REGISTRATION RIGHTS AGREEMENT
EXHIBIT
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This
Registration Rights Agreement (the “Agreement”) is made and
entered into as of December 10, 2007 (the “Effective Date”) among
Internet America, Inc., a Texas corporation (the “Company”), and the parties
set
forth on Exhibit
A hereto (each, an “Investor” and collectively,
whether one or more, the “Investors”).
RECITALS:
A. The
Investors have purchased shares of common stock, $0.01 par value, of the Company
pursuant to the Securities Purchase Agreement (the “Securities Purchase
Agreement”), dated as of the date hereof, by and between the Company and
each Investor.
B. The
Company and the Investors desire to set forth the registration rights to be
granted by the Company to the Investors.
NOW,
THEREFORE, in consideration of the mutual promises, representations, warranties,
covenants, and conditions set forth herein, in the Securities Purchase
Agreement, or otherwise, the parties mutually agree as follows:
AGREEMENT:
1. Certain
Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
“Blackout
Period” means, with
respect to a registration, a period in each case commencing on the day
immediately after the Company notifies the Investors that they are required,
pursuant to Section 4(f), to suspend offers and sales of Registrable Securities
during which the Company, in the good faith judgment of its Board of Directors,
determines (because of the existence of, or in anticipation of, any acquisition,
financing activity, or other transaction involving the Company, or the
unavailability for reasons beyond the Company’s control of any required
financial statements, disclosure of information which is in its best interest
not to publicly disclose, or any other event or condition of similar
significance to the Company) that the registration and distribution of the
Registrable Securities to be covered by such registration statement, if any,
would be seriously detrimental to the Company and its shareholders and ending
on
the earlier of (1) the date upon which the material non-public information
commencing the Blackout Period is disclosed to the public or ceases to be
material and (2) such time as the Company notifies the selling Holders that
the
Company will no longer delay such filing of the Registration Statement and
recommences taking steps to make such Registration Statement effective or allows
sales pursuant to such Registration Statement to resume.
“Business
Day” means any day of
the year, other than a Saturday, Sunday, or other day on which the Commission
is
required or authorized to close.
“Closing
Date” means December
10, 2007, or such other time as is mutually agreed between the Company and
the
Investors for the closing of the sale referred to in Recital A
above.
“Commission”
means
the
Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.
“Common
Stock” means the common
stock, $0.01 par value, of the Company and any and all shares of capital stock
or other equity securities of: (i) the Company which are added to or exchanged
or substituted for the Common Stock by reason of the declaration of any stock
dividend or stock split, the issuance of any distribution or the
reclassification, readjustment, recapitalization or other such modification
of
the capital structure of the Company; and (ii) any other corporation, now or
hereafter organized under the laws of any state or other governmental authority,
with which the Company is merged, which results from any consolidation or
reorganization to which the Company is a party, or to which is sold all or
substantially all of the shares or assets of the Company, if immediately after
such merger, consolidation, reorganization or sale, the Company or the
stockholders of the Company own equity securities having in the aggregate more
than 50% of the total voting power of such other corporation.
“Exchange
Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
of
the Commission promulgated thereunder.
“Family
Member” means (a) with
respect to any individual, such individual’s spouse, any descendants (whether
natural or adopted), any trust all of the beneficial interests of which are
owned by any of such individuals or by any of such individuals together with
any
organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, the estate of any such individual, and any corporation,
association, partnership or limited liability company all of the equity
interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust.
“Form
S-1” means such form
under the Securities Act as in effect on the date hereof.
“Holder”
means
each Investor or
any successor or Permitted Assignee of an Investor, who acquires rights in
accordance with this Agreement with respect to the Registrable Securities
directly or indirectly from an Investor, including from any Permitted
Assignee.
“Inspector”
means
any attorney,
accountant, or other agent retained by an Investor for the purposes provided
in
Section 4(j).
“Permitted
Assignee” means (a)
with respect to a partnership, its partners or former partners in accordance
with their partnership interests, (b) with respect to a corporation, its
shareholders in accordance with their interest in the corporation, (c) with
respect to a limited liability company, its members or former members in
accordance with their interest in the limited liability company, (d) with
respect to an individual party, any Family Member of such party, (e) an entity
that is controlled by, controls, or is under common control with a transferor,
or (f) a party to this Agreement.
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The
terms “register,” “registered,”
and
“registration”
refers to
a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
“Registrable
Securities” means
shares of Common Stock issued to each Investor pursuant to the Securities
Purchase Agreement, but in each case excluding (A) any Registrable Securities
that have been publicly sold or may be publicly sold immediately without
registration under the Securities Act either pursuant to Rule 144 of the
Securities Act or otherwise; (B) any Registrable Securities sold by a person
in
a transaction pursuant to a registration statement filed under the Securities
Act or (C) any Registrable Securities that are at the time subject to an
effective registration statement under the Securities Act.
“Registration
Statement” means
the registration statement required to be filed by the Company pursuant to
Section 3(a).
“Securities
Act” means the
Securities Act of 1933, as amended, or any similar federal statute promulgated
in replacement thereof, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
“SEC
Effective Date” means the
date the Registration Statement is declared effective by the
Commission.
2. Term.
This Agreement
shall continue in full force and effect for a period of two (2) years from
the
Effective Date, unless terminated sooner hereunder.
3. Registration.
(a) Piggyback
Registration. If the Company shall determine to register for sale for
cash any of its Common Stock, for its own account or for the account of others
(other than the Holders), other than (i) a registration relating solely to
employee benefit plans or securities issued or issuable to employees,
consultants (to the extent the securities owned or to be owned by such
consultants could be registered on Form S-8) or any of their Family Members
(including a registration on Form S-8), (ii) a registration relating solely
to a
Commission Rule 145 transaction, a registration on Form S-4 in connection with
a
merger, acquisition, divestiture, reorganization, or similar event, or (iii)
a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered,
the
Company shall promptly give to the Holders written notice thereof (and in no
event shall such notice be given less than 20 calendar days prior to the filing
of such registration statement), and shall, subject to Section 3(b), include
in
such registration (and any related qualification under blue sky laws or
other compliance) (a “Piggyback
Registration”),
all of the Registrable Securities specified in a written request or requests,
made within 10 calendar days after receipt of such written notice from the
Company, by any Holder or Holders. However, the Company may, without the consent
of the Holders, withdraw such registration statement prior to its becoming
effective if the Company or such other shareholders have elected to abandon
the
proposal to register the securities proposed to be registered
thereby.
(b) Underwriting.
If a
Piggyback Registration is for a registered public offering involving an
underwriting, the Company shall so advise the Holders in writing or as a
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part
of the written notice given pursuant to Section 3(a). In such event the right
of
any Holder to registration pursuant to Section 3(a) shall be conditioned upon
such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and any other shareholders of
the
Company distributing their securities through such underwriting) enter into
an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company or selling
shareholders, as applicable. Notwithstanding any other provision of this Section
3(b), if the underwriter or the Company determines that marketing factors
require a limitation of the number of shares to be underwritten, the underwriter
may exclude some or all Registrable Securities from such registration and
underwriting. The Company shall so advise all Holders (except those Holders
who
failed to timely elect to distribute their Registrable Securities through
such underwriting or have indicated to the Company their decision not to do
so),
and the number of shares of Registrable Securities that may be included in
the
registration and underwriting, if any, shall be allocated among such Holders
as
follows:
(i) In
the event of a Piggyback Registration that is initiated by the Company, the
number of shares that may be included in the registration and underwriting
shall
be allocated first to the Company and then, subject to obligations and
commitments existing as of the date hereof, to all selling shareholders,
including the Holders, who have requested to sell in the registration on a
pro
rata basis according to the number of shares requested to be
included; and
(ii) In
the event of a Piggyback Registration that is initiated by the exercise of
demand registration rights by a shareholder or shareholders of the Company
(other than the Holders), then the number of shares that may be included in
the
registration and underwriting shall be allocated first to such selling
shareholders who exercised such demand and then, subject to obligations and
commitments existing as of the date hereof, to all other selling shareholders,
including the Holders, who have requested to sell in the registration, on a
pro
rata basis according to the number of shares requested to be
included.
No
Registrable Securities excluded from the underwriting by reason of the
underwriter’s marketing limitation shall be included in such registration. If
any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from such registration; provided, however, that, if
by the withdrawal of such Registrable Securities a greater number of Registrable
Securities held by other Holders may be included in such registration (up to
the
maximum of any limitation imposed by the underwriters), then the Company shall
offer to all Holders who have included Registrable Securities in the
registration the right to include additional Registrable Securities pursuant
to
the terms and limitations set forth herein in the same proportion used above
in
determining the underwriter limitation.
(c) Right
to Terminate
Registration. The Company
shall have
the right to terminate or withdraw any registration initiated by it under this
Section 3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The registration
expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 6 hereof.
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4. Registration
Procedures. In the case of each registration, qualification, or
compliance effected by the Company pursuant to Section 3 hereof, the Company
will keep each Holder including securities therein reasonably advised in writing
(which may include e-mail) as to the initiation of each registration,
qualification, and compliance and as to the completion thereof. With respect
to
any registration statement filed pursuant to Section 3, the Company will use
its
commercially reasonable best efforts to:
(a) prepare
and file with the Commission with respect to such Registrable Securities, a
registration statement on Form S-1, or any other form for which the Company
then
qualifies or which counsel for the Company shall deem appropriate, and which
form shall be available for the sale of the Registrable Securities in accordance
with the intended method(s) of distribution thereof, and use its commercially
reasonable efforts to cause such registration statement to become and remain
effective at least for a period ending with the first to occur of (i) the sale
of all Registrable Securities covered by the registration statement, (ii) the
availability under Rule 144 for the Holder to immediately, freely resell without
restriction all Registrable Securities covered by the registration statement,
(iii) 90 days after a Piggyback Registration is declared effective by the
Commission (in each case, the”Effectiveness
Period”); provided that no later
than
two business days before filing with the Commission a registration statement
or
prospectus or any amendments or supplements thereto, the Company shall (i)
furnish to one special counsel (“Holders’
Counsel”) selected by the
Company for the benefit of the Holders (which Holders’ Counsel shall be the same
Holders’ Counsel selected under the Registration Rights Agreement of the Company
dated October 17, 2007 so long as the Investors remain a party to that
agreement), copies of all such documents proposed to be filed (excluding any
exhibits other than applicable underwriting documents), in substantially the
form proposed to be filed, which documents shall be subject to the review of
such Holders’ Counsel, and (ii) notify each Holder of Registrable Securities
covered by such registration statement of any stop order issued or threatened
by
the Commission and take all reasonable actions required to prevent the entry
of
such stop order or to remove it if entered;
(b) if
a registration statement is subject to review by the Commission, promptly
respond to all comments and diligently pursue resolution of any comments to
the
satisfaction of the Commission;
(c) prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be
necessary to keep such registration statement effective during the Effectiveness
Period (but in any event at least until expiration of the 90-day period referred
to in Section 4(3) of the Securities Act and Rule 174, or any successor thereto,
thereunder, if applicable), and comply with the provisions of the Securities
Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended method(s) of
disposition by the sellers thereof set forth in such registration
statement;
(d) furnish,
without charge, to each Holder of Registrable Securities covered by such
registration statement (i) a reasonable number of copies of such registration
statement
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(including
any exhibits thereto other than exhibits incorporated by reference), each
amendment and supplement thereto as such Holder may request, (ii) such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus and any other prospectus filed under
Rule
424 under the Securities Act) as such Holders may request, in conformity with
the requirements of the Securities Act, and (iii) such other documents as such
Holder may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Holder, but only during the Effectiveness
Period;
(e) use
its commercially reasonable best efforts to register or qualify such Registrable
Securities under such other applicable securities or blue sky laws of such
jurisdictions as any Holder of Registrable Securities covered by such
registration statement reasonably requests as may be necessary for the
marketability of the Registrable Securities (such request to be made by the
time
the applicable registration statement is deemed effective by the Commission)
and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder; provided that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such
jurisdiction;
(f) as
promptly as practicable after becoming aware of such event, notify each Holder
of such Registrable Securities at any time when a prospectus relating thereto
is
required to be delivered under the Securities Act of the happening of any event
which comes to the Company’s attention if as a result of such event the
prospectus included in such registration statement contains an 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 not misleading and the
Company shall promptly prepare and furnish to such Holder a supplement or
amendment to such prospectus (or prepare and file appropriate reports under
the
Exchange Act) so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue statement
of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, unless suspension
of
the use of such prospectus otherwise is authorized herein or in the event of
a
Blackout Period, in which case no supplement or amendment need be furnished
(or
Exchange Act filing made) until the termination of such suspension or Blackout
Period;
(g) comply,
and continue to comply during the period that such registration statement is
effective under the Securities Act, in all material respects with the Securities
Act and the Exchange Act and with all applicable rules and regulations of the
Commission with respect to the disposition of all securities covered by
such registration statement, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of
at
least 12 months, but not more than 18 months, beginning with the first full
calendar month after the SEC Effective Date, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
(h) as
promptly as practicable after becoming aware of such event, notify each Holder
of Registrable Securities being offered or sold pursuant to the Registration
Statement of the issuance by the Commission of any stop order or other
suspension of effectiveness of the Registration Statement at the earliest
possible time;
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(i) permit
the Holders of Registrable Securities being included in the Registration
Statement and their legal counsel, at such Holders’ sole cost and expense
(except as otherwise specifically provided in Section 6) to review and have
a
reasonable opportunity to comment on the Registration Statement and all
amendments and supplements thereto at least two Business Days prior to their
filing with the Commission;
(j) make
available for inspection by any Holder and any Inspector retained by such
Holder, at such Holder’s sole expense, all records as shall be reasonably
necessary to enable such Holder to exercise its due diligence responsibility,
and cause the Company’s officers, directors, and employees to supply all
information which such Holder or any Inspector may reasonably request for
purposes of such due diligence; provided, however, that such
Holder shall hold in confidence and shall not make any disclosure of any record
or other information which the Company determines in good faith to be
confidential, and of which determination such Holder is so notified at the
time
such Holder receives such information, unless (i) the disclosure of such record
is necessary to avoid or correct a misstatement or omission in the Registration
Statement and a reasonable time prior to such disclosure the Holder shall have
informed the Company of the need to so correct such misstatement or omission
and
the Company shall have failed to correct such misstatement or omission, (ii)
the
release of such record is ordered pursuant to a subpoena or other order from
a
court or governmental body of competent jurisdiction or (iii) the information
in
such record has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company shall not
be
required to disclose any confidential information in such records to any
Inspector until and unless such Inspector shall have entered into a
confidentiality agreement with the Company with respect thereto, substantially
in the form of this Section 4(j), which agreement shall permit such Inspector
to
disclose records to the Holder who has retained such Inspector. Each Holder
agrees that it shall, upon learning that disclosure of such records is sought
in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at the Company’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the records deemed confidential. The Company shall
hold
in confidence and shall not make any disclosure of information concerning a
Holder provided to the Company pursuant to this Agreement unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) disclosure of such information to the Staff of the Division of
Corporation Finance is necessary to respond to comments raised by the Staff
in
its review of the Registration Statement, (iii) disclosure of such information
is necessary to avoid or correct a misstatement or omission in the Registration
Statement, (iv) release of such information is ordered pursuant to a subpoena
or
other order from a court or governmental body of competent jurisdiction, or
(v)
such information has been made generally available to the public other than
by
disclosure in violation of this or any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information concerning
a
Holder is sought in or by a court or governmental body of competent jurisdiction
or through other means, give prompt notice to such Holder and allow such Holder,
at such Holder’s expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, such information;
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(k) use
its best efforts to cause all the Registrable Securities covered by the
Registration Statement to be listed or quoted on the principal securities market
on which securities of the same class or series issued by the Company are then
listed or traded;
(l) provide
a transfer agent and registrar, which may be a single entity, for the
Registrable Securities at all times;
(m) cooperate
with the Holders of Registrable Securities being offered pursuant to the
Registration Statement to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable
such
certificates to be in such denominations or amounts as the Holders may
reasonably request and registered in such names as the Holders may request;
and
(n) take
all other reasonable actions necessary to expedite and facilitate disposition
by
the Holders of the Registrable Securities pursuant to the Registration
Statement.
5. Suspension
of Offers and
Sales. Each Holder of Registrable Securities agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 4(f) hereof or of the commencement of a Blackout Period, such Holder
shall discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such Holder’s
receipt of the copies of the supplemented or amended prospectus contemplated
by
Section 4(f) hereof or notice of the end of the Blackout Period, and, if so
directed by the Company, such Holder shall deliver to the Company (at the
Company’s expense) all copies (including, without limitation, any and all
drafts), other than permanent file copies, then in such Holder’s possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.
6. Registration
Expenses. The Company shall pay all expenses in connection with any
registration, including, without limitation, all registration, filing, stock
exchange and Financial Industry Regulatory Authority (or FINRA) fees, printing
expenses, all fees and expenses of complying with securities or blue sky laws,
the fees and disbursements of counsel for the Company and of its independent
accountants, and the reasonable fees and disbursements of a Holders’ Counsel;
provided that, in any underwritten registration, each party shall pay for its
own underwriting discounts and commissions and transfer taxes. Except as
provided above in this Section 6 and Section 9, the Company shall not be
responsible for the expenses of any attorney or other advisor employed by a
Holder of Registrable Securities.
7. Assignment
of Rights.
No Holder may assign its rights under this Agreement to any party without the
prior written consent of the Company; provided, however, that a
Holder may assign its rights under this Agreement without such restrictions
to a
Permitted Assignee as long as (a) such transfer or assignment is effected in
accordance with applicable securities laws; (b) such transferee or assignee
agrees in writing to become subject to the terms of this Agreement; and (c)
the
Company is given written notice by such Holder of such transfer or assignment,
stating the name and address of the transferee or assignee and identifying
the
Registrable Securities with respect to which such rights are being transferred
or assigned.
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8. Information
by
Holder. The Holder or Holders of Registrable Securities included in any
registration shall furnish to the Company such information regarding such Holder
or Holders and the distribution proposed by such Holder or Holders as the
Company may request in writing.
9. Indemnification.
(a) In
the event of the offer and sale of Registrable Securities held by Holders under
the Securities Act, the Company shall, and hereby does, indemnify and hold
harmless, to the fullest extent permitted by law, each Holder, its directors,
officers, partners, trustees, each other person who participates as an
underwriter in the offering or sale of such securities, and each other person,
if any, who controls or is under common control with such Holder or any such
underwriter within the meaning of Section 15 of the Securities Act, against
any
losses, claims, damages or liabilities, joint or several, and expenses to which
the Holder or any such director, officer, partner, trustee, or underwriter
or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
or
proceedings, whether commenced or threatened, in respect thereof) arise out
of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such shares
were registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and the Company shall reimburse the Holder, and each such director, officer,
partner, trustee, underwriter and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating, defending
or settling any such loss, claim, damage, liability, action or proceeding;
provided that the foregoing shall not apply to, and the Company shall not be
liable, in any such case (i) to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out
of
or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by or on behalf of such
Holder specifically stating that it is for use in the preparation thereof,
(ii)
provided that the Company has complied with its obligations hereunder to furnish
such Holder with copies of the applicable prospectus, if the person asserting
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) who purchased the Registrable Securities that are the subject thereof
did not receive a copy of an amended preliminary prospectus or the final
prospectus (or the final prospectus as amended or supplemented) at or prior
to
the written confirmation of the sale of such Registrable Securities to such
person because of the failure of such Holder or underwriter to so provide such
amended preliminary or final prospectus and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact made in
such
preliminary prospectus was corrected in the amended preliminary or final
prospectus (or the final prospectus as amended or supplemented), or (iii)
provided that the plan of distribution mechanics described in the applicable
prospectus are, in form and substance, reasonable and customary for transactions
of this type, to the extent that the Holders failed to comply with the terms
of
such plan of distribution mechanics. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Holders,
or any such director, officer, partner, underwriter or controlling person
and shall survive the transfer of such shares by the Holder.
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(b) As
a condition to including any Registrable Securities to be offered by a Holder
in
any registration statement filed pursuant to this Agreement, each such Holder
agrees to be bound by the terms of this Section 9 and to indemnify and hold
harmless, to the fullest extent permitted by law, the Company, its directors
and
officers, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, legal counsel and accountants
for
the Company, any underwriter, any other Holder selling securities in such
registration statement and any controlling person within the meaning of the
Securities Act of any such underwriter or other Holder, against any losses,
claims, damages or liabilities, joint or several, to which the Company or any
such director or officer or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information about such Holder
as
that Holder furnished to the Company, (ii) provided that the Company has
complied with its obligations hereunder to furnish such Holder with copies
of
the applicable prospectus, if the person asserting any such loss, claim, damage,
liability (or action or proceeding in respect thereof) who purchased the
Registrable Securities that are the subject thereof did not receive a copy
of an
amended preliminary prospectus or the final prospectus (or the final prospectus
as amended or supplemented) at or prior to the written confirmation of the
sale
of such Registrable Securities to such person because of the failure of such
Holder or underwriter to so provide such amended preliminary or final prospectus
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact made in such preliminary prospectus was corrected
in
the amended preliminary or final prospectus (or the final prospectus as amended
or supplemented), or (iii) provided that the plan of distribution mechanics
described in the applicable prospectus are, in form and substance, reasonable
and customary for transactions of this type, to the extent that the Holders
failed to comply with the terms of such plan of distribution mechanics. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Holders, or any such director, officer, partner,
underwriter or controlling person and shall survive the transfer of such shares
by the Holder, and such Holder shall reimburse the Company, and each such
director, officer, legal counsel and accountants, underwriter, other Holder,
and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating, defending, or settling and such loss, claim,
damage, liability, action, or proceeding; provided, however, that such
indemnity agreement found in this Section 9(b) shall in no event exceed the
gross proceeds from the offering received by such Holder. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or
on
behalf of the Company or any such director, officer or controlling person and
shall survive the transfer by any Holder of such shares.
(c) Promptly
after receipt by an indemnified party of notice of the commencement of any
action or proceeding involving a claim referred to in Section 9(a) or (b) hereof
(including any governmental action), such indemnified party shall, if a claim
in
respect
10
thereof
is to be made against an indemnifying party, give written notice to the
indemnifying party of the commencement of such action; provided that the failure
of any indemnified party to give notice as provided herein shall not relieve
the
indemnifying party of its obligations under Section 9(a) or (b) hereof, except
to the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified party,
unless in the reasonable judgment of counsel to such indemnified party a
conflict of interest between such indemnified and indemnifying parties may
exist
or the indemnified party may have defenses not available to the indemnifying
party in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof, unless in such indemnified party’s
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of
the
defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner, other than reasonable costs of investigation. Neither an
indemnified nor an indemnifying party shall be liable for any settlement of
any
action or proceeding effected without its consent. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement, which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of
a
release from all liability in respect of such claim or litigation.
Notwithstanding anything to the contrary set forth herein, and without limiting
any of the rights set forth above, in any event any party shall have the right
to retain, at its own expense, counsel with respect to the defense of a
claim.
(d) In
the event that an indemnifying party does or is not permitted to assume the
defense of an action pursuant to Section 9(c) or in the case of the expense
reimbursement obligation set forth in Section 9(a) and (b), the indemnification
required by Section 9(a) and (b) hereof shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as and
when bills received or expenses, losses, damages, or liabilities are
incurred.
(e) If
the indemnification provided for in this Section 9 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect
to
any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall (i) contribute to the amount paid or payable by such indemnified party
as
a result of such loss, liability, claim, damage or expense as is appropriate
to
reflect the proportionate relative fault of the indemnifying party on the one
hand and the indemnified party on the other (determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact
or omission relates to information supplied by the indemnifying party or the
indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission), or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, not only the proportionate relative
fault of the indemnifying party and the indemnified party, but also the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other, as well as any other relevant equitable
considerations. No indemnified party guilty
11
of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any indemnifying party
who was not guilty of such fraudulent misrepresentation.
(f) Other
Indemnification. Indemnification similar to that specified in the
preceding subsections of this Section 9 (with appropriate modifications) shall
be given by the Company and each Holder of Registrable Securities with respect
to any required registration or other qualification of securities under any
federal or state law or regulation or governmental authority other than the
Securities Act.
10. Rule
144 Reporting.
With a view to making available to the Holders the benefits of certain rules
and
regulations of the Commission which may permit the sale of the Registrable
Securities to the public without registration, the Company agrees to use its
reasonable efforts to:
(a) Make
and keep public information available, as those terms are understood and defined
in Rule 144 or any similar or analogous rule promulgated under the Securities
Act, at all times after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general
public;
(b) File
with the Commission, in a timely manner, all reports and other documents
required of the Company under the Exchange Act; and
(c) So
long as a Holder owns any Registrable Securities, furnish to such Holder
forthwith upon request: a written statement by the Company as to its compliance
with the reporting requirements of said Rule 144 of the Securities Act, and
of
the Exchange Act (at any time after it has become subject to such reporting
requirements); a copy of the most recent annual or quarterly report of the
Company; and such other reports and documents as a Holder may reasonably request
in availing itself of any rule or regulation of the Commission allowing it
to
sell any such securities without registration.
11. Miscellaneous
(a) Governing
Law. This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Texas and the United States of America, both substantive and remedial.
Any judicial proceeding brought against either of the parties to this agreement
or any dispute arising out of this Agreement or any matter related hereto shall
be brought in the courts of the State of Texas, Xxxxxx County, or in the United
States District Court for the Southern District of Texas and, by its execution
and delivery of this agreement, each party to this Agreement accepts the
jurisdiction of such courts. The foregoing consent to jurisdiction shall not
be
deemed to confer rights on any person other than the parties to this
Agreement.
(b) Successors
and
Assigns. Except as otherwise provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors, Permitted Assigns,
executors and administrators of the parties hereto. In the event the Company
merges with, or is otherwise acquired by, a direct or indirect subsidiary of
a
publicly traded company, the Company shall condition the merger or acquisition
on the assumption by such parent company of the Company’s obligations under this
Agreement.
12
(c) Entire
Agreement.
This Agreement constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof.
(d) Notices,
etc. All notices or
other communications which are required or permitted under this Agreement shall
be in writing and sufficient if delivered by hand, by facsimile transmission,
by
registered or certified mail, postage pre-paid, by electronic mail, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed
to
have been delivered as of the date so delivered:
If
to the Company:
Internet
America, Inc.
00000
X. Xxx Xxxxxxx Xxxx., X.
Xxxxx
000
Xxxxxxx,
Xxxxx, 00000
Attn:
Xxxxxxx X. Xxxxx, Xx.
Facsimile:
(000) 000-0000
With
a copy to:
Xxxxx
& Ketchand
Nine
Greenway Plaza, Suite 3100
Xxxxxxx,
Xxxxx 00000
Attention:
Xxxx X. Leader
Fax:
(000) 000-0000
If
to an Investor:
To
the address set forth immediately below such Investor’s name on the signature
pages hereto.
With
a copy to:
Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP
000
Xxxxx Xxxxx Xxx., Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxxx X. Xxxxxx
Facsimile:
(000) 000-0000
or
at such other address as any party shall have furnished to the other parties
in
writing.
(e) Delays
or Omissions.
No delay or omission to exercise any right, power or remedy accruing
to
any Holder of any Registrable Securities, upon any breach or default of the
Company under this Agreement, shall impair any such right, power or remedy
of
such Holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereunder occurring; nor shall any waiver of any single breach or default
be
deemed a waiver of any other breach or default theretofore or thereafter
13
occurring.
Any waiver, permit, consent or approval of any kind or character on the part
of
any Holder of any breach or default under this Agreement, or any waiver on
the part of any Holder of any provisions or conditions of this Agreement, must
be in writing and shall be effective only to the extent specifically set forth
in such writing. All remedies, either under this Agreement, or by law or
otherwise afforded to any holder, shall be cumulative and not
alternative.
(f) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
enforceable against the parties actually executing such counterparts, and all
of
which together shall constitute one instrument.
(g) Severability.
In the
case any provision of this Agreement shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall
not
in any way be affected or impaired thereby.
(h) Amendments.
The provisions of this
Agreement may be amended at any time and from time to time, and particular
provisions of this Agreement may be waived, with and only with an agreement
or
consent in writing signed by the Company and by the holders of a majority of
the
number of shares of Registrable Securities outstanding as of the date of such
amendment or waiver. The Investors acknowledge that by the operation of this
Section 11(h), the holders of a majority of the outstanding Registrable
Securities may have the right and power to diminish or eliminate all rights
of
the Investors under this Agreement.
14
This
Registration Rights Agreement is hereby executed as of the date first above
written.
|
COMPANY:
|
|||
|
INTERNET
AMERICA,
INC.
|
|||
|
By:
|
/s/
Xxxxxxx X. Xxxxx, Xx
|
||
|
Name:
Xxxxxxx X. Xxxxx, Xx., CEO
|
|||
|
INVESTORS:
|
|||
|
THE
XXXXXX X. XXXXXXX
TRUST
|
|||
|
By:
|
/s/
Xxxxxx X. Xxxxxxx
|
||
|
Name:
Xxxxxx X. Xxxxxxx, Trustee
|
|||
Exhibit
A
Investor
Information
|
Name
and Address
|
Shares
|
|
|
|
|
The
Xxxxxx X. Xxxxxxx Trust
c/o
Xxxxxx X. Xxxxxxx, Trustee
X.X.
Xxx 00000
Xxxx,
Xxxxxx 00000
|
4,000,000
|
