SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 24, 1999
----------
INTERNET COMMERCE CORPORATION
(Exact name of registrant as specified in its charter)
Commission file number 024996
Delaware 133645702
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
805 Third Avenue, New York, New York 10022
(Address of principal executive offices)
(Zip Code)
(212) 271-7640
(Registrant's telephone number, including area code)
<PAGE>
INTERNET COMMERCE CORPORATION
FORM 8-K
CURRENT REPORT
TABLE OF CONTENTS
Page
----
Item 5. Other Event........................................................3
Item 7. Exhibit.............................................................3
Signature...................................................................4
<PAGE>
Item 5. OTHER EVENT
On December 1, 1999 ICC announced that it has agreed to establish a
strategic global alliance with Cable & Wireless, a global provider of Internet,
data, voice and messaging services, to jointly market and sell their respective
product and service offerings in the business-to-business e-commerce
marketplace. Cable & Wireless will be entitled to commissions for sales of ICC
products and services based on quarterly target levels to be agreed upon. These
commissions will be payable in shares of class A common stock valued at the then
fair market value of such shares. ICC and Cable & Wireless expect to finalize
the details of the alliance over the next 30 days.
As part of these arrangements, Cable & Wireless has agreed to purchase
for $10 million 10,000 shares of a new class of convertible preferred stock of
ICC that is initially convertible into shares of class A common stock at $22.34
per share. The average closing bid price of the class A common stock for the
five trading days before the definitive agreement was executed and delivered was
$22.21. The preferred stock is entitled to a four percent cumulative, annual
dividend, payable in cash or in kind at ICC's option, and votes together with
the class A common stock. Each share of preferred stock entitles Cable &
Wireless to a number of votes equal to the number of shares of class A common
stock into which the preferred stock is convertible. Cable & Wireless will also
receive 400,000 warrants to purchase class A common stock of ICC. The warrants
are exercisable for five years at $22.21.
ICC has agreed to elect a nominee of Cable & Wireless to its Board of
Directors and to allow Cable & Wireless to participate in any equity offering on
the same terms and conditions as other purchasers to maintain its percentage
interest in ICC.
The transaction with Cable & Wireless is subject to approval of the
boards of both companies.
The foregoing description of the transaction with Cable & Wireless is
qualified in its entirety by reference to the Master Agreement filed herewith as
Exhibit 99.1, which Master Agreement is hereby incorporated herein by reference.
Item 7. EXHIBIT
99.1 Master Agreement between Cable & Wireless PLC and Internet
Commerce Corporation executed on November 24, 1999.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 1, 1999
INTERNET COMMERCE CORPORATION
/s/ Dr. Geoffrey S. Carroll
-------------------------------------
Dr. Geoffrey S. Carroll
President and Chief Executive Officer
(Principal Executive Officer)
4
Exhibit 99.1
Master Agreement
Between
Cable & Wireless PLC and Internet Commerce Corporation
The Parties, Cable & Wireless PLC (C&W) and Internet Commerce Corporation (ICC),
have determined that there exists substantial synergies between both
organizations to expand their respective market efforts for Internet-based
services. As such, the Parties have agreed to this Master Agreement as the basis
for a resulting commercial relationship. This Master Agreement is subject to
both Parties obtaining their respective Management or Supervisory Board
approval, and, if relevant, regulatory approvals. Notwithstanding delays due to
public holidays, the Parties respective Board approvals will be obtained within
30 days after the execution of this Master Agreement. Other than those terms
explicitly outlined herein, no representations or warranties are expressed or
implied. All co-signed Addendums shall be agreed upon within 30 days of the
execution of this Agreement and will be deemed integral to this Master
Agreement.
1) STOCK PURCHASE AND RELATED TRANSACTIONS
a) C&W shall invest US ten million ($10,000,000.00) dollars in ICC. For
good and valuable consideration of this investment, ICC shall issue to
C&W 10,000 Shares of Series C Convertible Preferred Stock in ICC. The
closing of the transaction will occur within 10 days after receiving
Board approvals.
b) The Series C Preferred Stock issued to C&W by ICC shall be convertible
into Class A Common Stock. Each share of Series C Preferred Stock is
convertible into a number of shares of Class A Common Stock determined
by the following formula: $1,000.00 divided by the daily average of the
closing bid price of ICC Common Stock for the five (5) trading days
prior to the execution of this Master Agreement plus $0.13 per share
(the "Conversion Price").
The Series C Preferred Stock has a value of $1,000.00. The conversion
price will be adjusted for stock splits, dividends and combinations,
mergers and consolidations.
c) The per share voting rights of the Series C Preferred Stock shall be
equal to that of the number of shares of Class A Common Stock into which
the Series C Preferred Stock is convertible. At all times the Series C
Preferred Stock held by C&W shall vote as one class with ICC Class A
Common Stock. The Series C Preferred Stock shall be entitled to receive
cumulative dividends at a rate equal to 4% per share (as adjusted for
subsequent stock dividends, splits, recapitalizations and similar
transactions). Such dividends shall accrue whether or not declared and
shall be paid in either cash or shares of ICC Class A Common Stock at
ICC's option; provided, that such dividends are paid prior to and in
preference to any distribution with respect to the shares of Common
Stock.
d) The Series C Preferred Stock issued to C&W shall have liquidation
priority and preference over any and all classes and series of ICC
Capital Stock. The liquidation value shall equal $1,000.00 per share
plus accrued and unpaid dividends.
<PAGE>
e) At the closing, ICC shall issue 400,000 warrants for ICC Class A Common.
The exercise price for such warrants shall be the Conversion Price, less
$0.13 per share, as may be adjusted (the "Warrant Price"), and the
warrants shall have an initial term of 5 years from the date of
issuance.
f) ICC agrees to issue to C&W additional stock for the attainment of set
quarterly revenue targets for the sales of ICC services. The number of
Shares in connection with this section 1(f) shall be equal to the result
of multiplying the gross amount of sales for ICC services sold by C&W by
5%. The shares will be priced by the daily average of the closing bid
price of ICC stock for the 5 days prior to the end of each quarter. The
basis for the revenue calculation will be derived from the
commissionable revenue figure to be negotiated in the Reseller
Addendums. Each outstanding share of the Series C Preferred Stock is
redeemable by ICC at a price of $1,000.00 per share, plus any accrued
and unpaid dividends (the "Redemption Price"), commencing on the fifth
anniversary of the date of issuance thereof upon written notice to the
holders of Series C Preferred Stock. No such redemption shall diminish
C&W's right to convert the Series C Preferred Stock prior to the
redemption date.
g) C&W shall have right of first refusal to participate in any ICC equity
offering, on the same terms and conditions as other purchasers, to
maintain its percentage ownership of ICC.
h) In exchange for C&W investment in ICC and for other good and valuable
consideration, ICC shall grant C&W one seat on ICC's Board. ICC's
approval of the C&W candidate will not be unreasonably withheld. In the
event ICC's Board increases to more than nine members, ICC shall grant
C&W an additional seat on ICC's Board. ICC agrees that C&W's Board
representation shall at no time be less than one seat and shall increase
roughly proportionate to C&W's percentage ownership of ICC as such
percentage ownership may increase.
i) At the time of the issuance of the shares provided for in section 1, the
parties will enter into a Registration Rights Agreement providing demand
and piggyback registration rights with respect to all shares of
Preferred and Common Stock issued to C&W pursuant to this Master
Agreement and all shares issued upon the conversion of the Preferred
Stock and the exercise of the Warrants.
j) ICC represents and warrants that the information contained in its
private placement memorandum dated October 1999 is true and correct in
all material respects; that such private placement memorandum does not
contain any untrue statements of material fact or omit to state any
material fact required to make the statements therein not misleading;
and that there has been no material changes in the business, properties,
financial condition or results of operations of ICC. In addition, ICC
represents and warrants that the products described therein are all
currently available for sale. However, statements included in such
private placement memorandum which are not historical in nature are
forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995 including,
without limitation, statements regarding the ability to obtain
financing, the hiring of new personnel, the Company's ability to secure
new business, and those factors highlighted in Internet Commerce
Corporation's Annual Reports on Form 10-K and Quarterly Reports on Form
10-Q, which could cause the Company's actual results to materially
differ from forward-looking statements made by the Company.
2) COMMERCIAL ACTIVITIES
a) The scope of this Agreement is intended to be global in nature and as
such, ICC and C&W shall endeavor to address the global markets together.
Therefore, ICC will utilize C&W IP and data
2
<PAGE>
networks and other services (including hosting) to the greatest extent
possible, consistent with ICC's needs for redundant facilities, at rates
no higher than C&W lowest rates to comparable customers. C&W intention
is to use ICC EDI services on a global basis.
b) The Parties agree that the initial focus shall be on North America,
Western Europe, and Japan, with other C&W market activities to follow as
resources allow.
c) C&W will serve as a sales channel for ICC, and ICC will serve as a sales
channel for C&W, as either a reseller or as an agent and as C&W and ICC
shall mutually agree. ICC, at ICC's sole expense, shall co-locate
dedicated sales and support personnel at mutually determined C&W
facilities as requested by C&W Global Markets and which is reasonably
required to attain the sales goals referred to in section 2(e) herein.
C&W shall seek to provide office space and related support to ICC as may
be required for these activities. For the first 12 months of this Master
Agreement, C&W agrees to consider the provision of these services to be
in-kind funding. Thereafter, the cost associated with office provision
and support shall be negotiated country by country.
d) ICC shall compensate C&W for each sale of ICC services made by C&W sales
representatives as will C&W compensate ICC for each sale of C&W services
made by ICC sales representatives. For compensation purposes only, in
the case where the Parties jointly make sales calls, Parties shall split
commissions on a basis to be mutually agreed upon.
e) The Parties shall jointly develop a Global Schedule of Services and
Compensation (GSSC) that shall determine the service offerings, MFN
pricing structures and resulting compensation values. Subject to mutual
prior consent, which consent will not be unreasonably withheld, the
Parties shall be entitled to bundle the other's products with any
product offer either Party may develop. The GSSC shall include bundled
service offerings wherein the Parties will determine the percentage of
revenues attributable to each Party's contribution to the offering in
order to calculate the applicable compensation. The GSSC shall be
incorporated into this Agreement by reference and the Parties shall
agree on any deviation from the terms of the GSSC in advance.
f) ICC shall cooperate with C&W Global Operations to jointly develop and
agree upon a sales and market plan (SMP) for each global region
enumerated above in section 2(b) herein. The SMP shall include
reasonable sales goals, existing customer lead activity, new customer
acquisition targets, co-located ICC support headcount requirements and
other issues that may be required for the Parties to reach their sales
goals during the first year of the Agreement. The SMP shall be reviewed
by the Parties on a quarterly basis and measured against performance.
Modifications mutually agreed upon as a result of such reviews shall be
incorporated into the SMP as appropriate from time to time. The SMP
shall be incorporated into this Agreement by reference and the Parties
shall agree on any deviation from the terms of the SMP in advance.
g) Where additional product development efforts are necessary to launch
and/or support bundled offerings, the Parties will cooperate in
performing such additional efforts in a professional and timely manner.
C&W may at its sole option decline such request and ICC may decline such
request if C&W is not meeting sales targets established and agreed to in
the SMP referenced in section 2(e) above.
3
<PAGE>
3) LENGTH OF TERM
a) The Initial Period of this Master Agreement shall commence upon the date
that both Parties receive the executed Master Agreement and shall
continue for a period of one (1) year. At C&W sole discretion, the
Agreement shall automatically renew on each anniversary thereof for
additional one (1) year Periods. Should C&W wish to terminate this
Master Agreement, a 60 day written notification is required.
b) During all Periods, C&W shall be ICC's exclusive Tier 1 provider for the
regions described in section 2(b) herein. The Parties shall develop a
Tier 1 and Global Competitor List (GCL) that shall name those
competitors identified and agreed by the Parties. ICC agrees that it
will not enter into an agreement with any entity identified and
incorporated into the GCL. The GCL shall be incorporated into this
Agreement by reference and the Parties shall agree any modifications to
the GCL in advance.
c) Following the expiration of the Initial Period, either Party, upon 60
days written notice prior to the expiration of any subsequent Period,
may terminate the Agreement for cause as shall be described in an
Addendum to the Master Agreement. The Parties may at anytime mutually
agree to an earlier termination date. In the event that either party is
notified of a cause for discontinuance, the other party will have 60
days to cure the alleged fault. Should the cure be deemed inadequate,
the 60 day period for termination of service will begin.
d) Notwithstanding any other provision after termination of the Agreement
should C&W desire to continue selling ICC's services, ICC agrees to
provide C&W with MFN terms and conditions for all ICC's services.
4) MISCELLANEOUS
a) The Parties will co-develop relevant MARCOM materials. C&W shall retain
right of advance approval of any and all materials bearing reference to
C&W. As well, ICC shall retain right of advance approval of any and all
materials bearing reference to ICC. The Parties shall bear their
individual costs of the production of their own materials. Should ICC
desire to use C&W MARCOM materials, such materials in reasonable
quantities shall be provided to ICC at C&W cost. Should C&W wish to use
or incorporate any ICC MARCOM materials, it may do so with ICC's
consent, such consent not to be unreasonably denied.
b) The Parties will jointly develop and mutually agree upon a press
announcement pertaining to this Master Agreement. Additionally, it is
agreed that both parties shall jointly prepare a PR Strategy for the
next 30, 60, 90 days of this relationship.
c) C&W will endeavor to provide in-kind support to ICC. The Parties shall
agree on pricing and terms ICC shall be required to pay to C&W before
commencement of such services will begin. A separate purchase agreement
for such services will be executed as appropriate.
d) This Master Agreement shall be governed by the laws and subject to the
jurisdiction of the Commonwealth of Virginia.
4
<PAGE>
Cable & Wireless PLC Internet Commerce Corporation
Date Date
By:_______________________________ By: _____________________________
Matthew Wolk Dr. Geoffrey S. Carroll
Vice President Strategic Business President and Chief Executive
Development Global Operations Officer
5
