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.
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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
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
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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;
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(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").
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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
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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.
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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;
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(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. Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP, counsel to the Company, substantially in the form
annexed hereto as Exhibit C.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Confidentiality.
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(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.
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(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
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"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]
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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:
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