declared effective on or prior to 120 days
from the Closing Date, or (2) if a Registration Statement has been declared
effective and subsequent thereto is not effective (or otherwise does not permit
the resale of the Registrable Securities covered thereby) for any period of time
until the date no Holder owns any Registrable Securities or Warrants (an
"Effectiveness Default"), then the Company shall pay to each Holder an amount in
cash until the date a Registration Statement is declared effective (and permits
the resale of the Registrable Securities covered thereby)(or if previously
declared effective until the date the Registration Statement becomes effective
(and otherwise permits the resale of the Registrable Securities covered thereby)
again), as liquidated damages and not as a penalty, equal to (i) one (1%)
percent of the aggregate purchase price paid by such Holder pursuant to the
Purchase Agreement for the first thirty (30) days (or a pro rata portion of one
(1%) percent for any part thereof), and (ii) an additional one (1%) percent of
the aggregate purchase price paid by such Holder thereunder for each thirty (30)
day period subsequent thereto (or a pro rata portion of one (1%) for any part
thereof) until the earlier of (a) such date the Registration Statement is
declared effective (or if previously declared effective until the date the
Registration Statement becomes effective (and otherwise permits the resale of
the Registrable Securities covered thereby) again), and (b) the Registrable
Securities may be sold pursuant to Rule 144(k); provided, however, for purposes
of this subsection (c), it shall not be considered an Effectiveness Default
during any such period in which there is a Material Development Condition (as
defined below) which is permitted pursuant to Section 6(o). Any such payment(s)
shall be made in immediately available funds no later than five (5) days after
the first day of each 30 day period of each such Effectiveness Default.
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(d) Piggyback Registrations Rights. If, at any time during the
Effectiveness Period, there is not an effective Registration Statement covering
all of the Registrable Securities or there is an effective Registration
Statement that does not permit the resale of all of the Registrable Securities
covered thereby (other than the Registrable Securities of a Holder that failed
to comply with its obligations under Section 2(f) or Section 3(j)), and the
Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities, other than on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to each Holder a written notice of such determination and, if within
ten (10) days after receipt by a Holder, the Company shall receive a request in
writing from any such Holder, the Company shall include in such registration
statement all or any part of such Registrable Securities such Holder requests to
be registered; provided, however, that (i) if, at any time after giving written
notice of is intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company determines for any reason not to proceed with such registration, the
Company will be relieved of its obligation to register any Registrable
Securities in connection with such registration, and (ii) in case of a
determination by the Company to delay registration of its securities, the
Company will be permitted to delay the registration of Registrable Securities
for the same period as the delay in registering such other securities, in any
such case without any obligation or liability to any Holder. Any Holder who
elects to include Registrable Securities in a registration statement pursuant to
this Section 1(d) shall sell such Registrable Securities on the same terms and
conditions as the equity securities of the Company or others (other than other
Holders) are being sold pursuant to such registration statement. Notwithstanding
the foregoing, nothing in this Section 2(d) shall permit the Company to file a
registration statement in contravention of the restrictions in Section 6(b).
(e) Sufficient Number of Shares Registered. In the event the number of
shares of Common Stock covered under a Registration Statement filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities which
such Registration Statement is required to cover, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover at least 100% of the
Registrable Securities, in each case, as soon as practicable, but in any event
not later than ten (10) Business Days after the necessity therefor arises. The
Company shall use its commercially reasonable efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable
following the filing thereof. For purposes of the foregoing provision, the
number of shares of Common Stock covered under a Registration Statement shall be
deemed "insufficient to cover all of the Registrable Securities" if the number
of Registrable Securities issued or issuable upon exercise of the Warrants
covered by such Registration Statement is greater than the number of shares of
Common Stock available for resale under the Registration Statement to cover
shares issued or issuable upon exercise of the Warrants.
(f) Other Requirements. In connection with any Registration Statement
under Section 1(a) or any registration statement under Section 1(d), Holders
whose Registrable Securities are included therein shall provide such information
and shall execute and deliver to the
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Company such documents, including, but not limited to, a selling securityholder
questionnaire in customary form and substance reasonably satisfactory to the
Company, as the Company may reasonably request in order to effect such
registration pursuant to this Agreement and in accordance with applicable
securities laws.
3. Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:
(a) Not less than three (3) Trading Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or supplement
thereto, (i) furnish to the Holders copies of all such documents substantially
in the form proposed to be filed (including documents incorporated or deemed
incorporated by reference to the extent requested by such Person) which
documents will be subject to the review of such Holders, and (ii) subject, if
appropriate, to the execution of confidentiality agreements in form acceptable
to the Company, cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of respective counsel to conduct a reasonable
investigation within the meaning of the Securities Act; provided, however, that
with respect to clause (i) the Company shall not furnish to Holders, without
their prior approval, any information that constitutes or might constitute
material, non-public information.
(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; and (iii) respond as promptly as
reasonably possible to any comments received from the Commission with respect to
the Registration Statement or any amendment thereto and, as promptly as
reasonably possible, upon request, provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement (subject, if appropriate, to the execution of confidentiality
agreements in form acceptable to the Company).
(c) Notify the Holders of Registrable Securities to be sold as promptly
as reasonably possible (and, in the case of (i)(A) below, not less than three
(3) Trading Days prior to such filing) and (if requested by any such Person)
confirm such notice in writing promptly following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed; (B) when the Commission notifies
the Company whether there will be a "review" of the Registration Statement and
whenever the Commission comments in writing on the Registration Statement (the
Company shall upon request provide true and complete copies thereof and all
written responses thereto to each of the Holders, subject, if appropriate, to
the execution of confidentiality agreements in form acceptable to the Company);
and (C) with respect to the Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the
Commission 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 Prospectus or for additional
information; (iii) of the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement covering any or all of the Registrable Securities or
the initiation of
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any Proceedings for that purpose; (iv) of the receipt by the Company 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; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, 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 light of the circumstances under which they were made, not misleading.
(d) Use its commercially reasonable efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
(e) Promptly deliver to each Holder no later than two (2) business days
after the Effectiveness Date, without charge, two (2) copies of the Prospectus
or Prospectuses (including each form of prospectus) and each amendment or
supplement thereto (and, upon the request of the Holder such additional copies
as such Persons may reasonably request in connection with resales by the Holder
of Registrable Securities). The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except after
the giving of any notice pursuant to Section 3(c).
(f) Prior to any resale of Registrable Securities by a Holder, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement; provided,
however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified, subject the
Company to any material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.
(g) If requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent
permitted by the Purchase Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such
names as any such Holders may request.
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(h) Upon the occurrence of any event contemplated by Section 3(c)(v),
as promptly as reasonably possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain 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 light of the circumstances under which they were made, not misleading.
(i) Use its reasonable commercial efforts to comply in all material
respects with all applicable rules and regulations of the Commission relating to
the registration of the Registrable Securities pursuant to the Registration
Statement or otherwise.
(j) The Company shall not be required to include in any Registration
Statement the Registrable Securities of any Holder that does not complete a
Selling Shareholder Questionnaire.
(k) The Company shall use commercially reasonable efforts either to (a)
cause all the Registrable Securities covered by a Registration Statement to be
listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(b) secure designation and quotation of all the Registrable Securities covered
by the Registration Statement on the Nasdaq National Market or the Nasdaq
SmallCap Market, or, (c) if the Company is unsuccessful in satisfying the
preceding clauses (a) or (b), the Company shall secure the inclusion for
quotation on The American Stock Exchange, Inc. or if it is unable to, the NASD
Bulletin Board for such Registrable Securities and, without limiting the
generality of the foregoing, to use its commercially reasonable efforts to
arrange for at least two (2) market makers to register with the National
Association of Securities Dealers, Inc. ("NASD") as such with respect to such
Registrable Securities. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3(k).
(l) The Company shall make all documents, files, books, records,
officers, directors and employees of the Company reasonably available to any
Holder, one legal counsel to the Holders and one firm of accountants or other
agents retained by the Holders (collectively, the "Inspectors"), and make such
other accommodations as are reasonably necessary for the Inspectors, if any, to
perform a due diligence review of the Company; provided, however, that all such
information ("Confidential Information") will be kept confidential and not
utilized by the Inspectors except as contemplated herein and except as required
by law or court order. The term Confidential Information also includes any
information included in a draft Registration Statement or any related Prospectus
or any amendment or supplement hereto provided to a Holder pursuant to Section
3(a); for the avoidance of doubt, however, as noted in Section 3(a) above, the
Company shall not furnish to Holders, without their prior approval, any
information that constitutes or might constitute material, non-public
information. The term Confidential Information does not include information that
(a) is already in possession of such other party (other than that which is
subject to another confidentiality agreement unless obtained from a third party
where the receiving party knows that the third party was subject to a
confidentiality agreement), (b) becomes generally available to the public, or
(c) becomes available on a non-confidential basis from a source other than the
Company unless obtained from a third party
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where the receiving party knows that the third party was subject to a
confidentiality agreement. Each Holder agrees that it shall, upon learning that
disclosure of such Confidential Information is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the information deemed confidential.
(m) The Company shall hold in confidence and not make any disclosure of
information concerning any Holder provided to the Company unless (a) disclosure
of such information is necessary to comply with federal or state securities
laws, (b) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement or Prospectus, (c) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, (d) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement to which the Company is a party, or (e) such Holder consents to the
form and content of any such disclosure (the Holders shall be deemed to consent
to the inclusion of any information provided in the Selling Shareholder
Questionnaire in the Registration Statement, any Prospectus related thereto, and
any amendments or supplements thereto). The Company agrees that it shall, upon
learning that disclosure of such information concerning any Holder is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt written notice to such Holder and allow such Holder, at the
Holder's expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.
(n) The Company covenants that it shall file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder so long as the Holder owns any
Registrable Securities, but in no event longer than two (2) years; provided,
however, the Company may delay any such filing but only pursuant to Rule 12b-25
under the Exchange Act, and the Company shall use commercially reasonable
efforts to take such further action as any Holder of Registrable Securities may
reasonably request (including without limitation, promptly obtaining any
required legal opinions from Company counsel necessary to effect the sale of
Registrable Securities under Rule 144 and paying the related fees and expenses
of such counsel), all to the extent required from time to time to enable such
Holder 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, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Holder of Registrable Securities, the Company will deliver to such Holder
a written statement as to whether it has complied with such requirements.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement, other than fees and expenses of counsel of any other
advisor retained by the Holders and discounts, fees and commissions with respect
to the sale of any Registrable Securities by the Holders. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with the Trading Market on which
the Common Stock is then listed for trading, and (B) to effect compliance with
applicable state securities or Blue Sky laws), (ii)
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printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing Prospectuses), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange or other trading market as required hereunder.
5. Indemnification
(a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorneys' fees)
and expenses (including the cost (including without limitation, reasonable
attorneys' fees) and expenses relating to an Indemnified Party's actions to
enforce the provisions of this Section 5) (collectively, "Losses"), as incurred,
to the extent arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (1) such untrue (or alleged untrue) statements or omissions (or alleged
omissions) are based solely upon information regarding such Holder furnished (or
in the case of an omission, not furnished) in writing to the Company by or on
behalf of such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed by such Holder expressly
for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood that
the Holder has reviewed Annex A hereto for this purpose), (2) in the case of an
occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by
such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section 6(d),
or (3) the failure of the Holder to deliver a Prospectus prior to the
confirmation of a sale. The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding of which the Company is aware
in connection with the transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each
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Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors, officers,
agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent
arising out of or based upon: (x) such Holder's failure to comply with the
prospectus delivery requirements of the Securities Act or (y) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of the
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading (i) to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished (or in the case of an omission, not furnished) in
writing by or on behalf of such Holder to the Company specifically for inclusion
in the Registration Statement or such Prospectus or (ii) to the extent that (1)
such untrue statements or omissions are based solely upon information regarding
such Holder furnished (or in the case of an omission, not furnished) in writing
to the Company by or on behalf of such Holder expressly for use therein, or to
the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed by
such Holder expressly for use in the Registration Statement (it being understood
that the Holder has reviewed Annex A hereto for this purpose), such Prospectus
or such form of Prospectus or in any amendment or supplement thereto, or (2) in
the case of an occurrence of an event of the type specified in Section
3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d), or (3) the failure of the Holder to deliver a
Prospectus prior to the confirmation of a sale. In no event shall the liability
of any selling Holder hereunder be greater in amount than the net proceeds
received by the Holder with respect to the sale of its Registrable Securities.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall have the right to assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that such failure
shall have materially prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in (but not control) the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been
10
advised by counsel in writing that a conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the reasonable fees and expenses of one separate counsel
for all Indemnified Parties in any matters related on a factual basis shall be
at the expense of the Indemnifying Party). The Indemnifying Party shall not be
liable for any settlement of any such Proceeding affected without its written
consent. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within fifteen (15) Trading Days of written notice thereof to the
Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is not entitled to
indemnification hereunder, determined based upon the relative faults of the
parties.
(d) Contribution. If a claim for indemnification under Section 5(a) or
Section 5(b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each 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 Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
(e) The parties hereto agree that it would not be just and equitable if
contribution pursuant to Section 5(d) were determined by pro rata allocation or
by any other method of allocation that does not take into account the equitable
considerations referred to in Section 5(d). Notwithstanding the provisions of
Section 5(d), no Holder shall be required to indemnify or contribute, in the
aggregate, pursuant to this Article 5, any amount in excess of the amount by
which the proceeds actually received by such Holder from the sale of the
Registrable
11
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud by
such Holder. The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties. No party guilty of fraudulent misrepresentation pursuant to
Section 11(f) of the Securities Act shall be entitled to contribution from any
other party.
6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder of
any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement will be entitled to specific performance of its
rights under this Agreement; provided, however, that the exclusive remedy for a
breach of Section 2(b) or Section 2(c) shall be the recovery of liquidated
damages pursuant to such Sections, exclusively. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Piggyback on Registrations. Other than those securities
(including securities issuable upon exercise of warrants) that may be issued to
Holders and/or the Placement Agent and/or its designee(s), the securities set
forth on Schedule 3.1(z) of the Purchase Agreement and such other securities as
may be consented to in writing by the Placement Agent, neither the Company nor
any of its security holders may include securities of the Company in a
Registration Statement filed pursuant to Section 2(a) hereof. Other than
pursuant to rights granted to the Placement Agent and/or to Holders in this
Agreement, no Person has any right to cause the Company to effect a registration
under the Securities Act of any securities of the Company. Except in connection
with any acquisition or other strategic transaction entered into after the date
hereof, the Company shall not and will not file any other registration statement
until thirty (30) days after the Effective Date without the written consent of
the Placement Agent.
(c) Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it in connection with sales of Registrable Securities pursuant to the
Registration Statement.
(d) Discontinued Disposition. Each Holder agrees by its acquisition of
such Registrable Securities that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Section 3(c), such Holder
will forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.
12
(e) Amendments and Waivers. 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 same shall be in writing and signed by the Company and the
Holders of at least 75% of the then outstanding Registrable Securities (assuming
the exercise of all Warrants, whether exercised or not), whereupon such
amendment, modification, supplement or waiver shall be binding on all Holders;
provided, however, that no consideration shall be offered or paid to any Holder
to amend or consent to a waiver or modification of any provision of this
Agreement unless the same consideration is also offered to all of the Holders
under this Agreement.
(f) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the Trading Day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(ii) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be delivered and
addressed as set forth in the Purchase Agreement
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. Each Holder may assign
their respective rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.
(h) Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
conflicts of laws principles thereof. The parties hereto hereby irrevocably
agree that any suit or proceeding arising directly and/or indirectly pursuant to
or under this Agreement, shall be brought solely in a federal or state court
located in the City, County and State of New York. By its execution hereof, the
parties hereby covenant and irrevocably submit to the in personam jurisdiction
of the federal and state courts located in the City, County and State of New
York and agree that any process in any such action may be served upon any of
them personally, or by certified mail or registered mail upon them or their
agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York City. The parties hereto waive any claim
that any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of in personam jurisdiction with respect
thereto.
(j) Cumulative Remedies. Subject to the first sentence of Section 6(a),
the remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(k) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and
13
the parties hereto shall use their commercially reasonable efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
(l) Headings; Section References. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. References to Sections mean Sections of this Agreement unless
otherwise stated.
(m) Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to independently protect and enforce its
rights, including without limitation the rights arising out of this Agreement,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. Each Purchaser represents
that it has been represented by its own separate legal counsel in its review and
negotiation of this Agreement. The Company has elected to provide all Purchasers
with the same terms and documents for the convenience of the Company and not
because it was required to do so by the Purchasers.
(n) Assignment of Registration Rights. The rights under this Agreement
shall be automatically assignable by any Holder to any permitted transferee of
all or any portion of Registrable Securities if: (a) such Holder agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment; (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (i) the name and address of such
transferee or assignee, and (ii) the securities with respect to which such
registration rights are being transferred or assigned; and (c) at or before the
time the Company receives the written notice contemplated by clause (b) of this
sentence the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions contained herein.
(o) Deferral Period. With respect to any Registration Statement filed
or to be filed pursuant to Section 2, if the Company determines that, in its
good faith judgment, it would (because of the existence of, or in reasonable
anticipation of, any acquisition or corporate reorganization or other
transaction, financing activity, stock repurchase or other material development
involving the Company or any subsidiary, or the unavailability for reasons
beyond the Company's control of any required financial statements, or any other
event or condition of similar significance to the Company or any subsidiary) to
be materially disadvantageous (a "Material Development Condition") to the
Company to proceed with such Registration Statement, then the Company shall,
notwithstanding any other provisions of this Agreement, be entitled, upon the
giving of a written notice that a Material Development Condition has occurred
14
(a "Delay Notice") from an officer of the Company to the Placement Agent, as the
representative of the Purchasers, (i) to cause sales of Registrable Securities
by the Purchasers pursuant to such Registration Statement to cease, (ii) to
cause such Registration Statement to be withdrawn and the effectiveness of such
Registration Statement suspended, or (iii) in the event no such Registration
Statement has yet been filed or declared effective, to delay filing or
effectiveness of any such Registration Statement until, in the good faith
judgment of the Company, such Material Development Condition shall be disclosed
or no longer exists (notice of which the Company shall promptly deliver to the
Placement Agent, as the representative of the Purchasers). Notwithstanding the
foregoing provisions of this Section 6(o), (1) in no event may such cessation or
delay be for a period of more than forty-five (45) consecutive days from giving
of its Delay Notice to the Purchasers with respect to such Material Development
Condition, as above provided, or more than ninety (90) days in any twelve (12)
months; and (2) in the event a Registration Statement is filed and subsequently
withdrawn by reason of any existing or anticipated Material Development
Condition as provided above, the Company shall cause a new Registration
Statement covering the Registrable Securities to be filed with the Commission as
soon as reasonably practicable after such Material Development Condition ceases
to exist or, if sooner, as practicable after the expiration of such forty-five
(45) day period.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
INTERNET COMMERCE CORPORATION
By:
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Name:
Title:
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(PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)
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By:
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Name:
Title:
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By:
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Name:
Title:
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By:
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Name:
Title:
ANNEX A
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Plan of Distribution
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The Selling Stockholders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker/dealer solicits purchasers;
o block trades in which the broker/dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker/dealer as principal and resale by the
broker/dealer for its account;
o an exchange distribution in accordance with the Rules of the
applicable exchange;
o privately negotiated transactions;
o put or call options transactions;
o settlement of short sales;
o broker/dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
Broker/dealers engaged by the Selling Stockholders may arrange for other
brokers/dealers to participate in sales. Broker/dealers may receive commissions
from the Selling Stockholders (or, if any broker/dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
Selling Stockholders do not expect these commissions to exceed what is customary
in the types of transactions involved.
The Selling Stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the donees, pledgees or
secured parties may offer and sell the shares of common stock from time to time
under this prospectus, or under an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 amending
the list of Selling Stockholders to include the donee, pledgee, transferee or
other successors in interest as Selling Stockholders under this prospectus.
The Selling Stockholders and any broker/dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker/dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions under the Securities Act. The Selling Stockholders have informed the
Company that it does not have any agreement or understanding, directly or
indirectly, with any person to distribute the Common Stock.
At the time a particular offering of securities is made, to the extent
required, a prospectus supplement will be distributed which will set forth the
number of securities being offered and the terms of the offering, including the
purchase price or the public offering price, the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriters for
securities purchased from the Selling Stockholders, any discounts, commissions
and other items constituting compensation from the selling security holders and
any discounts, commissions or concessions allowed or reallowed or paid to
dealers.
Pursuant to applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the securities offered hereby may not
simultaneously engage in market activities for the shares of common stock for a
period of five business days prior to the commencement of such distribution. In
addition, each Selling Stockholder and any other person who participates in a
distribution of the securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M,
which provisions may limit the timing of purchases and may affect the
marketability of the securities and the ability of any person to engage in
market activities for the shares of common stock.
The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
