REGISTRATION RIGHTS AGREEMENT
EXHIBIT
4.2
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.
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“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.
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(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
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.
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(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.
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;
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(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 (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.
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(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;
(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;
7
(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.
10
(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 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
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.
11
(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.
12
(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.
(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.
13
(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 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.
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
|
14
Exhibit
A
Investor
Information
|
Name
and Address
|
Shares
|
|||
|
The
Xxxxxx X. Xxxxxxx Trust
x/x
Xxxxxx X. Xxxxxxx, Xxxxxxx
X.X.
Xxx 00000
Xxxx,
Xxxxxx 00000
|
4,000,000
|
|||
15
