-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B/m9Q2PU2DiwI0YR37B/kU+h7InoZoJdaTqvKVmokU2x8mbA0EoD5FswZd3OIgzF 0zihyPWCFwTSMCICyS/WpQ== 0000922423-03-000424.txt : 20030502 0000922423-03-000424.hdr.sgml : 20030502 20030502170828 ACCESSION NUMBER: 0000922423-03-000424 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20030430 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNET COMMERCE CORP CENTRAL INDEX KEY: 0000894738 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 133645702 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24996 FILM NUMBER: 03680391 BUSINESS ADDRESS: STREET 1: 805 THIRD AVE STREET 2: STE 622 CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2122717640 MAIL ADDRESS: STREET 1: 805 THIRD AVENUE STREET 2: 342 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: INFOSAFE SYSTEMS INC DATE OF NAME CHANGE: 19940914 8-K 1 kl05005_8k.txt FORM 8-K CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): April 30, 2003 ---------- INTERNET COMMERCE CORPORATION (Exact name of registrant as specified in its charter) Delaware 024996 13-3645702 (State or other jurisdiction of (Commission file (I.R.S. employer incorporation or organization) number) identification no.) 805 Third Avenue, New York, New York 10022 10022 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (212) 271-7640 (Former name or former address, if changed since last report.) Item 5. Other Events On April 30, 2003 and May 1, 2003, the Company completed a private placement for an aggregate of $2,050,000. The Company issued 1,730,759 shares of Class A Common Stock, 250 shares of newly authorized Series D Convertible Redeemable Preferred Stock, which are initially convertible into 192,307 shares of Class A Common Stock at $1.30 per share, and five year warrants exercisable for 1,538,445 shares of Class A Common Stock at $1.47 per share. Officers and Directors of the Company participated in the private placement to the extent of $444,920 or 21.7%. The Company has agreed to file a registration statement to register for resale the shares of Class A Common Stock issued in the private placement as well as the shares of Class A Common Stock issuable upon conversion of the Series D Preferred Stock and upon exercise of the warrants. The proceeds of the private placement will be for general corporate purposes, including the acceleration of marketing and sales initiatives for the Company's Van services. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. 3.1 Certificate of Designations - Series D Convertible Redeemable Preferred Stock. 4.1 Form of Warrant Agreement issued in the private placement. 10.1 Form of Subscription Agreement dated as of April 30, 2003, among Internet Commerce Corporation and the purchasers of shares of class A common stock identified therein. 10.2 Form of Subscription Agreement dated as of April 30, 2003, between Internet Commerce Corporation and Blue Water Venture Fund II, L.L.C. for the purchase of shares of Series D Preferred Stock. 10.3 Form of Registration Rights Agreement dated April 30, 2003, among Internet Commerce Corporation and the purchasers of shares of class A common stock identified therein. 10.4 Form of Registration Rights Agreement dated April 30, 2003, between Internet Commerce Corporation and Blue Water Venture Fund II, L.L.C. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, Internet Commerce Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 2, 2003 INTERNET COMMERCE CORPORATION By: Walter M. Psztur ------------------------------ Walter M. Psztur Chief Financial Officer EX-3 3 kl05005_exhibit3-1.txt EXHIBIT 3.1 CERTIFICATE OF DESIGNATIONS Exhibit 3.1 Certificate of the Powers, Designations, Preferences and Relative, Participating, Optional and Other Special Rights of the SERIES D CONVERTIBLE REDEEMABLE PREFERRED STOCK OF INTERNET COMMERCE CORPORATION and the Qualifications, Limitations or Restrictions Thereof, Which Have Not Been Set Forth in the Certificate of Incorporation or in Any Amendment Thereto. (Pursuant to Section 151 of the General Corporation Law of the State of Delaware) The undersigned, G. Michael Cassidy, President and Chief Executive Officer of INTERNET COMMERCE CORPORATION, a corporation organized and existing under the laws of the State of Delaware (hereinafter the "Corporation"), DOES HEREBY CERTIFY: That pursuant to authority conferred upon the Board of Directors of the Corporation by the Certificate of Incorporation and pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Corporation, by a meeting of the Board of Directors on April 18, 2003, duly adopted the following resolution: RESOLVED, that, pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation by the provisions of its Certificate of Incorporation, the Board of Directors of the Corporation hereby creates a series of Preferred Stock of the Corporation to consist of 250 of the 5,000,000 shares of Preferred Stock, $.01 par value per share, which the Corporation now has authority to issue, and the Board of Directors of the Corporation hereby fixes the designations, powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, of the shares of such series of Preferred Stock (in addition to the designations, powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation of the Corporation which are applicable to Preferred Stock of all series) as follows: 1. Designation and Number. The distinctive designation of the series shall be Series D Convertible Redeemable Preferred Stock, par value $0.01 per share (the "Series D Preferred"). The number of shares of Series D Preferred which the Corporation is authorized to issue shall be two hundred fifty (250), which number may be increased (but not above the total number of authorized shares of Preferred stock of the Corporation) or decreased (but not below the number of shares then outstanding) from time to time by the Board of Directors of the Corporation. 2. Definitions. For purposes of this Certificate of Designations, the following terms shall have the meanings indicated. (a) The term "Senior Stock" means: (i) the Series C Convertible Redeemable Preferred Stock, par value $0.01 per share (the "Series C Preferred"); and (ii) any and all classes and series of preferred or special stock which, by the terms of the Certificate of Incorporation (as the same may be amended) or of the instrument by which the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation (as the same may be amended), shall designate the special rights and limitations of each such class and series of preferred or special stock to be senior to the Series D Preferred Stock with respect to the right of the holders thereof to participate in the distribution of assets of the Corporation distributable to stockholders upon any liquidation, dissolution, reorganization or winding-up of the Corporation. (b) The term "Junior Stock" means: (i) the Series A Convertible Redeemable Preferred Stock, par value $.01 per share (the "Series A Preferred"); (ii) the Class A Common Stock, par value $.01 per share, (the "Common Stock"); (iii) the Class B Common Stock, par value $.01 per share; and (iv) all those classes and series of preferred or special stock which, by the terms of the Certificate of Incorporation (as the same may hereafter be amended) or of the instrument by which the Board of Directors of the Corporation, acting pursuant to authority granted in the Certificate of Incorporation (as the same may hereafter be amended), shall designate the special rights and limitations of each such class and series of preferred or special stock to be subordinate to the Series D Preferred with respect to the right of the holders thereof to participate in the distribution of assets of the Corporation distributable to stockholders upon any liquidation, dissolution, reorganization or winding-up of the Corporation. (c) The term "Market Price per share of Common Stock" for any Trading Day means: (i) the closing bid price for the Common Stock on such Trading Day as published by the National Association of Securities Dealers Automated Quotation System ("NASDAQ") (or, if such prices are not so published by NASDAQ, the average of the high and low bid prices for the Common Stock on such Trading Day, as furnished by any New York Stock Exchange member firm selected from time to time by the Corporation for such purpose); or (ii) if the Common Stock is then listed or admitted to trading on a national securities exchange, the last sale price regular way for the Common Stock on such Trading Day as reported in the consolidated transaction reporting system for securities listed or traded on such exchange, or, in case no such reported sale takes place on such Trading Day, the reported closing bid price regular way for the Common Stock on such Trading Day on the principal national securities exchange on which the Common Stock is then listed or admitted to trading. 2 (d) The term "Trading Day" shall mean any day on which trading takes place on the principal market on which the Common Stock trades, or, if the Common Stock is not listed for trading on any recognized market or exchange, a day on which a sale transaction occurs with respect to such Common Stock. 3. Dividends. Each holder of Series D Preferred shall be entitled to receive, when, as, and if declared by the Board of Directors, out of any funds legally available for such use, such dividends which the Board of Directors may determine from time to time in its sole discretion. No dividends or distributions may be made to holders of Junior Stock prior to the moment the Series D Preferred have been redeemed or converted. Dividends or distributions can only be paid to holders of shares on parity with the Series D Preferred if also paid to the holders of Series D Preferred at the same time. 4. Liquidation Preference. ----------------------- (a) In General. In the event of any voluntary or involuntary liquidation, dissolution, reorganization or winding-up (each, a "Liquidation") of the Corporation, the holders of Series D Preferred shall be entitled to have set apart for them or to be paid out of the assets of the Corporation (after provision for the holders of Senior Stock but before the holders of Junior Stock) an amount in cash equal to, and in no event more than, $1,000 per share of Series D Preferred plus a sum of money equal to all dividends accrued and unpaid thereon up to the date that payment is made available to the holders of Series D Preferred (the "Liquidation Amount"). After the full Liquidation Amount has been paid to, or determined and set apart for the Series D Preferred Stock and all other series of Preferred Stock of equal ranking with the Series D Preferred (the "Parity Stock"), if any, the remaining assets of the Corporation available for distribution to stockholders shall be distributed to the holders of Junior Stock as their interests may appear. (b) Insufficient Funds. If, upon such Liquidation, the assets of the Corporation available for distribution to the holders of its stock shall be insufficient to permit the distribution in full of the amounts receivable as aforesaid by the holders of Series D Preferred, then all such assets of the Corporation then remaining shall be distributed ratably among the holders of Series D Preferred and any Parity Stock, in proportion to the amounts which each would have been entitled to receive if such assets were sufficient to permit distribution in full as aforesaid. (c) Events Not Triggering Liquidation. Neither the consolidation nor merger of the Corporation nor the sale, lease or transfer by the Corporation of all or any part of its assets shall be deemed to be a Liquidation for the purposes of this Section 4, and the Series D Preferred Stock shall be entitled only to (i) the rights provided in any agreement or plan governing the reorganization or other consolidation, merger or sale of assets transaction, (ii) the rights contained in the Delaware General Corporation Law and (iii) the rights contained in other Sections hereof. 3 5. Voting. (a) Voting; Generally. Except as otherwise required by law or as provided herein, a holder of Series D Preferred shall be entitled: (i) for each share of Series D Preferred held, to the number of votes per share equal to the number of whole shares of Common Stock into which each share of Series D Preferred is convertible as of the record date for the determination of stockholders entitled to vote; (ii) to vote on or consent to all matters upon which the holders of Common Stock are entitled to vote or consent; and (iii) to notice of any stockholders meeting in accordance with the By-laws of the Corporation. (b) Fractional Votes. Fractional votes shall not be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares of Series D Preferred held by each holder) shall be rounded to the nearest whole number (with one-half being rounded upward). (c) Class Voting Rights. (i) Except as otherwise provided in the Certificate of Incorporation or as expressly required by law, the holders of Series D Preferred, the holders of Common Stock and the holders of any other class or series of shares entitled to vote with the Common Stock, shall vote together as a single class on all matters presented to stockholders and not as separate classes. (ii) Notwithstanding the foregoing, the Corporation shall not, without the affirmative vote or consent of the holders of at least fifty percent (50%) of all the outstanding shares of Series D Preferred, voting separately as a class, amend, alter or repeal any provision of the Certificate of Incorporation or the By-Laws of the Corporation so as to materially and adversely affect the relative rights, preferences, qualifications, limitations or restrictions of the Series D Preferred. For this purpose, the authorization or issuance of any stock on parity with or junior to the Series D Preferred as to the right to receive dividends or distributions upon a Liquidation shall not be deemed so to adversely affect the Series D Preferred. 4 6. Redemption. (a) Redemption; Generally. Subject to the provisions of Section 6(b) hereof, if at any time beginning on the day that is the second anniversary after the first date on which the shares of Series D Preferred are issued, the Market Price per share of Common Stock for thirty (30) consecutive trading days ending no more than five (5) days prior to the giving of the Redemption Notice pursuant to Section 6(b) hereof, is at least 200% of the Conversion Price then in effect, the Corporation, at its option, may (except as otherwise provided in Section 7 hereof) redeem, in whole or in part, the Series D Preferred at the Liquidation Amount (as defined in Section 4(a) hereof), provided that the shares of Common Stock issuable upon conversion of the Series D Preferred pursuant to Section 7 hereof are then registered for resale pursuant to an effective registration statement under the Securities Act of 1933, as amended. (b) Redemption Notice. Not less than fifteen (15) and no more than forty-five (45) days prior to the date fixed for any redemption of the Series D Preferred, a notice (a "Redemption Notice") specifying the time, date and place of the redemption (the "Redemption Date") and the Liquidation Amount shall be given by mail to the holders of record of the shares of Series D Preferred to be redeemed at their respective addresses as shown on the stock records of the Corporation. If less than all of the Series D Preferred then outstanding are to be redeemed, the Redemption Notice mailed to each holder of shares of Series D Preferred to be redeemed shall identify the shares of Series D Preferred held by such holder to be redeemed. Any failure to mail such Redemption Notice or any defect therein or in the mailing thereof shall not affect the validity of the proceedings for such redemption except as to a holder (i) to whom the Corporation has failed to mail such notice or (ii) whose notice was defective. An affidavit of the Secretary of the Corporation (or of a transfer agent for the Series D Preferred, if one has been appointed) that the Redemption Notice has been mailed shall, in the absence of fraud, be prima facie evidence of the facts stated therein. The Redemption Notice shall also clearly state the date and time by which the holders of the Series D Preferred must exercise any conversion rights under Section 7 hereof with respect to any shares being called for redemption. (c) Termination of Rights Upon Redemption. (i) From and after the Redemption Date (unless default be made by the Corporation in providing moneys for the payment of the redemption price), all dividends on shares of Series D Preferred thereby called for redemption shall cease to accrue, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive payment of the Liquidation Amount) shall cease. (ii) If the Corporation shall, with respect to shares of Series D Preferred called for redemption, irrevocably deposit, in trust for the account of the holders of shares of Series D Preferred to be redeemed, a sum sufficient to redeem such shares upon surrender of certificates therefor, then such shares which have been called for redemption shall not be deemed to be outstanding shares for the purpose of voting or determining the total number of shares entitled to vote on any matter on and after the date the Redemption Notice has been sent to holders thereof and such deposit has been made. 5 (d) Unclaimed Redemption Amounts. In the event the holder of any such shares of Series D Preferred shall not, within three (3) years after the Redemption Date, claim the amount deposited for the redemption thereof, the depositary shall, upon the request of the Corporation, pay over to the Corporation such unclaimed amount. Any moneys so deposited by the Corporation which shall not be required for redemption because of the exercise of any right of conversion subsequent to the date of the deposit, and any interest accrued on any moneys so deposited, shall be repaid to the Corporation upon request. (e) Delivery of Liquidation Amount. From and after the Redemption Date, the Corporation shall, at the place specified in the Redemption Notice, upon presentation and surrender to the Corporation by the holder thereof of one or more certificates representing shares of Series D Preferred to be redeemed, deliver or cause to be delivered to or upon the written order of such holder a sum in cash equal to the Liquidation Amount of the shares of such holder to be redeemed, together with, if the certificate(s) presented and surrendered by such holder represent a greater number of shares than the number of shares to be redeemed from such holder, one or more new certificates registered in the name of such holder and representing the shares of Series D Preferred not redeemed. (f) Status of Redeemed Shares. Shares of Series D Preferred redeemed pursuant to this Section 6 or converted pursuant to Section 7 hereof shall thereupon be deemed retired and shall resume the status of authorized but unissued shares of Preferred Stock (without serial designation) and may, subject to the provisions hereof, be reissued as shares of Series D Preferred or shares of any other series of Preferred Stock as determined by the Board of Directors of the Corporation. 7. Conversion. ----------- (a) Conversion Generally; Notice of Conversion. Subject to the provisions of Section 6 hereof regarding redemption and to the terms and conditions of this Section 7, shares of Series D Preferred shall be convertible, in whole or in part, at the option of the holder thereof (except that, in respect of any such shares which shall have been called for redemption, such option shall terminate at the close of business on the second full business day prior to the Redemption Date unless the Corporation shall default in the payment of the Liquidation Amount), into the number of whole shares (calculated to the nearest whole share, with 5/10ths of a share being considered as nearer to the next higher whole share) of fully paid and nonassessable Common Stock at the then applicable Conversion Price (as defined below), each share of Series D Preferred being taken at $1,000 for the purpose of such conversion, by surrender of a certificate or certificates for shares of Series D Preferred so to be converted at the principal place of business of the Corporation to the attention of the Secretary (or at such other place or places, or to such other person's attention, as may be designated by the Corporation) at any time during usual business hours, together with written notice (a "Conversion Notice") that the holder elects to convert all such shares of Series D Preferred, or a stated number of shares thereof, in accordance with the provisions of this Section 7. Such Conversion Notice shall also state the name or names (with addresses) in which the certificate or certificates for Common Stock shall be issued. The date on which a Conversion Notice is given to the Company shall be deemed to be the date set forth therefor in the Conversion Notice (the "Conversion Date"). 6 (b) Delivery of Converted Securities. As promptly as practicable after the Conversion Date, the Corporation shall deliver or cause to be delivered to or upon the written order of such holder one or more certificates representing the number of shares of Common Stock issuable upon such conversion, issued in such name or names as such holder may direct, together with, if the certificate(s) surrendered evidence a greater number of shares than the number of shares to be converted, one or more certificates evidencing the shares of Series D Preferred not to be converted. On each Conversion Date, all rights of the converting holder as a holder of the shares of Series D Preferred surrendered for conversion shall cease and the person or persons in whose name or names the certificate(s) for the shares of Common Stock issuable upon conversion are to be issued shall be treated for all purposes as having become the record holder or holders thereof at such time. (c) Last Day of Conversion. If the last day for the exercise of the conversion option be, in the jurisdiction where the principal place of business of the Corporation (or other place designated by the Corporation as a place for conversion of shares of Series D Preferred) is located, a Saturday, Sunday or legal holiday, then such conversion option may be exercised, at the conversion price in effect on such last day, upon the next succeeding day not a Saturday, Sunday or legal holiday in such jurisdiction. (d) Conversion Price. The conversion price for the shares of Series D Preferred shall be $1.30 per share (the "Conversion Price"); provided that, if adjustment of the Conversion Price is required pursuant to Section 7(e) hereof, the Conversion Price shall be such adjusted price. (e) Adjustment of Conversion Price. In case any of the following shall occur (each, a "Conversion Adjustment Event"): (i) any reclassification or change in the outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination); (ii) any consolidation or merger to which the Corporation is a party (other than a merger in which the Corporation is the surviving corporation and which does not result in any reclassification of, or change in, the outstanding shares of Common Stock); or (iii) any sale or conveyance to another corporation, entity or person of the property of the Corporation as an entirety or substantially as an entirety, other than a sale/leaseback, mortgage or other similar financing transaction, then, in each such case, appropriate provision shall be made, effective as of the effective date of any Conversion Adjustment Event, as the case may be, whereby the holders of Series D Preferred then outstanding shall have the right to convert such shares of Series D Preferred into the kind and amount of shares of stock, other securities or property, including cash, which would have been receivable upon such Conversion Adjustment Event by a holder of the number of shares of Common Stock which would have been issuable upon conversion of the shares of Series D Preferred immediately prior to such Conversion Adjustment Event. In connection with any provision made pursuant to the terms of the preceding sentence, provision shall also be made 7 for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 7(d). The above provisions of this Section 7(d) shall similarly apply to successive Conversion Adjustment Events. (f) Decision of the Board of Directors Is Binding. Any determination as to whether an adjustment in the Conversion Price in effect hereunder is required pursuant to Section 7(e) hereof, or as to the amount of any such adjustment, if required, shall be final, binding and conclusive if made in good faith by the Board of Directors of the Corporation. (g) Notice of Adjustments. Whenever a Conversion Adjustment Event occurs, then, in each such case, the Corporation shall mail, or cause to be mailed, to the holders of Series D Preferred, of record not more than ten (10) days before the date of mailing, a notice in writing stating the kind and amount of shares of stock, other securities or property, including cash, which such holders are entitled to receive as a result of such Conversion Adjustment Event, and the facts on which such calculation is based. An affidavit of the Secretary of the Corporation (or of a transfer agent for the Series D Preferred, if one has been appointed) that any such notice has been mailed shall, in the absence of fraud, be prima facie evidence of the facts stated therein. (h) Fractional Shares. No fractional shares of stock shall be issued upon the conversion of any Series D Preferred. If the number of shares of Common Stock issuable upon any such conversion would include a fraction of a share, such number shall be rounded up to the next whole number of shares of Common Stock. (i) No Adjustments for Dividends. Upon any conversion, no adjustment shall be made for dividends on the Series D Preferred surrendered for conversion or on the Common Stock delivered. (j) Reservation of Shares. The Corporation will at all times reserve and keep available out of its authorized but unissued capital stock, solely for the purpose of issue upon conversion of the Series D Preferred, as provided in this Section 7, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series D Preferred, and, upon the issuance thereof upon conversion, all in accordance with the provisions hereof, such shares of Common Stock shall be duly and validly issued, fully paid and nonassessable. (k) Transfer Taxes. The issuance of certificates for shares of Common Stock shall be made without charge for any tax in respect of such issuance. However, if any such certificate is to be issued in a name other than that of the holder of the converted Series D Preferred, the Corporation shall not be required to issue or deliver any stock certificate or certificates unless and until the holder has paid to the Corporation the amount of any tax which may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Corporation that such tax has been paid or is not due. 8 (l) Notice Upon Setting a Record Date for Dividends or Distributions to Holders of Common Stock. In the event of: (i) any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders of such securities who are entitled to receive any dividend or other distribution on the Common Stock or any right, warrant or option to subscribe for or purchase any shares of Common Stock of any class; or (ii) any reclassification or recapitalization of the capital stock of the Corporation, any consolidation or merger of the Corporation with or into another corporation, any transfer of all or substantially all of the assets of the Corporation to any other corporation, entity or person, or any voluntary or involuntary dissolution, liquidation, reorganization or winding-up of the Corporation, the Corporation shall mail to each holder of Series D Preferred at least ten (10) days prior to the date specified in such notice, a notice specifying: (A) the date on which any such record is to be taken for the purpose of such dividend, distribution or rights; (B) the date on which any such reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation, reorganization or winding-up is expected to come effective; and (C) the time, if any is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation, reorganization or winding-up. 8. General. -------- (a) If any other class or series of preferred or special stock or series of Preferred Stock shall be created, whether ranking prior to or on a parity with or junior to Series D Preferred as to dividends or in Liquidation, either by or pursuant to authority granted in the Certificate of Incorporation (as the same may hereafter be amended), nothing in this Certificate of Designations shall prevent the holders of any such other class or series of preferred or special stock or series of Preferred Stock from being given any powers, preferences and relative, participating, optional and other special rights authorized by law and the Certificate of Incorporation (as the same may hereafter be amended). (b) The section headings contained in this Certificate of Designations are for reference purposes only and shall not affect in any way the meaning of this Certificate of Designations. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 9 THE UNDERSIGNED President and Chief Executive Officer of Internet Commerce Corporation hereby makes this certificate, declaring and certifying that this is the duly authorized act and deed of the Corporation and the facts herein stated are true, and accordingly have hereunto set his hand this 29th day of April, 2003. INTERNET COMMERCE CORPORATION By: /s/ G. Michael Cassidy ------------------------ Name: G. Michael Cassidy Title: President and Chief ATTEST: By: /s/ Walter M. Psztur --------------------------- Walter M. Psztur, Secretary 10 EX-4 4 kl05005_exhibit4-1.txt EXHIBIT 4.1 FORM OF WARRANT AGREEMENT Exhibit 4.1 EXHIBIT A THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") NOR UNDER ANY STATE SECURITIES LAW AND NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF MAY BE PLEDGED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW HAS BECOME EFFECTIVE WITH RESPECT THERETO, OR (2) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE EFFECT THAT REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER. No. 2003-1 _______ Shares WARRANT TO PURCHASE SHARES OF CLASS A COMMON STOCK OF INTERNET COMMERCE CORPORATION This is to Certify That, FOR VALUE RECEIVED, ______________ (the "Holder") is entitled to purchase, subject to the provisions of this Warrant (this "Warrant"), from Internet Commerce Corporation, a Delaware corporation (the "Company"), at any time or from time to time during the period beginning on April ___, 2003 (the "Commencement Date"), until April ___, 2008 (the "Expiration Date"), _______ fully paid, validly issued and nonassessable shares of Class A Common Stock, par value $0.01 per share, of the Company (the "Common Stock") at a price of $______ per share (subject to adjustment pursuant to Paragraph (b)(i) hereof) (the "Exercise Price"); provided, however, that if this Warrant is called for redemption in accordance with Paragraph (d) hereof, the Holder shall have the right to exercise this Warrant up to two (2) days prior to the date fixed for redemption in accordance with Paragraph (d) hereof. The shares of Common Stock deliverable upon such exercise are hereinafter sometimes referred to as "Warrant Shares." (a) EXERCISE OF WARRANT. This Warrant may be exercised in whole at any time or in part from time to time on or after the Commencement Date and until 5:00 p.m., New York City Time, on the Expiration Date; provided, however, that if such day is a day on which banking institutions in the State of New York are authorized by law to close, then on the next succeeding day which shall not be such a day. This Warrant may be exercised by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form, annexed hereto, duly executed and accompanied by payment of the Exercise Price in the form of a wire transfer or Federal funds check for the number of Warrant Shares specified in such form. As soon as practicable after each such exercise hereof, but not later than seven (7) days from the date of such exercise, the Company shall issue and deliver to the Holder a certificate or certificates for the Warrant Shares issuable upon such exercise, registered in the name of the Holder or its designee. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable hereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, if any, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be physically delivered to the Holder. (b) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. (i) In the event the Company shall, at any time or from time to time after the Commencement Date, issue any shares of Common Stock as a stock dividend to the holders of Common Stock, or subdivide or combine the outstanding shares of Common Stock into a greater or lesser number of shares (any such issuance, subdivision or combination being herein called a "Change of Shares"), then, and thereafter upon each further Change of Shares, the Exercise Price in effect immediately prior to such Change of Shares shall be changed to a price (including any applicable fraction of a cent) determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such Change of Shares and the denominator of which shall be the number of shares of Common Stock outstanding immediately after giving effect to such Change of Shares. Such adjustment shall be made successively whenever such an issuance is made. (ii) Upon each adjustment of the Exercise Price pursuant to Paragraph (b)(i) hereof, the total number of shares of Common Stock purchasable upon the exercise of this Warrant shall be such number of shares (calculated to the nearest tenth) purchasable at the Exercise Price in effect immediately prior to such adjustment multiplied by a fraction, the numerator of which shall be the Exercise Price in effect immediately prior to such adjustment and the denominator of which shall be the Exercise Price in effect immediately after giving effect to such adjustment. (iii) In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock, or in case of any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation or other entity and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock), or in case of any sale or conveyance to another corporation or other entity of the property of the Company as, or substantially as, an entirety (other than a sale/leaseback, mortgage or other financing transaction), the Company shall cause effective provision to be made so that the Holder of this Warrant shall have the right thereafter, by exercising this Warrant, to purchase the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock that would have been purchased upon exercise in full of this Warrant immediately prior to such reclassification, capital reorganization or other change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments that shall be as nearly equivalent as may be practicable to 2 the adjustments provided for in this Paragraph (b). The Company shall not effect any such consolidation, merger or sale unless prior to or simultaneously with the consummation thereof the successor (if other than the Company) resulting from such consolidation or merger or the corporation or other entity purchasing such assets or other appropriate corporation or entity shall assume, by written instrument executed and delivered to the Company, the obligation to deliver to the Holder of this Warrant such shares of stock, securities or property (including cash) as, in accordance with the foregoing provisions, the Holder may be entitled to purchase and the other obligations of the Company under this Warrant. The foregoing provisions shall similarly apply to successive reclassifications, capital reorganizations and other changes of outstanding shares of Common Stock and to successive consolidations, mergers, sales or conveyances. (iv) Irrespective of any adjustments or changes in the Exercise Price or the number of shares of Common Stock purchasable upon exercise of this Warrant, this Warrant certificate shall continue to express the Exercise Price per share and the number of shares of Common Stock purchasable hereunder as the Exercise Price per share and the number of shares of Common stock purchasable therefor as were expressed in this Warrant certificate when the same was originally issued. (v) After each adjustment of the Purchase Price pursuant to this Paragraph (b), the Company will promptly prepare a certificate signed by the Chairman, the President or the Chief Financial Officer of the Company setting forth: (1) the Exercise Price as so adjusted, (2) the number of shares of Common Stock purchasable upon exercise of this Warrant after such adjustment, and (3) a brief statement of the facts accounting for such adjustment. The Company will promptly cause a copy of such certificate to be sent by ordinary first class mail to the Holder of this Warrant at such Holder's last address as it shall appear on the registry books of the Company. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity of any such adjustment. (c) RESERVATION OF SHARES. The Company shall at all times reserve for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant. (d) REDEMPTION OF WARRANT. (i) If at any time after the Commencement Date the closing bid price per share of the Common Stock shall exceed 200% of the Exercise Price as then in effect for a period of thirty (30) consecutive Trading Days (as defined below) ending no more than five (5) days prior to the date fixed for redemption pursuant to Paragraph (d)(ii) hereof, the Company, at its option, may redeem this Warrant at a price of $0.10 per Warrant (the "Redemption Price"), provided that the Warrant Shares are then registered for resale pursuant to an effective registration statement under the Act. (ii) The Company may exercise its redemption right by giving a Redemption Notice (in the form attached hereto) to the Holder no more than thirty (30) and no less than ten (10) calendar days before the date fixed specified in the Redemption Notice for redemption. On and after the date fixed for redemption, the Holder shall have no rights with respect to the Warrants represented hereby except to receive the Redemption Price per Warrant upon surrender of this Warrant. 3 As used in this Paragraph (d), the term "Trading Days" shall mean any day on which trading takes place on the principal market on which the Common Stock trades, or, if the Common Stock is not listed for trading on any recognized market or exchange, a day on which a sale transaction occurs with respect to such Common Stock. (e) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other warrants of like tenor and of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the assignment form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. As a condition of such assignment, however, such assignee shall deliver to the Company an opinion of counsel to the effect that registration of such transfer under the Securities Act of 1933, as amended, and applicable state securities laws is not required. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at any time enforceable by anyone. (f) RESTRICTIVE LEGEND. Each Warrant Share, when issued, shall include a legend in substantially the following form: THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW HAS BECOME EFFECTIVE WITH RESPECT THERETO, OR (2) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE EFFECT THAT REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER. 4 (g) HOLDER NOT DEEMED STOCKHOLDER. The Holder of this Warrant shall not, as such, be entitled to vote or to receive dividends or be deemed the holder of Common Stock that may at any time be issuable upon exercise of this Warrant for any purpose whatsoever, nor shall anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issue or reclassification of stock, change of par value or change of stock to no par value, consolidation, merger or conveyance or otherwise), or to receive notice of meetings, or to receive dividends or subscription rights, until the Holder shall have exercised this Warrant in accordance with the provisions hereof. (h) AGREEMENT OF WARRANT HOLDERS. The Holder of this Warrant, by such Holder's acceptance thereof, consents and agrees with the Company that: (i) This Warrant is transferable only on the registry books of the Company by the Holder thereof in person or by his attorney duly authorized in writing and only if this Warrant certificate is surrendered at the office of the Company, duly endorsed or accompanied by a proper instrument of transfer satisfactory to the Company in its sole discretion; and (ii) The Company may deem and treat the person in whose name this Warrant certificate is registered as the holder and as the absolute, true and lawful owner of this Warrant for all purposes, and the Company shall not be affected by any notice or knowledge to the contrary. (i) GOVERNING LAW. This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws. (j) BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the Company and its respective successors and assigns, and the registered Holder from time to time of this Warrant certificate. Nothing in this Warrant is intended or shall be construed to confer upon any other person any right, remedy or claim, in equity or at law, or to impose upon any other person any duty, liability or obligation. (k) TRANSFER TAXES. The issuance of certificates for shares of Common Stock shall be made without charge for any tax in respect of such issuance. However, if any such certificate is to be issued in a name other than that of the Holder, the Company shall not be required to issue or deliver any stock certificate or certificates unless and until the Holder has paid to the Company the amount of any tax which may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Company that such tax has been paid or is not due. (l) CERTAIN NOTICES. In case at any time the Company shall propose to: (i) pay any dividend or make any distribution on shares of Common Stock in shares of Common Stock or make any other distribution (other than regularly scheduled cash dividends) to all holders of Common Stock; or 5 (ii) issue any rights, warrants or other securities to all holders of Common Stock entitling them to purchase any additional shares of Common Stock or any other rights, warrants or other securities; or (iii) effect any reclassification or change of outstanding shares of Common Stock, or any consolidation or merger with or into any corporation or other entity in which the Company is not the surviving corporation or any sale, lease or conveyance of all or substantially all of its assets; or (iv) effect any liquidation, dissolution or winding-up of the Company (whether voluntary or involuntary); then, and in any one or more of such cases, the Company shall give written notice thereof, by certified mail, postage prepaid, to the Holder at the Holder's address as it shall appear on the books of the Company, mailed at least fifteen (15) days prior to (i) the date as of which the holders of record of shares of Common Stock to be entitled to receive any such dividend, distribution, rights, warrants or other securities are to be determined, or (ii) the date on which any such reclassification, change of outstanding shares of Common Stock, consolidation, merger, sale, lease, conveyance, liquidation, dissolution or winding-up is expected to become effective and the date as of which it is expected that holders of record of shares of Common Stock shall be entitled to exchange their shares for shares of stock or other securities or property, including cash, if any, deliverable upon such reclassification, change of outstanding shares, consolidation, merger, sale, lease, conveyance, liquidation, dissolution or winding-up. (m) AMENDMENT. This Warrant may not be amended by the Company without the prior written consent of the Holder; any amendment to which the Holder so consents shall bind its successors and permitted transferees and assigns. INTERNET COMMERCE CORPORATION By: --------------------------------------- Name: G. Michael Cassidy Title: President and Chief Executive Officer [SEAL] Dated: _________, 2003 Attest: - -------------------------------- Walter M. Psztur, Secretary 6 PURCHASE FORM ------------- The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing ____ shares of Class A Common Stock and hereby makes payment of $_________ in payment of the full exercise price therefor. INSTRUCTIONS FOR REGISTRATION OF STOCK -------------------------------------- Name -------------------------------------------- (Please typewrite or print in block letters) Address ----------------------------------------- Social Security No./Taxpayer ID No. - ------------------------------------------------ Signature -------------------------------------- Dated ------------------------------------------ 7 ASSIGNMENT FORM --------------- FOR VALUE RECEIVED, hereby sells, assigns ---------------------- and transfers unto Name -------------------------------------------- (Please typewrite or print in block letters) Address ----------------------------------------- the right to purchase shares Class A Common Stock represented by this Warrant to the extent of _______ shares as to which such right is exercisable and does hereby irrevocably constitute and appoint Attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Date: ------------------------------- Signature -------------------------- 8 REDEMPTION NOTICE ----------------- To: Name: ------------------------ Address: ------------------------ The Company hereby irrevocably elects to exercise its redemption right under the Warrant dated as of March __________, 2003 to purchase shares of Class A Common Stock of the Company and hereby redeems, for $0.10 per Warrant (the "Redemption Price"), at 5:00 p.m., New York City time, on _______________, 200__ (the "Redemption Date"), all of such Warrants. Please be aware that presentation and surrender of the Warrant in exercise of the Holder's right to purchase Class A Common Stock will only be accepted, in accordance with the terms of Paragraph (a) ("EXERCISE OF WARRANT") of the Warrant, until 5:00 p.m. New York City Time on the Redemption Date. Thereafter, the holder of the Warrants will only be entitled to receive the Redemption Price. Dated: , 200_ INTERNET COMMERCE CORPORATION By: -------------------------------- Name: Title: 9 Schedule A ---------- Name of Stockholder Address - --------------------------------- -------------------------------------------- 10 EX-10 5 kl05005_exhibit10-1.txt EXHIBIT 10.1 FOR OF SUBSCRIPTION AGREEMENT Exhibit 10.1 THIS SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of April 30, 2003, is among Internet Commerce Corporation, a Delaware corporation (the "Company"), and the parties listed on Schedule A annexed hereto that execute and deliver this Agreement (the "Purchasers"). WHEREAS, the Company desires to sell to the Purchasers, and the Purchasers desire to purchase from the Company, (a) an aggregate of 1,730,759 shares of the Company's Class A Common Stock, par value $0.01 per share (the "Common Stock"), and (b) an aggregate of 1,384,600 five-year warrants to purchase one share of Common Stock, at a price of $1.47 per share (the "Warrants"), in substantially in the form annexed hereto as Exhibit A (the "Warrant Agreement"); NOW, THEREFORE, in consideration of the premises and mutual covenants and obligations hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Purchasers, intending to be legally bound, hereby agree as follows: ARTICLE I PURCHASE AND SALE OF COMMON STOCK AND WARRANTS SECTION 1.1. Authorization of Common Stock and Warrants. The Company has authorized the issuance (a) an aggregate of 1,730,759 shares of Common Stock and (b) an aggregate of approximately 1,384,600 Warrants and has reserved an aggregate of approximately 1,384,600 shares of Common Stock for issuance upon exercise of the Warrants in accordance with the terms of the Warrant Agreement (such reserved shares of Common Stock sometimes hereinafter referred to as the "Warrant Shares"). SECTION 1.2. Agreement to Purchase the Common Stock and Warrants. Subject to the terms and conditions hereof, the Company agrees to issue and sell to the Purchasers and the Purchasers agree to purchase from the Company (the "Offering"), at the Closings (as defined below), an aggregate of 1,730,759 shares of Common Stock (the "Shares") and 1,384,600 Warrants for a purchase price of $1.47 per Share, for an aggregate purchase price of $1,800,000.00 (the "Purchase Price"), payable in cash at the Closings. Each Purchaser shall purchase the number of shares of Common Stock and Warrants set forth opposite its name on Schedule A annexed hereto at the Closing indicated on said Schedule A. 1 SECTION 1.3. Delivery of Common Stock and Warrants; Legend. (a) At the Closings, or as soon as reasonably practicable thereafter, the Company shall deliver to the Purchasers one or more certificates, registered in the names of the Purchasers as set forth on Schedule A annexed hereto, representing the Shares and the Warrant Agreement representing the Warrants. Delivery of certificates representing the Shares and the Warrant Agreement representing the Warrants shall be made against receipt by the Company of a check payable to the order of the Company or a wire transfer of U.S. funds to an account designated by the Company in the full amount of the Purchase Price. (b) The Company will prepare and issue one or more certificates for the Shares and the Warrant Agreement registered in such name or names as specified by the Purchasers. Such certificate(s) shall bear a legend in substantially the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR HYPOTHECATED OR OFFERED FOR SALE, TRANSFER OR HYPOTHECATION UNLESS A REGISTRATION STATEMENT UNDER THAT ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN EFFECT OR, IN THE OPINION OF COUNSEL, SUCH REGISTRATION IS NOT REQUIRED. The certificates representing the Shares, the Warrant Shares and the Warrant Agreement shall bear the legend set forth above until and unless a resale thereof is effected pursuant to an effective registration statement covering such resale or such resale is effected pursuant to and in accordance with an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the securities laws of any individual State or such resale is effected pursuant to Rule 144 promulgated under the Securities Act. SECTION 1.4. The Closings. The closing with respect to the transactions contemplated by Sections 1.2 and 1.3 shall take place on the date hereof and on May 1, 2003 (each, a "Closing" and, together, the "Closings") at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New York 10022. 2 ARTICLE II Representations AND WARRANTIES OF THE PURCHASERS; Access to Information; Independent Investigation SECTION 2.1. Representations and Warranties of the Purchasers. Each of the Purchasers for itself hereby represents and warrants to and agrees with the Company as follows: (a) such Purchaser is an "accredited investor" as such term is defined in Rule 501(a) promulgated under the Securities Act. Such Purchaser agrees to furnish any additional information requested to assure compliance with applicable federal and state securities laws in connection with the acquisition and sale of the Shares, the Warrants and the Warrant Shares; (b) such Purchaser has such knowledge, skill and experience in financial, investment and business matters to be capable of evaluating the merits and risks of an investment in the Shares and Warrants, to make an informed decision relating thereto and to protect its own interests in connection with the transaction; (c) such Purchaser has all requisite power, capacity and authority to enter into this Agreement and the Registration Rights Agreement in the form annexed hereto as Exhibit B (the "Registration Rights Agreement") and to perform all of the obligations required to be performed by it hereunder and thereunder; (d) the execution, delivery and performance by such Purchaser of this Agreement and the Registration Rights Agreement have been duly authorized by all requisite action by such Purchaser and this Agreement and the Registration Rights Agreement each constitutes the valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with their respective terms, except as enforcement may be limited by general principles of equity and by bankruptcy, insolvency and similar laws affecting creditors' rights and remedies generally; (e) the execution, delivery and performance of this Agreement and the Registration Rights Agreement, and the consummation of the transactions contemplated hereby and thereby, by such Purchaser will not (i) violate any law or governmental order applicable to such Purchaser or any of its properties or assets or (ii) with or without due notice or lapse of time, or both, violate, conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, or result in the creation of any lien upon any of the properties or assets of such Purchaser under its organizational documents, if applicable, or any contract or obligation to which such Purchaser is a party or by which such Purchaser or any of its properties is bound; (f) such Purchaser is a resident of the State set forth under its name on Schedule A annexed hereto and is not acquiring the Shares and the Warrants, and will not acquire the Warrant Shares, as an agent or otherwise for any other person; 3 (g) such Purchaser is purchasing and acquiring the Shares and the Warrants, and will acquire the Warrant Shares, for its own account and not with an intent or view towards the further sale or distribution thereof, or any part thereof or interest therein, within the meaning of the Securities Act in any transaction that would violate the registration requirements of the securities laws of the United States of America, or any state, without prejudice; however, to the right of such Purchaser at all times to sell or otherwise dispose of the Shares, the Warrants and the Warrant Shares under an effective registration statement or applicable exemption from registration under the Securities Act and any applicable state securities law, subject to this Agreement, and such Purchaser has not pre-arranged any sale with any other purchaser; (h) given that the Shares, the Warrants and the Warrant Shares have not been registered under the Securities Act, are deemed to be "restricted securities", as defined in Rule 144(a)(3) promulgated under the Securities Act, and may not be transferred, sold, assigned, hypothecated or otherwise disposed of unless such transaction is the subject of a registration statement filed with and declared effective by the Securities and Exchange Commission (the "SEC") or unless an exemption from the registration requirements under the Securities Act is available, such Purchaser hereby agrees that all offers and sales of the Shares, the Warrants and the Warrant Shares shall be made only pursuant to such registration or pursuant to an exemption from registration; (i) such Purchaser acknowledges that the purchase and acquisition of the Shares, the Warrants and the Warrant Shares involves a high degree of risk, is aware of the risks and further acknowledges that such Purchaser can bear the economic risk of the Shares, the Warrants and the Warrant Shares, including the total loss of its investment; (j) such Purchaser understands that the Shares, the Warrants and the Warrant Shares are being offered and sold to such Purchaser in reliance on exemptions from the registration requirements of the Securities Act and state securities laws, and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of such Purchaser to purchase and acquire the Shares, the Warrants and the Warrant Shares; and (k) in evaluating its investment, such Purchaser has consulted its own investment and/or legal and/or tax advisors. SECTION 2.2. Current Public Information. Such Purchaser has been furnished with or has acquired and has read copies of the Company's most recent Annual Report on Form 10-K as filed with the SEC and each Quarterly Report on Form 10-Q and Current Report on Form 8-K filed thereafter (collectively, the "SEC Filings"). 4 SECTION 2.3. Independent Investigation; Access. Such Purchaser acknowledges that, in making the decision to purchase and acquire the Shares and the Warrants, it has relied upon independent investigations made by it and such Purchaser, prior to any sale to it, has been given access and the opportunity to examine all material contracts and documents relating to the purchase of the Shares and the Warrants and an opportunity to ask questions of, and to receive answers from, the Company concerning the terms and conditions of the purchase of the Shares and the Warrants. Such Purchaser and its advisors, if any, have been furnished with access to all publicly available materials relating to the business, finances and operation of the Company and materials relating to the offer and sale of the Shares and the Warrants which have been requested. Such Purchaser and its advisors, if any, have received answers to all such inquiries. Except as set forth in this Agreement, the Company has made no representation or warranty to such Purchaser on which such Purchaser has relied to enter into this Agreement and acquire the Shares and the Warrants. SECTION 2.4. No Government Recommendation or Approval. Such Purchaser understands that no federal or state agency has passed on or made any recommendation or endorsement of the Shares, the Warrants or the Offering or made any finding or determination concerning the fairness or advisability of this investment. SECTION 2.5. Authority of Signatory. Any person executing this Agreement on behalf of such Purchaser represents and warrants that he or she is duly authorized to enter into and execute this Agreement and the Registration Rights Agreement on behalf of such Purchaser. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to each of the Purchasers as follows: SECTION 3.1. Reporting Company Status. The Common Stock is registered as a class under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is currently admitted for quotation on the Nasdaq SmallCap Market of The Nasdaq Stock Market, Inc. ("Nasdaq"). The Company has filed all reports required to be filed pursuant to Section 13(a) of the Exchange Act and is eligible to file a Registration Statement on Form S-3 in connection with a secondary shelf offering by securityholders. SECTION 3.2. Legality. The Company has the requisite corporate power and authority to enter into this Agreement, the Warrant Agreement and the Registration Rights Agreement and to issue and deliver the Shares and the Warrants and, upon exercise of the Warrants in accordance with the terms of the Warrant Agreement, the Warrant Shares. The execution and delivery of this Agreement, the Warrant Agreement and the Registration Rights Agreement and the issuance and delivery of the Shares and the Warrants hereunder and thereunder and the consummation of the transactions contemplated hereby and by the Warrant Agreement and the Registration Rights Agreement have been duly and validly authorized by all necessary corporate action by the Company. This Agreement, the Warrant Agreement and the Registration Rights Agreement have been duly and validly executed and delivered by and on behalf of the Company and are the valid and binding agreements of the Company, enforceable 5 against the Company in accordance with their respective terms, except as enforceability may be limited by general equitable principles, bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws affecting creditors' rights generally. Upon delivery thereof at the Closing, the Shares and the Warrants will be duly authorized, validly issued, fully paid and non-assessable. Upon issuance of the Warrant Shares upon the exercise of the Warrants in accordance with the terms of the Warrant Agreement, the Warrant Shares will be duly authorized, validly issued, fully paid and non-assessable. The Shares and the Warrants and, upon exercise of the Warrants in accordance with the terms of the Warrant Agreement, the Warrant Shares do not subject the holders thereof to personal liability by reason of being such holders. SECTION 3.3. Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware and is duly qualified as a foreign corporation in all jurisdictions where the failure to be so qualified would have a materially adverse effect on its business. SECTION 3.4. No Legal Proceedings. There is no action, suit or proceeding before or by any court or any governmental agency or body, domestic or foreign, now pending or, to the knowledge of the Company, threatened against or affecting the Company, or any of its properties or assets, which is reasonably likely to result in any material adverse change in the condition (financial or otherwise) or in the earnings or business affairs of the Company, or which is reasonably likely to materially and adversely affect the properties or assets thereof, except as described in the SEC Filings. SECTION 3.5. Non-Default. The Company is not in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust or other material instrument or agreement to which it is a party or by which it or its property may be bound. SECTION 3.6. No Misleading Statements. None of the SEC Filings, as of their respective dates, contains any untrue statement of a material fact or omits 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. SECTION 3.7. No Adverse Change. Except as disclosed or contemplated in the SEC Filings, there has been no material adverse change in the financial condition, earnings, business affairs or business prospects of the Company since the date of the Company's most recent Quarterly Report on Form 10-Q. 6 SECTION 3.8. Non-Contravention. Neither the execution and delivery of this Agreement, the Warrant Agreement or the Registration Rights Agreement, the issuance of the Shares and the Warrants nor the consummation of the transactions contemplated by this Agreement, the Warrant Agreement and the Registration Rights Agreement conflicts with or results in a breach by the Company of any of the terms or provisions of, or constitutes a default under, the Certificate of Incorporation or by-laws of the Company, or any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, or any existing applicable Federal or State law, rule, or regulation or any applicable decree, judgment or order of any court, Federal or State regulatory body, administrative agency or other domestic governmental body having jurisdiction over the Company or any of its properties or assets, except for such conflicts, breaches or defaults as would not have a material adverse effect on the Company's business. SECTION 3.9. Exemption from Registration. Assuming the representations and warranties of the Purchasers contained in Section 2.1 hereof are true, correct and complete, the sale of the Shares and the Warrants to the Purchaser pursuant to this Agreement is exempt from the registration requirements of the Securities Act. ARTICLE IV Covenants SECTION 4.1. Reservation of Warrant Shares. For so long as any Warrants held by the Purchasers shall remain outstanding, the Company covenants and agrees with the Purchasers that it will at all times fully reserve from its authorized but unissued shares of Common Stock such sufficient number of shares thereof to permit the exercise in full of the Warrants in accordance with the terms of the Warrant Agreement. SECTION 4.2. Registration of the Warrant Shares. The Company agrees to register the Warrant Shares for resale in accordance with the terms and conditions of the Registration Rights Agreement. Regardless of whether the Company registers the resale of the Common Stock, the Company will, upon the presentation of an opinion (in form and substance reasonably satisfactory to the Company) of counsel to a Purchaser, allow such Purchaser to offer and sell the Shares and the Warrant Shares in reliance on the provisions of Rule 144 or other exemption from the registration provisions of state or federal law, at the option of the Purchaser. ARTICLE V CONDITIONS TO CLOSING SECTION 5.1. Conditions to the Company's Obligation to Sell the Shares and the Warrants. The Purchasers understand that unless waived by the Company, the Company's obligation to issue and sell the Shares and the Warrants is conditioned upon: (a) Delivery by the Purchasers to the Company of a duly executed copy of this Agreement and the Registration Rights Agreement and the Purchase Price, in cash, in full; 7 (b) The accuracy as of the date of each Closing of the representations and warranties of the Purchasers contained in this Agreement, and performance by the Purchasers of all covenants and agreements of the Purchasers required to be performed by them on or before the date of such Closing; and (c) The continued listing of the Common Stock on the Nasdaq SmallCap Market. SECTION 5.2. Conditions to the Purchasers' Obligation to Purchase the Shares and the Warrants. The Company understands that each Purchaser's obligation to purchase the Shares and the Warrants is conditioned upon: (a) Delivery by the Company to such Purchaser of a duly executed copy of this Agreement, the Warrant Agreement and the Registration Rights Agreement; (b) Delivery to such Purchaser of certificates evidencing the Shares; (c) The accuracy as of the date of each Closing of the representations and warranties of the Company contained in this Agreement and the performance by the Company on or before the date of such Closing of all covenants and agreements of the Company required to be performed by it on or before such date; (d) The continued listing of the Common Stock on the Nasdaq SmallCap Market; and (e) The receipt by such Purchaser of an opinion of Messrs. Kramer Levin Naftalis & Frankel LLP, counsel to the Company, substantially in the form annexed hereto as Exhibit C. ARTICLE VI MISCELLANEOUS SECTION 6.1. Confidentiality. ---------------- (a) Each Purchaser undertakes to keep in strict confidence, and not to use for any purpose unrelated to its interest in the Company, any and all information relating in any way, to the Company which had been provided to such Purchaser, or its representatives, by the Company (such information, "Confidential Information"), except information which: (i) is or shall be in the public domain not due to any act of such Purchaser in breach of law or agreement; (ii) was initially possessed by such Purchaser without the obligation of confidentiality under any obligation of confidentiality; (iii) was rightfully received or shall be received without obligation of confidentiality from a third party under no obligation of confidentiality; or (iv) is required to be disclosed according to any law, including under the securities laws of the United States. 8 (b) Notwithstanding the foregoing, in the event that any Purchaser or any of its representatives is legally compelled, pursuant to a subpoena, civil investigative demand, regulatory demand or similar process or pursuant to applicable law to disclose any Confidential Information, such Purchaser shall provide the Company with prompt notice (both oral and in writing) of such request or requirement together with the text of the proposed disclosure as far in advance of its disclosure as is reasonably practicable, and will in good faith consult with and consider the suggestions of the Company concerning the nature and scope of the Confidential Information and any other information such Purchaser proposes to disclose. The Company may seek an appropriate protective order or other remedy, may consult with such Purchaser with respect to the Company's taking steps to resist or narrow the scope of such request or legal process, or may waive compliance, in whole or in part, with the terms of this Section 6.1. Such Purchaser agrees to use its best efforts to cooperate with and not to oppose any reasonable action by the Company to obtain a protective order or other appropriate remedy. In the event that no such protective order or other remedy is obtained, or that the Company waives compliance with the terms of this Section 6.1, such Purchaser may disclose only that part of the Confidential Information as it is advised by counsel is legally required. The Company shall reimburse such Purchaser for its reasonable out of pocket cost for such advice of counsel. (c) Notwithstanding anything contained herein to the contrary, the provisions set forth in this Section 6.1 shall be in addition to and shall not supersede or terminate any other agreement, including, but not limited to any non-disclosure agreement, entered into between any Purchaser and the Company prior to the date hereof. SECTION 6.2. Governing Law. This Agreement shall be governed by and construed under the law of the State of New York without regard to its choice of law provisions. SECTION 6.3. Survival of Representations, Warranties, and Covenants. The representations, warranties and covenants of the Company and each Purchaser shall survive the execution and delivery of this Agreement and the delivery of the certificates representing the Shares, the Warrants and the Warrant Shares. SECTION 6.4. Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either the Company or any Purchaser without the prior written consent of the Purchasers or the Company, respectively. SECTION 6.5. Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. SECTION 6.6. Section and Other Headings; Interpretation. The section and other headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section or Exhibit, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise indicated. Where the reference "hereof," "hereby" or "herein" appears in this Agreement, such reference shall be deemed to be a reference to this Agreement as a whole. Whenever the words "include," "includes" or 9 "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." Words denoting the singular include the plural, and vice versa, and references to it or its or words denoting any gender shall include all genders. References to "$" or "dollars" mean U.S. dollars. SECTION 6.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement. A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto to the same extent as if delivered personally. SECTION 6.8. Brokers or Finders. The Company may provide fees or commissions to certain brokers or finders in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Company. The Company will indemnify and hold the Purchasers harmless from and against any such fees or commissions. SECTION 6.9. Entire Agreement; Waiver, Amendment. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and supersedes any and all prior agreements, understandings or undertakings, written or oral. Neither this Agreement nor any provision hereof shall be waived, amended, modified, changed, discharged or terminated except by an instrument in writing, signed by the party against whom any waiver, amendment, modification, change, discharge or termination is sought. [SIGNATURE PAGE FOLLOWS] 10 SIGNATURE PAGE IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. INTERNET COMMERCE CORPORATION By: _________________________________ Name: Title: PURCHASERS: --------------------------------------- 11 EX-10 6 kl05005_exhibit10-2.txt EXHIBIT 10.2 FOR OF SUBSCRIPTION AGREEMENT Exhibit 10.2 THIS SUBSCRIPTION AGREEMENT (this "Agreement"), dated April 30, 2003, is among Internet Commerce Corporation, a Delaware corporation (the "Company"), and the parties listed on Schedule A annexed hereto that execute and deliver this Agreement (the "Purchasers"). WHEREAS, the Company desires to sell to the Purchasers, and the Purchasers desire to purchase from the Company, (a) an aggregate of two hundred fifty (250) shares of the Company's Series D Convertible Redeemable Preferred Stock, par value $0.01 per share (the "Series D Preferred Stock"), and (b) an aggregate of 153,845 five-year warrants to purchase one share of the Company's Class A Common Stock, par value $0.01 per share (the "Common Stock"), at a price of $1.47 per share (the "Warrants"), in substantially in the form annexed hereto as Exhibit A (the "Warrant Agreement"); NOW, THEREFORE, in consideration of the premises and mutual covenants and obligations hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Purchasers, intending to be legally bound, hereby agree as follows: ARTICLE I PURCHASE AND SALE OF SERIES D PREFERRED STOCK AND WARRANTS SECTION 1.1. Authorization of Series D Preferred Stock and Warrants. The Company has authorized the issuance, as of the date hereof, of (a) an aggregate of 250 shares of Series D Preferred Stock and (b) an aggregate of approximately 153,845 Warrants and has reserved an aggregate of approximately 192,307 shares of Common Stock for issuance upon conversion of the Series D Preferred Stock and upon exercise of the Warrants in accordance with the terms of the Certificate of Designations for the Series D Preferred Stock in the form annexed hereto as Exhibit B (the "Certificate of Designations") and the Warrant Agreement, respectively (such reserved shares of Common Stock sometimes hereinafter referred to as the "Reserved Common Stock"). SECTION 1.2. Agreement to Purchase the Series D Preferred Stock and Warrants. Subject to the terms and conditions hereof, the Company agrees to issue and sell to the Purchasers and the Purchasers agree to purchase from the Company (the "Offering"), at the Closing (as defined below), an aggregate of 250 shares of Series D Preferred Stock (the "Shares") and 153,845 Warrants for a purchase price of $1,000 per Share, for an aggregate purchase price of $250,000 (the "Purchase Price"), payable in cash at the Closing. Each Purchaser shall purchase the number of shares of Series D Preferred Stock and Warrants set forth opposite its name on Schedule A annexed hereto. 1 SECTION 1.3. Delivery of Series D Preferred Stock and Warrants; Legend. (a) At the Closing, the Company shall deliver to the Purchasers one or more certificates, registered in the names of the Purchasers as set forth on Schedule A annexed hereto, representing the Shares and the Warrant Agreement representing the Warrants. Delivery of certificates representing the Shares and the Warrant Agreement representing the Warrants shall be made against receipt by the Company of a check payable to the order of the Company or a wire transfer of U.S. funds to an account designated by the Company in the full amount of the Purchase Price. (b) The Company will prepare and issue one or more certificates for the Shares and the Warrant Agreement registered in such name or names as specified by the Purchasers. Such certificate(s) shall bear a legend in substantially the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR HYPOTHECATED OR OFFERED FOR SALE, TRANSFER OR HYPOTHECATION UNLESS A REGISTRATION STATEMENT UNDER THAT ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN EFFECT OR, IN THE OPINION OF COUNSEL, SUCH REGISTRATION IS NOT REQUIRED. The certificates representing the Shares, the Reserved Common Stock and the Warrant Agreement shall bear the legend set forth above until and unless a resale thereof is effected pursuant to an effective registration statement covering such resale or such resale is effected pursuant to and in accordance with an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the securities laws of any individual State or such resale is effected pursuant to Rule 144 promulgated under the Securities Act. SECTION 1.4. The Closing. The closing (the "Closing") hereunder with respect to the transactions contemplated by Sections 1.2 and 1.3 shall take place on the date hereof at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New York 10022, or on such other date or at such other place as the Company and a majority in interest of the Purchasers shall agree. 2 ARTICLE II Representations AND WARRANTIES OF THE PURCHASERS; Access to Information; Independent Investigation SECTION 2.1. Representations and Warranties of the Purchasers. Each of the Purchasers for itself hereby represents and warrants to and agrees with the Company as follows: (a) such Purchaser is an "accredited investor" as such term is defined in Rule 501(a) promulgated under the Securities Act. Such Purchaser agrees to furnish any additional information requested to assure compliance with applicable federal and state securities laws in connection with the acquisition and sale of the Shares, the Warrants and the Reserved Common Stock; (b) such Purchaser has such knowledge, skill and experience in financial, investment and business matters to be capable of evaluating the merits and risks of an investment in the Shares and Warrants, to make an informed decision relating thereto and to protect its own interests in connection with the transaction; (c) such Purchaser has all requisite power, capacity and authority to enter into this Agreement and the Registration Rights Agreement in the form annexed hereto as Exhibit C (the "Registration Rights Agreement") and to perform all of the obligations required to be performed by it hereunder and thereunder; (d) the execution, delivery and performance by such Purchaser of this Agreement and the Registration Rights Agreement have been duly authorized by all requisite action by such Purchaser and this Agreement and the Registration Rights Agreement each constitutes the valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with their respective terms, except as enforcement may be limited by general principles of equity and by bankruptcy, insolvency and similar laws affecting creditors' rights and remedies generally; (e) the execution, delivery and performance of this Agreement and the Registration Rights Agreement, and the consummation of the transactions contemplated hereby and thereby, by such Purchaser will not (i) violate any law or governmental order applicable to such Purchaser or any of its properties or assets or (ii) with or without due notice or lapse of time, or both, violate, conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, or result in the creation of any lien upon any of the properties or assets of such Purchaser under its organizational documents, if applicable, or any contract or obligation to which such Purchaser is a party or by which such Purchaser or any of its properties is bound; (f) such Purchaser is a resident of the State set forth under its name on Schedule A annexed hereto and is not acquiring the Shares and the Warrants, and will not acquire the Reserved Common Stock, as an agent or otherwise for any other person; 3 (g) such Purchaser is purchasing and acquiring the Shares and the Warrants, and will acquire the Reserved Common Stock, for its own account and not with an intent or view towards the further sale or distribution thereof, or any part thereof or interest therein, within the meaning of the Securities Act in any transaction that would violate the registration requirements of the securities laws of the United States of America, or any state, without prejudice; however, to the right of such Purchaser at all times to sell or otherwise dispose of the Shares, the Warrants and the Reserved Common Stock under an effective registration statement or applicable exemption from registration under the Securities Act and any applicable state securities law, subject to this Agreement, and such Purchaser has not pre-arranged any sale with any other purchaser; (h) given that the Shares, the Warrants and the Reserved Common Stock have not been registered under the Securities Act, are deemed to be "restricted securities", as defined in Rule 144(a)(3) promulgated under the Securities Act, and may not be transferred, sold, assigned, hypothecated or otherwise disposed of unless such transaction is the subject of a registration statement filed with and declared effective by the Securities and Exchange Commission (the "SEC") or unless an exemption from the registration requirements under the Securities Act is available, such Purchaser hereby agrees that all offers and sales of the Shares, the Warrants and the Reserved Common Stock shall be made only pursuant to such registration or pursuant to an exemption from registration; (i) such Purchaser acknowledges that the purchase and acquisition of the Shares, the Warrants and the Reserved Common Stock involves a high degree of risk, is aware of the risks and further acknowledges that such Purchaser can bear the economic risk of the Shares, the Warrants and the Reserved Common Stock, including the total loss of its investment; (j) such Purchaser understands that the Shares, the Warrants and the Reserved Common Stock are being offered and sold to such Purchaser in reliance on exemptions from the registration requirements of the Securities Act and state securities laws, and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of such Purchaser to purchase and acquire the Shares, the Warrants and the Reserved Common Stock; and (k) in evaluating its investment, such Purchaser has consulted its own investment and/or legal and/or tax advisors. SECTION 2.2. Current Public Information. Such Purchaser has been furnished with or has acquired and has read copies of the Company's most recent Annual Report on Form 10-K as filed with the SEC and each Quarterly Report on Form 10-Q and Current Report on Form 8-K filed thereafter (collectively, the "SEC Filings"). 4 SECTION 2.3. Independent Investigation; Access. Such Purchaser acknowledges that, in making the decision to purchase and acquire the Shares and the Warrants, it has relied upon independent investigations made by it and such Purchaser, prior to any sale to it, has been given access and the opportunity to examine all material contracts and documents relating to the purchase of the Shares and the Warrants and an opportunity to ask questions of, and to receive answers from, the Company concerning the terms and conditions of the purchase of the Shares and the Warrants. Such Purchaser and its advisors, if any, have been furnished with access to all publicly available materials relating to the business, finances and operation of the Company and materials relating to the offer and sale of the Shares and the Warrants which have been requested. Such Purchaser and its advisors, if any, have received answers to all such inquiries. Except as set forth in this Agreement, the Company has made no representation or warranty to such Purchaser on which such Purchaser has relied to enter into this Agreement and acquire the Shares and the Warrants. SECTION 2.4. No Government Recommendation or Approval. Such Purchaser understands that no federal or state agency has passed on or made any recommendation or endorsement of the Shares, the Warrants or the Offering or made any finding or determination concerning the fairness or advisability of this investment. SECTION 2.5. Authority of Signatory. Any person executing this Agreement on behalf of such Purchaser represents and warrants that he or she is duly authorized to enter into and execute this Agreement and the Registration Rights Agreement on behalf of such Purchaser. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to each of the Purchasers as follows: SECTION 3.1. Reporting Company Status. The Common Stock is registered as a class under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is currently admitted for quotation on the Nasdaq SmallCap Market of The Nasdaq Stock Market, Inc. ("Nasdaq"). The Company has filed all reports required to be filed pursuant to Section 13(a) of the Exchange Act and is eligible to file a Registration Statement on Form S-3 in connection with a secondary shelf offering by securityholders. SECTION 3.2. Legality. The Company has the requisite corporate power and authority to enter into this Agreement, the Warrant Agreement, the Certificate of Designations and the Registration Rights Agreement and to issue and deliver the Shares and the Warrants and, upon conversion of the Series D Preferred Stock and upon exercise of the Warrants in accordance with the terms of the Certificate of Designations or the Warrant Agreement, as the case may be, the Reserved Common Stock. The execution and delivery of this Agreement, the Warrant Agreement and the Registration Rights Agreement and the issuance and delivery of the Shares and the Warrants hereunder and thereunder and the consummation of the transactions contemplated hereby and by the Warrant Agreement and the Registration Rights Agreement have been duly and validly authorized by all necessary corporate action by the Company. This Agreement, the Warrant Agreement and the Registration Rights Agreement have been duly and 5 validly executed and delivered by and on behalf of the Company and are the valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by general equitable principles, bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws affecting creditors' rights generally. Upon delivery thereof at the Closing, the Shares and the Warrants will be duly authorized, validly issued, fully paid and non-assessable. Upon issuance of the Reserved Common Stock upon conversion of the Series D Preferred Stock and upon the exercise of the Warrants in accordance with the terms of the Certificate of Designations or the Warrant Agreement, as the case may be, the Reserved Common Stock will be duly authorized, validly issued, fully paid and non-assessable. The Shares and the Warrants and, upon conversion of the Series D Preferred Stock and upon exercise of the Warrants in accordance with the terms of the Certificate of Designations or Warrant Agreement, as the case may be, the Reserved Common Stock do not subject the holders thereof to personal liability by reason of being such holders. SECTION 3.3. Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware and is duly qualified as a foreign corporation in all jurisdictions where the failure to be so qualified would have a materially adverse effect on its business. SECTION 3.4. No Legal Proceedings. There is no action, suit or proceeding before or by any court or any governmental agency or body, domestic or foreign, now pending or, to the knowledge of the Company, threatened against or affecting the Company, or any of its properties or assets, which is reasonably likely to result in any material adverse change in the condition (financial or otherwise) or in the earnings or business affairs of the Company, or which is reasonably likely to materially and adversely affect the properties or assets thereof, except as described in the SEC Filings. SECTION 3.5. Non-Default. The Company is not in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust or other material instrument or agreement to which it is a party or by which it or its property may be bound. SECTION 3.6. No Misleading Statements. None of the SEC Filings, as of their respective dates, contains any untrue statement of a material fact or omits 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. SECTION 3.7. No Adverse Change. Except as disclosed or contemplated in the SEC Filings, there has been no material adverse change in the financial condition, earnings, business affairs or business prospects of the Company since the date of the Company's most recent Quarterly Report on Form 10-Q. 6 SECTION 3.8. Non-Contravention. Neither the execution and delivery of this Agreement, the Warrant Agreement or the Registration Rights Agreement, the issuance of the Shares and the Warrants nor the consummation of the transactions contemplated by this Agreement, the Warrant Agreement and the Registration Rights Agreement conflicts with or results in a breach by the Company of any of the terms or provisions of, or constitutes a default under, the Certificate of Incorporation or by-laws of the Company, or any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, or any existing applicable Federal or State law, rule, or regulation or any applicable decree, judgment or order of any court, Federal or State regulatory body, administrative agency or other domestic governmental body having jurisdiction over the Company or any of its properties or assets, except for such conflicts, breaches or defaults as would not have a material adverse effect on the Company's business. SECTION 3.9. Exemption from Registration. Assuming the representations and warranties of the Purchasers contained in Section 2.1 hereof are true, correct and complete, the sale of the Shares and the Warrants to the Purchaser pursuant to this Agreement is exempt from the registration requirements of the Securities Act. SECTION 3.10. Filing of the Certificate of Designations. The Company has duly executed and filed the Certificate of Designations with the Secretary of State of the State of Delaware. ARTICLE IV COVENANTS SECTION 4.1. Reservation of Reserved Common Stock. For so long as any Series D Preferred Stock or Warrants held by the Purchasers shall remain outstanding, the Company covenants and agrees with the Purchasers that it will at all times fully reserve from its authorized but unissued shares of Common Stock such sufficient number of shares thereof to permit the conversion in full of all shares of Series D Preferred Stock and the exercise in full of the Warrants in accordance with the terms of the Certificate of Designations and Warrant Agreement. SECTION 4.2. Registration of the Reserved Common Stock. The Company agrees to register the Reserved Common Stock for resale in accordance with the terms and conditions of the Registration Rights Agreement. Regardless of whether the Company registers the resale of the Common Stock, the Company will, upon the presentation of an opinion (in form and substance reasonably satisfactory to the Company) of counsel to a Purchaser, allow such Purchaser to offer and sell the Shares and the Reserved Common Stock in reliance on the provisions of Rule 144 or other exemption from the registration provisions of state or federal law, at the option of the Purchaser. 7 ARTICLE V CONDITIONS TO CLOSING SECTION 5.1. Conditions to the Company's Obligation to Sell the Shares and the Warrants. The Purchasers understand that unless waived by the Company, the Company's obligation to issue and sell the Shares and the Warrants is conditioned upon: (a) Delivery by the Purchasers to the Company of a duly executed copy of this Agreement and the Registration Rights Agreement and the Purchase Price, in cash, in full; (b) The accuracy as of the date of the Closing of the representations and warranties of the Purchasers contained in this Agreement, and performance by the Purchasers of all covenants and agreements of the Purchasers required to be performed by them on or before the date of the Closing; and (c) The continued listing of the Common Stock on the Nasdaq SmallCap Market. SECTION 5.2. Conditions to the Purchasers' Obligation to Purchase the Shares and the Warrants. The Company understands that each Purchaser's obligation to purchase the Shares and the Warrants is conditioned upon: (a) Delivery by the Company to such Purchaser of a duly executed copy of this Agreement, the Warrant Agreement and the Registration Rights Agreement; (b) Delivery to such Purchaser of certificates evidencing the Shares; (c) The accuracy as of the date of the Closing of the representations and warranties of the Company contained in this Agreement and the performance by the Company on or before the date of the Closing of all covenants and agreements of the Company required to be performed by it on or before such date; (d) The continued listing of the Common Stock on the Nasdaq SmallCap Market; and (e) The receipt by such Purchaser of an opinion of Messrs. Kramer Levin Naftalis & Frankel LLP, counsel to the Company, substantially in the form annexed hereto as Exhibit D. 8 ARTICLE VI MISCELLANEOUS SECTION 6.1. Confidentiality. ---------------- (a) Each Purchaser undertakes to keep in strict confidence, and not to use for any purpose unrelated to its interest in the Company, any and all information relating in any way, to the Company which had been provided to such Purchaser, or its representatives, by the Company (such information, "Confidential Information"), except information which: (i) is or shall be in the public domain not due to any act of such Purchaser in breach of law or agreement; (ii) was initially possessed by such Purchaser without the obligation of confidentiality under any obligation of confidentiality; (iii) was rightfully received or shall be received without obligation of confidentiality from a third party under no obligation of confidentiality; or (iv) is required to be disclosed according to any law, including under the securities laws of the United States. (b) Notwithstanding the foregoing, in the event that any Purchaser or any of its representatives is legally compelled, pursuant to a subpoena, civil investigative demand, regulatory demand or similar process or pursuant to applicable law to disclose any Confidential Information, such Purchaser shall provide the Company with prompt notice (both oral and in writing) of such request or requirement together with the text of the proposed disclosure as far in advance of its disclosure as is reasonably practicable, and will in good faith consult with and consider the suggestions of the Company concerning the nature and scope of the Confidential Information and any other information such Purchaser proposes to disclose. The Company may seek an appropriate protective order or other remedy, may consult with such Purchaser with respect to the Company's taking steps to resist or narrow the scope of such request or legal process, or may waive compliance, in whole or in part, with the terms of this Section 6.1. Such Purchaser agrees to use its best efforts to cooperate with and not to oppose any reasonable action by the Company to obtain a protective order or other appropriate remedy. In the event that no such protective order or other remedy is obtained, or that the Company waives compliance with the terms of this Section 6.1, such Purchaser may disclose only that part of the Confidential Information as it is advised by counsel is legally required. The Company shall reimburse such Purchaser for its reasonable out of pocket cost for such advice of counsel. (c) Notwithstanding anything contained herein to the contrary, the provisions set forth in this Section 6.1 shall be in addition to and shall not supersede or terminate any other agreement, including, but not limited to any non-disclosure agreement, entered into between any Purchaser and the Company prior to the date hereof. SECTION 6.2. Governing Law. This Agreement shall be governed by and construed under the law of the State of New York without regard to its choice of law provisions. SECTION 6.3. Survival of Representations, Warranties, and Covenants. The representations, warranties and covenants of the Company and each Purchaser shall survive the execution and delivery of this Agreement and the delivery of the certificates representing the Shares, the Warrants and the Reserved Common Stock. 9 SECTION 6.4. Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either the Company or any Purchaser without the prior written consent of the Purchasers or the Company, respectively. SECTION 6.5. Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. SECTION 6.6. Section and Other Headings; Interpretation. The section and other headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section or Exhibit, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise indicated. Where the reference "hereof," "hereby" or "herein" appears in this Agreement, such reference shall be deemed to be a reference to this Agreement as a whole. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." Words denoting the singular include the plural, and vice versa, and references to it or its or words denoting any gender shall include all genders. References to "$" or "dollars" mean U.S. dollars. SECTION 6.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement. A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto to the same extent as if delivered personally. SECTION 6.8. Brokers or Finders. The Company may provide fees or commissions to certain brokers or finders in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Company. The Company will indemnify and hold the Purchasers harmless from and against any such fees or commissions. SECTION 6.9. Entire Agreement; Waiver, Amendment. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and supersedes any and all prior agreements, understandings or undertakings, written or oral. Neither this Agreement nor any provision hereof shall be waived, amended, modified, changed, discharged or terminated except by an instrument in writing, signed by the party against whom any waiver, amendment, modification, change, discharge or termination is sought. [SIGNATURE PAGE FOLLOWS] 10 SIGNATURE PAGE IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. INTERNET COMMERCE CORPORATION By: _________________________________ Name: Title: PURCHASERS: --------------------------------------- 11 EX-10 7 kl05005_exhibit10-3.txt EXHIBIT 10.3 FORM OF REGISTRATION RIGHTS Exhibit 10.3 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made and entered into on April 30, 2003, by and among INTERNET COMMERCE CORPORATION, a Delaware corporation (the "Company"), and the Persons listed on Schedule A annexed hereto that execute and deliver this Agreement. WHEREAS, the Stockholders are purchasing from the Company shares of the Company's Common Stock, par value $0.01 per share (the "Common Stock"), and Warrants (as hereinafter defined) pursuant to a subscription agreement dated of even date herewith (the "Subscription Agreement"); NOW, THEREFORE, in consideration of the premises and mutual covenants and obligations hereinafter set forth, the parties hereto, intending legally to be bound, hereby agree as follows. Section 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: "Agreement" shall have the meaning set forth in the preamble hereof. "Affiliate" of any Person means any other Person who either, directly or indirectly, is in control of, is controlled by, or is under common control with such Person. For purposes of this definition, the term "control" (including the terms "controlling" "controlled by" and under "common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Business Day" shall mean any day which is not a Saturday or Sunday or legal holiday on which banks are authorized or required to be closed in New York, New York. "Capital Stock" shall mean all shares, interests, participations, rights or other equivalents (however designated) of corporate stock. "Common Stock" shall have the meaning set forth in the recitals to this Agreement. "Current Market Value" shall mean the average closing price on The Nasdaq SmallCap Market of the Common Stock for the ten (10) consecutive trading days ending one (1) day prior to the date of any calculation; provided, however, that if there are no trades on any such trading day, the closing price shall be the average of the closing bid and asked prices for such day; provided, further, however, that if the Common Stock is not then listed on The Nasdaq SmallCap Market, the Current Market Value shall mean the average closing price either of the principal stock exchange on which the Common Stock is listed, or of the quotation system, operated by a national securities association, on which the Common Stock is quoted, for the ten (10) consecutive trading days ending one (1) day prior to the date of any calculation; however, if there are no trades on any such trading day, the closing price shall be the average of the closing bid and asked prices for such day. "Delay Notice" shall have the meaning set forth in Section 6(b) hereof. "Encumbrance" means any lien, pledge, mortgage, security interest, charge, restriction, adverse claim or other encumbrance of any kind or nature whatsoever. "Hold-Back Election" shall have the meaning set forth in Section 6(a) hereof. "Indemnifiable Costs and Expenses" shall have the meaning set forth in Section 8(a) hereof. "Material Development Condition" shall have the meaning set forth in Section 6(b) hereof. "Other Holders" shall have the meaning set forth in Section 3(c) hereof. "Person" shall mean an individual, partnership, corporation, limited liability company, joint venture, trust or unincorporated organization or a government or agency or political subdivision thereof or any other similar entity. "Prospectus" shall mean the prospectus included in any Registration Statement, as amended or supplemented by a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus. "Registrable Securities" shall mean the Common Stock purchased by the Stockholders from the Company pursuant to the Subscription Agreement, the Warrant Shares and any other securities issued or issuable as a result of or in connection with any stock dividend, stock split or reverse stock split, combination, recapitalization, reclassification, merger or consolidation, exchange or distribution or otherwise in respect of such Common Stock. "Registration Expenses" shall have the definition set forth in Section 7 hereof. "Registration Statement" shall mean any registration statement which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included therein, all amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. "Requesting Securityholder" shall have the meaning set forth in Section 4 hereof. "Restricted Securities" shall have the meaning set forth in Section 2 hereof. 2 "Rule 144" shall mean Rule 144 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. "Rule 903" shall mean Rule 903 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. "Rule 904" shall mean Rule 904 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. "SEC" shall mean the United States Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act. "Securities Act" shall mean the Securities Act of 1933, as amended (or any similar successor federal statute), and the rules and regulations thereunder, as the same are in effect from time to time. "Selling Stockholder" shall mean any Stockholder whose Registrable Securities are included in a Registration Statement. "Shelf Registration" shall have the meaning set forth in Section 3(a) hereof. "Shelf Registration Period" shall have the meaning set forth in Section 3(b) hereof. "Stockholders" shall mean the Persons listed on Schedule A annexed hereto that execute and deliver this Agreement and any Person to whom the rights under this Agreement are assigned pursuant to Section 17 hereof. "Subscription Agreement" shall have the definition set forth in the recitals to this Agreement. "Underwritten Offering" shall mean a registered offering in which securities of the Company are sold to an underwriter pursuant to a firm commitment underwriting agreement for reoffering to the public. "Warrant Shares" shall mean the shares of Common Stock issuable upon exercise of the Warrants. "Warrants" shall mean the five year warrants to purchase Common Stock issued to the Stockholders pursuant to the Subscription Agreement. 3 Section 2. Securities Subject to this Agreement. The securities entitled to the benefits of this Agreement are the Registrable Securities but, with respect to any particular Registrable Security, only so long as such security continues to be a Restricted Security. A Registrable Security that has ceased to be a Registrable Security cannot thereafter become a Registrable Security. As used herein, a "Restricted Security" is a Registrable Security which has not been effectively registered under the Securities Act and distributed in accordance with an effective Registration Statement and which has not been distributed by a Stockholder pursuant to Rule 144, Rule 903 or Rule 904, unless, in the case of a Registrable Security distributed pursuant to Rule 903 or 904, any applicable restricted period has not expired or the SEC or its staff has taken the position in a published release, ruling or no-action letter that securities distributed under Rule 903 or 904 are ineligible for resale in the United States under Section 4(1) of the Securities Act notwithstanding expiration of the applicable restricted period. Section 3. Shelf Registration. ------------------- (a) Filing. Subject to the provisions of Section 6(b) hereof, the Company shall use its commercially reasonable efforts to file, as expeditiously as possible, but in any event no later than seventy five (75) days after the date hereof, a Registration Statement on Form S-3 (or any successor form) covering all Registrable Securities (the "Shelf Registration"). (b) Effectiveness of Registration Statement. Subject to the provisions of Section 6(b) hereof, the Company shall use its commercially reasonable efforts to (i) cause the Registration Statement relating to the Shelf Registration to become effective as promptly as practicable, and (ii) thereafter keep such Registration Statement effective continuously for the period (the "Shelf Registration Period") ending on the earlier of (A) two (2) years from the closing under the Subscription Agreement and (B) the date on which all Registrable Securities covered by such Registration Statement have been sold and the distribution contemplated thereby has been completed. (c) Inclusion of Other Securities. The Company and any other holder of the Company's securities who has registration rights ("Other Holders") may include its securities in the Shelf Registration effected pursuant to this Section 3. Section 4. Piggyback Registrations. If the Company at any time proposes to file a registration statement with respect to its Common Stock, whether for its own account or for the account of any Other Holder or Other Holders that have requested such registration (a "Requesting Securityholder"), other than a registration statement or Form S-4 or S-8 (or any successor or substantially similar form) and other than in connection with on employee compensation plan, or securities issued pursuant to any such plan, or a dividend reinvestment plan, then the Company shall in each case give written notice of such proposed filing to the Stockholders at least twenty (20) days before the anticipated filing date of any such Registration Statement by the Company, and such notice shall offer to the Stockholders the opportunity to have any or all of the Registrable Securities held by the Stockholders included in such Registration Statement. If any Stockholder desires to have its Registrable Securities registered under this Section 4, it shall so advise the Company in writing within ten (10) days after the date of receipt of such notice (which request shall set forth the amount of Registrable Securities for which registration is requested), and the Company shall use its commercially reasonable efforts 4 to include in such Registration Statement all such Registrable Securities so requested to be included therein. Notwithstanding the foregoing, if the managing underwriter or underwriters of any such proposed public offering advises the Company that the total amount of Common Stock which the Stockholders, the Company and any other Persons intended to be included in such proposed public offering is sufficiently large to adversely affect the success of such proposed public offering, then the number of shares of Common Stock to be offered for the accounts of the Stockholders and the Other Holders shall be reduced pro rata, based upon the aggregate number of securities to be offered for the accounts of the Stockholders and all Other Holders (except the Company and the Requesting Securityholder) intended to be included in such offering, to the extent necessary to reduce the total number of securities to be included in such proposed public offering to the number recommended by such managing underwriter or underwriters before the securities offered by the Company or any Requesting Securityholder are so reduced. Anything to the contrary in this Agreement notwithstanding, the Company may withdraw or postpone a Registration Statement referred to in this Section 4 at any time before it becomes effective or withdraw, postpone or terminate the offering after it becomes effective without any liability or obligation to any Stockholder. Section 5. Registration Procedures. ----------------------- (a) General. In connection with the Company's registration obligations pursuant to Sections 3 and 4 hereof, the Company will: (i) prepare and file with the SEC a new Registration Statement or such amendments and post-effective amendments to an existing Registration Statement as may be necessary to keep such Registration Statement effective for the time periods set forth in Section 3(b) hereof; provided that no Registration Statement shall be required to remain in effect after all Registrable Securities covered by such Registration Statement have been sold and distributed as contemplated by such Registration Statement, and, provided, further, that as soon as practicable, but in no event later than three (3) Business Days before filing such Registration Statement, the Company shall furnish to the Selling Stockholder(s) copies of all such documents proposed to be filed, which documents shall be subject to the review of the Selling Stockholders; (ii) notify the Selling Stockholder(s) promptly (1) when a new Registration Statement, Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any new Registration Statement or post-effective amendment, when it has become effective, (2) of any request by the SEC for amendments or supplements to any Registration Statement or Prospectus or for additional information, (3) of the issuance by the SEC of any comments with respect to any filing (and to reply thereto as promptly as reasonably practicable), (4) of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose (and use commercially reasonable efforts to obtain the withdrawal of such order), (5) of any suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (6) if there is any misstatement or omission of any material fact in any Registration Statement, Prospectus or any document incorporated therein by reference or if any event occurs which requires the making of any changes in any Registration 5 Statement, Prospectus or any document incorporated therein by reference in order to make the statements therein (in the case of any Prospectus, in the light of the circumstances under which they were made) not misleading; (iii) if reasonably requested by a Selling Stockholder, promptly incorporate in a Prospectus supplement or post-effective amendment such information with respect to such Selling Stockholder and its proposed plan of distribution as such Selling Stockholder reasonably requests be included therein; and promptly make all required filings of such Prospectus supplement or post-effective amendment; (iv) furnish to each Selling Stockholder, without charge, as many conformed copies as may reasonably be requested of the then effective Registration Statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (v) deliver to each Selling Stockholder, without charge, as many copies as may reasonably be requested of the then effective Prospectus (including each prospectus subject to completion) and any amendments or supplements thereto; (vi) use commercially reasonable efforts to register or qualify or cooperate with the Selling Stockholder(s) in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as such Selling Stockholder(s) reasonably requests in writing; provided, however, that the Company will not be required to (1) qualify to do business in any jurisdiction where it would not otherwise be required to qualify, but for this paragraph (vi), (2) subject itself to general taxation in any such jurisdiction or (3) file a general consent to service of process in any such jurisdiction; (vii) cooperate with the Selling Stockholder(s) to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two (2) Business Days prior to any sale of Registrable Securities to the underwriters; (viii) otherwise use its commercially reasonable efforts to comply in all material respects with all applicable rules and regulations of the SEC relating to such registration and the distribution of the securities being offered and make generally available to its securities holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act; (ix) cooperate and assist in any filings required to be made with the National Association of Securities Dealers, Inc.; and (x) upon reasonable notice and during normal business hours, provide reasonable access to the Company's personnel and auditors for the purpose of permitting the Selling Stockholders to conduct due diligence in connection with any such Registration Statement. 6 As a condition precedent to the participation in any registration hereunder, the Company may require the Selling Stockholders to furnish to the Company such information regarding such Stockholders and the distribution of such securities as the Company may from time to time reasonably request to comply with the applicable provisions of the Securities Act. (b) Cessation of Sales. Each Selling Stockholder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(a)(ii) hereof, such Selling Stockholder will forthwith discontinue disposition of Registrable Securities pursuant to the then current Prospectus until (1) such Selling Stockholder is advised in writing by the Company that a new Registration Statement covering the offer of Registrable Securities has become effective under the Securities Act or (2) such Selling Stockholder receives copies of any required supplemented or amended Prospectus, or until such Selling Stockholder is advised in writing by the Company that the use of the Prospectus may be resumed; provided, however, that the Company shall use its commercially reasonable efforts to cure any such misstatement, omission or event that is applicable to the Registration Statement as soon as reasonably practicable after delivery of such notice pursuant to clause (6) of Section 5(a)(ii) hereof. If so directed by the Company, on the happening of such event, each Selling Stockholder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Stockholder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. Section 6. Holdback. --------- (a) Hold-Back Election. In the case of the registration of any underwritten primary offering initiated by the Company, each Stockholder agrees that if it is reasonably requested to do so by the managing underwriter or the underwriters for such offering, then such Stockholder shall not effect any public sale or distribution of Capital Stock of the Company, except as part of such underwritten registration, during the period beginning ten (10) days prior to the closing date of such underwritten offering and ending ninety (90) days after such closing date. (b) Material Development Condition. With respect to any Registration Statement filed or to be filed pursuant to Section 3 hereof, if the Board of Directors of 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 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) be impracticable or seriously detrimental (a "Material Development Condition") to the Company or any subsidiary to file such Registration Statement with the SEC, or to amend or supplement a Registration Statement that has been filed with the SEC, then the Company shall, notwithstanding any other provisions of this Agreement, be entitled, upon the giving to the Stockholders of a certificate signed by an executive officer of the Company stating that in the good faith judgment of the Board of Directors that a Material Development Condition has occurred (a "Delay Notice"), (i) to cause sales of Registrable Securities by the Selling Stockholders pursuant to such Registration Statement to cease, (ii) to cause such Registration Statement to be withdrawn and the effectiveness of such Registration Statement terminated, or 7 (iii) in the event no such Registration Statement has yet been filed or declared effective, to delay the filing or acceleration of effectiveness of any such Registration Statement until, in the good faith judgment of the Board of Directors, such Material Development Condition no longer exists (notice of which the Company shall promptly deliver to the Selling Stockholders). Notwithstanding the foregoing provisions of this Section 6(b): (1) in no event may such cessation or delay be, for each such Registration Statement, for a period of more than ninety (90) consecutive days from the giving of its Delay Notice to the Stockholders with respect to such Material Development Condition, as above provided; 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 SEC as soon as practicable after such Material Development Condition ceases to exist or, if sooner, as soon as practicable after the expiration of such ninety (90) day period. (c) Limitation on Registration Rights. Anything to the contrary contained in this Agreement notwithstanding, when in the opinion of counsel for the Company registration of all Registrable Securities owned by a Stockholder is not required by the Securities Act and other applicable securities laws in connection with a proposed sale of such Registrable Securities, such Stockholder shall have no rights pursuant to Section 4 hereof to request Registrable Securities be included in a Registration Statement in connection with such proposed sale and the Company shall promptly provide to the transfer agent and such Stockholder's broker in connection with any sale transaction a written opinion addressed to such Stockholder and the transfer agent to the effect set forth above, reasonably sufficient in form and substance to permit the transfer agent to issue stock certificates for such Registrable Securities without any legend restricting transfer thereof. Section 7. Registration Expenses. All expenses incident to the Company's performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications or registrations (or the obtaining of exemptions therefrom) of the Registrable Securities), printing expenses (including expenses of printing Prospectuses), messenger and delivery expenses, fees and disbursements of the Company's counsel and its independent certified public accountants, Securities Act liability insurance (if the Company elects to obtain such insurance), fees and expenses of any special experts retained by the Company in connection with any registration hereunder and fees and expenses of other Persons retained by the Company (all such expenses being referred to as "Registration Expenses"), shall be borne by the Company; provided, that Registration Expenses shall not include any fees and expenses of counsel for the Stockholders, out-of-pocket expenses incurred by the Selling Stockholders and underwriting discounts, commissions, brokerage or other fees attributable to the sale of the Registrable Securities. 8 Section 8. Indemnification. --------------- (a) Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the full extent permitted by law, but without duplication, each Selling Stockholder and its officers, directors, stockholders, employees, advisors and agents, and each Person who controls a Selling Stockholder (within the meaning of the Securities Act), against all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation and reasonable legal fees and expenses) ("Indemnifiable Costs and Expenses") resulting from (x) any untrue statement (or alleged untrue statement) of a material fact in, or any omission (or alleged omission) of a material fact required to be stated in, any Registration Statement or Prospectus or necessary to make the statements therein (including any such statements or omissions incorporated by reference therein) (in the case of a Prospectus, in light of the circumstances under which they were made) not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such Selling Stockholder or any underwriters expressly for use therein, or (y) any violation or alleged violation by the Company of the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such Registration Statement. The Company will also indemnify underwriters participating in the distribution, their officers, directors, employees, partners and agents, and each Person who controls such underwriters (within the meaning of the Securities Act), to the same extent as provided above with respect to the indemnification of the Selling Stockholder(s), if so requested. (b) Indemnification by the Selling Stockholder(s). In connection with any Registration Statement, each Selling Stockholder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and agrees to indemnify and hold harmless, to the full extent permitted by law, but without duplication, the Company, its officers, directors, stockholders, employees, advisors and agents, and each Person who controls the Company (within the meaning of the Securities Act), against all Indemnifiable Costs and Expenses resulting from (x) any untrue statement (or alleged untrue statement) of a material fact in, or any omission (or alleged omission) of a material fact required to be stated in, the Registration Statement or Prospectus or necessary to make the statements therein (in the case of a Prospectus in light of the circumstances under which they were made) not misleading to the extent that such untrue statement or omission is caused by or contained in any information or affidavit so furnished in writing by such Selling Stockholder to the Company, or (y) any violation or alleged violation by such Selling Stockholder of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such Registration Statement. No Selling Stockholder shall be required to provide indemnification or contribution hereunder in excess of an amount equal to the net proceeds to such Stockholder from the disposition of the Registrable Securities disposed of by such Stockholder pursuant to such Registration Statement. 9 (c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder will (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel of such indemnifying party's choice; provided, however, that any Person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in (but not control) the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such indemnified Person unless the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to the indemnified party in a timely manner. The indemnifying party will not be subject to any liability for any settlement made without the indemnified party's consent. No indemnified party will be required to 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 of such claim or litigation. An indemnifying party who is not entitled to, or elects not to, assume the defense of the claim will not be obligated to pay the fees and expenses of more than one counsel (except one (1) local counsel if required in a specific instance) for all parties indemnified by such indemnifying party with respect to such claim. (d) Contribution. If for any reason the indemnification provided for in Section 8(a) or Section 8(b) hereof is unavailable to an indemnified party or is insufficient to hold it harmless as contemplated by Section 8(a) and Section 8(b) hereof, respectively, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect not only the relative benefits received by the indemnifying party and the indemnified party, but also the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement or the omission or alleged omission relates to information supplied by the indemnifying party or parties on the one hand, or the indemnified party or parties on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentations. (e) Conflict with Underwriting Agreement. Notwithstanding the foregoing, to the extent that the indemnification and contribution provisions contained in any underwriting agreement entered into in connection with any Underwritten Offering conflict with the foregoing, the provisions of such underwriting agreement shall control. Section 9. Participation in Underwritten Registrations. No Stockholder may participate in any Underwritten Offering hereunder unless it (i) agrees to sell the Registrable Securities included therein on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, custodial arrangements and other documents required under the terms of such underwriting arrangements. Nothing in this Section 9 shall be construed to create any additional rights regarding the registration of Registrable Securities in any Person otherwise than as set forth herein. 10 Section 10. Certain Covenants by the Company. -------------------------------- (a) The Company agrees to use its commercially reasonable efforts to file with the SEC on a timely basis all annual, quarterly and current reports required to be filed by the Company under the Exchange Act. (b) Upon request by any Stockholder, the Company will inform such Stockholder whether it is in compliance with its reporting obligations under the Exchange Act. (c) Upon obtaining an opinion in form and substance satisfactory to the Company from counsel to a Stockholder that is reasonably satisfactory in form and substance to the Company to the effect that such Stockholder may transfer its Registrable Securities without registration under the Securities Act, the Company will instruct its transfer agent to issue to such Stockholder a certificate representing such Registrable Securities without any legend affixed thereto. Section 11. Amendments and Waivers. The provisions of this Agreement, including the provisions of this Section 11, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless such amendment, modification, waiver or consent is in writing and duly executed by the Company and a majority in interest of the Stockholders. No waiver of any provision of this Agreement shall constitute a waiver of any other provision of this Agreement and no waiver on one occasion shall constitute a waiver on any future occasion with respect to the same or any other provision of this Agreement. Section 12. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telecopier, or air-courier guaranteeing overnight delivery: (a) If to a Stockholder, at the most current address given by such Stockholder to the Company, in accordance with the provisions of this Section 12, which address (including facsimile number) initially is set forth opposite the Stockholders' names on Schedule A annexed hereto. (b) If to the Company, initially at 805 Third Avenue, New York, NY 10022, attention: Walter M. Psztur, Chief Financial Officer, facsimile No.: (212) 271-8580, and thereafter at such other address as may be designated from time to time by notice given in accordance with the provisions of this Section 12, with copies to Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New York 10022, attention: Peter S. Kolevzon, Esq., facsimile No.: (212) 715-8000. (c) All such notices and other communications shall be deemed to have been delivered and received (i) in the case of personal delivery, facsimile, telecopier or telegram, on the date of such delivery, (ii) in the case of air courier, on the Business Day after the date when sent and (iii) in the case of mailing, on the third (3rd) Business Day following such mailing. 11 Section 13. Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate 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. Delivery of an executed counterpart by facsimile shall constitute delivery of an original. Section 14. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Section 15. 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 PRINCIPLES OF THE CONFLICT OF LAWS THEREOF. Section 16. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. Section 17. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Except as otherwise expressly provided in Section 8 hereof, this Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective successors and permitted assigns. A Stockholder may assign its rights under this Agreement to any "accredited investor" (as defined in Rule 501 under the Securities Act) to whom it transfers shares of Common Stock, Warrants or Registrable Securities; provided that such Stockholder provides an opinion of counsel, in form and substance reasonably satisfactory to the Company, that such transfer is not required to be registered under the Securities Act or any applicable state securities laws. Upon any such assignment, the assignee shall be deemed to have agreed to, and shall, be bound by all of the terms and provisions of this Agreement as if such assignee had executed and delivered this Agreement on the date hereof. Section 18. Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. [SIGNATURE PAGE FOLLOWS] 12 IN WITNESS WHEREOF, the Company and the Stockholders have executed this Registration Rights Agreement as of the date first written above. INTERNET COMMERCE CORPORATION By: ---------------------------- Name: G. Michael Cassidy Title: President and Chief Executive Officer Stockholders: ---------------------------------- ---------------------------------- ---------------------------------- ---------------------------------- EX-10 8 kl05005_exhibit10-4.txt EXHIBIT 10.4 FORM OF REGISTRATION RIGHTS Exhibit 10.4 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made and entered into on April 30, 2003, by and among INTERNET COMMERCE CORPORATION, a Delaware corporation (the "Company"), and the Persons listed on Schedule A annexed hereto that execute and deliver this Agreement. WHEREAS, the Stockholders are purchasing from the Company shares of the Company's Series D Convertible Redeemable Preferred Stock, par value $0.01 per share (the "Series D Preferred Stock"), and Warrants (as hereinafter defined) pursuant to a subscription agreement dated of even date herewith (the "Subscription Agreement"); NOW, THEREFORE, in consideration of the premises and mutual covenants and obligations hereinafter set forth, the parties hereto, intending legally to be bound, hereby agree as follows. Section 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: "Agreement" shall have the meaning set forth in the preamble hereof. "Affiliate" of any Person means any other Person who either, directly or indirectly, is in control of, is controlled by, or is under common control with such Person. For purposes of this definition, the term "control" (including the terms "controlling" "controlled by" and under "common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Business Day" shall mean any day which is not a Saturday or Sunday or legal holiday on which banks are authorized or required to be closed in New York, New York. "Capital Stock" shall mean all shares, interests, participations, rights or other equivalents (however designated) of corporate stock. "Common Stock" shall mean the Class A Common Stock, par value $0.01 per share, of the Company. "Current Market Value" shall mean the average closing price on The Nasdaq SmallCap Market of the Company's Common Stock for the ten (10) consecutive trading days ending one (1) day prior to the date of any calculation; provided, however, that if there are no trades on any such trading day, the closing price shall be the average of the closing bid and asked prices for such day; provided, further, however, that if the Common Stock is not then listed on The Nasdaq SmallCap Market, the Current Market Value shall mean the average closing price either of the principal stock exchange on which the Common Stock is listed, or of the quotation system, operated by a national securities association, on which the Common Stock is quoted, for the ten (10) consecutive trading days ending one (1) day prior to the date of any calculation; however, if there are no trades on any such trading day, the closing price shall be the average of the closing bid and asked prices for such day. "Delay Notice" shall have the meaning set forth in Section 6(b) hereof. "Encumbrance" means any lien, pledge, mortgage, security interest, charge, restriction, adverse claim or other encumbrance of any kind or nature whatsoever. "Hold-Back Election" shall have the meaning set forth in Section 6(a) hereof. "Indemnifiable Costs and Expenses" shall have the meaning set forth in Section 8(a) hereof. "Material Development Condition" shall have the meaning set forth in Section 6(b) hereof. "Other Holders" shall have the meaning set forth in Section 3(c) hereof. "Person" shall mean an individual, partnership, corporation, limited liability company, joint venture, trust or unincorporated organization or a government or agency or political subdivision thereof or any other similar entity. "Prospectus" shall mean the prospectus included in any Registration Statement, as amended or supplemented by a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus. "Registrable Securities" shall mean the shares of Common Stock issuable upon conversion of the Series D Preferred Stock and upon the exercise of the Warrants purchased by the Stockholders from the Company pursuant to the Subscription Agreement and any other securities issued or issuable as a result of or in connection with any stock dividend, stock split or reverse stock split, combination, recapitalization, reclassification, merger or consolidation, exchange or distribution or otherwise in respect of such Common Stock. "Registration Expenses" shall have the definition set forth in Section 7 hereof. "Registration Statement" shall mean any registration statement which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included therein, all amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. "Requesting Securityholder" shall have the meaning set forth in Section 4 hereof. "Restricted Securities" shall have the meaning set forth in Section 2 hereof. 2 "Rule 144" shall mean Rule 144 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. "Rule 903" shall mean Rule 903 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. "Rule 904" shall mean Rule 904 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. "SEC" shall mean the United States Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act. "Securities Act" shall mean the Securities Act of 1933, as amended (or any similar successor federal statute), and the rules and regulations thereunder, as the same are in effect from time to time. "Selling Stockholder" shall mean any Stockholder whose Registrable Securities are included in a Registration Statement. "Series D Preferred Stock" shall have the definition set forth in the recitals to this Agreement. "Shelf Registration" shall have the meaning set forth in Section 3(a) hereof. "Shelf Registration Period" shall have the meaning set forth in Section 3(b) hereof. "Stockholders" shall mean the Persons listed on Schedule A annexed hereto that execute and deliver this Agreement and any Person to whom the rights under this Agreement are assigned pursuant to Section 17 hereof. "Subscription Agreement" shall have the definition set forth in the recitals to this Agreement. "Underwritten Offering" shall mean a registered offering in which securities of the Company are sold to an underwriter pursuant to a firm commitment underwriting agreement for reoffering to the public. "Warrants" shall mean the five year warrants to purchase Common Stock issued to the Stockholders pursuant to the Subscription Agreement. 3 Section 2. Securities Subject to this Agreement. The securities entitled to the benefits of this Agreement are the Registrable Securities but, with respect to any particular Registrable Security, only so long as such security continues to be a Restricted Security. A Registrable Security that has ceased to be a Registrable Security cannot thereafter become a Registrable Security. As used herein, a "Restricted Security" is a Registrable Security which has not been effectively registered under the Securities Act and distributed in accordance with an effective Registration Statement and which has not been distributed by a Stockholder pursuant to Rule 144, Rule 903 or Rule 904, unless, in the case of a Registrable Security distributed pursuant to Rule 903 or 904, any applicable restricted period has not expired or the SEC or its staff has taken the position in a published release, ruling or no-action letter that securities distributed under Rule 903 or 904 are ineligible for resale in the United States under Section 4(1) of the Securities Act notwithstanding expiration of the applicable restricted period. Section 3. Shelf Registration. ------------------ (a) Filing. Subject to the provisions of Section 6(b) hereof, the Company shall use its commercially reasonable efforts to file, as expeditiously as possible, but in any event no later than seventy five (75) days after the date hereof, a Registration Statement on Form S-3 (or any successor form) covering all Registrable Securities (the "Shelf Registration"). (b) Effectiveness of Registration Statement. Subject to the provisions of Section 6(b) hereof, the Company shall use its commercially reasonable efforts to (i) cause the Registration Statement relating to the Shelf Registration to become effective as promptly as practicable, and (ii) thereafter keep such Registration Statement effective continuously for the period (the "Shelf Registration Period") ending on the earlier of (A) two (2) years from the closing under the Subscription Agreement and (B) the date on which all Registrable Securities covered by such Registration Statement have been sold and the distribution contemplated thereby has been completed. (c) Inclusion of Other Securities. The Company and any other holder of the Company's securities who has registration rights ("Other Holders") may include its securities in the Shelf Registration effected pursuant to this Section 3. Section 4. Piggyback Registrations. If the Company at any time proposes to file a registration statement with respect to its Common Stock, whether for its own account or for the account of any Other Holder or Other Holders that have requested such registration (a "Requesting Securityholder"), other than a registration statement or Form S-4 or S-8 (or any successor or substantially similar form) and other than in connection with on employee compensation plan, or securities issued pursuant to any such plan, or a dividend reinvestment plan, then the Company shall in each case give written notice of such proposed filing to the Stockholders at least twenty (20) days before the anticipated filing date of any such Registration Statement by the Company, and such notice shall offer to the Stockholders the opportunity to have any or all of the Registrable Securities held by the Stockholders included in such Registration Statement. If any Stockholder desires to have its Registrable Securities registered under this Section 4, it shall so advise the Company in writing within ten (10) days after the date of receipt of such notice (which request shall set forth the amount of Registrable Securities for which registration is requested), and the Company shall use its commercially reasonable efforts 4 to include in such Registration Statement all such Registrable Securities so requested to be included therein. Notwithstanding the foregoing, if the managing underwriter or underwriters of any such proposed public offering advises the Company that the total amount of Common Stock which the Stockholders, the Company and any other Persons intended to be included in such proposed public offering is sufficiently large to adversely affect the success of such proposed public offering, then the number of shares of Common Stock to be offered for the accounts of the Stockholders and the Other Holders shall be reduced pro rata, based upon the aggregate number of securities to be offered for the accounts of the Stockholders and all Other Holders (except the Company and the Requesting Securityholder) intended to be included in such offering, to the extent necessary to reduce the total number of securities to be included in such proposed public offering to the number recommended by such managing underwriter or underwriters before the securities offered by the Company or any Requesting Securityholder are so reduced. Anything to the contrary in this Agreement notwithstanding, the Company may withdraw or postpone a Registration Statement referred to in this Section 4 at any time before it becomes effective or withdraw, postpone or terminate the offering after it becomes effective without any liability or obligation to any Stockholder. Section 5. Registration Procedures. ----------------------- (a) General. In connection with the Company's registration obligations pursuant to Sections 3 and 4 hereof, the Company will: (i) prepare and file with the SEC a new Registration Statement or such amendments and post-effective amendments to an existing Registration Statement as may be necessary to keep such Registration Statement effective for the time periods set forth in Section 3(b) hereof; provided that no Registration Statement shall be required to remain in effect after all Registrable Securities covered by such Registration Statement have been sold and distributed as contemplated by such Registration Statement, and, provided, further, that as soon as practicable, but in no event later than three (3) Business Days before filing such Registration Statement, the Company shall furnish to the Selling Stockholder(s) copies of all such documents proposed to be filed, which documents shall be subject to the review of the Selling Stockholders; (ii) notify the Selling Stockholder(s) promptly (1) when a new Registration Statement, Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any new Registration Statement or post-effective amendment, when it has become effective, (2) of any request by the SEC for amendments or supplements to any Registration Statement or Prospectus or for additional information, (3) of the issuance by the SEC of any comments with respect to any filing (and to reply thereto as promptly as reasonably practicable), (4) of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose (and use commercially reasonable efforts to obtain the withdrawal of such order), (5) of any suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (6) if there is any misstatement or omission of any material fact in any Registration Statement, Prospectus or any document incorporated therein by reference or if any event occurs which requires the making of any changes in any Registration 5 Statement, Prospectus or any document incorporated therein by reference in order to make the statements therein (in the case of any Prospectus, in the light of the circumstances under which they were made) not misleading; (iii) if reasonably requested by a Selling Stockholder, promptly incorporate in a Prospectus supplement or post-effective amendment such information with respect to such Selling Stockholder and its proposed plan of distribution as such Selling Stockholder reasonably requests be included therein; and promptly make all required filings of such Prospectus supplement or post-effective amendment; (iv) furnish to each Selling Stockholder, without charge, as many conformed copies as may reasonably be requested of the then effective Registration Statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (v) deliver to each Selling Stockholder, without charge, as many copies as may reasonably be requested of the then effective Prospectus (including each prospectus subject to completion) and any amendments or supplements thereto; (vi) use commercially reasonable efforts to register or qualify or cooperate with the Selling Stockholder(s) in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as such Selling Stockholder(s) reasonably requests in writing; provided, however, that the Company will not be required to (1) qualify to do business in any jurisdiction where it would not otherwise be required to qualify, but for this paragraph (vi), (2) subject itself to general taxation in any such jurisdiction or (3) file a general consent to service of process in any such jurisdiction; (vii) cooperate with the Selling Stockholder(s) to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two (2) Business Days prior to any sale of Registrable Securities to the underwriters; (viii) otherwise use its commercially reasonable efforts to comply in all material respects with all applicable rules and regulations of the SEC relating to such registration and the distribution of the securities being offered and make generally available to its securities holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act; (ix) cooperate and assist in any filings required to be made with the National Association of Securities Dealers, Inc.; and (x) upon reasonable notice and during normal business hours, provide reasonable access to the Company's personnel and auditors for the purpose of permitting the Selling Stockholders to conduct due diligence in connection with any such Registration Statement. 6 As a condition precedent to the participation in any registration hereunder, the Company may require the Selling Stockholders to furnish to the Company such information regarding such Stockholders and the distribution of such securities as the Company may from time to time reasonably request to comply with the applicable provisions of the Securities Act. (b) Cessation of Sales. Each Selling Stockholder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(a)(ii) hereof, such Selling Stockholder will forthwith discontinue disposition of Registrable Securities pursuant to the then current Prospectus until (1) such Selling Stockholder is advised in writing by the Company that a new Registration Statement covering the offer of Registrable Securities has become effective under the Securities Act or (2) such Selling Stockholder receives copies of any required supplemented or amended Prospectus, or until such Selling Stockholder is advised in writing by the Company that the use of the Prospectus may be resumed; provided, however, that the Company shall use its commercially reasonable efforts to cure any such misstatement, omission or event that is applicable to the Registration Statement as soon as reasonably practicable after delivery of such notice pursuant to clause (6) of Section 5(a)(ii) hereof. If so directed by the Company, on the happening of such event, each Selling Stockholder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Stockholder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. Section 6. Holdback. -------- (a) Hold-Back Election. In the case of the registration of any underwritten primary offering initiated by the Company, each Stockholder agrees that if it is reasonably requested to do so by the managing underwriter or the underwriters for such offering, then such Stockholder shall not effect any public sale or distribution of Capital Stock of the Company, except as part of such underwritten registration, during the period beginning ten (10) days prior to the closing date of such underwritten offering and ending ninety (90) days after such closing date. (b) Material Development Condition. With respect to any Registration Statement filed or to be filed pursuant to Section 3 hereof, if the Board of Directors of 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 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) be impracticable or seriously detrimental (a "Material Development Condition") to the Company or any subsidiary to file such Registration Statement with the SEC, or to amend or supplement a Registration Statement that has been filed with the SEC, then the Company shall, notwithstanding any other provisions of this Agreement, be entitled, upon the giving to the Stockholders of a certificate signed by an executive officer of the Company stating that in the good faith judgment of the Board of Directors that a Material Development Condition has occurred (a "Delay Notice"), (i) to cause sales of Registrable Securities by the Selling Stockholders pursuant to such Registration Statement to cease, (ii) to cause such Registration Statement to be withdrawn and the effectiveness of such Registration Statement terminated, or 7 (iii) in the event no such Registration Statement has yet been filed or declared effective, to delay the filing or acceleration of effectiveness of any such Registration Statement until, in the good faith judgment of the Board of Directors, such Material Development Condition no longer exists (notice of which the Company shall promptly deliver to the Selling Stockholders). Notwithstanding the foregoing provisions of this Section 6(b): (1) in no event may such cessation or delay be, for each such Registration Statement, for a period of more than ninety (90) consecutive days from the giving of its Delay Notice to the Stockholders with respect to such Material Development Condition, as above provided; 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 SEC as soon as practicable after such Material Development Condition ceases to exist or, if sooner, as soon as practicable after the expiration of such ninety (90) day period. (c) Limitation on Registration Rights. Anything to the contrary contained in this Agreement notwithstanding, when in the opinion of counsel for the Company registration of all Registrable Securities owned by a Stockholder is not required by the Securities Act and other applicable securities laws in connection with a proposed sale of such Registrable Securities, such Stockholder shall have no rights pursuant to Section 4 hereof to request Registrable Securities be included in a Registration Statement in connection with such proposed sale and the Company shall promptly provide to the transfer agent and such Stockholder's broker in connection with any sale transaction a written opinion addressed to such Stockholder and the transfer agent to the effect set forth above, reasonably sufficient in form and substance to permit the transfer agent to issue stock certificates for such Registrable Securities without any legend restricting transfer thereof. Section 7. Registration Expenses. All expenses incident to the Company's performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications or registrations (or the obtaining of exemptions therefrom) of the Registrable Securities), printing expenses (including expenses of printing Prospectuses), messenger and delivery expenses, fees and disbursements of the Company's counsel and its independent certified public accountants, Securities Act liability insurance (if the Company elects to obtain such insurance), fees and expenses of any special experts retained by the Company in connection with any registration hereunder and fees and expenses of other Persons retained by the Company (all such expenses being referred to as "Registration Expenses"), shall be borne by the Company; provided, that Registration Expenses shall not include any fees and expenses of counsel for the Stockholders, out-of-pocket expenses incurred by the Selling Stockholders and underwriting discounts, commissions, brokerage or other fees attributable to the sale of the Registrable Securities. 8 Section 8. Indemnification. --------------- (a) Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the full extent permitted by law, but without duplication, each Selling Stockholder and its officers, directors, stockholders, employees, advisors and agents, and each Person who controls a Selling Stockholder (within the meaning of the Securities Act), against all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation and reasonable legal fees and expenses) ("Indemnifiable Costs and Expenses") resulting from (x) any untrue statement (or alleged untrue statement) of a material fact in, or any omission (or alleged omission) of a material fact required to be stated in, any Registration Statement or Prospectus or necessary to make the statements therein (including any such statements or omissions incorporated by reference therein) (in the case of a Prospectus, in light of the circumstances under which they were made) not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such Selling Stockholder or any underwriters expressly for use therein, or (y) any violation or alleged violation by the Company of the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such Registration Statement. The Company will also indemnify underwriters participating in the distribution, their officers, directors, employees, partners and agents, and each Person who controls such underwriters (within the meaning of the Securities Act), to the same extent as provided above with respect to the indemnification of the Selling Stockholder(s), if so requested. (b) Indemnification by the Selling Stockholder(s). In connection with any Registration Statement, each Selling Stockholder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and agrees to indemnify and hold harmless, to the full extent permitted by law, but without duplication, the Company, its officers, directors, stockholders, employees, advisors and agents, and each Person who controls the Company (within the meaning of the Securities Act), against all Indemnifiable Costs and Expenses resulting from (x) any untrue statement (or alleged untrue statement) of a material fact in, or any omission (or alleged omission) of a material fact required to be stated in, the Registration Statement or Prospectus or necessary to make the statements therein (in the case of a Prospectus in light of the circumstances under which they were made) not misleading to the extent that such untrue statement or omission is caused by or contained in any information or affidavit so furnished in writing by such Selling Stockholder to the Company, or (y) any violation or alleged violation by such Selling Stockholder of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such Registration Statement. No Selling Stockholder shall be required to provide indemnification or contribution hereunder in excess of an amount equal to the net proceeds to such Stockholder from the disposition of the Registrable Securities disposed of by such Stockholder pursuant to such Registration Statement. 9 (c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder will (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel of such indemnifying party's choice; provided, however, that any Person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in (but not control) the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such indemnified Person unless the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to the indemnified party in a timely manner. The indemnifying party will not be subject to any liability for any settlement made without the indemnified party's consent. No indemnified party will be required to 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 of such claim or litigation. An indemnifying party who is not entitled to, or elects not to, assume the defense of the claim will not be obligated to pay the fees and expenses of more than one counsel (except one (1) local counsel if required in a specific instance) for all parties indemnified by such indemnifying party with respect to such claim. (d) Contribution. If for any reason the indemnification provided for in Section 8(a) or Section 8(b) hereof is unavailable to an indemnified party or is insufficient to hold it harmless as contemplated by Section 8(a) and Section 8(b) hereof, respectively, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect not only the relative benefits received by the indemnifying party and the indemnified party, but also the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement or the omission or alleged omission relates to information supplied by the indemnifying party or parties on the one hand, or the indemnified party or parties on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentations. (e) Conflict with Underwriting Agreement. Notwithstanding the foregoing, to the extent that the indemnification and contribution provisions contained in any underwriting agreement entered into in connection with any Underwritten Offering conflict with the foregoing, the provisions of such underwriting agreement shall control. Section 9. Participation in Underwritten Registrations. No Stockholder may participate in any Underwritten Offering hereunder unless it (i) agrees to sell the Registrable Securities included therein on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, custodial arrangements and other documents required under the terms of such underwriting arrangements. Nothing in this Section 9 shall be construed to create any additional rights regarding the registration of Registrable Securities in any Person otherwise than as set forth herein. 10 Section 10. Certain Covenants by the Company. -------------------------------- (a) The Company agrees to use its commercially reasonable efforts to file with the SEC on a timely basis all annual, quarterly and current reports required to be filed by the Company under the Exchange Act. (b) Upon request by any Stockholder, the Company will inform such Stockholder whether it is in compliance with its reporting obligations under the Exchange Act. (c) Upon obtaining an opinion in form and substance satisfactory to the Company from counsel to a Stockholder that is reasonably satisfactory in form and substance to the Company to the effect that such Stockholder may transfer its Registrable Securities without registration under the Securities Act, the Company will instruct its transfer agent to issue to such Stockholder a certificate representing such Registrable Securities without any legend affixed thereto. Section 11. Amendments and Waivers. The provisions of this Agreement, including the provisions of this Section 11, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless such amendment, modification, waiver or consent is in writing and duly executed by the Company and a majority in interest of the Stockholders. No waiver of any provision of this Agreement shall constitute a waiver of any other provision of this Agreement and no waiver on one occasion shall constitute a waiver on any future occasion with respect to the same or any other provision of this Agreement. Section 12. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telecopier, or air-courier guaranteeing overnight delivery: (a) If to a Stockholder, at the most current address given by such Stockholder to the Company, in accordance with the provisions of this Section 12, which address (including facsimile number) initially is set forth opposite the Stockholders' names on Schedule A annexed hereto. (b) If to the Company, initially at 805 Third Avenue, New York, NY 10022, attention: Walter M. Psztur, Chief Financial Officer, facsimile No.: (212) 271-8580, and thereafter at such other address as may be designated from time to time by notice given in accordance with the provisions of this Section 12, with copies to Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New York 10022, attention: Peter S. Kolevzon, Esq., facsimile No.: (212) 715-8000. (c) All such notices and other communications shall be deemed to have been delivered and received (i) in the case of personal delivery, facsimile, telecopier or telegram, on the date of such delivery, (ii) in the case of air courier, on the Business Day after the date when sent and (iii) in the case of mailing, on the third (3rd) Business Day following such mailing. 11 Section 13. Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate 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. Delivery of an executed counterpart by facsimile shall constitute delivery of an original. Section 14. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Section 15. 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 PRINCIPLES OF THE CONFLICT OF LAWS THEREOF. Section 16. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. Section 17. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Except as otherwise expressly provided in Section 8 hereof, this Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective successors and permitted assigns. A Stockholder may assign its rights under this Agreement to any "accredited investor" (as defined in Rule 501 under the Securities Act) to whom it transfers shares of Series D Preferred Stock, Warrants or Registrable Securities, provided that such Stockholder provides an opinion of counsel, in form and substance reasonably satisfactory to the Company, that such transfer is not required to be registered under the Securities Act or any applicable state securities laws. Upon any such assignment, the assignee shall be deemed to have agreed to, and shall, be bound by all of the terms and provisions of this Agreement as if such assignee had executed and delivered this Agreement on the date hereof. Section 18. Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. [SIGNATURE PAGE FOLLOWS] 12 IN WITNESS WHEREOF, the Company and the Stockholders have executed this Registration Rights Agreement as of the date first written above. INTERNET COMMERCE CORPORATION By: ------------------------------------------- Name: G. Michael Cassidy Title: President and Chief Executive Officer Stockholders: ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----