As filed with the Securities and Exchange Commission on June 4, 1999
Registration No. _________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INTERNET COMMERCE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3645702
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
805 Third Avenue
New York, New York 10022
(212) 271-7640
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive office)
RICHARD J. BERMAN
Chairman and Chief Executive Officer
INTERNET COMMERCE CORPORATION
805 Third Avenue
New York, New York 10022
(212) 271-7640
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copy to:
PETER S. KOLEVZON, ESQ.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022-3903
(212) 715-9100
--------------------
Approximate date of commencement of proposed sale to the public: at such
time or times after the effective date of this Registration Statement as the
selling stockholders may determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reimbursement plans, check the following box. |X|
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
Title of each class Amount Proposed Proposed maximum Amount
of securities to be to be maximum offering aggregate offering of
registered registered(1) price per share price per share(2) registration fee(2)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock,
par value $.01 per share 3,213,334 $ 12.06 $ 38,760,841 $ 10,776
</TABLE>
- -----------
(1) Issuable upon conversion of Series A Convertible Redeemable Preferred Stock.
Also includes such indeterminate number of shares of Class A Common Stock that
may be issuable upon conversion of the Series A Convertible Redeemable Preferred
Stock pursuant to the anti-dilution provisions thereof.
(2) The proposed maximum aggregate offering price has been estimated solely to
calculate the registration fee under Rule 457(c) of the Securities Act, based
upon the average of the highest and lowest price per share of common stock on
The Nasdaq SmallCap Market reported on June 1, 1999.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
<PAGE>
- --------------------------------------------------------------------------------
The information in this prospectus is not complete and may be
changed. The selling stockholders may not sell these securities until
the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
- --------------------------------------------------------------------------------
PROSPECTUS
INTERNET COMMERCE CORPORATION
3,213,334 Shares of Class A Common Stock
par value $.01 per Share
o This Prospectus relates to the public offering from time to time of up
to 3,213,334 shares of our Class A Common Stock by the persons listed in
"Selling Stockholders" below or their pledgees, donees, transferees and
other successors in-interest, referred to in this Prospectus as the
"selling stockholders," after the selling stockholders convert all or
part of their shares of Series A Convertible Redeemable Preferred Stock
(the "Series A Preferred Stock"). We issued the Series A Preferred Stock
to the selling shareholders in a private placement that was completed in
April 1999. This Prospectus also relates to the sale by the selling
stockholders of an indeterminate number of additional shares of our
common stock that is issuable upon conversion of the Series A Preferred
Stock if the conversion price is adjusted as required by the Series A
Preferred Stock.
o Our common stock is traded on The Nasdaq SmallCap Market under the
symbol "ICCSA". On June 3, 1999, the last sale price for the common
stock was $11.625.
o The shares of common stock offered by this Prospectus are being sold by
the selling stockholders. Any selling stockholder may sell the common
stock on The Nasdaq SmallCap Market or in privately negotiated
transactions, whenever he decides and at the price he sets. The price at
which any of the shares of common stock are sold and the commissions
paid, if any, may be privately negotiated, may be based on the
prevailing market prices and may vary from transaction to transaction.
o We will not receive any proceeds from the sale of these shares. We will
pay all expenses of registration incurred in connection with this
offering. The selling stockholders will pay all selling and other
expenses that they incur.
o This investment involves a high degree of risk. You should carefully
consider the risk factors beginning on page 7 of this Prospectus before
you decide to invest.
Neither the Securities and Exchange Commission (the "SEC") nor any state
securities commission has approved or disapproved of these securities or
determined if this Prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
We have not authorized anyone to provide you with, and you should not
rely on, information other than that which is in this Prospectus.
The date of this Prospectus is June _, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
Forward-Looking Statements................................................... 3
Summary of Our Business...................................................... 3
Risk Factors................................................................. 7
Risks Relating to our Company................................................ 7
Risks Relating to the Internet and Online Commerce Aspects of our Business... 14
Risks Relating to our Class A Common Stock................................... 16
Use of Proceeds.............................................................. 18
Selling Stockholders......................................................... 18
Plan of Distribution......................................................... 21
Description of Securities.................................................... 22
Legal Matters................................................................ 30
Experts...................................................................... 30
Where You Can Find More Information.......................................... 30
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus contains a number of "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Specifically, all statements other than statements
of historical facts included in this Prospectus (or incorporated by reference in
this Prospectus) regarding our financial position, business strategy and plans
and objectives of management for future operations are forward-looking
statements. These forward-looking statements are based on the beliefs of
management, as well as assumptions made by and information currently available
to management. When used in this Prospectus (including the information
incorporated by reference), the words "anticipate," "believe," "estimate,"
"expect," "may," "will," "continue" and "intend," and words or phrases of
similar import, as they relate to our financial position, business strategy and
plans, or objectives of management, are intended to identify forward-looking
statements. These "cautionary statements" reflect our current view with respect
to future events and are subject to risks, uncertainties and assumptions related
to various factors including, without limitation, those listed under the heading
"Risk Factors" and other cautionary statements in this Prospectus (and in the
information incorporated in this Prospectus by reference).
Although we believe that our expectations are reasonable, we cannot
assure you that our expectations will prove to be correct. Based upon changing
conditions, should any one or more of these risks or uncertainties materialize,
or should any underlying assumptions prove incorrect, actual results may vary
materially from those described in this Prospectus as anticipated, believed,
estimated, expected or intended. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by these cautionary statements.
SUMMARY OF OUR BUSINESS
Internet Commerce Corporation
We have developed, and own and operate, an Internet-based value-added
network ("VAN") with which we provide Electronic Data Interchange ("EDI")
services to large organizations and their trading partners under the trade name
CommerceSense. We have developed our CommerceSense service as an alternative to
the EDI services that are currently provided by traditional VANs that offer
their services primarily using dedicated telecommunications links. Our
CommerceSense service translates and transmits electronic documents, such as
purchase orders, requests for proposals and receipts, as well as images and
other data over the Internet through an "in" and "out" mailbox system. We began
the development of our CommerceSense service in 1997, introduced CommerceSense
for beta testing in November 1997 and launched the current version of
CommerceSense commercially in April 1999.
We believe that our CommerceSense service offers the following services
typically provided by traditional VANs:
- 3 -
<PAGE>
o Document management, acknowledgment and tracking;
o Archiving and reporting services;
o Third-party non-repudiation (we act as an independent third party
to verify document transmission, receipt and content);
o Technical support; and
o Security and encryption as required by application.
In addition to providing many of the features of the services provided
by traditional VANs, we believe that CommerceSense offers advantages over the
services provided by traditional VANs, such as:
Lower Costs. Our CommerceSense service uses the Internet to offer
customers services at a lower cost than traditional VANs.
o CommerceSense does not require the customer to purchase software or
an EDI translator to access the network, thus lowering the upfront
costs required to subscribe to our CommerceSense service compared to
subscribing to a traditional VAN service;
o Using the Internet rather than the traditional VAN
telecommunications infrastructure reduces the costs associated with
EDI transmissions and enables us to offer our CommerceSense service
at lower prices than those currently charged by traditional VANs;
o CommerceSense does not require customers to make ongoing software
modifications or maintain a technical staff to manage EDI
transmissions; and
o The lower setup and operating costs allow a larger percentage of an
organization's smaller trading partners to become EDI-enabled,
thereby facilitating the exchange of documents and other data and
reducing costs for both the organization and its trading partners.
Improved Quality of Service and Additional Features. Our CommerceSense
service uses the Internet to deliver a higher level of service and more
features than traditional VANs.
o Documents are delivered significantly faster, depending upon the
speed of the customer's ISP connection;
o Customers may more effectively track, monitor and process business
documents and other data;
o Documents can be delivered either in real time or retrieved when
convenient for the customer, rather than in batches, which in some
cases can take several hours to be delivered. Real-time delivery
reduces the potential for
- 4 -
<PAGE>
document corruption, bottlenecks and other problems associated with
batch delivery modes;
o Our CommerceSense service can handle transmissions of data other
than standard business documents, such as images, engineering
drawings, architectural blueprints, audio and video clips; and
o The customer can create different document types and formats for
various business applications. For example, the customer can add its
business logo to its documents and can use its own format for each
document type.
In addition, we believe our CommerceSense service offers advantages over
e-mail and other Internet-based electronic commerce systems, such as:
o Our CommerceSense service can handle a wide variety of business
documents and data, including purchase orders, invoices, statements,
inventory tracking and shipping documents, images, engineering
drawings, architectural blueprints, audio and video clips; and
o We believe that CommerceSense is the only Internet-based data
transmission service that is approved to interconnect with the six
largest traditional VANs, which we believe currently account for 90%
of EDI revenue. Thus, we can handle EDI traffic between our customers
and any of their trading partners that choose to continue to use a
traditional VAN.
A large company that uses EDI to communicate with its vendors is
referred to as a "hub"; the vendors are referred to as "spokes". We intend to
continue to market our CommerceSense service to the 2,500 largest hub companies
in the United States. Due to the cost to the spoke companies of using VANs,
large hub companies using EDI are currently connected to only a small percentage
of their potential spoke companies. We believe that a significant number of
these hub companies intend to expand the use of electronic commerce to more of
their spoke companies. Since small spoke companies using our CommerceSense
service require only an Internet connection or a Web browser to receive and
transmit documents electronically, large hub companies may now be able to
request or encourage electronic commerce with their small hub companies. In
turn, many of these spoke companies may become the hub companies for their
suppliers, which should further broaden the reach of our CommerceSense service.
We believe that if we are able to sell our CommerceSense service to a
significant percentage of a hub company's spokes, we may be able to offer to
such a trading community ancillary messaging services in addition to
CommerceSense. It is our intention to attempt to develop and introduce a variety
of messaging products and services with a focus on the needs of large-scale
enterprises, particularly those enterprises that are in vertical markets in the
25 largest commercial industries. We believe that a large-scale CommerceSense
trading community within an individual vertical market could make available to
third parties
- 5 -
<PAGE>
desirable access to a group of buyers and sellers that share applications and
circumstances unique to their industry.
The address of our principal executive office is 805 Third Avenue, New
York, New York 10022. Our telephone number at that address is (212) 271-7640.
- 6 -
<PAGE>
RISK FACTORS
You should carefully consider each of the following risk factors in
addition to the other information contained in this Prospectus before purchasing
shares of our common stock. Investing in our common stock involves a high degree
of risk. Any of the following risks could materially and adversely affect our
business, operating results, financial condition and the market price of our
common stock and could result in the complete loss of your investment.
The risks and uncertainties described below are not the only ones we
face. Additional risks and uncertainties that we do not currently recognize or
that we currently believe are immaterial may also adversely impact our business,
operating results, financial condition and the market price of our common stock.
RISKS RELATING TO OUR COMPANY
We have a limited operating history.
We were founded in November 1991 and from 1991 to 1997 we conducted
limited operations and developed certain products that we were unable to exploit
commercially and consequently discontinued. In 1997, we shifted our business
emphasis to focus exclusively on the development and marketing of our
CommerceSense service and launched the current version of our CommerceSense
service commercially in April 1999. As a result, we have only a limited
operating history and there is little historical information on which to
evaluate our business and prospects. An investor in our common stock must
consider the substantial risks, expenses and difficulties frequently encountered
by companies that depend solely on the success of a recently-introduced new
product or service and that compete in new and rapidly evolving markets. Such
risks for us include:
o our evolving business model;
o our ability to achieve market acceptance of our services;
o our ability to manage growth and expanding operations;
o our competitors, many of which have more established electronic
document delivery systems and customer relationships and vastly
greater financial and other resources than we do; and
o the rapid evolution of technology in electronic commerce.
We may not be successful in implementing any of our business strategies
or in addressing these risks. Even if we accomplish these objectives, we may not
be profitable in the near future, or ever.
We have incurred significant losses, expect future losses and we may never
become profitable.
We have incurred significant losses since our company was founded in
1991. We have never earned a profit in any fiscal quarter and, as of January 31,
1999, we had an
- 7 -
<PAGE>
accumulated deficit of approximately $16.5 million. In their audit report on our
July 31, 1998 financial statements, Richard A. Eisner & Company, LLP questioned
our ability to continue as a going concern. However, this occurred prior to the
consummation of our April 1999 private placement of Series A Preferred Stock in
which we raised approximately $7 million of cash proceeds and converted into
equity approximately $2,595,000 million of debt. We are currently focusing on
our CommerceSense service, which we introduced for beta testing in November
1997. We launched the current version of CommerceSense commercially in April
1999. As a result, our revenue for the foreseeable future is almost entirely
dependent on the success of this service, including, but not limited to, the
number of customers who subscribe to the service and the volume (in
kilocharacters) of the data, documents or other information they send or
retrieve utilizing our service. We expect our cost of revenue and operating
expenses to increase significantly, especially in the areas of marketing,
customer installation and customer service. We will need to generate significant
revenue to achieve and maintain profitability. If we do not increase our revenue
significantly, we will continue to be unprofitable.
We expect to base our expenditures on our plans and estimates of future
revenue. We may be unable to adjust spending in a timely manner if we experience
an unexpected shortfall in our revenue. As a result, we may not achieve
profitability.
Our prospects depend to a large extent on the future of business-to-business
electronic commence conducted on the Internet, which is uncertain.
The market for Internet-based electronic commence has only recently
begun to develop and is evolving rapidly. This makes it difficult to predict
demand and market acceptance for our CommerceSense service. We are not sure that
this market will grow. If the market does not develop as quickly as we expect,
our business, operating results and financial condition will be materially and
adversely affected. We cannot assure you that widespread acceptance of
business-to-business Internet-based electronic commence will occur.
We may not be able to manage our growth.
Our ability to implement our business plan successfully in a new and
rapidly-evolving market requires effective planning and growth management. We
plan to expand our existing operations substantially, particularly those
relating to sales and marketing, customer installation and technical support. We
expect that we will need to continue to manage and to expand multiple
relationships with customers, Internet service providers and other third
parties. We also expect that we will need to continue to improve our financial
systems, procedures and controls and will need to expand, train and manage our
workforce, particularly our information technology staff. Our management and
operating systems may be strained by our growth and we may be unable to complete
in a timely manner necessary improvements to our operating systems, procedures
and controls to support our future operations. If we cannot manage our
anticipated growth effectively, our business, operating results and financial
condition will be materially and adversely affected.
- 8 -
<PAGE>
We may face capacity constraints.
The satisfactory performance, reliability and availability of our
network infrastructure, customer support and document delivery systems and our
Web site are critical to our reputation and our ability to attract customers and
maintain adequate customer service levels. Capacity constraints could prevent
customers from sending or gaining access to their documents or other data or
accessing our customer support services for extended periods of time and
decrease our ability to acquire and retain customers. If the amount of traffic
increases substantially and we experience capacity constraints, we will need to
expand further and upgrade our technology and network infrastructure. We may be
unable to predict the rate or timing of increases in the use of our services to
enable us to upgrade our operating systems in a timely manner. Any significant
or prolonged capacity constraints would likely have a material and adverse
effect on our business, operating results and financial condition.
We face risks relating to rapid technological changes.
Our market is characterized by rapidly changing technologies, customer
demands and intense competition. If we cannot keep pace with these changes, our
CommerceSense service could become uncompetitive and our business will suffer.
The Internet's recent growth and the intense competition in our industry
exacerbate these characteristics. We need to continue to develop strategic
business and Internet solutions that enhance and improve the customer service
features, functions and responsiveness of our CommerceSense service and that
keep pace with continuing changes in information technology and customer
requirements. If we are not successful in developing and marketing enhancements
to our CommerceSense service or new services that respond to technological
change or customer demands, our business will suffer.
We may have future capital needs.
If we do not become profitable, or if achieving profitability takes
longer than we anticipate, we will need to raise additional funds. In addition,
we may need to raise additional funds sooner if we attempt to expand more
rapidly or if competitive pressures or technological changes are greater than
anticipated. If additional financing is needed, we cannot assure you that it
will be available on reasonable terms or at all. Our business, operating results
and financial condition could be materially and adversely affected by any
failure to obtain necessary additional financing.
If additional funds are raised through the issuance of debt securities,
the holders of the debt securities will have a claim to our assets that will be
prior to any claim of our stockholders. The interest on these debt securities
could have a material and adverse effect on our operating results and financial
condition. If additional funds are raised through the issuance of common stock
or securities convertible into or exchangeable for common stock, the percentage
ownership of our then-existing stockholders will decrease and they may
experience additional dilution. In addition, any convertible or exchangeable
securities may have rights, preferences and privileges more favorable to the
holders than those of the common stock.
- 9 -
<PAGE>
The business-to-business electronic commerce market is intensely competitive.
The business-to-business electronic commerce industry is evolving
rapidly and is intensely competitive. Our principal competitors include: GE
Information Services, Inc., Harbinger Corporation, AT&T Corp., MCI
Communications Corporation, Sterling Commerce, Inc. and Advantis, a
joint-venture of International Business Machines Corporation and Sears Roebuck &
Co. Each of these competitors has an established VAN that has provided EDI for
at least several years and has long-established relationships with the users of
EDI, including many of our prospective customers. Current and potential
competitors may establish cooperative relationships among themselves.
Many of our current and potential competitors, especially those named
above, have significant existing customer relationships and vastly larger
financial, marketing, customer support, technical and other resources than we
do. As a result, they may be able to respond more quickly to changes in customer
requirements or be able to undertake more extensive marketing campaigns, adopt
more aggressive pricing policies and make more attractive offers to potential
customers and employees, or be able to devote greater resources to the
development, promotion and sale of their services than we can. New competitors
or alliances or other cooperative relationships among current and potential
competitors and suppliers may emerge and rapidly acquire market share.
We may not be successful in competing against our current and future
competitors. Increased competition or our failure to compete successfully is
likely to result in fewer customers, price reductions, reduced gross margins,
increased marketing costs or loss of market share, or a combination of these
problems, any of which could have a material and adverse effect on our business,
operating results and financial condition.
We currently depend on our CommerceSense service and face the risks of expanding
into new business areas.
We are currently focusing exclusively on our CommerceSense service. As a
result, our financial condition for the foreseeable future will depend heavily
on the success or failure of our CommerceSense service. We introduced the
current version of our CommerceSense service commercially in April 1999 and it
is difficult to predict demand and market acceptance for this service in the new
and rapidly evolving business-to-business electronic commerce market.
It is our intention to attempt to expand our operations by developing
and marketing new or complementary services or systems or by expanding the
breadth and depth of our offerings. We cannot assure you that we will be able to
do so effectively. Furthermore, although we believe that we will be able to use
our CommerceSense service as a platform to provide these additional services or
systems, we cannot assure you that we will be able to do so.
- 10 -
<PAGE>
We may pursue acquisitions which will require substantial funding and divert our
management and may involve substantial risk.
We may seek acquisitions of services, products or companies, joint
ventures or other arrangements which complement or expand our business. However,
we cannot assure you that we will be able to identify appropriate acquisition
candidates in the future. If an acquisition candidate is identified, we cannot
assure you that we will be able to successfully negotiate and finance the
acquisition. In addition, we cannot assure you that we will be able to integrate
the acquisition into our existing business and successfully operate the
acquisition. The negotiation of potential acquisitions could cause diversion of
management's time and resources and require significant resources to consummate.
If we consummate one or more significant acquisitions through the issuance of
shares of common stock, you could suffer significant dilution of your ownership
interests in ICC. Finally, expanding our business through acquisitions may
expose us to new and different competitors, which will likely have greater
financial and other resources than we do.
We depend on our key personnel and certain third-party providers and we will
need to attract and retain additional personnel.
We are substantially dependent on the continued services and performance
of our executive officers and other key employees. In addition, we believe we
will need to expand significantly our information technology, marketing and
customer service staffs in the near future by hiring employees who are highly
skilled in the Internet and its rapidly-changing technology. Individuals who
have Internet expertise and can manage, service or market the services we offer
and propose to offer are in high demand. Many of our competitors have
significantly greater financial and other resources than we do and may be able
to offer more lucrative compensation packages and higher-profile employment
opportunities than we can. Although all of our executive officers and certain
key employees have entered into employment agreements, none of these agreements
prevents any of them from leaving us. The loss of the services of any of our
executive officers or other key employees or our inability to hire needed
additional personnel could materially and adversely affect our business,
operating results and financial condition.
We intend that an important part of the compensation of our key
employees will be stock options and other stock-based compensation. If our stock
price declines for any significant period of time, we may not be compensating
our employees in a competitive manner. In that case, it could become difficult
to retain key employees and our business would suffer.
In addition, we are substantially dependent on the services of
independent contractors to train customers in the use of CommerceSense. We have
entered into one such relationship and are seeking to retain several other
providers of such services. We do not control or supervise these service
providers and if they fail to perform satisfactorily or if we cannot retain
additional service providers, our business will be materially and adversely
affected.
- 11 -
<PAGE>
We are dependent on our intellectual property.
Other than our branding patent, our intellectual property consists of
proprietary or confidential information that is not currently subject to patent,
trademark or similar protection. Although we have applied for trademark
protection for the CommerceSense name, this name is not currently a registered
trademark in the United States.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related businesses are
uncertain and still evolving. As a result, we cannot assure you that
unauthorized third parties will not try to copy our service or our business
model or use our confidential information to develop competing services. It is
possible that our competitors or others will adopt product or service names
similar to CommerceSense, thereby impeding our ability to build brand identity
and possibly confusing customers. We cannot assure you that we will be able to
secure significant protection for this trademark. Policing unauthorized use of
our technology is difficult and expensive, particularly because the global
nature of the Internet makes it difficult to control the ultimate destination or
security of software or other data transmitted. The laws of other countries may
not adequately protect our intellectual property.
We also cannot assure you that our business activities and our
CommerceSense service will not infringe upon the proprietary rights of others,
or that other parties will not assert infringement claims against us. Any such
claims and any resulting litigation, should it occur, could subject us to
significant liability for damages and could result in invalidation of our
proprietary rights and a requirement that we enter into costly and burdensome
royalty and licensing agreements. If a license or royalty agreement is required,
it may not be available on terms acceptable to us, or may not be available at
all. In the future, we may also need to file lawsuits to defend the validity of
our intellectual property rights and trade secrets, or to determine the validity
and scope of the proprietary rights of others. These litigations, whether
successful or unsuccessful, could result in substantial costs and diversion of
resources, including management time and attention.
Our operating results may fluctuate significantly due to seasonality.
Our limited operating history with respect to our CommerceSense service,
together with our expanded business strategy, make it difficult to assess fully
the impact of seasonal factors on our business. However, we expect to experience
seasonality in our business that reflects the seasonality of the businesses of
our customers. We believe that period-to-period comparisons of our operating
results may not be meaningful and that our operating results for any particular
period will not necessarily be a good indicator of our future performance.
International expansion could result in financial losses.
We intend to expand our international marketing and sales efforts.
International operations are subject to a number of inherent risks, including
the following:
- 12 -
<PAGE>
o political, economic and legal instability;
o fluctuations in currency exchange rates;
o potentially adverse tax consequences;
o the burdens of complying with a wide variety of foreign laws and
changing regulatory requirements; and
o tariffs and other trade barriers.
We may suffer systems failures and business interruptions.
Our success will depend on the efficient and uninterrupted operation of
our service that is required to accommodate a high volume of traffic. Almost all
of our network operating systems are located at a single leased facility in New
York, New York. Our systems are vulnerable to damage from fire, power loss,
telecommunications failures, break-ins, earthquakes and other events. Although
we have implemented network security measures, our servers may be vulnerable to
computer viruses, electronic break-ins, attempts by third parties deliberately
to exceed the capacity of our systems and similar disruptions. Any of these
events could lead to interruptions or delays in service, loss of data or the
inability to accept, transmit and confirm customer documents and data. These
events could have a material adverse effect on our business, operating results
and financial condition.
Certain of our existing stockholders will exercise significant control.
Certain of our stockholders currently, in the aggregate, beneficially
own shares having approximately 28.4% of the combined voting power of our voting
securities. These shares have been deposited into a voting trust and will be
voted at the direction of a majority of the non-management directors of the
Company and Richard J. Berman, our Chairman and Chief Executive Officer. See
"Description of Securities". As a result, these stockholders will be able to
take any of the following actions without your approval:
o elect all of our directors;
o amend our charter or approve a merger, sale of assets or other major
corporate transaction;
o defeat any takeover attempt that you may believe is beneficial; and
o otherwise control the outcome of all matters submitted for a
stockholder vote.
The interests of these stockholders could conflict with your interests. In
addition, this concentration of ownership could delay or prevent another person
from acquiring control or causing a change in control of ICC, which may affect
your ability to resell your shares at a favorable price.
Problems related to the year 2000 issue could require us to incur unanticipated
delays and expenses.
As a company engaged in business-to-business electronic commence over
the Internet, we rely on computer programs and systems in connection with our
internal and external communication networks and systems (including
transmissions of information over the
- 13 -
<PAGE>
Internet), order processing and fulfillment, accounting and financial systems,
customer access to our Web site and other business functions. Based on our
design process and assessment to date, we believe the current versions of our
service and our various systems are year 2000 compliant. However, we cannot
assure you that our programs designed to minimize the impact of the transition
to the year 2000 on our electronic date-sensitive equipment, including the
terminal operations software at our facilities, will be completely successful
(or that the costs of implementing them will not exceed our current estimates).
If these programs are not successful (or if their costs exceed our estimates),
the date change from 1999 to 2000 could have a material and adverse effect on
our business, operating results and financial condition. The full extent of any
adverse impact on our business is impossible to determine.
It is possible that our customers may not become year 2000 compliant in
a timely fashion. While the failure of a customer to become year 2000 compliant
will not affect our ability to receive or transmit that customer's documents or
data, the ability of that customer's trading partners to receive or utilize the
document or data transmitted may be adversely affected. As a result, customers
that are not year 2000 compliant may cease using our CommerceSense service and
that may have a material and adverse effect on our business, operating results
and financial condition.
RISKS RELATING TO THE INTERNET AND ONLINE COMMERCE
ASPECTS OF OUR BUSINESS
We depend on the continued existence of the Internet infrastructure.
The increased acceptance of the Internet for business-to-business
electronic commerce is essential for our business to grow. We cannot be certain
that the infrastructure or complementary services necessary to maintain the
Internet as a useful and easy means of transferring documents and data will
continue to develop. The Internet infrastructure may not support the demands
that growth may place on it and the performance and reliability of the Internet
may decline. The Internet could lose its viability or its usage could decline
due to many factors, including:
o cost and ease of Internet access;
o delays in the development of the Internet infrastructure;
o inconsistent service quality;
o the adoption of new standards or protocols for the Internet;
o changes or increases in governmental regulation;
o the development and adoption of new technologies which do not use the
Internet;
o intellectual property ownership; and
o privacy concerns.
In addition, concerns over the security of online transactions and the
privacy of users may inhibit the growth of the Internet as a means of delivering
business documents and data. We rely upon encryption and authentication
technology to provide secure transmission of
- 14 -
<PAGE>
confidential information. However, we cannot assure you that our security
measures will prevent security breaches, and such breaches could expose us to
operating losses, damage to our reputation, litigation and possible liability.
Advances in computer capabilities, new discoveries in the field of cryptography
or other developments may result in a compromise or breach of our encryption and
authentication technology and could enable an outside party to steal proprietary
information or interrupt our operations. We may need to incur significant
expenses and use significant resources to protect against the threat of security
breaches or to alleviate problems caused by such breaches.
We depend on third-party providers of Internet and telecommunications service.
Our operations also depend upon third parties for Internet access and
telecommunications. Frequent or prolonged interruptions of these services could
result in significant losses of revenues. We have limited control over these
third parties and cannot assure you that we will be able to maintain
satisfactory relationships with any of them on acceptable commercial terms. Nor
can we assure you that the quality of services that they provide will remain at
the levels needed to enable us to conduct our business effectively. Each of them
has experienced outages in the past, and could experience outages, delays and
other difficulties due to system failures unrelated to our on-line architecture.
These types of occurrences could cause users to perceive our products as not
functioning properly and therefore cause them to use other methods to deliver
and receive information.
Government regulation and legal uncertainties relating to the Internet could
hurt our business.
The Internet is largely unregulated and the laws governing the Internet
remain unsettled, even in areas where there has been some legislative action. It
may take years to determine whether and how existing laws such as those
governing intellectual property, privacy and taxation apply to the Internet. In
addition, due to the increasing popularity and use of the Internet, it is
possible that a number of laws and regulations may be adopted with respect to
the Internet or other online services covering issues such as:
o user privacy;
o security;
o pricing;
o content;
o copyrights;
o distribution;
o taxation; and
o characteristics and quality of services.
Several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet and on-line service providers in
a manner similar to long distance telephone carriers and to impose access fees
on such providers. This could increase the cost of transmitting documents and
data over the Internet. Finally, foreign laws and state tax laws and regulations
relating to the provision of services over the Internet are still
- 15 -
<PAGE>
developing. If individual states impose taxes on services provided over the
Internet, our cost of providing our CommerceSense and other services may
increase and we may not be able to increase the prices we charge to cover these
costs. Any new domestic or foreign laws or regulations or new interpretations of
existing laws and regulations relating to the Internet could have a material and
adverse effect on our business, operating results and financial condition.
RISKS RELATING TO OUR CLASS A COMMON STOCK
Our stock price may be extremely volatile.
The market price of our common stock is likely to fluctuate
substantially in the future. In addition, the securities markets have
experienced significant price and volume fluctuations and the market prices of
the securities of Internet-related companies have been especially volatile.
Fluctuations in the market price of our common stock may affect our visibility
and credibility in the Internet commerce market. In addition, in the past,
companies that have experienced volatility in the market price of their stock
have been subject to securities class action litigation. A securities class
action lawsuit against us could result in substantial costs and a significant
diversion of resources, including management time and attention.
If you decide to purchase our shares, you may not be able to resell them
at or above the price you paid due to a number of factors, including, in
addition to those described above:
o changes in earnings estimates by analysts;
o actual or anticipated variations in quarterly operating results,
including actual results below analysts' expectations;
o the loss of customers;
o market conditions in the industry or generally;
o general domestic and international economic conditions;
o announcements of technological innovations by our competitors; and
o significant sales of our common stock by one or more of our principal
stockholders.
As a result, you could suffer a loss if the future market price remains less
than the price you paid per share.
The market for our common stock may be illiquid.
Our common stock is currently trading on the Nasdaq SmallCap Market.
There can be no assurance that an active trading market will be sustained. It is
possible that the trading market for the common stock in the future will be
"thin" and "illiquid", which could result in increased volatility in the trading
prices for our common stock. The price at which the common stock will trade in
the future cannot be predicted and will be determined
- 16 -
<PAGE>
by the market. The price may be influenced by many factors, including, but not
limited to, investors' perceptions of us, the use of the Internet for business
purposes and general economic and market conditions.
Our common stock was delisted from the Nasdaq SmallCap Market on
February 22, 1999 because we did not satisfy the listing criteria. We have since
then been relisted on the Nasdaq SmallCap Market. We believe that we are
significantly better positioned to maintain our listing on the Nasdaq SmallCap
Market as a result of the funds we raised in our private placement of Series A
Preferred Stock.
Our board of directors can issue preferred stock with rights adverse to the
holders of common stock.
Our board of directors is authorized, without further stockholder
approval, to determine the provisions of and to issue up to 4,989,825 shares of
preferred stock. Issuance of preferred shares with rights to dividends and other
distributions, voting rights or other rights superior to the common stock could
be adverse to the holders of common stock.
Our certificate of incorporation and bylaws provide director and officer
indemnification and limit their liability.
We may have to spend significant resources indemnifying our officers and
directors or paying for damages caused by their conduct. The Delaware General
Corporation Law provides for broad indemnification by corporations of their
officers and directors and permits a corporation to exculpate its directors from
liability for their actions. Our bylaws and certificate of incorporation
implement this indemnification and exculpation to the fullest extent permitted
under this law as it currently exists or as it may be amended in the future.
Consequently, subject to this law and to certain limited exceptions in our
certificate of incorporation, none of our directors will be liable to us or to
our stockholders for monetary damages resulting from conduct as a director.
Our anti-takeover provisions and Delaware law may have adverse effects on our
stock price.
There are provisions in our certificate of incorporation, our bylaws and
Delaware law that make it more difficult for a third party to obtain control of
ICC, even if doing so would be beneficial to our stockholders, which could
depress our stock price. These provisions include: (a) authority to divide the
Board of Directors into three classes so that only one-third of our directors
are elected each year and are elected for terms of three years; (b) requiring a
request by stockholders holding not less than 20% of our outstanding stock to
compel the Board of Directors to call a special meeting of the stockholders,
which request must state the object of the proposed meeting; and (c) permitting
the Board of Directors to amend or repeal our bylaws without stockholder consent
or vote.
- 17 -
<PAGE>
USE OF PROCEEDS
The selling stockholders are selling all the common stock covered by
this Prospectus for their own account. Accordingly, we will not receive any
proceeds from the sale of such common stock. We will pay all expenses of
registration incurred in connection with this offering. The selling stockholders
will pay all selling and other expenses that they incur.
SELLING STOCKHOLDERS
We raised $7 million of cash proceeds and converted into equity
$2,595,000 of debt through the sale and exchange of Series A Preferred Stock in
our private placement that was completed in April 1999. We issued a total of
9,595 shares of Series A Preferred Stock in connection with this private
placement to the selling stockholders named below. In May 1999 we issued 45
shares of Series A Preferred Stock to Summerwind Restructuring, Inc. for
financial consulting and advisory services rendered from January 1, 1999 through
April 30, 1999. This Prospectus relates to 3,213,334 shares of common stock that
may be offered and sold from time to time by the selling stockholders after they
convert their shares of Series A Preferred Stock. It also relates to the sale by
the selling stockholders of an indeterminate number of additional shares of our
common stock that is issuable upon conversion of the Series A Preferred Stock if
the conversion price is adjusted as required by the Series A Preferred Stock.
Set forth below is information, as of the date of this Prospectus,
regarding the beneficial ownership of the shares by the selling stockholders.
The number of shares shown as beneficially owned by the selling stockholders
represents all of the shares of Common Stock to be issued upon conversion in
full of all of the outstanding shares of Series A Preferred Stock. The
information regarding the selling stockholders' beneficial ownership after this
offering assumes that all shares of common stock offered by the selling
stockholders through this Prospectus are actually sold. The presentation is
based on __________ shares of our common stock outstanding as of _____, 1999.
- 18 -
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Number of Shares Number of Common Stock
of Common Stock Shares of Beneficially Owned
Beneficially Owned Common Stock After Offering
- ----------------------------------------------------------------------------------------------------------
Selling Stockholders Prior to Offering Offered Number Percent
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DOUG SCHMIDT
AGR HALIFAX FUND, LTD
ALBA LTD
ALEXANDER MITCHELL
ALTA WEHNERT
ANTHONY G. ORPHANOS
ARAB COMMERCE BANK LTD
ARCHIBALD M. BROWN, JR.
ASHISIE DRUVE
AUSTOST ANSTALT SCHAAN
BANCA FINNAT
EURAMERICA, S.p.A
BEAR STEARNS SECURITIES
CORP CUSTODIAN FOR
STEVEN MIZEL IR
BENNY SHABTAI
B.R. FRIES & ASSOCIATES
CANADIAN ADVANTAGE
CFC GROUP
CHARLES TRAVERS
CLAUDE P. LEMIEUX
ROBERT GEROTH
STEVEN ABLAMSKY
JOHN ABLAMSKY
JODI KURST
RENEE CASADONTE
DONALD CASADONTE
CYRILLE PLACE
DAVID C. LYLE
DAVID HANDLER
DAVID JAN MITCHELL
DAVID MITCHELL
DAVID MORLEY
DIETER WITTRIN
DOMINIC BASSANI
DOMINIC CHANG
DOMINICK D'ALLEVA
DRS. AJ SCHACHTER
E & G GLASBRENNER
ELISE G. KLEIN
ELLIS AG
EMERSON CAPITAL
MANAGEMENT LTD.
FALCON SECURITIES
FIDUCIARIA OREFICI, S.p.A
FINANCIAL INSTITUTION
RETIREMENT FUND
GARY S. GLUCK
GARY WRUBLE
GERALD WILLIAM CRABBE
GORDON SCHAEFFER
GUILLAUME ZOLA PLACE
HARVEY BLITZ
HERBERT BORK
HERIOT HOLDINGS LIMITED
ICN CAPITAL LIMITED
INGO SCHNELLE
- 19 -
<PAGE>
- ----------------------------------------------------------------------------------------------------------
Number of Shares Number of Common Stock
of Common Stock Shares of Beneficially Owned
Beneficially Owned Common Stock After Offering
- ----------------------------------------------------------------------------------------------------------
Selling Stockholders Prior to Offering Offered Number Percent
- ----------------------------------------------------------------------------------------------------------
JAMES A. ORTENZIO
JAMES BURZOTTA
JAMES J. MCANDREWS IRA
JAMES SCIBELLI
JAN MITCHELL
JEAN A. FRISA
JEFFREY S. MARKOWITZ
JIMMY C.M. HSU
JOERG LANGLITZ
JOHN D. LANE
JOSEPH A. FOGLIA
JOSEPH FUSCO
JOSEPH M. RAITI
JOSEPH M. IDY
JOSEPH P. BASILICE
J. DOUGLAS SCHMIDT
KATHLEEN MEDICI
KENNETH A. JOHNSON
KENSINGTON CAPITAL LTD
KERRY M. FLEMING
KEVIN STEELE
KLAUS KAPOSI
KURT GUBLER, C/O
INVESTARIT AG
LADNER INVESTMENTS LTD
LONDON VENTURE CAPITAL
CORP
LONG ISLAND TITLE
AGENCY, INC.
MAKOTO SASAKI
MARKUS WALLNEY
NIKO DIMITROV
ORHAN SADIK-KHAN
OTATO LIMITED
PARTNERSHIP
PASQUALE M. LAVECCHIA
PICTET & CIE
RANDALL McCATHREN
RBB BANK AG
RICHARD BLUME
RICHARD FELDMAN
RICHARD FRIEDMAN
RICHARD J. BERMAN
ROLAND MUELLER
ROLF ALBRECHT
RONALD C. FROMM
RONALD LOSHIN
ROSS DWORMAN
SALVATORE J. ZIZZA
SHOU-CHUNG WANG
SONEM PARTNERS LTD
STEVEN J. POSNER
STEVEN SLAWSON
SUMMERWIND
RESTRUCTURING, INC.
THOMAS ENRIGHT
THOMAS R. ULIE
THOMAS W. PEW, JR.
- 20 -
<PAGE>
- ----------------------------------------------------------------------------------------------------------
Number of Shares Number of Common Stock
of Common Stock Shares of Beneficially Owned
Beneficially Owned Common Stock After Offering
- ----------------------------------------------------------------------------------------------------------
Selling Stockholders Prior to Offering Offered Number Percent
- ----------------------------------------------------------------------------------------------------------
TIMOTHY VON FUELLING
STRAUS
TOMMY C. HSU
VINCENT FERRARA
WILLIAM PATTERSON
</TABLE>
- --------------------
PLAN OF DISTRIBUTION
We anticipate that the selling stockholders may sell all or a portion of
the shares offered by this Prospectus from time to time on The Nasdaq SmallCap
Market or otherwise, at fixed prices, at market prices prevailing at the time of
sale or at prices reasonably related to the market price, at negotiated prices,
or by a combination of these methods of sale through:
o ordinary brokerage transactions and transactions in which the broker
solicits purchases;
o sales to one or more brokers or dealers as principal, and the resale by
those brokers or dealers for their account, including resales to other
brokers and dealers;
o block trades in which the broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal in order to facilitate the transaction; or
o privately negotiated transactions with purchasers.
We are not aware as of the date of this Prospectus of any agreements
between the selling stockholders and any broker-dealers with respect to the sale
of the shares offered by this Prospectus, although we have made no inquiry in
that regard. In connection with distributions of the shares or otherwise, the
selling stockholders may enter into hedging transactions with broker-dealers. In
connection with these transactions:
o broker-dealers may engage in short sales of the shares covered by this
Prospectus in the course of hedging the positions they assume with
selling stockholders;
o the selling stockholders may sell shares of our common stock short and
deliver the shares to close out their short positions;
- 21 -
<PAGE>
o the selling stockholders may enter into option or other transactions
with broker-dealers that require the delivery to the broker-dealer of
the shares covered by this Prospectus, which the broker-dealer may
resell according to this Prospectus; and
o the selling stockholders may pledge the shares covered by this
Prospectus to a broker or dealer and upon a default, the broker or
dealer may effect sales of the pledged shares according to this
Prospectus.
The selling stockholders and any broker, dealer or other agent executing
sell orders on behalf of the selling stockholders may be considered to be
"underwriters" within the meaning of the Securities Act, in which event
commissions received by any such broker, dealer or agent and profit on any
resale of the shares may be considered to be underwriting commissions under the
Securities Act. Such commissions received by a broker, dealer or agent may be in
excess of customary compensation.
All costs, fees and expenses of registration incurred in connection with
the offering will be borne by us. All selling and other expenses incurred by the
selling stockholders will be borne by the selling stockholders.
We have notified the selling stockholders that they will be subject to
applicable provisions of the Exchange Act and its rules and regulations,
including without limitation, Rule 102 under Regulation M. These provisions may
limit the timing of purchases and sales of any of the common stock by the
selling stockholders. Rule 102 under Regulation M provides, with some
exceptions, that it is unlawful for the selling stockholders or their affiliated
purchasers to, directly or indirectly, bid for or purchase, or attempt to induce
any person to bid for or purchase, an account in which the selling stockholders
or affiliated purchasers have a beneficial interest in any securities that are
the subject of the distribution during the applicable restricted period under
Regulation M. All of the above may affect the marketability of the common stock.
To the extent required by law, we may require the selling stockholders, and
their brokers if applicable, to provide a letter that acknowledges compliance
with Regulation M under the Exchange Act before authorizing the transfer of the
selling stockholders' shares.
DESCRIPTION OF SECURITIES
The following summary description of the material terms of our capital
stock and warrants is not intended to be complete. Since the terms of our
capital stock must comply with the provisions of our certificate of
incorporation and bylaws, which are included as exhibits to the registration
statement, and the Delaware General Corporation Law, you should
- 22 -
<PAGE>
read our certificate of incorporation and bylaws very carefully. See "Delaware
Law and Certificate of Incorporation and Bylaw Provisions" in this Section for a
discussion of certain relevant provisions of our certificate of incorporation
and bylaws and the Delaware General Corporation Law.
We have the authority to issue up to 40,000,000 shares of Class A Common
Stock, 2,000,000 shares of Class B Common Stock, 2,000,000 shares of Class E-1
Common Stock, 2,000,000 shares of Class E-2 Common Stock and 5,000,000 shares of
preferred stock, which includes 10,000 shares of Series A Preferred Stock and
175 shares of Series S Preferred Stock ("Series S Preferred Stock"). Each class
and series of our capital stock has a par value of $.01 per share.
Common Stock
Class A Common Stock
- --------------------
As of May 31, 1999, there were 1,383,437 shares of Class A Common Stock
outstanding, held of record by approximately 160 stockholders. Class A Common
Stock is currently traded on the Nasdaq SmallCap Market under the symbol
"ICCSA".
Holders of Class A Common Stock are entitled to one vote per share on
all matters to be voted on by our common stockholders. Subject to the
preferences of the preferred stock, the holders of Class A Common Stock are
entitled to a proportional distribution of any dividends that may be declared by
the board of directors, provided that if any distributions are made to the
holders of Class A Common Stock, identical per-share distributions must be made
to the holders of the Class B Common Stock, even if the distributions are in
Class A Common Stock. In the event of a liquidation, dissolution or winding up
of ICC, the holders of Class A Common Stock are entitled to share equally with
holders of the Class B Common Stock in all assets remaining after liabilities
and amounts due to holders of preferred stock have been paid in full or set
aside. Class A Common Stock has no preemptive, redemption or conversion rights.
The rights of holders of common stock are subject to, and may be adversely
affected by, the rights of the holders of shares of Series A Preferred Stock,
Series S Preferred Stock or any other series of preferred stock that ICC may
designate and issue in the future.
Class B Common Stock
- --------------------
As of May 31, 1999, there were 114,954 shares of Class B Common Stock
outstanding, held of record by 24 stockholders.
- 23 -
<PAGE>
Class B Common Stock is convertible into Class A Common Stock on a
one-for-one basis both upon request of the holder of the Class B Common Stock or
automatically upon transfer of the Class B Common Stock to a stockholder that
does not hold any Class B Common Stock prior to the transfer. Class B Common
Stock is entitled to six votes per share rather than one vote per share, but in
all other respects each share of Class B Common Stock is identical to one share
of Class A Common Stock.
Class E-1 and E-2 Common Stock
- ------------------------------
As of May 31, 1999, there were 276,851 shares each of Class E-1 Common
Stock and Class E-2 Common Stock outstanding. On May 28, 1999, we called for
redemption on June 11, 1999 all outstanding shares of Class E-1 and Class E-2
Common Stock for a total redemption price of $276.85.
Preferred Stock
The certificate of incorporation authorizes the board of directors,
without any approval of our stockholders, to issue up to 5,000,000 shares of
preferred stock from time to time and in one or more series and to fix the
number of shares of any series and the designation, conversion, dividend and
other rights of the series. The board of directors has designated 10,000 shares
of preferred stock as Series A Preferred Stock and 175 shares of preferred stock
as Series S Preferred Stock.
Future issuances of preferred stock may have the effect of delaying or
preventing a change in control of ICC. The issuance of preferred stock could
decrease the amount of earnings and assets available for distribution to the
holders of common stock or could adversely affect the rights and powers,
including voting rights, of the holders of our common stock. In some
circumstances, the issuance of preferred stock could have the effect of
decreasing the market price of our common stock.
Series A Preferred Stock
- ------------------------
As of May 31, 1999, ICC had 9,640 shares of Series A Preferred Stock
outstanding, held by approximately 110 stockholders.
Series A Preferred Stock is convertible, at the option of the holder,
into the number of shares of Class A Common Stock equal to $1,000 divided by 75%
of the average closing price of the Class A Common Stock on the Nasdaq SmallCap
Market or, if not then traded on the Nasdaq SmallCap Market, in the
over-the-counter market for the ten trading days immediately prior to the
conversion date, at a conversion rate of $5.00 per share until December 31, 1999
with respect to 6,940 shares of Series A Preferred Stock and a minimum
- 24 -
<PAGE>
conversion rate of $3.00 per share and a maximum conversion rate of $5.00 per
share with respect to 2,700 shares of Series A Preferred Stock. As of January 1,
2000, all outstanding shares of Series A Preferred Stock will have a minimum
conversion rate of $3.00 per share and a maximum conversion rate of $5.00 per
share. No fewer than 25 shares may be converted at one time unless the holder
then holds fewer than 25 shares and converts all such shares at that time.
Series A Preferred Stock is redeemable, in whole or in part, by ICC at
$1,000 per share, plus any accrued and unpaid dividends, upon thirty-days'
written notice, commencing on the third anniversary of the date of issuance.
Subject to the rights of stockholders holding any series of ICC
preferred stock that is senior to the Series A Preferred, in the event of a
liquidation, dissolution or winding up of ICC, the holders of Series A Preferred
Stock are entitled to receive an amount equal to $1,000 per share of Series A
Preferred Stock. If upon a liquidation, dissolution or winding up of ICC the
assets remaining after liabilities and amounts due to holders of senior
preferred stock have been paid in full or set aside are not sufficient to pay
such amount and the amount also due to holders of other preferred stock ranking
on a parity with the Series A Preferred Stock, the holders of the Series A
Preferred Stock share ratably with the holders of the parity preferred stock in
the assets remaining.
The holders of the outstanding shares of Series A Preferred Stock are
entitled to a 4% annual dividend payable in cash or in shares of Class A Common
Stock, at the option of ICC, each July 1 commencing July 1, 1999.
Series A Preferred Stock has no voting rights except as expressly
required by law.
Series S Preferred Stock
- ------------------------
As of May 31, 1999, ICC had 175 shares of Series S Preferred Stock
outstanding, held by one stockholder.
Commencing July 1, 1999, and on the first day of each calendar month
thereafter, twelve shares of Series S Preferred Stock shall be mandatorily
redeemed by ICC at a price of $1,000 per share. If ICC is unable to redeem the
twelve shares, the twelve shares will be automatically converted into Class A
Common Stock at a conversion rate per share of Series S Preferred Stock equal to
$1,000 divided by the average closing price of the Class A Common Stock on the
Nasdaq SmallCap Market or, if not then traded on the Nasdaq SmallCap Market, in
the over-the-counter market for the five trading days immediately prior to the
conversion date.
- 25 -
<PAGE>
Subject to the rights of stockholders holding any series of preferred
stock of ICC that is senior to the Series S Preferred, in the event of a
liquidation, dissolution or winding up of ICC, the holders of Series S Preferred
Stock are entitled to receive an amount equal to $1,000 per share of Series S
Preferred Stock. If upon a liquidation, dissolution or winding up of ICC the
assets remaining after liabilities and amounts due to holders of senior
preferred stock have been paid in full or set aside are not sufficient to pay
such amount and the amount also due to holders of other preferred stock ranking
on a parity with the Series S Preferred Stock, the holders of the Series S
Preferred Stock shall share ratably with the holders of the parity preferred
stock in the remaining assets.
Holders of the outstanding Series S Preferred Stock are not entitled to
receive any dividend payments and have no voting rights except as expressly
required by law.
Voting Trust. Thomas H. Lipscomb (former Chairman of the Board and President of
the Company), and Alan N. Alpern (former Chief Financial Officer of the Company)
have deposited substantially all the shares of common stock beneficially owned
by them and other members of their families, which includes Class B Common
Stock, into a voting trust (the "Voting Trust") until February 18, 2000. As of
May 1, 1998, 123,739 shares of Class B Common Stock were forfeited pursuant to
an Escrow Agreement dated as of September 11, 1992, as amended September 20,
1994 (the "Escrow Agreement"), and such shares were delivered by the Escrow
Agent to the Company which holds the shares in treasury. Accordingly, as of May
31, 1999, the shares in the Voting Trust represent 28.4% of the total voting
power of the Company. The shares of Common Stock held in the Voting Trust will
be voted at the direction of a majority of the non-management directors of the
Company and Richard J. Berman, the Chief Executive Officer of the Company and
Arthur R. Medici, former President and a current Director of the Company.
Warrants
As of May 31, 1999 there were 1,227,573 Class A Warrants outstanding.
Each Class A Warrant entitles the holder upon exercise to purchase one Class B
Warrant (described below) and one share of Class A Common Stock. Each Class A
Warrant is exercisable for $22.39 and expires in February 2002.
As of May 31, 1999 there were 2,212,439 Class B Warrants outstanding.
Each Class B Warrant entitles the holder upon exercise to purchase one share of
Class A Common Stock. Each Class B Warrant is exercisable for $30.13 and expires
in February 2002.
- 26 -
<PAGE>
The Class A and Class B Warrants are traded in the over-the-counter
market on the NASD's "OTC Electronic Bulletin Board". The number of Class A and
Class B Warrants and the exercise prices thereof are subject to adjustment in
the event of any subdivision or combination of the outstanding Class A Common
Stock, any stock dividend payable in shares of Class A Common Stock paid to
holders of Class A Common Stock, or any sale of any shares of Class A Common
Stock, or of any rights, warrants, options or securities convertible into or
exercisable for Class A Common Stock, for consideration valued at less than the
then market price (as defined the Class A and Class B Warrants) of the Class A
Common Stock. In the event that all the Series A Preferred Stock remains
outstanding on January 1, 2000 and the minimum price at which it may be
converted changes to $3.00 per share, the number of Class A Warrants and Class B
Warrants outstanding as of May 31, 1999 would increase to 1,519,683 and
2,738,906, respectively, and the exercise prices of the Class A Warrants and
Class B Warrants would decrease to $18.08 and $24.34, respectively.
In connection with our initial public offering, unit purchase options
were issued to D.H. Blair and its designees to purchase 31,000 units for $33.75
per unit. Upon exercise of these options, the holders are entitled to receive
one share of Class A Common Stock, one Class A Warrant and one Class B Warrant.
In connection with our 1997 private placement, unit purchase options were issued
to D.H. Blair and its designees to purchase 112,229 of the same units for $15.75
per unit. The unit purchase options issued in connection with our 1997 private
placement are subject to an anti-dilution adjustment as a result of the private
placement of Series A Preferred Stock and this adjustment is substantial. The
unit purchase options issued in connection with our initial public offering
expire in January 2000. The unit purchase options issued in connection with our
1997 private placement expire in February 2002.
Investors in our 1998 bridge financing purchased 10% notes with warrants
attached. For each $1 of notes, a purchaser was entitled to 0.3 warrants and we
issued a total of 778,500 warrants in this transaction. Each of these warrants
entitles the holder upon exercise to purchase one share of Class A Common Stock
for $2.50. These warrants expire between December 2001 and July 2002.
Two placement agents provided services in connection with our 1998
bridge financing and are entitled to receive a total of 59,850 warrants for
these services. Each of these warrants entitles the holder upon exercise to
purchase one share of Class A Common Stock for $2.50. These warrants expire
between July 2001 and January 2002.
Several NASD registered broker/dealers provided services in connection
with our April 1999 private placement of Series A Preferred Stock and are
entitled to receive a total of 158,250 warrants for these services. Each of
these warrants entitles the holder upon exercise to purchase one share of Class
A Common Stock for $5.00 and expires in April 2002.
- 27 -
<PAGE>
The warrants issued in our 1998 bridge financing to investors and
placement agents are redeemable by ICC for $2.50 per warrant within 10 days of
mailing an acceleration notice at any time from June 1999 to January 2000 if the
bid price of the Class A Common Stock exceeds $7.50 (subject to adjustment for
stock splits, dividends or combinations) for 10 consecutive trading days.
The number and exercise price of the warrants issued to financial
advisors in connection with our 1998 bridge financing and our April 1999 private
placement are subject to adjustment in the event of any stock dividend payable
in shares of Class A Common Stock paid to holders of Class A Common Stock or any
subdivision or combination of the outstanding Class A Common Stock.
Summerwind Restructuring, Inc. received 500,000 warrants (the
"Summerwind Warrants") as consideration for various consulting services under a
consulting agreement with our predecessor, Infosafe Systems, Inc. ("Infosafe"),
dated as of June 12, 1998. Each of these warrants entitles the holder upon
exercise to purchase one share of Class A Common Stock for $2.50 and expires in
June 2003. The number and exercise price of the Summerwind Warrants are subject
to adjustment in the event of any sale or distribution of debt or other
securities of ICC or of cash, property or other assets to holders of Class A
Common Stock, any stock dividend payable in shares of Class A Common Stock paid
to holders of Class A Common Stock, any subdivision or combination of the
outstanding Class A Common Stock, or any sale of any shares of Class A Common
Stock, or of any rights, options, warrants, or securities convertible into or
exercisable for Class A Common Stock, for consideration valued at less than the
then exercise price of the Summerwind Warrants.
Delaware Law and Certificate of Incorporation and Bylaw Provisions
The following summary description of provisions of the Delaware General
Corporation Law and our certificate of incorporation and bylaws is not intended
to be complete. You should read our certificate of incorporation and bylaws very
carefully.
We must comply with the provisions of Section 203 of the Delaware
General Corporation Law. Section 203 prohibits a publicly-held Delaware
corporation from engaging in a business combination with an interested
stockholder for three years after the date of the transaction in which the
person became an interested stockholder, unless the business combination is
approved in a prescribed manner. A business combination includes mergers, asset
sales and other transactions resulting in a financial benefit to the interested
stockholder. An interested stockholder is generally a person who, together with
affiliates and associates, owns, or within the past three years did own, 15% of
the corporation's voting stock.
- 28 -
<PAGE>
The provisions of our certificate of incorporation and bylaws could also
have anti-takeover effects. These provisions enhance the likelihood of
continuity and stability in the composition of the policies formulated by the
board of directors. In addition, these provisions are intended to ensure that
the board of directors will have sufficient time to act in what it believes to
be in the best interests of ICC and its stockholders. These provisions also are
designed to reduce the vulnerability of ICC to an unsolicited proposal for a
takeover of ICC that does not contemplate the acquisition of all of its
outstanding shares or an unsolicited proposal for the restructuring or sale of
all or part of ICC. The provisions are also intended to discourage some tactics
that may be used in proxy fights. See "Risk Factors--Risks relating to our Class
A Common Stock--Our anti-takeover provisions and Delaware law may have adverse
effects on our stock price."
Classified Board of Directors
We received stockholder authorization on June 26, 1998 to amend our
certificate of incorporation to provide for the board of directors to be divided
into three classes of directors, with each class as nearly equal in number as
possible, serving staggered three-year terms. We intend to elect directors for
each class at our next annual meeting of stockholders. As a result,
approximately one-third of the board of directors will be elected each year. The
classified board provision will help to assure the continuity and stability of
the board of directors and the business strategies and policies of ICC as
determined by the board of directors. The classified board provision could have
the effect of discouraging a third party from making a tender offer for our
shares or attempting to obtain control of ICC. In addition, the classified board
provision could delay stockholders who do not agree with the policies of the
board of directors from removing a majority of the board of directors for two
years.
Indemnification
We have included in our certificate of incorporation and bylaws
provisions to (1) eliminate the personal liability of its directors for monetary
damages resulting from breaches of their fiduciary duty to the extent permitted
by the Delaware General Corporation Law and (2) indemnify its directors and
officers to the fullest extent permitted by the Delaware General Corporation
Law, including circumstances in which indemnification is discretionary.
We believe that these provisions are necessary to attract and retain
qualified persons as directors and officers.
- 29 -
<PAGE>
Transfer Agent and Registrar
The transfer agent and registrar for our Class A Common Stock is
American Stock Transfer and Trust Company.
LEGAL MATTERS
The legality of the shares being offered will be passed upon by Kramer
Levin Naftalis & Frankel LLP, New York, New York.
EXPERTS
Richard A. Eisner & Company, LLP, independent auditors, have audited our
consolidated financial statements as of July 31, 1998 and for each of the two
years then ended and for the period from November 18, 1991 (inception) through
July 31, 1998, as set forth in their report, included in our Annual Report on
Form 10-KSB for the year ended July 31, 1998 which is incorporated in this
Prospectus by reference. Such report contained an explanatory paragraph which
indicated that substantial doubt existed with respect to the Company's ability
to continue as a going concern. Our consolidated financial statements are
incorporated by reference in reliance on Richard A. Eisner & Company, LLP's
report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
o Government Filings. We file annual, quarterly and special reports, proxy
statements and other information with the SEC. Our SEC filings are
available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at
the SEC's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain information on the operation of the SEC's
public reference room in Washington, D.C. by calling the SEC at
1-800-SEC-0330.
We have filed with the SEC a registration statement on Form S-3 to
register the shares of common stock to be offered. This Prospectus is part of
that registration statement and, as permitted by the SEC's rules, does not
contain all the information included in the registration statement. For further
information with respect to us and our common stock, you should refer to that
registration statement and to the exhibits and schedules filed as part of that
registration statement, as well as the documents we have incorporated by
reference which are discussed below. You can review and copy the registration
statement, its exhibits
- 30 -
<PAGE>
and schedules, as well as the documents we have incorporated by reference, at
the public reference facilities maintained by the SEC as described above. The
registration statement, including its exhibits and schedules, are also available
on the SEC's web site, given above.
o Stock Market. Shares of our common stock are traded on The Nasdaq
SmallCap Market. Materials that are filed can be inspected at the
offices of the National Association of Securities Dealers, Inc., Reports
Section, 1735 K Street, N.W., Washington, D.C. 20006.
o Information Incorporated by Reference. The SEC allows us to "incorporate
by reference" the information we file with it, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is an important
part of this Prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate
by reference the documents listed below and any further filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, until this offering has been completed:
o Our Annual Report on Form 10-KSB for the year ended July 31, 1998;
o Our Quarterly Reports on Form 10-QSB for the quarters ended October 31,
1998 and January 31, 1999;
o Our Quarterly Reports on Form 10-QSB/A for the quarters ended October
31, 1998 and January 31, 1999;
o Our proxy statement for the 1999 Annual Meeting of Stockholders;
o Our Current Report on Form 8-K, filed with the SEC on April 20, 1999 and
our amendment on Form 8K/A filed with the SEC on April 28, 1999; and
o The description of our Class A Common Stock contained in our Rule 424
Prospectus filed with the SEC on June 18, 1997, including any amendments
or reports filed for the purpose of updating such description. See also
"Description of Securities" in this Prospectus.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
- 31 -
<PAGE>
Internet Commerce Corporation
805 Third Avenue
New York, New York 10022
(212) 271-7640
Attn: Victor Bjorge
You should rely only on the information incorporated by reference or
provided in this Prospectus or any Prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this Prospectus or any Prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
- 32 -
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with
the distribution of the securities covered by this Registration Statement. All
of the expenses will be borne by the Company except as otherwise indicated.
SEC Registration Fee (actual)....................................$10,776
Nasdaq SmallCap Market Listing Fee (actual)..................... $ 7,500
Blue Sky Fees and Expenses...................................... $ 5,000
Printing and Engraving Fees and Expenses.........................$ *
Legal Fees and Expenses..........................................$ *
Accounting Fees and Expenses.....................................$ *
Miscellaneous....................................................$ *
Total............................................................$ *
- ----------
* To be completed by amendment.
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") provides that a corporation may indemnify directors and officers as well
as other employees and individuals against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement in connection with specified
actions, suits, proceedings whether civil, criminal, administrative, or
investigative (other than action by or in the right of the corporation -- a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such action, and the statue requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. The statue provides that it is not
exclusive of other indemnification that may be granted by a corporation's
charter, by-laws, disinterested director vote, stockholder vote, agreement, or
otherwise. Section 145 thus makes provision for indemnification in terms
sufficiently broad to cover officers and directors, under certain circumstances,
for liabilities arising under the Securities Act.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for (i) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) payment of unlawful dividends or
<PAGE>
unlawful stock purchases or redemptions, or (iv) any transaction from which the
director derived an improper personal benefit.
Article Seventh of our Amended and Restated Certificate of
Incorporation, as further amended, further provides that we shall indemnify, to
the fullest extent permitted by Section 145 of the DGCL, each person that
Section 145 grants us power to indemnify. Article Seventh of our Amended and
Restated Certificate of Incorporation, as further amended, provides that no
director shall be liable to ICC or any of our stockholders for monetary damages
for breach of fiduciary duty as a director, except with respect to (1) a breach
of the director's duty of loyalty to the corporation or its stockholders, (2)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) liability under Section 174 of the DGCL or (4) a
transaction from which the director derived an improper personal benefit, and
that it is the intention of the foregoing provisions to eliminate the liability
of our directors to ICC or our stockholders to the fullest extent permitted by
Section 102(b)(7) of the DGCL.
Article V of our by-laws provides that we shall, to the fullest extent
permitted by the laws of the State of Delaware, indemnify any and all persons
whom we shall have power to indemnify against any and all of the costs,
expenses, liabilities or other matters incurred by them by reason of having been
officers or directors of ICC, any subsidiary of ICC or of any other corporation
for which the person acted as officer or director at the request of the
corporation.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by ICC of expenses incurred or
paid by a director, officer or controlling person of ICC in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, we
will, unless in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by ICC is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
Item 16. Exhibits.
The following documents are filed as exhibits to this Registration
Statement, including those exhibits incorporated in this Registration Statement
by reference to a prior filing of the Company under the Securities Act or the
Exchange Act as indicated in parenthesis:
- 2 -
<PAGE>
Exhibit
Number Description
- ------ -----------
3(i).1 Amended and Restated Certificate of Incorporation
3(i).2 Certificate of Merger merging Infosafe Systems, Inc. and
Internet Commerce Corporation
3(i).3 Certificate of Amendment to the Amended and Restated
Articles of Incorporation (1)
3(i).4 Certificate of Designations -- Series A Convertible
Redeemable Preferred Stock
3(i).5 Certificate of Designations -- Series S Preferred Stock
3(ii).1 * By-laws
4.1 Specimen Certificate for Class A Common Stock (2)
4.2 Form of Revised Subscription Agreement, dated March 31,
1999, relating to the shares of Series A Convertible
Redeemable Preferred Stock sold in the 1999 private
placement
4.3 Form of Underwriter's Option (2)
4.4 Form of Warrant Agreement (2)
4.5 Escrow agreement, as amended (2)
4.6 Form of warrant expiring February 18, 2002 (2)
4.7 Warrant Agreement, dated February 10, 1997, by and among
ICC, American Stock Transfer and Trust Company as warrant
agent and D.H. Blair Investment Banking Corp. (3)
4.8 Amendment Agreement, dated February 10, 1997, to Warrant
Agreement dated January 25, 1995 by and among ICC,
American Stock Transfer and Trust Company as warrant agent
and D.H. Blair Investment Banking Corp. (3)
4.9 Form of Unit Purchase Option for D.H. Blair Investment
Banking Corp. dated February 18, 1997 (3)
- 3 -
<PAGE>
4.10 Agreement, dated February 18, 1997, between ICC and D. H.
Blair Investment Banking Corp. to extend an agreement
dated January 25, 1995 regarding mergers, acquisitions and
similar transactions (3)
4.11 Form of Class A Bridge Warrant issued in the 1998 bridge
financing
5.1 * Opinion of Kramer Levin Naftalis & Frankel LLP regarding
legality of the shares of Class A Common Stock being
registered pursuant to this Registration Statement
9.1 Voting Trust Agreement between the trustees of the voting
trust and various stockholders of ICC (2)
9.2 Amendments to the Voting Trust Agreement
10.1 1992 Stock Option Plan (2)
10.2 1994 Stock Option Plan (2)
10.3 Formation and Stock Purchase Agreement, dated as of April
16, 1997 among ICC, Michele Golden and Michael
Cassidy (4)
10.4 Lease Agreement between 805 Third Ave. Co. as landlord and
ICC as tenant relating to the rental of ICC's current
principal executive office (5)
10.5 Consulting Agreement, dated as of June 12, 1998, between
Summerwind Restructuring, Inc. and ICC
10.6 * Lease Agreement, dated as of May 21, 1999, between JB
Squared LLC and ICC relating to the rental of
approximately 4,000 square feet at the Lakeview Executive
Center, 45 Research Way, East Setauket, New York, 11733
10.7 * Lease Agreement, dated as of December 23, 1998, between
ICC and Data General Corporation relating to computer
hardware and software.
10.8 * Lease Agreement, entered into in May 1999, between ICC
and Data General Corporation relating to computer hardware
and software
10.9 Employment Agreement for Richard J. Berman dated as of
September 15, 1998
10.10 Employment Agreement for G. Michael Cassidy dated as of
April 16, 1997
10.11 Employment Agreement for Michele Golden dated as of April
16, 1997
10.12 Employment Agreement for Donald R. Gordon dated as of
December 18, 1998
- 4 -
<PAGE>
10.13 Employment Agreement for David Hubbard dated as of April
16, 1997
10.14 Employment Agreement for Walter M. Psztur dated as of
August 21, 1998
23(ii).1 Consent of Richard A. Eisner & Company, LLP
(b) Financial Statement Schedules:
Not Applicable.
* To be filed by amendment
(1) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended July 31, 1998.
(2) Incorporated by reference to the Company's Registration Statement on
Form SB-2 (File no. 33-83940)
(3) Incorporated by reference to the Company's Report on Form 10-QSB dated
January 31, 1997
(4) Incorporated by reference to the Company's Report on Form 10-QSB dated
April 30, 1997
(5) Incorporated by reference to the Company's Report on Form 10-QSB dated
October 31, 1997
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the Prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
- 5 -
<PAGE>
(2) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
- 6 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
4th day of June, 1999.
INTERNET COMMERCE CORPORATION
By: /s/ Richard J. Berman
------------------------------------
Richard J. Berman
Chief Executive Officer and
Chairman of the Board
<PAGE>
Pursuant to the requirements of the Securities Act, this Registration
Statement or amendment thereto has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Richard J. Berman Chairman of the Board June 4, 1999
- ----------------------- and Chief Executive Officer
Richard J. Berman (principal executive officer)
/s/ Walter M. Psztur Vice President, June 4, 1999
- ----------------------- Finance & Administration
Walter M. Psztur (principal financial
and accounting officer)
/s/ G. Michael Cassidy Director June 4, 1999
- -----------------------
G. Michael Cassidy
/s/ Michele Golden Director June 4, 1999
- -----------------------
Michele Golden
/s/ Charles C. Johnston Director June 4, 1999
- -----------------------
Charles C. Johnston
Director
- -----------------------
Arthur R. Medici
Director
- -----------------------
James Ortenzio
/s/ Peter Ruel Director June 4, 1999
- -----------------------
Peter Ruel
Exhibit 3(i).1
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 08/27/1997
971287299-2279234
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
INFOSAFE SYSTEMS, INC.
Infosafe Systems, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"DGCL"), does hereby certify as follows:
1. The present name of the Corporation is Infosafe Systems, Inc. and its
original certificate of incorporation was filed with the office of the Secretary
of the State of Delaware on November 18, 1991.
2. This Amended and Restated Certificate of Incorporation was duly
adopted by the Board of Directors of the Corporation (the "Board") and by a
majority of the outstanding stock entitled to vote thereon and a majority of the
outstanding stock of each class entitled to vote thereon as a class in
accordance with Sections 228, 242 and 245 of the DGCL.
3. This Amended and Restated Certificate of Incorporation restates and
integrates and further amends the certificate of incorporation of the
Corporation, as heretofore amended (the "Certificate of Incorporation").
4. Upon the filing (the "Effective Time") of this Certificate of
Incorporation pursuant to the DGCL, the number of authorized shares of the
Corporation's Class A Common Stock shall be increased by 20,000,000 shares to an
aggregate of 40,000,000 shares.
5. The text of the Certificate of Incorporation is amended and restated
in its entirety as follows:
FIRST: The name of the corporation is
INFOSAFE SYSTEMS, INC.
SECOND: The address of the initial registered and principal office of
this corporation in this state is c/o United Corporate Services, Inc., 15 East
North Street, in the City of Dover, County of Kent, State of Delaware 19901 and
the name of the registered agent at said address is United Corporate Services,
Inc.
<PAGE>
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the corporation laws
of the State of Delaware.
FOURTH:
I.
a. The aggregate number of shares which the Corporation shall
have authority to issue is Fifty One Million (51,000,000) shares, consisting of
(i) Forty Million (40,000,000) shares of Class A Common Stock, $.01 par value
per share; (ii) Two Million (2,000,000) shares of Class B Common Stock, $.01 par
value per share; (iii) Two Million (2,000,000) shares of Class E-1 Common Stock,
$.01 par value per share; (iv) Two Million (2,000,000) shares of Class E-2
Common Stock, $.01 par value per share; and (v) Five Million (5,000,000) shares
of preferred stock, $.01 par value per share.
b. As of September 20, 1994 ("Reverse Split Date"), each four
shares of Class A Common Stock and Class B Common Stock then issued and
outstanding was, without any further action on the part of the Corporation or
any stockholder, automatically changed and reclassified into one share of Class
A Common Stock or Class B Common Stock, as the case may be, and from and after
the Reverse Split Date each certificate which theretofore represented any four
shares of the then issued and outstanding Class A Common Stock or Class B Common
Stock shall automatically be deemed to represent one share of Class A Common
Stock or Class B Common Stock, as the case may be (the "Reverse Stock Split").
c. No fractional shares of Common Stock shall be issued in
connection with the Reverse Stock Split and each holder of shares shall be
entitled to receive an amount equal to the fair value of any fractional
interests with respect to the shares of Common Stock.
II. Class A Common Stock, Class B Common Stock, Class E-1 and Class E-2
Common Stock.
A. General. The designations, preferences, limitations and relative
rights of the Class A Common Stock and the Class B Common Stock, the Class E-1
Common Stock and the Class E-2 Common Stock shall be in all respects identical,
except as stated in this Certificate of Incorporation or as otherwise required
by law.
B. Voting Rights.
(1) At each meeting of stockholders of the Corporation and upon
each proposal presented at such meeting, every holder of Class A Common Stock,
Class B-1 Common Stock and Class E-2 Common Stock shall be entitled to one vote
in person or by proxy for each share of Class A Common Stock, Class E-1 Common
Stock and Class E-2 Common Stock standing in his or her name on the stock
transfer records of the Corporation and every holder of Class B Common Stock
shall be entitled to six votes in person or by
<PAGE>
proxy for each share of Class B Common Stock standing in his or her name on the
stock transfer records of the Corporation.
(2) Except as provided in this Paragraph (B) or Paragraphs (G)
and (H) of this Section II or as may be otherwise required by law, the holders
of Class A Common Stock, Class B Common Stock and Class E-1 and E-2 Common Stock
shall vote together as a single class with respect to all matters.
(3) Except as may be otherwise required by law or stated in any
Preferred Stock Designation (as defined in Section III of this Article Fourth),
the holders of Class A Common Stock, Class B Common Stock, Class E-1 Common
Stock and Class E-2 Common Stock shall have the exclusive right to vote for the
election of directors and for all other purposes, each holder of the Class A
Common Stock, Class B Common Stock, Class E-1 Common Stock and Class E-2 Common
Stock being entitled to vote as provided in this Paragraph (B) of this Section
II.
C. Dividends and Distributions. Except as provided in paragraph H, and
subject to the rights of the holders of Preferred Stock, and subject to any
other provisions of this Certificate of Incorporation, as it may be amended from
time to time, holders of Class A Common Stock, Class B Common Stock, Class E-1
Common Stock and Class E-2 Common Stock shall be entitled to receive such
dividends and other distributions in cash, in property or in shares of the
Corporation as may be declared thereon by the Board of Directors from time to
time out of assets or funds of the Corporation legally available therefor;
provided, however, that no cash, property or share dividend or distribution may
be declared or paid on the outstanding shares of either the Class A Common
Stock, the Class B Common Stock, the Class E-1 Common Stock or the Class E-2
Common Stock, unless an identical per share dividend or distribution is
simultaneously declared and paid on the outstanding shares of the other such
class of stock; provided, further, however, that a dividend of shares may be
declared and paid in Class A Common Stock to holders of Class A Common Stock,
Class B Common Stock, Class E-1 Common Stock and Class E-2 Common Stock if the
number of shares paid per share to holders of Class A Common Stock, to holders
of Class B Common Stock, to holders of Class E-1 Common Stock and to holders of
Class E-2 Common Stock shall be the same. If the Corporation shall in any manner
subdivide, combine or reclassify the outstanding shares of Class A Common Stock,
Class B Common Stock, Class E-1 Common Stock or Class E-2 Common Stock, the
outstanding shares of the other such class shall be subdivided, combined or
reclassified proportionally in the same manner and on the same basis as the
outstanding shares of Class A Common Stock, Class B Common Stock, Class E-1
Common Stock or Class E-2 Common Stock, as the case may be, have been
subdivided, combined or reclassified. A dividend in shares of Class A Common
Stock may be paid to the holders of shares of any other class of the
Corporation.
D. Common Stock Subject to Priorities of Preferred Stock. The Class A
Common Stock, Class B Common Stock, Class E-1 Common Stock and Class E-2 Common
Stock are subject to all the powers, rights, privileges, preferences and
priorities of the Preferred Stock as may be stated in this Certificate of
Incorporation and in any Preferred Stock Designation.
3
<PAGE>
E. Liquidation Rights. Upon liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, and after the holders, if
any, of the Preferred Stock of each series shall have been paid in full the
amounts to which they respectively shall be entitled, or a sum sufficient for
such payment in full shall have been set aside, the remaining net assets of the
Corporation shall be distributed pro rata on a share for share basis to the
holders of the Class A Common Stock, Class B Common Stock, Class E-1 Common
Stock and Class E-2 Common Stock, to the exclusion of the holders of the
Preferred Stock.
F. No Conversion of Class A Common Stock. The shares of Class A Common
Stock are not convertible into or exchangeable for shares of Class B Common
Stock or any other shares or securities of the Corporation.
G. Conversion of Class B Common Stock.
(1) Optional Conversion. Each record holder of Class B Common
Stock is entitled, at any time or from time to time, to convert any or all of
the shares of such holder's Class B Common Stock into shares of Class A Common
Stock at the ratio of one share of Class A Common Stock for each share of Class
B Common Stock.
(2) Optional Conversion Procedures.
(a) Each conversion of shares pursuant to Paragraph (G)(1)
of this Section II hereof shall be effected by the surrender of the certificate
or certificates representing the shares to be converted at the principal office
of the Corporation at any time during normal business hours, together with a
written notice by the holder stating the number of shares that such holder
desires to convert. Such conversion shall be deemed to have been effected as of
the close of business on the date on which such certificate or certificates have
been surrendered, and at such time, the rights of any such holder with respect
to the converted shares of such holder will cease and the person or persons in
whose name or names the certificate or certificates for shares are to be issued
upon such conversion will be deemed to have become the holder or holders of
record of such shares represented thereby.
(b) Promptly after such surrender, the Corporation will
issue and deliver in accordance with the surrendering holder's instructions the
certificate or certificates for the Class A Common Stock issuable upon such
conversion and a conversion and a certificate representing any Class B Common
Stock which was represented by the certificate or certificates delivered to the
Corporation in connection with such conversion, but which was not converted.
(3) Automatic Conversion. Each share of Class B Common Stock will
convert automatically into one share of Class A Common Stock upon the sale or
any other transfer thereof (including, without limitation, conveyance into a
trust and transfer by the operation of any will or the laws of descent and
distribution), except upon a sale or any other transfer to a person who
immediately prior to such sale or transfer is a holder of a share or shares of
Class B Common Stock.
4
<PAGE>
(4) Issuance Costs. The issuance of certificates upon conversion
of shares pursuant hereto will be made without charge to the holder or holders
of such shares for any issuance tax (except stock transfer tax) in respect
thereof or other costs incurred by the Corporation in connection therewith.
(5) Reservation of Shares. Solely for the purpose of issuance
upon conversion of such shares as herein provided, the Corporation shall at all
times reserve and keep available out of its authorized but unissued shares of
Class A Common Stock such number of shares of Class A Common Stock as are then
issuable upon the conversion of all outstanding shares of Class B Common Stock.
H. Class E Common Stock
(1) In General. The Class E-1 Common Stock and Class E-2 Common
Stock (collectively, "Class E Common Stock") shall have all of the same rights
as the Class A Common Stock and Class B Common Stock, except as specifically
provided herein. On liquidation of the Corporation, each outstanding share of
Class E Common Stock shall have the same rights as a share of Class A Common
Stock. Whenever any Class E Common Stock is outstanding, any other corporate
action, including but not limited to any declaration of dividends (whether in
cash, property or securities), distribution, repurchase, split or reverse split,
reorganization, recapitalization, merger or consolidation, shall also affect
equally all shares of Class A Common Stock, Class B Common Stock and Class E
Common Stock, except that any transaction that results or would result in the
holders of Class E Common Stock holding cash, new securities or other property
(referred to herein as the "Class E Distribution Proceeds") shall be effected in
such a fashion that the cash, new securities or other property issuable with
respect to each share of Class E Common Stock shall be held in trust by the
Corporation or by such other person as it may appoint. Such trust shall
terminate at the Determination Date (as defined below). During the period prior
to the Determination Date, the Class E Common Stock itself (in addition to the
Class E Distribution Proceeds) shall remain subject to the Escrow Conditions (as
defined below), so that the disposition of the Class E Common Stock and
corresponding Class E Distribution Proceeds shall be subject to the same Escrow
Conditions. Any earnings of the cash, new securities or other property held in
such trust shall be added to the corpus thereof, all of which shall be
distributed promptly after the Determination Date, to the holders of Class E
Common Stock as of the Determination Date, in proportion to their holdings of
Class E Common Stock, except that if none of the Escrow Conditions (as defined
below) shall have been satisfied on or before the Determination Date, then such
corpus shall revert to the Corporation.
(2) Determination Date. The Determination Date shall be the
earlier to occur of (i) the date any of the Escrow Conditions are satisfied, or
(ii) March 31, 1999.
(3) E-1 Escrow Conditions.
The Escrow Conditions for the Class E-1 Common Stock shall be
5
<PAGE>
(a) that the Corporation's "Income" (as defined below)
shall have equaled or exceeded $4,400,000 (adjusted as set forth below) for the
fiscal year ending July 31, 1996,
(b) that the Corporation's Income shall have equaled or
exceeded $6,600,000 (adjusted as set forth below) for the fiscal year ending
July 31, 1997,
(c) that the Corporation's Income shall have equaled or
exceeded $8,800,000 (adjusted as set forth below) for the fiscal year ending
July 31, 1998,
(d) that the "Market Price" (as defined below) of the
Class A Common Stock, when averaged over any 30 consecutive trading days all of
which are less than 18 months after the "Effective Date" (as defined below),
shall have equaled or exceeded $12.50 per share, or
(e) that the Market Price of the Class A Common Stock,
when averaged over any 30 consecutive trading days all of which are more than 18
and less than 36 months after the Effective Date, shall have equaled or exceeded
$16.50 per share.
(4) E-2 Escrow Conditions.
The Escrow Conditions for the Class E-2 Common Stock shall
be
(a) that the Corporation's Income shall have equaled or
exceeded $5,400,000 (adjusted as set forth below) for the fiscal year ending
July 31, 1996,
(b) that the Corporation's Income shall have equaled or
exceeded $8,100,000 (adjusted as set forth below) for the fiscal year ending
July 31, 1997,
(c) that the Corporation's Income shall have equaled or
exceeded $10,800,000 (adjusted as set forth below) for the fiscal year ending
July 31, 1998,
(d) that the Market Price of the Class A Common Stock,
when averaged over any 30 consecutive trading days all of which are less than 18
months after the Effective Date shall have equaled or exceeded $18.00 per share,
or
(e) that the Market Price of the Class A Common Stock,
when averaged over any 30 consecutive days all of which are more than 18 and
less than 36 months after the Effective Date, shall have equaled or exceeded
$22.00 per share.
(5) Definitions.
(a) "Income" shall mean the Corporation's net income
before provision for income taxes, but exclusive of any other earnings that are
classified as an extraordinary item, and exclusive of any charges to income that
may result from the release of any securities of the Corporation from an escrow
and the conversion of the Class E Common Stock into Class A Common Stock, as
stated in the Corporation's financial statements for such fiscal year upon which
independent auditors have given a report. For
6
<PAGE>
purposes of determining whether the above criteria are met at any Determination
Date, the Income amounts set forth above shall be increased at any Determination
Date by multiplying such Income amounts by a fraction, the numerator of which is
the average weighted number of shares of Common Stock outstanding over the
fiscal year for which the Escrow Condition is satisfied (including Class A and
Class E Common Stock, and treating as outstanding common stock of any class
issuable upon conversion of securities that are outstanding at the Determination
Date and which are convertible into common stock without the payment of
additional consideration ("Conversion Shares")) and the denominator of which is
the sum of (i) the number of shares of Common Stock (Class A, Class E and
Conversion Shares) which are outstanding (or, with respect to the Conversion
Shares, treated as outstanding as set forth above) at the Effective Date, plus
(ii) the number of shares of Common Stock sold under the "Registration
Statement," as defined below.
(b) The "Registration Statement" shall mean that certain
registration statement filed by the Corporation under the Securities Act of
1933, as amended, which is the first registration statement so filed by the
Corporation with the United States Securities and Exchange Commission.
(c) The "Effective Date"shall mean the date on which the
Registration Statement became effective within the meaning of Section 8 of the
Securities Act of 1933, as amended.
(d) "Market price" shall mean, in order of preferences,
(i) the last reported sales price on a consolidated transaction reporting
system, if the Class A Common Stock is listed on a national securities exchange
or is listed on the Nasdaq National Market, (ii) the high closing bid price if
such stock is otherwise quoted on the Nasdaq Stock Market, or (iii) otherwise, a
bid price for such stock determined by such means as the Corporation's Board of
Directors finds to be reasonable.
(6) Conversion.
(a) If on the Determination Date, any of the Escrow
Conditions shall have been satisfied, then each share of Class E Common Stock
shall be converted into one share of Class A Common Stock, and if on the
Determination Date none of the Escrow Conditions shall have been satisfied, then
the Class E Common Stock remaining in escrow shall be redeemed by the
Corporation at a price per share of $.0001 and canceled without further
obligation to the holder thereof. From and after the Determination Date, the
rights of the holders of Class E Common Stock shall be limited to the following:
(i) in the event that any of the Escrow Conditions were satisfied at the
Determination Date, the right to receive a certificate representing the number
of shares of Class A Common Stock into which such Class E Common Stock was
converted, and otherwise to the rights of a holder of such shares of Class A
Common Stock; or (ii) in the event that none of the Escrow Conditions were
satisfied at the Determination Date, no further right with respect to the Class
E Common Stock, which is thereby canceled, or with respect to any other property
or securities previously issued with respect thereto.
(b) Solely for the purpose of issuance upon conversion of
the Class E Common Stock as herein provided, the Corporation shall, at all
times, reserve and keep
7
<PAGE>
available out of its authorized but unissued shares of Class A Common Stock such
number of shares of Class A Common Stock as are then issuable upon the
conversion of all outstanding shares of Class E Common Stock.
(7) No Transfer. No person holding shares of Class E Common Stock
of record may transfer such shares, except by testamentary disposition or by
operation of law, and any purported transfer other than as permitted by the
preceding clause shall be ineffective, null and void.
(8) Registration. Shares of Class E Common Stock shall be
registered in the names of the beneficial owners thereof and not in "street" or
"nominee" name. For this purpose, a "beneficial owner" of any shares of Class E
Common Stock shall mean a person who, or any entity which, possesses the power,
either singly or jointly, to direct the voting or disposition of such shares.
The Corporation shall note on the certificates for shares of Class E Common
Stock the restrictions on transfer and registration.
III. Preferred Stock. The Board of Directors of the Corporation is
authorized, subject to any limitation prescribed by law, to provide for the
issuance of the shares of Preferred Stock in series, including, without
limitation, Series A Preferred Stock (as defined in Paragraph (A) of this
Section III), and any other series designated by the Board of Directors pursuant
to Paragraph (B) of this Section III.
A. Convertible Preferred Stock.
1. Designation of the 9% Series A Cumulative Convertible
Preferred Stock. The Corporation shall have authority to issue out of the
authorized but unissued shares of Preferred Stock a series of Preferred Stock to
be designated the Series A Convertible Preferred Stock (the "Series A Preferred
Stock"). The number of shares, powers, relative, participating, optional and
other special rights, and the qualifications, limitations and restrictions, if
any, of the Series A Preferred Stock shall be as set forth in this Paragraph
(A).
2. Number. The number of shares of Series A Preferred Stock
("Series A Shares") shall be 50,000.
3. Redemption. The Corporation will retire the Series A preferred
Stock by mandatory redemption ("sinking fund") as to 41,666 shares of July 30,
1994, 41,666 shares as of July 30, 1995 and 41,667 shares as of July 30, 1996
through the operation of a sinking fund calculated to retire the Series A
Preferred Stock at a price per share equal to the Original Series A Issue Price
(as defined in Paragraph (A)(4)) plus accrued dividends at the rate of 9% per
annum. The amount of any sinking fund payment in any year shall be automatically
reduced to the extent shares of Series A Preferred Stock are converted into
Class A Common Stock pursuant to the provisions of Paragraph (A)(6) prior to the
close of business on the sinking fund redemption date.
On and after the sinking fund redemption date, unless
default shall be made by the Corporation in making provisions for payment of the
redemption price, all
8
<PAGE>
rights to participate in the affairs of the Corporation as stockholders, except
the right to receive the redemption price, without interest, shall cease.
4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or
winding-up of the affairs of the Corporation (collectively, a "Liquidation"),
whether voluntary or involuntary, before any payment of cash or distribution of
other property shall be made to the holders of Common Stock, the holders of
Series A Preferred Stock shall be entitled to receive out of the assets of the
Corporation legally available for distribution to its stockholders, an amount
per share equal to (as such amount shall be adjusted to reflect subdivisions and
combinations of shares and stock dividends), with respect to each outstanding
share of Series A preferred Stock, $1.00 (the "Original Series A Issue Price"),
together with all declared but unpaid dividends with respect to each such share
(the "Liquidation Amount"). If the assets and funds legally available for
distribution among the holders of Preferred Stock shall be insufficient to
permit the payment to such holders of the full preferential amount, then such
assets and funds shall be distributed ratably among the holders of Preferred
Stock in proportion to the total preferential amount which each such holder is
entitled to receive.
(b) Any assets remaining after the distributions pursuant
to Paragraph (A)(4)(a) shall be distributed on a pro rata basis to the holders
of Common Stock.
(c) For purposes of this Paragraph (A)(4), a liquidation,
dissolution or winding up of the Corporation shall not be deemed to be
occasioned by, or to include, the Corporation's sale of all or substantially all
of its assets or the consolidation or merger of the Corporation with or into any
other corporation or corporations, or the effecting by the Corporation of a
transaction or series of related transactions after the Original Issue Date, as
hereinafter defined, in which more than 50% of the voting power of the
Corporation is disposed.
5. Voting Rights. Except as otherwise provided by law or this
Restated Certificate of Incorporation, the holders of Series A Preferred Stock
shall have no right to vote on any matter to be voted on by the Stockholders of
the Corporation (including any election or removal of directors of the
Corporation). The holders of each share of Series A Preferred Stock shall be
entitled to receive notice, together with the holders of each share of Common
Stock, of all stockholder meetings.
6. Conversion. The holders of Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert.
(i) Optional Conversion. Each share of Series A
Preferred Stock shall be convertible at the option of the holder thereof at any
time after the date of issuance of such shares, at the office of the Corporation
or any transfer agent for Series A Preferred Stock, into fully paid and
nonassessable shares of Class A Common Stock at the rate of $1.24975 per share.
The initial Conversion Price for shares of Series A Preferred
9
<PAGE>
Stock shall be $1.24975; provided, however, that the Conversion Price shall be
subject to adjustment as set forth below.
(ii) Upon conversion of the Series A Preferred
Stock, the Class A Common Stock so issued shall be duly and validly issued,
fully paid and nonassessable shares of the Corporation.
(b) Mechanics of Conversion. No fractional shares of Class
A Common Stock shall be issued upon conversion of Series A Preferred Stock and
the number of shares issuable upon such conversion shall be calculated to the
nearest whole share. Except as provided in Paragraph (A)(6)(a)(ii), before any
holder of Series A Preferred Stock shall be entitled to convert the same into
full shares of Class A Common Stock, he shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series A Preferred Stock, and shall give written notice
by mail, postage prepaid, to the Corporation at its principal corporate office,
of the election to convert the same. The Corporation shall, not later than 45
days thereafter, issue and deliver at such office to such holder of Series A
preferred Stock, a certificate or certificates for the number of shares of Class
A Common Stock to which he shall be entitled as aforesaid (after aggregating all
shares of Class A Common Stock issuable to such holder of Series A Preferred
Stock upon conversion of the number of shares of Series A Preferred Stock at the
time being converted) and a check in an amount equal to accrued but unpaid
dividends as to this date with respect to such shares converted. In addition, if
less than all of the shares represented by such certificates are surrendered for
conversion pursuant to Paragraph (A)(6)(a)(i), the Corporation shall issue and
deliver to such holder a new certificate for the balance of the shares of Series
A Preferred Stock not so converted. Except as provided in Paragraph
(A)(6)(a)(ii), such conversion shall be deemed to have been made immediately
prior to the close of business on the date of the surrender of the shares of
such Series A Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Class A Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Class A Common Stock as of such date.
(c) Adjustments to Conversion Price.
(i) Adjustments for Dividends, Distributions or
Subdivisions. In the event the Corporation shall issue additional shares of
Common Stock pursuant to a stock dividend, stock distribution or subdivision,
the Conversion Price in effect immediately prior to such stock dividend, stock
distribution or subdivision shall concurrently with such stock dividend, stock
distribution or subdivision, be proportionately decreased.
(ii) Adjustments for Combinations or
Consolidations. In the event the outstanding shares of Common Stock shall be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of Common Stock, the Conversion Price in effect immediately prior to
such combination or consolidation shall, concurrently with the effectiveness of
such combination or consolidation, be proportionately increased.
10
<PAGE>
(iii) Adjustments for Issuances of Shares at Less
than Conversion Price. In the event the Corporation shall sell additional shares
of Common Stock for a consideration per share less than the Conversion Price on
the date of the sale, the Conversion Price in effect immediately prior to such
sale shall be changed to a price determined by dividing (i) the sum of (a) the
total number of shares of Common Stock outstanding immediately prior to such
sale, multiplied by the Conversion Price in effect immediately prior to such
sale, and (b) the consideration, if any, received by the Corporation upon such
sale by (ii) the total number of shares of Common Stock outstanding immediately
after such sale.
(d) No impairment. The Corporation will not, by amendment
of its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will, at all times in good faith, assist the carrying out of all the provisions
of this Paragraph (A)(6) and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Preferred Stock against impairment.
(e) Reservation of Stock Issuable Upon Conversion. The
Corporation shall, at all times, reserve and keep available out of its
authorized but unissued shares of Class A Common Stock solely for the purposes
of effecting the conversion of the Series A Preferred Stock, such number of its
shares of Class A Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of Series A Preferred Stock; and
if at any time the number of authorized but unissued shares of Class A Common
Stock shall not be sufficient to effect the conversion of all then-outstanding
shares of Series A Preferred Stock, the Corporation will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Class A Common Stock to such number of shares
of as shall be sufficient for such purposes.
(f) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Price pursuant to this
Paragraph (A)(6), the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of Series A Preferred stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series A Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (i) all such
adjustments and readjustments, (ii) the Conversion Price at the time in effect,
and (iii) the number of shares of Class A Common Stock which at the time would
be received upon the conversion of such Series A Preferred Stock.
(g) Notices of Record Date. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon
the Common Stock, whether in cash, property, stock or other securities, whether
or not a regular cash dividend and whether or not out of earnings or earned
surplus; or
11
<PAGE>
(ii) to offer for subscription to the holders of
any class or series of its capital stock any additional shares of stock of any
class or series or any other rights; or
(iii) to effect any reclassification or
recapitalization; or
(iv) to merge or consolidate with or into any other
corporation, to sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up, then, in connection with each
such event, the Corporation shall send to the holders of the Series A Preferred
Stock:
(1) at least 10 days' prior written notice
of the date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining rights to vote in respect of
the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to
in (iii) and (iv) above, at least 10 days' prior written notice of the date of a
stockholders meeting at which a vote on such matters shall take place (and
specifying the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
the occurrence of such event and the amount of securities or other property
deliverable upon such event).
Each such written notice shall be given personally
or by first class mail, postage prepaid, addressed to the holders of Series A
Preferred Stock at the address for each such holder as shown on the books of the
Corporation.
7. Equal Rights. Each share of Series A Preferred Stock issued
and outstanding shall be identical in all respects one with the other, and no
dividends shall be paid on any shares of Series A Preferred Stock unless the
same dividend is paid on all shares of Series A Preferred Stock outstanding at
the time of such payment.
8. No Reissuance of Series A Preferred Stock. No share or shares
of Series A Preferred Stock acquired by the Corporation by reason of purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue.
B. Additional Series of Preferred Stock
1. Designation of Additional Series of Preferred Stock. The Board
of Directors is hereby expressly authorized, by resolution or resolutions
thereof, to provide for, designate and issue, out of the 4,950,000 authorized
but undesignated and unissued shares of Preferred Stock, one or more series of
Preferred Stock, subject to the terms and conditions set forth herein. Before
any shares of any such series is issued, the Board of Directors shall fix, and
hereby is expressly empowered to fix, by resolution or resolutions, the
following provisions of the shares of any such series:
12
<PAGE>
(a) the designation of such series, the number of shares
to constitute such series and the stated value thereof, if different from the
par value thereof;
(b) whether the shares of such series shall have voting
rights or powers, in addition to any voting rights required by law, and, if so,
the terms of such voting rights or powers, which may be full or limited;
(c) the dividends, if any, payable on such series, whether
any such dividends shall be cumulative, and, if so, from what dates, the
conditions and dates upon which such dividends shall be payable, and the
preference or relation which such dividends shall bear to the dividends payable
on any shares of stock or any other class or any other series of this class;
(d) whether the shares of such series shall be subject to
redemption by the Corporation and, if so, the times, prices and other conditions
of such redemption;
(e) the amount or amounts payable upon shares of such
series upon, and the rights of the holders of such series in, the voluntary or
involuntary liquidation, dissolution or winding up, or upon any distribution of
the assets, of the Corporation;
(f) whether the shares of such series shall be subject to
the operation of a retirement or sinking fund and, if so, the extent to and
manner in which any such retirement or sinking fund shall be applied to the
purchase or redemption of the shares of such series for retirement or other
corporate purposes and the terms and provisions relative to the operation
thereof;
(g) whether the shares of such series shall be convertible
into, or exchangeable for, shares of stock of any other class or any other
series of this class or any other securities and, if so, the price or prices or
the rate or rates of conversion or exchange and the method, if any, of adjusting
the same, and any other terms and condition or exchange;
(h) the limitations and restrictions, if any, to be
effective while any shares of such series are outstanding upon the payment of
dividends or the making of other distributions on, and upon the purchase,
redemption or other acquisition by the Corporation of, the Common Stock or
shares of stock of any other class or any other series of this class;
(i) the conditions or restrictions, if any, to be
effective while any shares of such series are outstanding upon the creation of
indebtedness of the Corporation upon the issue of any additional stock,
including additional shares of such series or of any other series of this class
or of any other class; and
(j) any other powers, designations, preferences and
relative, participating, optional or other special rights, and any
qualifications, limitations or restrictions thereof.
The powers, designations, preferences and relative,
participating, optional or other special rights of each series of Preferred
Stock, and the qualifications, limitations or
13
<PAGE>
restrictions thereof, if any, may differ from those of any and all other series
at any time outstanding. The Board of Directors is hereby expressly authorized
from time to time to increase (but not above the total number of authorized
shares of Preferred Stock) or decrease (but not below the number of shares
thereof then outstanding) the number of shares of stock of any series of
Preferred Stock designated as any one or more series of Preferred Stock pursuant
to this Paragraph (B)(1).
FIFTH: The name and address of the incorporator are as follows:
NAME ADDRESS
---- -------
Ray A. Barr 10 Bank Street
White Plains, New York 10606
SIXTH: The following provisions are inserted for the management
of the business and the conduct of the affairs of the corporation, and for
further definition, limitation and regulation of the powers of the corporation
and of its directors and stockholders:
(1) The number of directors of the corporation shall be such as
from time to time shall be fixed by, or in the manner provided in the by-laws.
Election of directors need not be by ballot unless the by-laws so provide.
(2) The Board of Directors shall have power without the assent or
vote of the stockholders:
(a) To make, alter, amend, change, add to or repeal the
By-Laws of the corporation; to fix and vary the amount to be reserved for any
proper purpose; to authorize and cause to be executed mortgages and liens upon
all or any part of the property of the corporation; to determine the use and
disposition of any surplus or net profits; and to fix the times for the
declaration and payment of dividends.
(b) To determine from time to time whether, and to what
times and places, and under what conditions the accounts and books of the
corporation (other than the stock ledger) or any of them, shall be open to the
inspection of the stockholders.
(3) The directors in their discretion may submit any contract or
act for approval or ratification at any annual meeting of the stockholders or at
any meeting of the stockholders called for the purpose of considering any such
act or contract, and any contract or act that shall be approved or be ratified
by the vote of the holders of a majority of the stock of the corporation which
is represented in person or by proxy at such meeting and entitled to vote
thereat (provided that a lawful quorum of stockholders be there represented in
person or by proxy) shall be as valid and as binding upon the corporation and
upon all stockholders as though it had been approved or ratified by every
stockholder of the corporation, whether or not the contract or act would
otherwise be open to legal attack because of directors' interest, or for any
other reason.
14
<PAGE>
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this certificate, and to any by-laws from time to time
made by the stockholders; provided, however, that no by-laws so made shall
invalidate any prior act of the directors which would have been valid if such
by-law had not been made.
SEVENTH: No director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except with respect to (1) a breach of the director's duty of loyalty to the
corporation or its stockholders, (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation Law or (4) a
transaction from which the director derived an improper personal benefit, it
being the intention of the foregoing provisions to eliminate the liability of
the corporation's directors to the corporation or its stockholders to the
fullest extent permitted by Section 102(b)(7) of the Delaware General
Corporation Law, as amended from time to time. The corporation shall indemnify
to the fullest extent permitted by Sections 102(b)(7) and 145 of the Delaware
General Corporation Law, as amended from time to time, each person that such
Section grant the corporation power to indemnify.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware, may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to compromise or arrangement and to any
reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
NINTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
15
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Incorporation to be executed this 27th day of August, 1997.
INFOSAFE SYSTEMS, INC.
By: /s/ Arthur R. Medici
--------------------
Arthur R. Medici
President and Chief Executive Officer
16
Exhibit 3(i).2
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 09/23/1998
981383187-2279234
CERTIFICATE OF MERGER
of
INTERNET COMMERCE CORPORATION
(a Delaware Corporation)
into
INFOSAFE SYSTEMS, INC.
(a Delaware Corporation)
It is hereby certified that:
1. Infosafe Systems, Inc. is a corporation of the State of Delaware.
2. Internet Commerce Corporation is a corporation of the State of
Delaware.
3. An agreement of merger has been approved, adopted, executed,
certified, and acknowledged by each of the constituent corporations
in accordance with Section 251 of the General Corporation of Law of
the State of Delaware ("DGCL").
4. The name of the surviving corporation shall be Infosafe Systems,
Inc.
5. The certificate of incorporation for the surviving corporation shall
be that of Infosafe Systems, Inc., as amended.
6. The executed agreement of merger is on file at the office of
Infosafe Systems, Inc. located at 805 Third Avenue, New York, New
York 10020.
7. A copy of the agreement of merger will be furnished by Infosafe
Systems, Inc., on the request and without cost, to any stockholder
of any constituent corporation.
BY: INFOSAFE SYSTEMS, INC.
/s/ Arthur R. Medici
--------------------
Arthur R. Medici
President
Exhibit 3(i).4
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/23/1999
991160957 - 227923(i)
CERTIFICATE OF
DESIGNATION OF SERIES AND
DETERMINATION OF RIGHTS AND PREFERENCES OF
SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK OF
INTERNET COMMERCE CORPORATION
----------------------------
Internet Commerce Corporation, a corporation organized and
existing under the laws of the States of Delaware (the "Corporation"), acting
pursuant to Section 151 of the Delaware General Corporation Law, does hereby
submit the following Designation of Series and Determination of Rights and
Preferences of Series A Convertible Redeemable Preferred Stock.
FIRST: The name of the Corporation is Internet Commerce
Corporation.
SECOND: By unanimous consent of the Board of Directors of the
Corporation dated March 2, 1999, the following resolutions were duly adopted:
WHEREAS the Certificate of Incorporation of the Corporation
authorizes Preferred Stock consisting of Five Million (5,000,000) shares, par
value $.01 per share, issuable from time to time in one or more series; and
WHEREAS the Board of Directors of the Corporation is authorized,
subject to limitations prescribed by law and by the provisions of Article Fifth
of the Corporation's Certificate of Incorporation, as amended, to establish and
fix the number of shares to be included in any series of Preferred Stock and the
designation, rights, preferences, powers, restrictions and limitations of the
shares of such series; and
WHEREAS it is the desire of the Board of Directors to establish
and fix the number of shares to be included in a new series of Preferred Stock
and the designation, rights, preferences and limitations of the shares of such
new series;
NOW, THEREFORE, BE IT RESOLVED That, pursuant to Article Fifth of
the Corporation's Certificate of Incorporation, as amended, there is hereby
established a series of the class of Preferred Stock, par value $.01 per share,
and that the designation and amount thereof and the voting powers, preferences,
and relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are set
forth in this Certificate of Designation of Series and Determination
<PAGE>
of Rights and Preferences of Series A Convertible Redeemable Preferred Stock
(the "Certificate of Designation") as follows:
1. Designation and Amount. Preferred Stock of the Corporation
created and authorized for issuance hereby shall be designated as the "Series A
Convertible Redeemable Preferred Stock" (herein referred to as the "Series A
Preferred Stock"), having a par value per share equal to One Cent ($.01), and
the number of shares constituting such series shall be Ten Thousand (10,000)
shares.
2. Dividends. The holders of outstanding shares of Series A
Convertible Preferred Stock shall be entitled to receive, out of funds legally
available therefor, a 4% annual dividend, equal in value to $40.00 per share,
and no more, payable on each July 1 commencing July 1, 1999 (or pro rata upon
conversion as of the Conversion Date, as defined below), based on a 360-day
year. At the option of the Corporation, each such dividend may be paid in cash
or in shares of the Corporation's Class A Common Stock, $.01 par value per share
(the "Class A Common Stock") valued at the Conversion Rate, as defined below, in
effect as of such July 1 or Conversion Date, as the case may be. Each share of
Series A Preferred Stock shall rank on a parity with each other share of Series
A Preferred Stock with respect to dividends. Each such dividend shall be mailed
to holders of record of the Series A Preferred Stock as their names and
addresses appear on the share register of the Corporation or at the office of
the transfer agent on the corresponding dividend payment date.
3. Redemption. Each outstanding share of the Series A Preferred
Stock is redeemable by the Corporation at a price of $1,000.00 per share, plus
any accrued and unpaid dividends (the "Redemption Price") commencing on the
third anniversary of the date of issuance thereof upon 30 days written notice to
the holders of the Series A Preferred Stock. Such shares may be redeemed in
whole or in part. The Corporation shall deliver the Redemption Price, payable by
bank check or wire transfer, to the holder of the shares selected for redemption
within 30 business days of the proposed redemption date (the "Redemption Date").
If the Redemption Date falls on a day on which the New York Stock Exchange is
closed, the Redemption Date shall be fixed at the next day on which such
exchange is open for business.
4. Liquidation, Dissolution or Winding Up. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of outstanding shares of Series A Preferred Stock shall
be entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, after and subject to the payment in full of
all amounts required to be distributed to the holders of any other class or
series of stock of the Corporation ranking on liquidation prior and in
preference to the Series A Preferred Stock (collectively referred to as "Senior
Preference Stock"), an amount equal to $1,000.00 per share of Series A Preferred
Stock (the "Liquidation Value"). After the full preferential liquidation amount
has been paid to, or determined and set apart for the Series A Preferred Stock
and all other series of Preferred Stock of equal ranking hereafter authorized
and issued, if any, the remaining assets of the Corporation available for
distribution to stockholders shall be distributed ratably to the holders of the
Corporation's common stock. If upon any such liquidation, dissolution or winding
up of the Corporation the remaining assets of the Corporation available for
distribution to its stockholders shall be
<PAGE>
insufficient to pay the holders of shares of Series A Preferred Stock the full
amount to which they shall be entitled, the holders of shares of Series A
Preferred Stock and any class or series of stock ranking on liquidation on a
parity with the Series A Preferred Stock (the "Parity Stock") shall share
ratably in any distribution of the remaining assets and funds of the Corporation
in proportion to the respective amounts which would otherwise be payable in
respect of the shares held by them upon such distribution if all amounts payable
on or with respect to such shares were paid in full. A reorganization or any
other consolidation or merger of the Corporation with or into any other
corporation, or any other sale of all or substantially all of the assets of the
Corporation, shall not be deemed to be a liquidation, dissolution or winding up
of the Corporation within the meaning of this Section 4, and the Series A
Preferred Stock shall be entitled only to (i) the right provided in any
agreement or plan governing the reorganization or other consolidation, merger or
sale of assets transaction, (ii) the rights contained in the Delaware General
Corporation Law and (iii) the rights contained in other Sections hereof.
5. Conversion Provisions. The holders of shares of the Series A
Preferred Stock shall have conversion rights as follows (the "Conversion
Rights"):
(a) Right to Convert.
(1) Each share of Series A Preferred Stock shall be
convertible, at the option of its holder, at any time after
issuance into shares of Class A Common Stock at the initial
conversion rate (the "Conversion Rate") defined below. The
Conversion Rate, subject to the adjustments described below,
shall be a number of shares of Class A Common Stock equal to
$1,000 divided by Seventy Five Percent (75%) of the average
Market Price of the Class A Common Stock for the ten trading days
immediately prior to the Conversion Date subject to a minimum
Conversion Rate of Three Dollars per share ($3.00) (the "Minimum
Conversion Rate"), and a maximum Conversion Rate of Five Dollars
per share ($5.00) (the "Maximum Conversion Rate"). For purposes
of this Section 5(a)(1), Market Price for any date shall be the
closing price of the Class A Common Stock on such date, as
reported by the Nasdaq SmallCap Market of The Nasdaq Stock
Market, Inc. ("Nasdaq"), or the closing price in the
over-the-counter market if other than Nasdaq.
(2) No fractional shares of Class A Common Stock
shall be issued upon conversion of the Series A Preferred Stock,
and in lieu thereof the number of shares of Class A Common Stock
issuable for each share of Series A Preferred Stock converted
shall be rounded to the nearest whole number. Such number of
whole shares of Class A Common Stock issuable upon the conversion
of one share of Series A Preferred Stock shall be multiplied by
the number of shares of Series A Preferred Stock submitted for
conversion pursuant to the Notice of Conversion, as defined
below, to determine the total number of shares of Class A Common
Stock issuable in connection with any conversion.
3
<PAGE>
(3) In order to convert the Series A Preferred
Stock into shares of Class A Common Stock, the holder thereof
shall: (i) complete, execute and deliver to the Corporation the
conversion certificate attached hereto as Exhibit A (the "Notice
of Conversion"); and (ii) surrender the certificate or
certificates representing the shares of Series A Preferred Stock
being converted (the "Converted Certificate") to the Corporation.
The Notice of Conversion shall be effective and in full force and
effect if delivered to the Corporation by facsimile transmission
at 212-271-8580. Provided that a copy of the Notice of Conversion
is delivered to the Corporation on such date by facsimile
transmission or otherwise, and provided that the original Notice
of Conversion and the Conversion Certificate are delivered to the
Corporation within three (3) business days thereafter at 805
Third Avenue, New York, NY 10022, the date on which the Notice of
Conversion is given shall be deemed to be the date set forth
therefor in the Notice of Conversion (the "Conversion Date"); and
the person or persons entitled to receive the shares of Class A
Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such shares of Class
A Common Stock as of the Conversion Date. If the original Notice
of Conversion and the Converted Certificate are not delivered to
the Corporation within three (3) business days following the
Conversion Date, the Notice of Conversion shall become null and
void as if it were never given and the Corporation shall, within
two (2) business days thereafter, return to the holder by
overnight courier any Converted Certificate that may have been
submitted in connection with any such conversion. In the event
that any Converted Certificate submitted represents a number of
shares of Series A Preferred Stock that is greater than the
number of such shares that is being converted pursuant to the
Notice of Conversion delivered in connection therewith, the
Corporation shall deliver, together with the certificates for the
shares of Class A Common Stock issuable upon such conversion as
provided herein, a certificate representing the remaining number
of shares of Series A Preferred Stock not converted.
(4) Upon receipt of a Notice of Conversion, the
Corporation shall absolutely and unconditionally be obligated to
cause a certificate or certificates representing the number of
shares of Class A Common Stock to which a converting holder of
Series A Preferred Stock shall be entitled to receive as provided
herein, which shares shall constitute fully paid and
nonassessable shares of Class A Common Stock that are freely
transferable on the books and records of the Corporation and its
transfer agents, subject to applicable state and federal
securities laws, to be issued to, delivered by overnight courier
to, and received by such converting holder by the fifth (5th)
calendar day following the Conversion Date. Such delivery shall
be made at such address as such converting holder may designate
therefor in its Notice of Conversion or in its written
instructions submitted together therewith.
(5) No less than 25 shares of Series A Convertible
Preferred Stock may be converted at any one time, unless the
holder then holds less than 25 shares and converts all such
shares at that time.
4
<PAGE>
(b) Adjustments to Conversion Rate.
(1) Reclassification, Exchange and Substitution. If
the Class A Common Stock issuable on conversion of the Series A
Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether
by capital reorganization, reclassification, reverse stock split
or forward stock split or stock dividend or otherwise (other than
a subdivision or combination of shares provided for above), the
holders of the Series A Preferred Stock shall, upon its
conversion, be entitled to receive, in lieu of the shares of
Class A Common Stock which the holders would have become entitled
to receive but for such change, a number of shares of such other
class or classes of stock that would have been subject to receipt
by the holders if they had exercised their rights of conversion
of the Series A Preferred Stock immediately before that change.
(2) Reorganizations, Mergers, Consolidations or
Sale of Assets. If at any time there shall be a capital
reorganization of the Corporation's common stock (other than a
subdivision, combination, reclassification or exchange of shares
provided for elsewhere in this Section 5 or merger of the
Corporation into another corporation, or the sale of the
Corporation's properties and assets as, or substantially as, an
entirety to any other person, then, as a part of such
reorganization, merger or sale, lawful provision shall be made so
that the holders of the Series A Preferred Stock shall thereafter
be entitled to receive upon conversion of the Series A Preferred
Stock, the number of shares of stock or other securities or
property of the Corporation, or of the successor corporation
resulting from such merger, to which holders of the Class A
Common Stock deliverable upon conversion of the Series A
Preferred Stock would have been entitled on such capital
reorganization, merger or sale if the Series A Preferred Stock
had been converted immediately before that capital
reorganization, merger or sale to the end that the provisions of
this paragraph (b)(2) (including adjustment of the Conversion
Rate then in effect and number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable
after that event as nearly equivalently as may be practicable.
(3) Additional Shares. In the event (i) the
Corporation does not file a registration statement under the
Securities Act of 1933 covering the shares of Class A Common
Stock issuable upon conversion of the Series A Preferred Stock
within 45 days of April 20, 1999 (the "Closing Date"), (ii) such
registration statement is not declared effective within 180 days
of the Closing Date or (iii) the Corporation does not issue the
shares of Class A Common Stock within the time limits set forth
in the penultimate sentence of Section 5(a)(1), then the
Conversion Rate shall be adjusted to increase the number of
shares of Class A Common Stock assessable by 2.5% for each
violation. The foregoing adjustments are cumulative and not
exclusive of each other, with the intent that the adjustments
hereunder may be a total of 2.5%, 5% or 7.5%, as the case may be.
5
<PAGE>
(c) No Impairment. The Corporation will not, by amendment
of its Articles of Incorporation or through any reorganization,
recapitalization, transfer of assets, merger, dissolution, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provision hereof and in the
taking of all such action as may be necessary or appropriate in
order to protect the Conversion Rights of the holders of the
Series A Preferred Stock against impairment.
(d) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Rate for any
shares of Series A Preferred Stock, the Corporation at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each
holder of Series A Preferred Stock effected thereby a certificate
setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) the Conversion Rate
at the time in effect, and (iii) the number of shares of Class A
Common Stock and the amount, if any, of other property which at
the time would be received upon the conversion of such holder's
shares of Series A Preferred Stock.
(e) Notices of Record Date. In the event of the
establishment by the Corporation of a record of the holders of
any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, the Corporation
shall mail to each holder of Series A Preferred Stock at least
twenty (20) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for
the purpose of such dividend or distribution and the amount and
character of such dividend or distribution.
(f) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Class A Common Stock solely
for the purpose of effecting the conversion of the outstanding
shares of the Series A Preferred Stock such number of its shares
of Class A Common Stock equal to $1,000 divided by the Minimum
Conversion Rate multiplied by the number of shares of Series A
Preferred Stock issued and outstanding as of the Closing Date.
(g) Notices. Any notices required by the provisions hereof
to be given to the holders of shares of Series A Preferred Stock
shall be deemed given if deposited in the United States mail,
postage prepaid and return receipt requested, and addressed to
each holder of record at its address appearing on
6
<PAGE>
the books of the Corporation or to such other address of such
holder or its representative as such holder may direct.
6. Voting Provisions. Except as otherwise expressly provided or
required by law, the Series A Preferred Stock shall have no voting rights.
7
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate
to be duly executed by its President and attested to by its Secretary this 17th
day of March, 1999 who, by signing their names hereto, acknowledge that this
Certificate is the act of the Corporation and state to the best of their
knowledge information and belief, under the penalties of perjury, that the above
matters and facts are true in all material respects.
INTERNET COMMERCE CORPORATION
/s/ Richard J. Berman
--------------------------------
Richard J. Berman, President
/s/ Walter M. Psztur
-------------------------------
Walter M. Psztur, Secretary
IN WITNESS WHEREOF, the Corporation has caused this Certificate
to be duly executed by its President and attested by its Secretary this 23rd day
of April, 1999 who, by signing their names hereto, acknowledge that this
Certificate is the act of the Corporation and state to the best of their
knowledge information and belief, under the penalties of perjury, that the above
matters and facts are true in all material respects.
INTERNET COMMERCE CORPORATION
/s/ Richard J. Berman
--------------------------------
Richard J. Berman, President
/s/ Walter M. Psztur
-------------------------------
Walter M. Psztur, Secretary
8
<PAGE>
Exhibit A
CONVERSION CERTIFICATE
INTERNET COMMERCE CORPORATION
Series A Convertible Redeemable Preferred Stock
The undersigned holder (the "Holder") is surrendering to Internet
Commerce Corporation, a Delaware corporation (the "Company"), one or more
certificates representing shares of Series A Convertible Redeemable Preferred
Stock of the Company (the "Preferred Stock") in connection with the conversion
of all or a portion of the Preferred Stock into shares of Class A Common Stock,
$.01 par value per share, of the Company (the "Class A Common Stock") as set
forth below.
1. The Holder understands that the Preferred Stock was issued by
the Company pursuant to the exemption from registration under the Securities Act
of 1933, as amended (the "Securities Act"), provided by Regulation D promulgated
thereunder.
2. The Holder represents and warrants that all offers and sales
of the Class A Common Stock issued to the Holder upon such conversion of the
Preferred Stock shall be made (a) pursuant to an effective registration
statement under the Securities Act, (in which case the Holder represents that a
prospectus has been delivered) (b) in compliance with Rule 144, or (c) pursuant
to some other exemption from registration.
Number of Shares of Preferred Stock being converted:
Applicable Conversion Price:
Number of Shares of Class A Common Stock Issuable:
Number of Dividend Shares:
Conversion Date:
Delivery Instructions for certificates of Class A Common Stock
and for new certificates representing any remaining shares of
Preferred Stock:
NAME OF HOLDER:
(Signature of Holder)
9
Exhibit 3(i).5
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:01 AM 04/23/1999
991160958-2279234
CERTIFICATE OF DESIGNATION OF SERIES AND
DETERMINATION OF RIGHTS AND PREFERENCES OF
SERIES S PREFERRED STOCK OF
INTERNET COMMERCE CORPORATION
-------------
Internet Commerce Corporation, a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), acting pursuant to
Section 151 of the Delaware General Corporation Law, does hereby submit the
following Certificate of Designation of Series and Determination of Rights and
Preferences of Series S Redeemable Preferred Stock.
FIRST: The name of the Corporation is Internet Commerce Corporation.
SECOND: By unanimous written consent of the Board of Directors of the
Corporation dated January 5, 1999, the following resolutions were duly adopted:
WHEREAS the Certificate of Incorporation of the Corporation authorizes
Preferred Stock consisting of Five Million (5,000,000) shares, par value $.01
per share, issuable from time to time in one or more series; and
WHEREAS the Board of Directors of the Corporation is authorized, subject
to limitations prescribed by law and by the provisions of Article Fifth of the
Corporation's Certificate of Incorporation, as amended, to establish and fix the
number of shares to be included in any series of Preferred Stock and the
designation, rights, preferences, powers, restrictions and limitations of the
shares of such series; and
WHEREAS it is the desire of the Board of Directors to establish and fix
the number of shares to be included in a new series of Preferred Stock and the
designation, rights, preferences and limitations of the shares of such new
series;
NOW, THEREFORE, BE IT RESOLVED That, pursuant to Article Fifth of the
Corporation's Certificate of Incorporation, as amended, there is hereby
established a series of the class of Preferred Stock, par value $.01 per share,
and that the designation and amount thereof and the voting powers, preferences,
and relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are set
forth in this Certificate of Designation of Series and Determination of Rights
and Preferences of Series S Preferred Stock (the "Certificate of Designation")
as follows:
<PAGE>
"1. Designation and Amount. Preferred Stock of Internet Commerce
Corporation, a Delaware corporation (the "Corporation"), created and authorized
for issuance hereby shall be designated as the "Series S Preferred Stock"
(herein referred to as the "Series S Preferred Stock"), having a par value per
share equal to One Cent ($.01), and the number of shares constituting such
series shall be One Hundred Seventy Five (175).
2. Dividends. The holders of outstanding shares of Series S Preferred
Stock shall not be entitled to receive any dividend payments on the shares of
Series S Preferred Stock.
3. Redemption. Commencing July 1, 1999, and on the first day of each
calendar month thereafter (the "Redemption Date"), or earlier upon the
effectiveness of a selling shareholder shelf registration statement covering the
shares of the Corporation's Class A Common Stock, par value $.01 per share (the
"Common Stock") issuable upon conversion of the Series S Preferred Stock as
provided herein (the "Underlying Shares"), twelve (12) shares of Series S
Preferred Stock shall be mandatorily redeemed by the Corporation (the
"Redemption Shares") at a price of $1,000.00 per share (the "Redemption Price")
under the terms and conditions herein set forth. In the event that the
Corporation is unable for any reason to effect any such redemption of the
Redemption Shares, then such Shares to be so redeemed shall automatically be
converted into shares of Class A Common Stock as herein provided. If applicable,
the Corporation shall deliver the Redemption Price, payable by bank check or
wire transfer, to the holder of the shares selected for redemption within 3
business days of the proposed Redemption Date. If the Redemption Date falls on a
day on which the New York Stock Exchange is closed, the Redemption Date shall be
fixed at the next day on which such exchange is open for business.
4. Liquidation, Dissolution or Winding Up. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of outstanding shares of Series S Preferred Stock shall
be entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, after and subject to the payment in full of
all amounts required to be distributed to the holders of any other class or
series of stock of the Corporation ranking on liquidation prior and in
preference to the Series S Preferred Stock (collectively referred to as "Senior
Preferred Stock"), an amount equal to $1,000.00 per share of Series S Preferred
Stock (the "Liquidation Value"). After the full preferential liquidation amount
has been paid to, or determined and set apart for the Series S Preferred Stock
and all other series of Preferred Stock of equal ranking hereafter authorized
and issued, if any, the remaining assets of the Corporation available for
distribution to stockholders shall be distributed ratably to the holders of the
Common Stock. If upon any such liquidation, dissolution or winding up of the
Corporation the remaining assets of the Corporation available for distribution
to its stockholders shall be insufficient to pay the holders of shares of Series
S Preferred Stock the full amount to which shall be entitled, the holders of
Series S Preferred Stock and any class or series of stock ranking on liquidation
on a parity with the Series S Preferred Stock (the "Parity Stock") shall share
ratably in any distribution of the remaining assets and funds of the Corporation
in proportion to the respective amounts which would otherwise be payable in
respect of the shares held by them upon such distribution if all amounts payable
on or with respect to such shares were paid in full.
2
<PAGE>
5. Automatic Conversion Provisions. The holders of shares of the Series
S Preferred Stock shall have automatic conversion rights as follows (the
"Automatic Conversion Rights"):
(a) If the Redemption Shares shall not be timely redeemed by the
Corporation for cash for any reason, then each such Share shall thereupon
immediately and automatically convert into shares of Class A Common Stock at the
conversion rate (the "Conversion Rate") defined below. The Conversion Rate,
subject to the adjustments described below, shall be a number of shares of Class
A Common Stock equal to $1,000 divided by the Market Price of the Class A Common
Stock for the five (5) trading days immediately prior to the Conversion Date.
For purposes of this Section 5(a), Market Price for any date shall be the
closing bid price of the Class A Common Stock on such date, as reported by the
Nasdaq SmallCap Market of The Nasdaq Stock Market, Inc. ("Nasdaq") (or other
national securities exchange) or otherwise the closing bid price in the
over-the-counter market.
(b) No fractional shares of Class A Common Stock shall be issued
upon conversion of the Series S Preferred Stock, and in lieu thereof the number
of shares of Class A Common Stock issuable for each share of Series S Preferred
Stock automatically converted shall be rounded to the nearest whole number. Such
number of whole shares of Class A Common Stock issuable upon the automatic
conversion of one share of Series S Preferred Stock shall be multiplied by the
number of shares of Series S Preferred Stock submitted for conversion pursuant
to the Notice of Conversion, as defined below, to determine the total number of
shares of Class A Common Stock issuable in connection with any such conversion.
(c) The Corporation shall absolutely and unconditionally be
obligated to cause a certificate or certificates representing the number of
shares of Class A Common Stock to which a holder of Series S Preferred Stock
shall be entitled to receive as provided herein, which shares shall constitute
fully paid and nonassessable shares of Class A Common Stock that are freely
transferable on the books and records of the Corporation and its transfer
agents, subject to applicable state and federal securities laws, to be issued
to, delivered by overnight courier to, and received by such holder by the fifth
(5th) calendar day following the Conversion Date. Such delivery shall be made at
such address as such holder may designate therefor.
(d) Adjustments to Conversion Rate.
(1) Reclassification, Exchange and Substitution. If the
Class A Common Stock issuable on conversion of the Series S Preferred
Stock shall be changed into the same or a different number of shares of
any other class or classes of stock, whether by capital reorganization,
reclassification, reverse stock split or forward stock split or stock
dividend or otherwise (other than a subdivision or combination of shares
provided for above), the holders of the Series S Preferred Stock shall,
upon its conversion, be entitled to receive, in lieu of the shares of
Class A Common Stock which the holders would have become entitled to
receive but for such
3
<PAGE>
change, a number of shares of such other class or classes of stock that
would have been subject to receipt by the holders as if the Series S
Preferred Stock had been converted, immediately prior to such change.
(2) Reorganizations, Mergers, Consolidations or Sale of
Assets. If at any time there shall be a capital reorganization of the
Corporation's common stock (other than a subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this
Section 5) or merger of the Corporation into another corporation, or the
sale of the Corporation's properties and assets as, or substantially as,
an entirety to any other person, then, as a part of such reorganization,
merger or sale, lawful provision shall be made so that the holders of
the Series S Preferred Stock shall thereafter be entitled to receive
upon conversion thereof, the number of shares of stock or other
securities or property of the Corporation, or of the successor
corporation resulting from such merger, to which holders of the Class A
Common Stock deliverable upon conversion of the Series S Preferred Stock
would have been entitled on such capital reorganization, merger or sale
if the Series S Preferred Stock had been converted immediately before
that capital reorganization, merger or sale to the end that the
provisions of this paragraph (d)(2) (including adjustment of the
Conversion Rate then in effect and/or number of shares issuable upon
conversion of the Series S Preferred Stock) shall be applicable after
that event as nearly equivalently as may be practicable
(e) No Impairment. The Corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, transfer of assets,
merger, dissolution, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions hereof and in the taking of all such action
as may be necessary or appropriate in order to protect the Automatic Conversion
Rights of the holders of the Series S Preferred Stock against impairment.
(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate for any share of Series S
Preferred Stock, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of Series S Preferred Stock effected thereby a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Corporation
shall, upon the written request at any time of any holder of Series S Preferred
Stock, furnish or cause to be furnished to such holder of like certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Rate
at the time in effect, and (iii) the number of shares of Class A Common Stock
and the amount, if any, of other property which at the time would be received
upon the conversion of such holder's shares of Series S Preferred Stock.
(g) Notices of Record Date. In the event of the establishment by
the Corporation of a record of the holders of any class of securities for the
purpose of
4
<PAGE>
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, the Corporation shall mail to each
holder of Series S Preferred Stock at least ten (10) days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend or distribution and the amount and
character of such dividend or distribution.
(h) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Class A Common Stock solely for the purpose of effecting
the conversion of the outstanding shares of the Series S Preferred Stock such
number of its shares of Class A Common Stock as shall from time to time be
sufficient, based on the Conversion Rate then in effect, to effect the
conversion of all then outstanding shares of the Series S Preferred Stock. If at
any time the number of authorized but unissued shares of Class A Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series S Preferred Stock, then, in addition to all rights, claims and
damages to which the holders of the Series S Preferred Stock shall be entitled
to receive at law or in equity as a result of such failure by the Corporation to
fulfill its obligations to the holders hereunder, the Corporation will take any
and all corporate or other action as may, in the opinion of its counsel, be
helpful, appropriate or necessary to increase its authorized but unissued shares
of Class A Common Stock to such number of shares as shall be sufficient for such
purpose.
(i) Notices. Any notices required by the provisions hereof to be
given to the holders of shares of Series S Preferred Stock shall be deemed given
if deposited in the United States mail, postage prepaid and return receipt
requested, and addressed to each holder of record at its address appearing on
the books of the Corporation or to such other address of such holder or its
representative as such holder may direct.
6. Voting Provisions. Except as otherwise expressly provided or
required by law, the Series S Preferred Stock shall have no voting rights."
IN WITNESS WHEREOF, the Corporation has caused this Certificate
to be duly executed by its President and attested to by its Secretary this 5th
day of January, 1999, who, by signing their names hereto, acknowledge that this
Certificate is the act of the Corporation and state to the best of their
knowledge information and belief, under the penalties of perjury, that the above
matters and facts are true in all material respects.
INTERNET COMMERCE CORPORATION
/s/ Richard Berman
------------------------------------
Richard Berman, President
/s/ Walter Psztur
-------------------------------------
Walter Psztur, Secretary
5
<PAGE>
EXHIBIT A
AUTOMATIC CONVERSION CERTIFICATE
INTERNET COMMERCE CORPORATION
Series S Preferred Stock
The undersigned holder (the "Holder") is surrendering to Internet
Commerce Corporation, a Delaware corporation (the "Company"), one or more
certificates representing shares of Series S Preferred Stock of the Company (the
"Preferred Stock") in connection with the automatic conversion of all or a
portion of the Preferred Stock into shares of Class A Common Stock, $.01 par
value per share, of the Company (the "Class A Common Stock") as set forth below.
1. The Holder understands that the Preferred Stock was issued by
the Company pursuant to the exemption from registration under the Securities Act
of 1933, as amended (the "Securities Act"), provided by Regulation D promulgated
thereunder.
2. The Holder represents and warrants that all offers and sales
of the Class A Common Stock issued to the Holder upon such automatic conversion
of the Preferred Stock shall be made (a) pursuant to an effective registration
statement under the Securities Act, (in which case the Holder represents that a
prospectus has been delivered), (b) in compliance with Rule 144, or (c) pursuant
to some other exemption from registration.
Number of Shares of Preferred Stock being automatically
converted:
Applicable Conversion Price:
Number of Shares of Class A Common Stock Issuable:
Conversion Date:
Delivery Instructions for certificates of Class A Common Stock
and for new certificates representing any remaining shares of
Preferred Stock:
NAME OF HOLDER:
(Signature of Holder)
6
Exhibit 4.2
REVISED SUBSCRIPTION AGREEMENT
(March 31, 1999)
THE SECURITIES BEING OFFERED AND SOLD PURSUANT TO THIS SUBSCRIPTION
AGREEMENT HAVE NOT BEEN REGISTERED UNDER FEDERAL OR STATE SECURITIES LAWS IN
ACCORDANCE WITH CERTAIN EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS. THE
ISSUER OF THE SECURITIES IS RELYING UPON THE REPRESENTATIONS AND AGREEMENTS
CONTAINED IN THIS SUBSCRIPTION AGREEMENT FOR THE PURPOSE OF DETERMINING WHETHER
THIS TRANSACTION MEETS THE REQUIREMENTS FOR SUCH EXEMPTIONS.
-------------------------------
THIS SUBSCRIPTION AGREEMENT ("Agreement") has been executed by the
undersigned in connection with the private offering (the "Offering"), on an "all
or none basis," of 5,000 shares of the Series A Convertible Redeemable Preferred
Stock, par value $.01 per share (the "Series A Preferred Stock"), of Internet
Commerce Corporation, a corporation organized under the laws of the State of
Delaware (the "Company"), and the shares of the Company's Class A Common Stock,
par value $.01 per share (the "Class A Common Stock"), underlying the Series A
Preferred Stock. In addition to such other terms as are set forth in this
Agreement, the terms on which the Series A Preferred Stock may be converted into
shares of Class A Common Stock (the "Conversion Common Stock"), and the other
terms of the Series A Preferred Stock are set forth in the Designation of Series
and Determination of Rights and Preferences of Series A Convertible Redeemable
Preferred Stock attached hereto as Annex I (the "Series A Designation"). The
Conversion Common Stock and the Series A Preferred Stock are collectively
referred to herein as the "Securities."
In addition, the Company has reserved for sale up to an additional 1,000
shares of Series A Preferred Stock to cover any over-subscriptions that it may
receive in the Offering.
The offer of the Series A Preferred Stock and the Conversion Common
Stock and, if this Agreement is accepted by the Company, the sale thereof is
being made in reliance upon exemptions from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and the securities or
"blue sky" or other similar laws of various states (collectively, the "State
Securities Laws").
The undersigned purchaser
NAME:
ADDRESS:
if applicable, a [Corporate] [Partnership] [Trust] organized under the laws of
____________; ("Purchaser"), hereby represents and warrants to, and agrees with
the Company as follows:
<PAGE>
1. Agreement to Subscribe
a. Subscription. The undersigned Purchaser hereby irrevocably
subscribes to purchase __________ shares of Series A Preferred Stock, at a
purchase price of $ 1,000 per share for an aggregate purchase price of $_______.
b. Form of Payment. Purchaser shall pay the aggregate purchase
price for the Series A Preferred Stock by delivering immediately available funds
in United States Dollars in accordance with Paragraph 1(c) below, to the escrow
agent (the "Escrow Agent").
c. Method of Payment. Payment of the aggregate purchase price for
the Series A Preferred Stock shall be made by check, money order or similar
instrument made out to "First Union National Bank/Internet Commerce Corporation
(or ICC Escrow Account" and delivered to the Company with the executed copy
hereof or wire transfer of funds to the Escrow Agent as follows:
First Union National Bank
Charlotte, North Carolina
ABA# 053000219
D/5000000016439
ATTN: Corporate Trust Dept. for Internet Commerce
Corporation Escrow Acct.
Notify CT5300 / Bill Michie
d. Obligations Irrevocable. The obligations of the Purchaser
hereunder shall be irrevocable, except with the consent of the Company.
e. Acceptance of Subscription. It is understood and agreed that
the Company shall have the sole right, at its complete discretion, to accept or
reject this subscription, in whole or in part, for any reason and that the same
shall be deemed to be accepted by the Company only when it is signed by a duly
authorized officer of the Company and delivered to the undersigned on or prior
to the date (the "Closing Date") that the Company receives and accepts
subscriptions for the purchase of at least 5,000 shares of Series A Preferred
Stock. Subscriptions need not be accepted in the order received, and the shares
of Series A Preferred Stock may be allocated among subscribers. The Company
shall have no obligation to issue any of the Securities to any person who is a
resident of a jurisdiction in which the issuance of the Securities to him would
constitute a violation of any State Securities Laws.
2. Purchaser Representations; Access to Information; Independent
Investigation
a. Purchaser Representations and Warranties. Purchaser represents
and warrants to the Company as follows:
(i) Purchaser is an "accredited investor" as such term is defined
in Rule 501(a) promulgated under the Securities Act. The Purchaser
agrees to furnish any additional information requested to assure
compliance with applicable federal and state securities laws in
connection with the purchase and sale of the Securities. The Purchaser
acknowledges that he has completed the Accredited Investor Certificate
2
<PAGE>
contained in Annex II and that the information contained therein is
complete and accurate as of the date hereof and is hereby affirmed as of
the date hereof;
(ii) 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 securities, to make an
informed decision relating thereto, and to protect its own interests in
connection with the transaction;
(iii) Purchaser has all requisite authority to enter into this
Agreement and to perform all of the obligations required to be
performed by the undersigned hereunder;
(iv) Purchaser is a resident of the state set forth above and is
not acquiring the Securities as an agent or otherwise for any other
person;
(v) Purchaser is purchasing the Series A Preferred Stock solely
for its own account, for investment purposes and not with an intent
towards further sale or distribution thereof, and has not pre-arranged
any sale with any other purchaser;
(vi) The Securities 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. Purchaser
represents and warrants and hereby agrees that all offers and sales of
the Series A Preferred Stock and the Conversion Common Stock shall be
made only pursuant to such registration or to an exemption from
registration;
(vii) Purchaser acknowledges that the purchase of the Securities
involves a high degree of risk, is aware of the risks and further
acknowledges that it can bear the economic risk of the Securities,
including the total loss of its investment;
(viii) Purchaser understands that the Securities are being
offered and sold to it 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 Purchaser set forth herein in order to determine the
applicability of such exemptions and the suitability of Purchaser to
acquire the Securities, and that, unless the Purchaser notifies the
Company in writing to the contrary at or before Closing Date, all of
the undersigned's representations, warranties, agreements,
acknowledgments and understandings contained in this Agreement will be
deemed to have been reaffirmed and confirmed as of Closing Date,
taking into account all information received by the Purchaser;
(ix) In evaluating its investment, Purchaser has consulted its
own investment and/or legal and/or tax advisors;
3
<PAGE>
(x) Purchaser is not an underwriter or, or dealer in, the
Securities, and Purchaser is not participating in a distribution of
the Securities; and
(xi) Purchaser understands that the Company may increase the
number of shares offered hereby and consents thereto.
b. Current Public Information. Purchaser has been furnished with
the Information Supplement attached hereto as Annex III and has been furnished
with or has acquired copies of the Company's most recent Annual Report on Form
10-KSB as filed with the SEC, Form 10-QSB and/or 8-K filed thereafter, and the
Company's Definitive Proxy Statement for Special Meeting of Stockholders
(collectively, the "SEC Filings").
c. Independent Investigation; Access. Purchaser acknowledges that
Purchaser, in making the decision to purchase the Securities subscribed for, has
relied upon independent investigations made by it and its purchaser
representatives, if any, and Purchaser and such representatives, if any, prior
to any sale to it, have been given access and the opportunity to examine all
material contracts and documents relating to the Offering and an opportunity to
ask questions of, and to receive answers from, the Company or any person acting
on its behalf concerning the terms and conditions of this Offering. 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 Securities which
have been requested. Purchaser and its advisors, if any, have received complete
and satisfactory answers to any such inquiries.
d. No Government Recommendation or Approval. Purchaser
understands that no federal or state agency has passed on or made any
recommendation or endorsement of the Securities or made any finding or
determination concerning the fairness or advisability of this investment.
e. Entity Purchasers. If Purchaser is a partnership, corporation
or trust, the person executing this Agreement on its behalf represents and
warrants that:
(i) He or she has made due inquiry to determine the truthfulness
of the representations and warranties made pursuant to this Agreement;
and
(ii) He or she is duly authorized (if the undersigned is a trust,
by the trust agreement) to make this investment and to enter into and
execute this Agreement on behalf of such entity.
f. Non-Affiliate. Purchaser and any affiliate of Purchase
represent, warrant and covenant that they are not an affiliate of the Company.
4
<PAGE>
3. Issuer Representations.
a. Reporting Company Status. The Class A Common Stock, is
registered as 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 ("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.
b. Nasdaq Delisting and Conditional Re-Listing. In July 1998, the
Company was notified by Nasdaq that it no longer met the minimum net tangible
assets, market capitalization or net income requirements for continued listing
on the SmallCap Market. In October 1998, Nasdaq further notified the Company
that it also did not meet the minimum market maker requirement in connection
with its warrant listings on the SmallCap Market, and raised concerns about the
Company's compliance with the Nasdaq's shareholder approval requirements related
to an issuance of Class A Common Stock in connection with the merger of the
Company into its majority-owned subsidiary. In a letter dated October 22, 1998,
Nasdaq informed the Company that it would not be afforded an extension of time
in which to achieve compliance with the continued listing requirements of the
SmallCap Market and that, unless the Company requested a hearing in that regard,
the securities of the Company would be delisted from the SmallCap Market
effective with the close of business on October 29, 1998. The Company requested
such a hearing with the Nasdaq Hearing Department which was held on January 7,
1999. At that hearing, the Company presented its plan for sustained compliance
with the continued listing requirements of the SmallCap Market. By letter dated
February 22, 1999, Nasdaq notified the Company that it had delisted the
Company's securities from the SmallCap Market effective as of the close of
business on that day. Since the Company was current in all of is periodic
reporting requirements with the SEC, the Company's securities were immediately
eligible to trade on the NASD OTC Bulletin Board (the "OTCBB"). On February 23,
1999, the Class A Common Stock commenced trading on the OTCBB under the
Company's regular ticker symbol, "ICCSA." The Company appealed Nasdaq's decision
to delist its securities and provided additional information and documentation
regarding the business plans and prospects of the Company, including its
financing plans relating to the Offering. On March 16, 1999, the Company was
notified by Nasdaq that, effective with the opening of trading on March 17,
1999, the Class A Common Stock would be re-admitted for listing on the SmallCap
Market on a conditional basis under the ticker symbol "ICCAC." Nasdaq imposed
certain conditions on the Company in order to permit the relisting of the Class
A Common Stock on the SmallCap Market, including a requirement to raise an
additional $2,000,000 in equity and to amend the terms of the Series A Preferred
Stock to include a floor on the conversion rate.
c. Terms of Series A Preferred Stock. The terms of the Series A
Preferred shall be as set forth in the form of Series A Designation, to be filed
with the Secretary of State of the State of Delaware, and delivered to Purchaser
as Annex I.
d. Legality. The Company has the requisite corporate power and
authority to enter into this Agreement and to issue, sell and deliver the
Securities; this Agreement and
5
<PAGE>
the issuance, sale and delivery of the Securities hereunder and the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action by the Company; this Agreement and the Securities have been
duly and validly authorized and when delivered by and on behalf of the Company,
are valid and binding agreement of the Company, enforceable 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.
The Series A Preferred Stock and the Conversion Common Stock will not subject
the holders thereof to personal liability by reason of being such holders.
e. Proper Organization. The Company is a corporation duly
organized, validity existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified as a foreign corporation in
all jurisdictions where the failure to he so qualified would have a materially
adverse effect on its business, taken as a whole.
f. 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 might result in
any material adverse change in the condition (financial or otherwise) or in the
earnings, business affairs or business prospects of the Company, or which might
materially and adversely affect the properties or assets thereof, except as
described in the SEC Filings.
g. Non-Default. The Company, except as described in the SEC
Filings, 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.
h. No Misleading Statements. None of the SEC Filings, and as of
their respective dates, none of the Company's other filings with the SEC,
contain any 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,
in light of the circumstances under which they were made, not misleading.
i. No Adverse Change. 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 Form 10-QSB filed
pursuant to the Exchange Act.
j. Absence of Non-Disclosed Facts. There is no fact known to the
Company (other than general economic conditions known to the public generally)
that has not been disclosed in writing to the Purchaser that: (i) could
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) or in the earnings, business affairs, business
prospects, properties or assets of the Company; or (ii) could reasonably be
expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement and the Series A Preferred
Stock, except as described in the SEC Filings.
6
<PAGE>
k. Transfer Restrictions. The Series A Preferred Stock and the
Conversion Common Stock issuable upon the conversion of the Series A Preferred
Stock are deemed to be restricted securities under the Securities Act and may
not be sold, offered for sale or otherwise transferred except pursuant to a
registration statement filed with and declared effective by the SEC or pursuant
to an exemption from the registration requirements of that Act.
l. Non-Contravention. The execution and delivery of this
Agreement and the consummation of the issuance of the Securities and the
transactions contemplated by this Agreement do not and will not conflict with or
result in a breach by the Company of any of the terms or provisions of, or
constitute a default under the Articles 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 decrees, judgment or order of any court,
Federal or State regulatory body, administrative agency or other domestic body
having jurisdiction over the Company or any of its properties or assets.
m. Filings. The Company undertakes and agrees pursuant to the
sale hereunder of its Securities hereunder to make all necessary filings in
connection with the sale of its Securities as required by the laws and
regulations of all appropriate jurisdictions and securities exchanges in the
United States, if any.
4. Covenants of the Company. For so long as any Series A Preferred Stock
held by the Purchaser shall remain outstanding, the Company covenants and agrees
with the Purchaser that it will at all times fully reserve from its authorized
but unissued shares of Class A Common Stock such sufficient number of shares
thereof to permit the conversion in full of the outstanding Series A Preferred
Stock.
5. Legend.
a. On or prior to the Closing Date, the Company will prepare and
issue one or more certificates for the Series A Preferred Stock registered in
such name or names as specified by the Purchaser. Such certificate(s) and the
certificates representing the Conversion Common Stock 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.
7
<PAGE>
The certificates representing shares of the Conversion Common Stock issued 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 and the State Securities Laws or
such resale is effected pursuant to Rule 144 promulgated under the Securities
Act.
b. The Purchaser acknowledges that the Company is under no
obligation register the Series A Preferred Stock or the Conversion Common Stock
under the Securities Act other than as set forth in Paragraph 10 hereunder.
6. Exemption: Reliance on Section 4(2). Purchaser understands that the
offer and sale of the Series A Preferred Stock is not being registered under the
Securities Act based on the exemption from registration provided by Section 4(2)
of the Securities Act. The Company is relying on such exemption.
7. Closing Date and Escrow Agent. Closing shall be effected through
delivery of funds to the Company by the Escrow Agent, and delivery of
certificates evidencing the Series A Preferred Stock to the Purchaser by the
Company. Each of the Company and the Purchaser agrees that the Escrow Agent has
no liability as a result of any fraudulent or unlawful conduct of any other
party, and agrees to hold the Escrow Agent harmless.
8. Conditions to the Company's Obligation to Sell. Purchaser understands
that the Company's obligation to sell the Series A Preferred Stock is
conditioned upon:
a. The receipt and acceptance by the Company of this Agreement,
as evidenced by execution of this Agreement by the Chief Executive Officer, the
President or the Chief Financial Officer of the Company;
b. Delivery to the Escrow Agent by Purchaser of immediately
available funds as payment in full for the purchase of the Series A Preferred
Stock;
c. The accuracy as of the Closing Date of the representations and
warranties of the Purchaser contained in this Agreement, and performance by the
Purchaser of all covenants and agreements of the Purchaser required to be
performed on or before the Closing Date;
d. The receipt and acceptance by the Company of subscriptions to
purchase at least 5,000 shares of the Series A Preferred Stock; and
e. The continued listing of the Class A Common Stock on the
SmallCap Market through the Closing Date.
9. Conditions to Purchasers Obligation to Purchase. The Company
understands that Purchaser's obligation to purchase the Series A Preferred Stock
is conditioned upon:
8
<PAGE>
a. Execution by Purchaser of this Agreement and the receipt of
the Company's acceptance of this Agreement as provided in Paragraph 8(a) above;
b. Delivery of certificates evidencing the Series A Preferred
Stock to the Purchaser;
c. Acceptance by the Company of subscriptions from the Purchaser
and other subscribers and the sale by the Company pursuant thereto of 5,000
shares of Series A Preferred Stock;
d. The accuracy as of the Closing Date of the representations and
warranties of the Company contained in this Agreement and the performance by the
Company on or before the Closing Date of all covenants and agreements of the
Company required to be performed on or before the Closing Date;
e. The filing of the Series A Designation attached hereto as
Annex I with the Secretary of State of Delaware on or before the Closing Date;
and
f. The continued listing of the Class A Common Stock on the
SmallCap Market through the Closing Date.
10. Registration of the Conversion Common Stock. No later than 45 days
after the Closing Date, the Company shall file a Registration Statement on Form
S-3 or any other form under the Securities Act that may be used to register for
resale the Conversion Common Stock under the Securities Act and under all
applicable State Securities Laws covering all of the Conversion Common Stock and
to use its best efforts to cause such registration statement to be declared
effective, by acceleration, within 180 days after the Closing Date, by the SEC,
all at the Company's sole cost and expense, excluding discounts, concessions or
commissions paid to participating broker-dealers. Such best efforts shall
include promptly responding to all comments received from the staff of the SEC,
providing Purchaser or its counsel with contemporaneous copies of all written
communications from the staff of the SEC if requested by Purchaser and promptly
preparing and filing amendments to such registration statement which are
responsive to the comments received from the staff of the SEC. Such registration
statement shall name Purchaser as a selling shareholder and shall provide for
the sale of the Conversion Common Stock by Purchaser from time to time directly
to purchasers or in the over-the-counter market through or to securities brokers
or dealers that may receive compensation in the form of discounts, concessions,
or commissions. None of the foregoing shall in any way limit Purchaser's rights
to sell the Conversion Common Stock in reliance on an exemption from the
registration requirements under the Securities Act in connection with a
particular transaction. In the event the Company either (a) fails to file a
registration statement covering the Conversion Common Stock, within 45 days of
the Closing Date or (b) fails to have such registration statement declared
effective by the SEC within 180 days of Closing Date, the conversion rate of the
Series A Preferred Stock shall be revised, in each case as liquidated damages
and not as a penalty, to give the Purchaser upon conversion additional shares of
Class A Common equal to 2.5% for each violation of the shares of Conversion
Common Stock that would otherwise be issuable for each violation of the
foregoing covenants.
9
<PAGE>
Regardless of whether the Company registers the resale of the Conversion
Common Stock, the Company will, upon the presentation of an opinion of the
Purchaser's counsel, allow the Purchaser to offer and sell the Conversion Common
Stock in reliance on the provisions of Rule 144 or other exemption from the
registration provisions of state or federal law, at the option of Purchaser. Any
such registration statement shall remain effective for up to 12 months or until
all such Conversion Common Stock are sold, or until the Conversion Common Stock
may be sold pursuant to Rule 144, whichever is later. The Company shall provide
the Purchaser with such copies of the prospectus as shall be reasonably
requested to facilitate the sale of the Conversion Common Stock.
11. Governing Law. This Agreement shall be governed by and construed
under the law of the State of Delaware without regard to its choice of law
provision. A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto.
12. Survival of Representations, Warranties, and Covenants. Each of the
Company's and Purchaser's representations, warranties, and covenants shall
survive the execution and delivery of this Agreement, the delivery of the
certificates representing the Securities and the death or disability of the
Purchaser.
13. Successors and Assigns. This Agreement shall inure the benefit of
and be binding on the respective successors and assigns of the parties hereto.
Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by either the Company or the
undersigned without the prior written consent of the other party.
14. 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 assigns.
15. Notification of Changes. The undersigned hereby covenants and agrees
to notify the Company upon the occurrence of any event prior to the Closing Date
which would cause any representation, warranty, or covenant of the undersigned
contained in this Agreement to be false or incorrect.
16. Section and Other Headings. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
17. 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.
18. Waiver, Amendment. Neither this Agreement nor any provisions hereof
shall be modified, changed, discharged or terminated except by an instrument in
writing, signed by the party against whom any waiver, change, discharge or
termination is sought.
10
<PAGE>
SIGNATURE PAGE FOR INDIVIDUAL SUBSCRIBER
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and that he, she, or they have executed this Subscription
Agreement on this ____ day of March, 1999.
______________________ ____________________
Printed Name Signature
______________________ ____________________
Printed Name Signature
Accepted this ____ day of March, 1999:
INTERNET COMMERCE CORPORATION
By:
Title:
11
<PAGE>
SIGNATURE PAGE FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and that it has caused this Subscription Agreement to be
duly executed on its behalf on this __ day of March, 1999.
__________________________________
Printed Name of Subscriber
By:__________________________________
(Signature of Authorized Person)
__________________________________
(Printed Name and Title)
Accepted this ___ day of March, 1999:
INTERNET COMMERCE CORPORATION
By:
Title:
12
<PAGE>
Full Name and Address of Purchaser for Registration Purposes:
NAME:
ADDRESS:
TEL. NO:
FAX NO.:
CONTACT NAME:
Delivery Instructions (if different from Registration Name):
NAME:
ADDRESS:
TEL. NO:
FAX NO.:
CONTACT NAME:
SPECIAL
INSTRUCTIONS:
13
EXHIBIT 4.11
THIS CLASS A BRIDGE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED,
SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNTIL A (1) REGISTRATION STATEMENT UNDER
THE ACT AND ANY APPLICABLE STATE SECURITIES LAW HAS BECOME EFFECTIVE WITH
RESPECT THERETO, OR (2) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE
COMPANY THE EFFECT THAT REGISTRATION UNDER THE ACT OF APPLICABLE STATE
SECURITIES LAW IS NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER.
CLASS A BRIDGE W-__
Class A Bridge Warrant to Purchase _______ Shares of Common Stock
CLASS A BRIDGE WARRANT
TO PURCHASE COMMON STOCK
OF
INFOSAFE SYSTEMS, INC.
This is to Certify That, FOR VALUE RECEIVED,
_________________________ _____________________ ("Holder"), the obligee of the
Company's 10% Bridge Note (the "Bridge Note") of even date herewith in the
principal amount of $[ ], is entitled to purchase, subject to the provisions of
this Class A Bridge Warrant, from Infosafe Systems, Inc., a Delaware corporation
("Company"), ___________________________ fully paid, validly issued and
nonassessable shares of Class A Common Stock, par value $0.01 per share, of the
Company ("Common Stock") at a price of $.50 per share at any time or from time
to time during the period beginning on the one hundred eightieth (180th) day
after the date of issuance of such Bridge Note Unit (the "Class A Commencement
Date"), until the date which is thirty six (36) months after such date (the
"Class A Expiration Date"). Notwithstanding the foregoing sentence, provided
that more than one year has elapsed since the issuance of the Class A Bridge
Warrants, if the bid price of the Common Stock shall exceed $1.50 per share for
ten (10) consecutive trading days, the Company may accelerate the Expiration
Date to a date not less than ten (10) business days after the mailing of the
Acceleration Notice (in the form annexed hereto) to the Holder. The shares of
Common Stock deliverable upon such exercise are hereinafter sometimes referred
to as "Warrant Shares" and the exercise price of a share of Common Stock is
hereinafter sometimes referred to as the "Exercise Price."
G-1
<PAGE>
(a) EXERCISE OF CLASS A BRIDGE WARRANT. This Class A Bridge
Warrant may be exercised in whole or in part at any time or from time to time on
or after the Commencement Date and until 5:00 p.m. New York Time on the
Expiration Date; provided, however, that if such day is a day on which banking
institutions in the State of New York are authorized by law to close, then on
the next succeeding day which shall not be such a day. This Warrant may be
exercised by presentation and surrender hereof to the Company at its principal
office, or at the office of its stock transfer agent, if any, with the Purchase
Form annexed hereto duly executed and accompanied by payment of the Exercise
Price in the form of a wire transfer or Federal funds check for the number of
Warrant Shares specified in such form. As soon as practicable after each such
exercise of the warrants, but not later than seven (7) days from the date of
such exercise, the Company shall issue and deliver to the Holder a certificate
or certificate for the Warrant Shares issuable upon such exercise, registered in
the name of the Holder or its designee. If this Class A Bridge Warrant should be
exercised in part only, the Company shall, upon surrender of this Class A Bridge
Warrant for cancellation, execute and deliver a new Class A Bridge Warrant
evidencing the rights of the Holder thereof to purchase the balance of the Class
A Bridge Warrant Shares purchasable thereunder. Upon receipt by the Company of
this Class A Bridge Warrant at its office, or by the stock transfer agent of the
Company at its office, if any, in proper form for exercise, the Holder shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Common
Stock shall not then be physically delivered to the Holder.
(b) RESERVATION OF SHARES. The Company shall at all times reserve
for issuance and/or delivery upon exercise of this Class A Bridge Warrant such
number of shares of its Common Stock as shall be required for issuance and
delivery upon exercise of the Class A Bridge Warrants.
(c) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Class
A Bridge Warrant is exchangeable, without expense, at the option of the Holder,
upon presentation and surrender hereof to the Company or at the office of its
stock transfer agent, if any, for other warrants of different denominations
entitling the holder thereof to purchase in the aggregate the same number of
shares of Common Stock purchasable hereunder. Upon surrender of this Class A
Bridge Warrant to the Company at its principal office or at the office of its
stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay any transfer tax the Company shall, without
charge, execute and deliver a new Class A Bridge Warrant in the name of the
assignee named in such instrument of assignment and this Class A Bridge Warrant
shall promptly be canceled. This Class A Bridge Warrant may be divided or
combined with other warrants which carry the same rights upon presentation
hereof at the principal office of the Company or at the office of its stock
transfer agent, if any, together with a written notice specifying the names and
denominations in which new Class A Bridge Warrants are to be issued and signed
by the Holder hereof The term "Class A Bridge Warrant" as used herein includes
any Class A Bridge Warrants into which this Class A Bridge Warrant may be
divided or exchanged. Upon receipt by the Company of evidence satisfactory to it
of the loss, theft, destruction or mutilation of this Class A Bridge Warrant,
and (in the case of loss, theft or destruction) of reasonably satisfactory in
indemnification, and upon surrender and cancellation of this Class A Bridge
Warrant, if mutilated, the Company will
G-2
<PAGE>
execute and deliver a new Class A Bridge Warrant of like tenor and date. Any
such new Class A Bridge Warrant executed and delivered shall constitute an
additional contractual obligation on the part of the Company, whether or not
this Class A Bridge Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.
(d) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof,
be entitled to any rights of a shareholder in the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in the Class
A Bridge Warrant and are not enforceable against the Company except to the
extent set forth herein.
(e) RESTRICTIVE LEGEND. Unless a registration statement is in
effect covering the Warrant Shares when issued, each Warrant Share, when issued,
shall include a legend in substantially the following form: THESE SHARES HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") NOR UNDER ANY
STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR OTHERWISE
TRANSFERRED UNTIL A (1) REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAW HAS BECOME EFFECTIVE WITH RESPECT THERETO, OR (2) RECEIPT
BY THE COMPANY OF AN OPINION OF COUNSEL TO THE COMPANY TO THE EFFECT THAT
REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN
CONNECTION WITH THE PROPOSED TRANSFER.
(f) REGISTRATION OF WARRANT SHARES. The Company shall, within
ninety (90) days after the date on which the Warrant Exchange Offer is declared
closed by the Company in accordance with its terms, prepare and file with the
Securities and Exchange Commission (the "SEC") a registration statement on the
appropriate form (the "Registration
G-3
<PAGE>
Statement") including no less than all of the Warrant Shares and thereafter use
its reasonable best efforts to cause the Registration Statement to become
effective not later than five (5) business days after notice by the SEC that it
may be declared effective.
INFOSAFE SYSTEMS, INC.
By:_________________________________
Name:
Title:
[SEAL]
Dated:
Attest:
- ---------------------------------
G-4
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the within
Class A Bridge Warrant to the extent of purchasing shares of Common Stock and
hereby makes payment of ___________ in payment of the actual exercise price
thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name_____________________________________
(Please typewrite or print in block letters)
Address___________________________________
Social Security No./Taxpayer ID No.
___________________________________________
Signature__________________________________
Dated______________________________________
G-5
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, __________________________ hereby sells, assigns,
and transfers unto
Name_____________________________________
(Please typewrite or print in block letters)
Address___________________________________
the right to purchase Common Stock represented by this Class A Bridge Warrant to
the extent of _________ shares as to which such right is exercisable and does
hereby irrevocably constitute and appoint ___________________________ Attorney,
to transfer the same on the books of the Company with full power of substitution
in the premises.
Date____________________
Signature______________________
G-6
<PAGE>
ACCELERATION NOTICE
To: [Name]________________________________________
[Address]_____________________________________
______________________________________________
______________________________________________
______________________________________________
The Company hereby irrevocably elects to exercise its right
within the Class A Bridge Warrant to accelerate the Expiration Date of the Class
A Bridge Warrant to [Date]. Please be aware that presentation and surrender of
the Class A Bridge Warrant in exercise of the Holders right to purchase Common
Stock will only be accepted, in accordance with the terms of Paragraph (a)
("EXERCISE OF CLASS A BRIDGE WARRANT"), until 5:00 p.m. New York Time on [Date],
the accelerated Expiration Date. In order for the the extent of purchasing
shares of Common Stock and hereby makes payment of ___________ in payment of the
actual exercise price thereof.
Dated:
INFOSAFE SYSTEMS, INC.
By:____________________________
Name:
Title:
G-7
Exhibit 9.2
INTERNET COMMERCE CORPORATION
(Formerly Infosafe Systems, Inc.)
AMENDMENT TO VOTING TRUST AGREEMENT
This agreement (the "Amendment"), dated as of January 5, 1999, amends a
Voting Trust Agreement (the "Voting Trust Agreement"), dated January 20, 1997,
among Arthur R. Medici, William N. Walker, Charles C. Johnston and the owners
and holders of Common Stock of the Company who are listed and whose signatures
appear on Exhibit A of the Voting Trust Agreement (collectively, the
"Shareholders").
WHEREAS, the Shareholders have agreed to deposit substantially all of
the approximately 405,359 shares of Common Stock beneficially owned by them in a
voting trust which will be voted at the direction of a majority of the
non-management directors of the Company and Richard J. Berman, Chairman and
Chief Executive Officer of the Company and Arthur R. Medici, President of the
Company, and
WHEREAS, on November 18, 1998 the Board of Directors of the Company
elected Peter Ruel as a non-management director of the Company:
IT IS AGREED that the undersigned shall become a Trustee pursuant to
Section 11 of the Voting Trust Agreement and be bound by the Voting Agreement
with the same force and effect as though he was originally named therein.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the day and year first above written.
AGREED AND ACCEPTED:
/s/ Peter Ruel
----------------------------------
Peter Ruel, Director
ACKNOWLEDGED:
/s/ Richard J. Berman
-----------------------------------
Richard J. Berman, Chairman and Chief
Executive Officer, Internet Commerce
Corporation, Trustee
<PAGE>
Exhibit 9.2
INTERNET COMMERCE CORPORATION
(Formerly Infosafe Systems, Inc.)
AMENDMENT TO VOTING TRUST AGREEMENT
This agreement (the "Amendment"), dated as of January 5, 1999, amends a
Voting Trust Agreement (the "Voting Trust Agreement"), dated January 20, 1997,
among Arthur R. Medici, William N. Walker, Charles C. Johnston and the owners
and holders of Common Stock of the Company who are listed and whose signatures
appear on Exhibit A of the Voting Trust Agreement (collectively, the
"Shareholders").
WHEREAS, the Shareholders have agreed to deposit substantially all of
the approximately 405,359 shares of Common Stock beneficially owned by them in a
voting trust which will be voted at the direction of a majority of the
non-management directors of the Company and Richard J. Berman, Chairman and
Chief Executive Officer of the Company and Arthur R. Medici, President of the
Company, and
WHEREAS, on September 22, 1998 the Board of Directors of the Company
elected Richard J. Berman as a Chairman and Chief Executive Officer of the
Company:
IT IS AGREED that the undersigned shall become a Trustee pursuant to
Section 11 of the Voting Trust Agreement and be bound by the Voting Agreement
with the same force and effect as though he was originally named therein.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the day and year first above written.
AGREED AND ACCEPTED:
/s/ Richard J. Berman
---------------------
Richard J. Berman
ACKNOWLEDGED:
/s/ Arthur R. Medici
--------------------
Arthur R. Medici, President, Internet
Commerce Corporation, Trustee
<PAGE>
Exhibit 9.2
INTERNET COMMERCE CORPORATION
(Formerly Infosafe Systems, Inc.)
AMENDMENT TO VOTING TRUST AGREEMENT
This agreement (the "Amendment"), dated as of January 5, 1999, amends a
Voting Trust Agreement (the "Voting Trust Agreement"), dated January 20, 1997,
among Arthur R. Medici, William N. Walker, Charles C. Johnston and the owners
and holders of Common Stock of the Company who are listed and whose signatures
appear on Exhibit A of the Voting Trust Agreement (collectively, the
"Shareholders").
WHEREAS, the Shareholders have agreed to deposit substantially all of
the approximately 405,359 shares of Common Stock beneficially owned by them in a
voting trust which will be voted at the direction of a majority of the
non-management directors of the Company and Richard J. Berman, Chairman and
Chief Executive Officer of the Company and Arthur R. Medici, President of the
Company, and
WHEREAS, on January 5, 1999 the Board of Directors of the Company
elected James A. Ortenzio as a non-management director of the Company:
IT IS AGREED that the undersigned shall become a Trustee pursuant to
Section 11 of the Voting Trust Agreement and be bound by the Voting Agreement
with the same force and effect as though he was originally named therein.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the day and year first above written.
AGREED AND ACCEPTED:
/s/ James A. Ortenzio
---------------------
James A. Ortenzio, Director
ACKNOWLEDGED:
/s/ Richard J. Berman
---------------------
Richard J. Berman, Chairman and Chief
Executive Officer, Internet Commerce
Corporation, Trustee
EXHIBIT 10.5
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement"), made and entered into this
12th day of June, 1998, by and between Infosafe Systems, Inc., a Delaware
corporation, having a principal place of business at 805 Third Avenue, New York,
New York 10022 (the "Company"), and Summerwind Restructuring, Inc. (the
"Consultant"), a New York corporation having its principal office and place of
business at 64 Village Hill Drive, Dix Hills, New York 11746.
Article I
TERM AND TERMINATION
1.1 Term. This Agreement will become effective on the date first shown
above and will continue in effect until the earlier of: (a) the date the Company
formally engages the services of an investment banker to serve as the Company's
solicitation agent and private placement agent, or (b) six months from the date
hereof, unless sooner terminated or extended by written agreement signed by both
parties. Notwithstanding the foregoing, the Consultant agrees that he will
continue in an advisory capacity only until the transactions contemplated by the
Infosafe Reorganization Plan approved by the Board of Directors are completed or
abandoned by the Company.
1.2 Termination. Either party may terminate this Agreement in the event
of a material breach by the other party of any obligation provided herein. Any
such termination may be made only by written notice to the other party,
specifically identifying the breach or breaches on which termination is based.
Following receipt of such notice, the party in breach shall have fifteen (15)
days to cure such breach or breaches, and this Agreement shall terminate in the
event that such cure is not made by the end of such period.
1.3 Return of Materials. Upon the termination of this Agreement, the
Consultant shall promptly return to the Company all "Confidential Information"
(as hereinafter defined) of the Company.
1.4 Survival. In the event of any termination of this Agreement,
Articles 5, 6, 7 and 8 hereof shall survive and continue in effect.
Article 2
INDEPENDENT CONSULTANT STATUS
2.1 Independent Consultant. It is the intention of the parties that the
Consultant be an independent contractor and not an agent, joint venturer, or
partner of the Company.
<PAGE>
Article 3
SERVICES TO BE PERFORMED BY THE CONSULTANT
3.1 Scope of Services. The scope of the services to be performed by the
Consultant hereunder are set forth in Exhibit A.
Article 4
COMPENSATION
4.1 Consideration for Services Rendered. The compensation payable by the
Company to the Consultant for the work performed pursuant to this Agreement
shall be 1,000,000 warrants (the "Consultant Warrants") to purchase the Class A
Common Stock (the "Class A Stock") of the Company. Each of the Consultant
Warrants shall be exercisable to purchase one share of Class A Stock at a price
of $0.50 per share and shall have a term of five (5) years. It is understood by
the parties hereto that the present value of the Consultant Warrants will be
determined by the investment banker engaged by the Company. In connection
therewith, the Company will be responsible for the federal and state income tax
consequences arising from the Consultant receipt of the Warrants. The form of
Consultant Warrants Certificate is attached hereto as Exhibit B.
4.2 Expenses. Except as otherwise provided herein, the Consultant shall
be responsible for payment of all ordinary and necessary expenses incident to
the performance of services hereunder.
Article 5
EMPLOYMENT TAXES AND BENEFITS
5.1 Compensation of the Consultant's Personnel. The Consultant shall
bear sole responsibility for payment of compensation to its employees. The
Consultant shall pay and report, for all personnel assigned to the Company's
work, federal and state income tax withholding, workers' compensation, social
security taxes, and unemployment insurance applicable to such personnel as
employees of the Consultant. The Consultant shall bear sole responsibility for
any health or disability insurance, retirement benefits, or other welfare or
pension benefits, if any, to which such personnel may be entitled. The
Consultant agrees to defend, indemnify, and hold harmless the Company, its
officers, directors, employees and agents, and the administrators of the
Company's benefit plans, from and against any claims, liabilities, or expenses
relating to such compensation, tax, insurance, or benefit matters, provided that
the Company shall notify the Consultant of each such claim and cooperate with
the Consultant in the defense and resolution of such claim.
2
<PAGE>
5.2 Workers' Compensation. Notwithstanding any other workers'
compensation or insurance policies that may be maintained by the Company, the
Consultant shall procure and maintain workers' compensation coverage sufficient
to meet the statutory requirements of every jurisdiction in which the
Consultant's personnel are engaged in work for the Company.
Article 6
INTELLECTUAL PROPERTY RIGHTS
6.1 Confidentiality.
(a) The Consultant shall maintain in strict confidence, and shall not,
without the prior written consent of the Company, disclose or distribute to
third parties any "Confidential Information" (as defined below) of the Company.
The Consultant shall use such information solely to further the performance of
its obligations under this Agreement, and for no other purpose. In addition, the
Consultant shall disclose the foregoing information only to those employees and
agents with a need for such information to perform the Consultant's obligations
hereunder. The Consultant shall protect the foregoing information with the same
degree of care as it protects its own proprietary information, but in no event
less than a reasonable degree of care.
(b) The foregoing restrictions shall not be construed to apply to (1)
information generally available to the public; (2) information released by the
Company generally without restriction; (3) information independently developed
or acquired by the Consultant or its personnel without reliance in any way on
other protected information of the Company; or (4) information approved for the
use and disclosure of the Consultant without restriction. Notwithstanding the
foregoing restrictions, the Consultant may use and disclose any information to
the extent required by an order of any court or other governmental authority,
but only after the Company has been so notified and has had the opportunity, if
possible, to obtain reasonable protection for such information in connection
with such disclosure.
(c) As used herein, "Confidential Information" means all of the
following information and materials belonging to the Company (or to third
parties that have furnished such information to the Company in confidence),
which are specifically, physically and conspicuously marked as such:
(i) Applications, operating systems, tools, communication and
other computer software, developed or used by the Company, and all versions and
enhancements of same and all future products developed or derived therefrom;
(ii) All source and object code, flowcharts, algorithms, coding
sheets, compilers, assemblers, design concepts, routines and subroutines,
documents and manuals for the software described in subparagraph (i) above;
3
<PAGE>
(iii) Production processes, marketing techniques, mailing lists,
purchasing information, price lists, pricing policies, quoting procedures,
financial information, legal information, customer prospect names and
requirements, customer data, customer site information and other materials or
information relating to the manner in which the Company conducts business;
(iv) Discoveries, concepts and ideas, whether or not patentable
or protectable by copyright, including without limitation the nature and results
of research and development activities, technical information on product or
program performance and reliability, processes, formulas, techniques,
"know-how", source codes, object codes, designs, drawings and specifications;
and
(v) Any other materials or information related to the business or
activities of the Company which are not generally known to others engaged in
similar businesses or activities.
Article 7
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Consultant as follows:
7.1 Corporate Authority. The Company and Internet Commerce Corporation
("ICC") have the full authority to execute and to perform this Agreement in
accordance with its terms; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including the issuance of
the Consultant Warrant Agreement, the Consultant Warrants and Class A Common
Stock underlying such Warrants, does not and will not result in a breach,
violation or default or give rise to an event which, with the giving of notice
or after the passage of time, or both, would result in a breach, violation or
default of any of the terms or provisions of the Articles of Incorporation,
By-Laws or of any indenture, agreement, judgment, decree or other instrument or
restriction to which either the Company or ICC is a party of by which their
assets may be bound or affected; the execution and delivery of this Agreement
has been and, as of the date of delivery of the Consultant Warrant Agreement and
the Consultant Warrants Certificate, the consummation of the transactions
contemplated hereby will have been, duly authorized by all requisite corporate
action on the part of the Company and ICC, as of the date of delivery; no
further authorization or approval, whether of the stockholders or directors of
either the Company or ICC or governmental bodies or otherwise, will be necessary
in order to enable the Company to enter into and perform the same; and this
Agreement and the Consultant Warrant Certificate constitute valid and binding
obligations enforceable against the Company in accordance with its terms.
7.2 Authorization; Enforcement Capitalization. The authorized capital
stock of the Company consists of 40,000,000 shares of Class A Common Stock,
2,000,000 shares of Class B Common Stock, 2,000,000 shares of Class E-1 Common
Stock, 2,000,000 shares Class E-2 Common Stock and 5,000,000 shares of Preferred
Stock; there are 4,720,419 shares of Class
4
<PAGE>
A Common Stock, 1,372,566 shares of Class B Common Stock, 1,432,137 shares of
Class E-l Common Stock, 1,432,137 shares Class E-2 Common Stock and 0 shares of
Preferred Stock issued and outstanding as of the date hereof. The Company has
furnished to the Consultants true and correct copies of the Company's
Certificate of Incorporation as in effect on the date hereof (the "Charter"),
and the Company's By-Laws, as in effect on the date hereof (the "By-Laws").
7.3 Issuance of Shares. The Class A Common Stock issuable upon the
exercise of the Consultant Warrants has been duly authorized and reserved for
issuance and, upon exercise of the Consultant Warrants, such shares will be
validly issued, fully paid and non-assessable and the holders shall be entitled
to all rights and preferences accorded to a holder of the Class A Common Stock.
7.4 No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not (i) result in a violation of the
Company's Charter of By-Laws or (ii) conflict with, or constitute a default (or
an event which with notice of lapses of time of both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any federal,
state, local or foreign law, rule, regulation, order, judgment or any of its
subsidiaries or by which any property or assets of the Company or any of its
subsidiaries is bound on. The Company is not required under Federal, state or
local law, rule or regulation in the United States to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue the Consultant Warrants in accordance
with their terms.
7.5 SEC Documents Financial Statements. The Class A Common Stock of the
Company is registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the Company has filed on a timely
basis all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the
Exchange Act, including material filed pursuant to Section 13(a) or 15(d), in
addition to one or more registration statements and amendments thereto
heretofore filed by the Company with the SEC under the Securities Act of 1933,
as amended (the "Act"), (all of the foregoing including filings incorporated by
reference therein being referred to herein as the "SEC Documents"). The Company,
through its agent, has delivered to the Consultant true and complete copies of
the SEC Documents (except for exhibits and incorporated documents). The Company
has not provided to the Consultant any information which, according to
applicable law, rule or regulation, should have been disclosed publicly by the
Company but which has not been so disclosed, other than with respect to the
transactions contemplated by this Agreement.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Act or the Exchange Act as the case may be
and the rules and regulations of the SEC promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
5
<PAGE>
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of operations
and cash flows of the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
7.6 No Material Adverse Change. Since the date through which the most
recent quarterly report of the Company on Form 10-Q has been prepared and filed
with the SEC, a copy of which is included in the SEC Documents, no events have
occurred which have had an adverse effect on the business, operations,
properties or financial condition of the Company and which is material to the
Company or any of its subsidiaries.
7.7 No Undisclosed Liabilities. The Company and its subsidiaries have no
material liabilities or obligations not disclosed in the SEC Documents, other
than those incurred in the ordinary course of the Company's or any of its
subsidiaries' respective businesses since the date of the most recently filed
SEC Documents which, individually or in the aggregate, do not or would not have
a material adverse effect on the Company or any of its subsidiaries.
7.8 No Undisclosed Events or Circumstances. Except the receipt of a
delisting notice of hearing which is to be disclosed in the next Form 10-QSB, no
material event or circumstances has occurred or exists with respect to the
Company or any of its subsidiaries or their respective businesses, properties,
prospects, operations or financial condition which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed.
7.9 Books and Records. All of the books and records of the Company and
ICC are true, complete and accurate in all material respects.
7.10 Compliance With Law. Except for the current noncompliance with
NASDAQ listing requirements, neither the Company nor ICC is in material
violation of any laws, governmental orders, rules, regulations or ordinances to
which any of their property, real, personal, mixed, tangible or intangible, or
their businesses related to such properties, are subject.
7.11 No Other Agreements. Except as disclosed in the SEC Documents, and
as contemplated under this Agreement, there are no material contracts,
instruments, commitments or agreements, whether oral or written, presently in
effect to which either the Company or ICC is a party or to which either or any
of their respective properties is subject, including, without limitation, the
following:
6
<PAGE>
(a) any instrument or arrangement evidencing or relating in any way to
(i) indebtedness for borrowed money by way of direct loan, purchase money
obligation, conditional sale, lease purchase arrangement, guarantee or
otherwise, (ii) liens, encumbrances or security interests, (iii) guaranties or
indemnification or (iv) investments in any person;
(b) any contract containing provisions limiting the freedom of either
the Company or ICC to engage in any business;
(c) any joint venture contract or arrangement or other agreement
involving a sharing of profits or expenses; or
(d) agreements providing for disposition of the business or any assets
or shares of the capital stock of either the Company or ICC; agreements of
merger or consolidation to which either the Company or ICC is a party; or any
letters of intent with respect to the foregoing;
7.12 Litigation. Except as set forth and described in the SEC Documents,
there are no actions, suits, proceedings or investigations (including any
purportedly on behalf of either the Company or ICC) pending or threatened
against or affecting the business or properties, real, personal, mixed, tangible
or intangible, of either the Company or ICC whether at law or in equity or
admiralty or before or by any governmental department, commission, board,
agency, court or instrumentality, domestic or foreign; nor is either the Company
or ICC operating under, subject to, in violation of or in default with respect
to, any judgment, order, writ, injunction or degree of any court or other
governmental department, commission, board, agency or instrumentality, domestic
or foreign.
7.13 Taxes. The Company and ICC have each filed, or caused to be filed,
with all appropriate governmental agencies all required tax and information
returns and have paid, caused to be paid or accrued all taxes (including,
without limitation, all income, franchise, sales, excise and use taxes),
assessments, charges, penalties and interest shown to be due and payable;
neither the Company nor ICC has any liability, contingent or otherwise, for any
taxes, assessments, charges, penalties or interest, other than amounts
adequately reserved for. Except as disclosed in the SEC Documents, neither the
Company nor ICC has received directly or indirectly notice of, nor is it
otherwise aware of an audit or examination; nor is either a party directly or
indirectly to any action or proceeding by any governmental authority for
assessment or collection of taxes, charges, penalties or interest; nor has any
claim for assessment and collection been asserted against either directly or
indirectly; nor has either executed a waiver of any statute of limitations with
respect thereto. The Company and ICC have paid, or caused to be paid, or
adequately reserved for, all applicable corporate franchise taxes, unemployment
taxes, payroll taxes, social security taxes, ad valorem taxes, property taxes,
excise taxes and imposts, sales and use taxes, and all other taxes of every
kind, character or description required to be paid to the date hereof, and has
received no notices and is not otherwise aware, of any deficiencies, adjustments
or changes in assessments with respect to any such taxes. The Company and ICC
have duly filed, or caused to be filed, all reports or returns relating to or
covering any such taxes or other charges which are due or required to be filed
at the date hereof and no extensions of time are in effect for the assessment of
deficiencies for such taxes in respect of any fiscal period.
7
<PAGE>
7.14 No Untrue Representation or Warranty. No representation or warranty
contained in this Agreement or any attachment, statement, schedule, exhibit,
certificate or instrument furnished or to be furnished to the Consultant by or
on behalf of the Company or ICC pursuant hereto, or in connection with the
transactions contemplated hereby or in connection therewith, contains any untrue
statement of a material fact, or omits to state any material fact necessary to
make the statements contained herein or therein not misleading.
Article 8
INDEMNIFICATION; LIMITATION OF DAMAGES
8.1 Indemnification from the Consultant. The Consultant hereby
indemnifies and agrees to hold harmless the Company from and against any and all
claims, demands, and actions, and any liabilities, damages, or expenses
resulting therefrom, arising out of or relating to the services performed by the
Consultant hereunder or any breach of the covenant made by the Consultant
pursuant to Paragraph 8.1 hereof. The Consultant's obligations under this
Paragraph 8.1 shall survive the termination of this Agreement for any reason.
The Company agrees to give the Consultant prompt notice of any such claim,
demand, or action and shall, to the extent the Company is not adversely
affected, cooperate fully with the Consultant in defense and settlement of such
claim, demand, or action.
8.2 Indemnification from the Company. The Company hereby indemnifies and
agrees to hold harmless the Consultant from and against any and all claims,
demands, and actions, and any liabilities, damages, or expenses resulting
therefrom, arising out of or relating to any breach by the Company of its
covenants, representations and warranties made hereunder. The Company's
obligations under this Paragraph 8.2 shall survive the termination of this
Agreement for any reason. The Consultant agrees to give the Company prompt
notice of any such claim, demand, or action and shall, to the extent the
Consultant is not adversely affected, cooperate fully with the Company in
defense and settlement of such claim, demand, or action.
8.3 Limitation of Damages. In no event shall either party be liable to
the other party for any incidental, indirect, special or consequential damages,
regardless of the nature of the claim, even if such party knew or should have
known of the possibility of such damages or claims. In no event shall either
party be liable for damages in excess of the fees paid by the Company to the
Consultant hereunder.
Article 9
GENERAL PROVISIONS
9.1 Notices. Any notices to be given hereunder by any party to the
another party may be effected either by personal delivery in writing or by
registered or certified mail (postage prepaid with return receipt requested),
overnight delivery service or facsimile (with a copy by registered mail). Mailed
notices shall be addressed to the parties at the addresses appearing in
8
<PAGE>
the introductory paragraph of this Agreement, but each party may change such
address by written notice in accordance with this paragraph. The date upon which
any such notice is received at the designated address shall be deemed to be the
date of such notice.
9.2 No Discrimination. The Consultant agrees that in the performance of
this Agreement it will not discriminate or permit discrimination against any
person or group of persons on the grounds of sex, race, color, religion, or
natural origin in any manner prohibited by the applicable law.
9.3 Assignment. Neither party may assign its rights or obligations under
this Agreement without the prior written consent of the other.
9.4 Waivers. Any delay or forbearance by either party in exercising any
right hereunder shall not be deemed a waiver of that right.
9.5 Entire Agreement of the Parties. This Agreement supersedes any and
all agreements, either oral or written, between the parties hereto with respect
to the rendering of services by the Consultant for the Company and contains all
the covenants and agreements between the parties with respect to the rendering
of such services in any manner whatsoever. Each party to this Agreement
acknowledges that no representations, inducements, promises, or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf of
any party, that are not embodied herein, and that no other agreement, statement,
or promise not contained in this agreement shall be valid or binding. Any
modification of this Agreement will be effective only if it is in writing signed
by the party to be charged.
9.6 Partial Invalidity. If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions will nevertheless continue in full force without being
impaired or invalidated in any way.
9.7 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York, without regard to its laws
relating to choice of laws.
9
<PAGE>
9.8 Headings. The headings in this Agreement are inserted merely for the
purpose of convenience and shall not affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
INFOSAFE SYSTEMS, INC.
By:
-------------------------------
Name:
Title:
SUMMERWIND RESTRUCTURING, INC.
By:
-------------------------------
Name:
Title:
10
<PAGE>
EXHIBIT A
Scope of Services
1. The Consultant will advise the Company on restructuring itself and
Internet Commerce Corporation in accordance with a reorganization plan
to be approved by both companies' Board of Directors.
2. The Consultant will assist the Company in structuring a bridge loan with
an independent investment banker in the amount of up to $2 million with
terms and conditions for repayment agreeable to the Company. Twenty-five
percent (25%) of the loan is expected to be completed and available to
the Company within ten (10) business days of the date of this Agreement.
3. The Consultant will assist the Company in the selection of a placement
agent for the proposed bridge loan financing and to serve as a warrant
solicitation agent.
4. The Consultant agrees that he will continue in an advisory capacity only
until the transactions contemplated by the Infosafe Reorganization Plan
approved by the Board of Directors are completed or abandoned by the
Company.
INFOSAFE SYSTEMS, INC.
By:
-------------------------------
Name:
Title:
SUMMERWIND RESTRUCTURING, INC.
By:
-------------------------------
Name:
Title:
<PAGE>
Exhibit B
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT
BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
REGISTRATION UNDER, OR THE AVAILABILITY OF AN EXEMPTION FOR REGISTRATION UNDER
THE SECURITIES ACT OF 1933.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
1,000,000 Shares
FOR VALUE RECEIVED, INFOSAFE SYSTEMS, INC. (the "Company"), hereby
certifies that SUMMERWIND RESTRUCTURING, INC., or an assign thereof, is entitled
to purchase from the Company, at any time or from time to time commencing June
__, 1998 and prior to 5:00 P.M., New York City time, on June _, 2003 One Million
(1,000,000) fully paid and nonassessable shares of the Class A Common Stock,
$.01 par value (the "Common Stock"), of the Company for an aggregate purchase
price of $500,000 (computed on the basis of $.50 per share). (Hereinafter, (i)
said common stock, together with any other equity securities which may be issued
by the Company with respect thereto or in substitution therefor, is referred to
as the "Common Stock," (ii) the shares of the Common Stock purchasable hereunder
or under any other Warrant (as hereinafter defined) are referred to as the
"Warrant Shares," the aggregate purchase price payable hereunder for the Warrant
Shares is referred to as the "Aggregate Warrant Price," (iv) the price payable
hereunder for each of the Warrant Shares is referred to as the "Per Share
Warrant Price," (v) this Warrant, all identical warrants issued on the date
hereof and all warrants hereafter issued in exchange or substitution for this
Warrant or such other warrants are referred to as the "Warrants" and (vi) the
holder of this Warrant is referred to as the "Holder" and the holder of this
Warrant and all other Warrants are referred to as the "Holders"). The Aggregate
Warrant Price is not subject to adjustment. The Per Share Warrant Price is
subject to adjustment as hereinafter provided; in the event of any such
adjustment, the number of Warrant Shares shall be adjusted by dividing the
Aggregate Warrant Price by the Per Share Warrant Price in effect immediately
after such adjustment.
1. Exercise of Warrant.
a) Exercise for Cash
This Warrant may be exercised, in whole at any time or in part from time
to time, commencing June __, 1998 and prior to 5:00 P.M., New York City
time, on June __, 2003 by the Holder by the surrender this Warrant (with
the subscription form at the end hereof duly executed) at the address
set forth in Subsection 9(a) hereof, together with proper payment of the
Aggregate Warrant Price, or the proportionate part thereof if this
Warrant is exercised in part. Payment for Warrant Shares shall be made
by certified or official bank check payable to the order of the Company.
If this Warrant is exercised
<PAGE>
in part, this Warrant must be exercised for a number of whole shares of
the Common Stock, and the Holder is entitled to receive a new Warrant
Covering the Warrant Shares which have not been exercised and setting
forth the proportionate part of the Aggregate Warrant Price applicable
to such Warrant Shares. Upon such surrender of this Warrant the Company
will (a) issue a certificate or certificates in the name of the Holder
for the largest number of whole shares of the Common Stock to which the
Holder shall be entitled and, if this Warrant is exercised in whole, in
lieu of any fractional share of the Common Stock to which the Holder
shall be entitled, pay to the Holder cash in an equal to the fair value
of such fractional share (determined in such reasonable manner as the
Board of Directors of the Company shall determine), and (b) deliver the
other securities and properties receivable upon the exercise of this
Warrant, or the proportionate part thereof if this Warrant is exercised
in part, pursuant to the provisions of this Warrant.
b) Cashless Exercise
In lieu of exercising this Warrant in the manner set forth in paragraph
1(a) above, the Warrant may be exercised in whole or in part by
surrender of the Warrant without payment of any other consideration,
commission or remuneration, by execution of the cashless exercise
subscription form (at the end hereof, duly executed). The number of
shares to be issued in exchange for the Warrant will be computed by
subtracting the Warrant Exercise Price from the closing bid price of the
common stock on the date of receipt of the cashless exercise
subscription form, multiplying that amount by the number of shares being
exercised under the Warrant, and dividing by the closing bid price as of
the same date.
2. Reservation of Warrant Shares.
The Company agrees that, prior to the expiration of this Warrant, the
Company will at all times have authorized and in reserve, and will keep
available, solely for issuance or delivery upon the exercise of this
Warrant, the shares of the Common Stock and other securities and
properties as from time to time shall be receivable upon the exercise of
this Warrant, free and clear of all restrictions on sale or transfer
(except for applicable state or federal securities law restrictions) and
free and clear of all pre-emptive rights.
3. Protection Against Dilution.
a) If, at any time or from time to time after the date of this
Warrant, the Company shall issue or distribute (for no
consideration) to the holders of shares of Common Stock
evidences of its indebtedness, any other securities of the
Company or any cash, property or other assets (excluding a
subdivision, combination or reclassification, or dividend or
distribution payable in shares of Common Stock, referred to in
Subsection 3(b), and also excluding cash dividends or cash
distributions paid out of net profits legally available therefor
if the full amount thereof, together with the value of other
dividends and distributions made substantially concurrently
therewith or pursuant to a plan which includes payment thereof,
is equivalent to not more than 5% of the Company's net worth)
(any such
2
<PAGE>
nonexcluded event being herein called a "Special Dividend"), the
Per Share Warrant Price shall be adjusted by multiplying the Per
Share Warrant Price then in effect by a fraction, the numerator
of which shall be the then current market price of the Common
Stock (defined as the average for the thirty consecutive
business days immediately prior to the record date of the daily
closing price of the Common Stock as reported by the NASDAQ
system less the fair market value (as determined by the
Company's Board or Directors) of the evidences or indebtedness,
securities or property, or other assets issued or distributed in
such Special Dividend applicable to one share of Common Stock
and the denominator of which shall be such then current market
price per share of Common Stock. An adjustment made pursuant to
this Subsection 3(a) shall become effective immediately after
the record date of any such Special Dividend.
b) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a
greater number or shares, (iii) combine its outstanding shares
of Common Stock into a smaller number of shares or (iv) issue by
reclassification of its Common Stock any shares of capital stock
of the Company, the Per Share Warrant Price shall be adjusted so
that the Holder of any Warrant upon the exercise hereof shall be
entitled to receive the number of shares of Common Stock or
other capital stock of the Company which he would have owned
immediately prior thereto. An adjustment made pursuant to this
Subsection 3(b) shall become effective immediately after the
record date in the case of a dividend or distribution and shall
become effective immediately after the effective date in the
case of a subdivision, combination or reclassification. If, as a
result of an adjustment made pursuant to this Subsection 3(b),
the Holder of any Warrant thereafter surrendered for exercise
shall become entitled to receive shares of two or more classes
of capital stock or shares of Common Stock and other capital
stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a
written notice to the Holder of any Warrant promptly after such
adjustment) shall determine the allocation of the adjusted Per
Share Warrant Price between or among shares of such classes or
capital stock or shares of Common Stock and other capital stock.
c) Except as provided in Subsection 3(e), in case the Company shall
hereafter issue or sell any shares of Common Stock for a
consideration per share less than the Per Share Warrant Price on
the date of such issuance or sale, the Per Share Warrant Price
shall be adjusted as of the date of such issuance or sale so
that the same shall equal the consideration per share received
by the Company upon such issuance or sale; provided, however,
that no adjustment of the Per Share Warrant Price shall be
required in connection with the issuance of shares upon the
exercise of presently outstanding warrants or options.
d) Except as provided in Subsection 3(a) and 3(c), in case the
Company shall hereafter issue or sell any rights, options,
warrants or securities convertible into Common Stock entitling
the holders thereof to purchase Common Stock or to
4
<PAGE>
convert such securities into Common Stock at a price per share
(determined by dividing (i) the total amount, if any, received
or receivable by the Company in consideration of the issuance or
sale of such rights, options, warrants or convertible securities
plus the total consideration, if any, payable to the Company
upon exercise or conversion thereof (the "Total Consideration")
by (ii) the number of additional shares of common stock issuable
upon exercise or conversion of such securities) less than the
then current Per Share Warrant Price in effect on the date of
such issuance or sale, the Per Share Warrant Price shall be
adjusted as of the date of such issuance or sale so that the
same shall equal the price determined by dividing (i) the sum of
(a) the number of shares of Common Stock outstanding on the date
of such issuance or sale multiplied by the Per Share Warrant
Price plus (b) the Total Consideration by (ii) the number of
shares of Common Stock outstanding on the date of such issuance
or sale plus (iii) the maximum number or additional shares of
Common Stock issuable upon exercise or conversion of such
securities.
e) In case of any capital reorganization or reclassification, or
any consolidation or merger to which the Company is a party
other than a merger or consolidation in which the Company is the
continuing corporation, or in case of any sale or conveyance to
another entity of the property of the Company as an entirety or
substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any
exchange effected in connection with a merger of a third
corporation into the Company), the Holder of this Warrant shall
have the right thereafter to convert such Warrant into the kind
and amount of securities, cash or other property which he would
have owned or have been entitled to receive immediately after
such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance had this Warrant been
converted immediately prior to the effective date of such
reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if
necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Section 3 with
respect to the rights and interests thereafter of the Holder of
this Warrant to the end that the provisions set forth in this
Section 3 shall thereafter correspondingly be made applicable,
as nearly as may reasonably be, in relation to any shares of
stock or other securities or be, in relation to any shares of
stock or other securities or property thereafter deliverable on
the conversion of this Warrant. The above provisions of this
Subsection 3(e) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers,
statutory exchanges, sales or conveyances. The issuer of any
shares of stock or other securities or property thereafter
deliverable on the conversion of this Warrant shall be
responsible for all of the agreements and obligations of the
Company hereunder. Notice of any such reorganization,
reclassification, consolidation, merger, statutory exchange,
sale or conveyance and of said provisions so proposed to be
made, shall be mailed to the Holders of the Warrants not less
than 10 days prior to such event. A sale of all or substantially
all of the assets of the Company for
4
<PAGE>
a consideration consisting primarily of securities shall be
deemed a consolidation or merger for the foregoing purposes.
f) No adjustment in the Per Share Warrant Price shall be required
unless such adjustment would require an increase or decrease of
at least $0.05 per share of Common Stock; provided, however,
that any adjustments which by reason of this ------------------
Subsection 3(f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment;
provided further, however, that ----------------- adjustments
shall be required and made in accordance with the provisions of
this Section 3 (other than this Subsection 3(f)) not later than
such time as may be required in order to preserve the tax-free
nature of a distribution to the Holder of this Warrant or Common
Stock issuable upon exercise hereof. All calculations under this
Section 3 shall be made to the nearest cent. Anything in this
Section 3 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Per Share Warrant Price,
in addition to those required by this Section 3, as in its
discretion shall deem to be advisable in order that any stock
dividend, subdivision of shares or distribution of rights to
purchase stock or securities convertible or exchangeable (for
stock hereafter made by the Company to its shareholders shall
not be taxable.
g) Whenever the Per Share Warrant Price is adjusted as provided in
this Section 3 and upon any modification of the rights of a
Holder of Warrants in accordance with this Section 3, the
Company shall promptly obtain, at its expense, a certificate of
a firm of independent public accountants of recognized standing
selected by the Board of Directors (who may be the regular
auditors of the Company) setting forth the Per Share Warrant
Price and the number of Warrant Shares after such adjustment or
the effect of such modification, a brief statement of the facts
requiring such adjustment or modification and the manner of
computing the same and cause copies of such certificate to be
mailed to the Holders of the Warrants.
h) If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to the Common Stock,
other than a cash distribution out of earned surplus, the
Company shall mail notice thereof to the Holders of the Warrants
not less than (10) days prior to the record date fixed for
determining shareholders entitled to participate in such
dividend or other distribution.
4. Fully Paid Stock, Taxes.
The Company agrees that the shares of the common Stock represented by
each and every certificate for Warrant Shares delivered on the exercise
of this Warrant shall, at the time of such delivery, be validly issued
and outstanding, fully paid and nonassessable, and not subject to
preemptive rights, and the Company will take all such actions as may be
necessary to assure that the par value or stated value, if any, per
share of the Common Stock is at all times equal to or less than the then
Per Share Warrant Price. The Company further covenants and agrees that
it will pay, when due and payable, any and
5
<PAGE>
all Federal and state stamp, original issue or similar taxes which may
be payable in respect of the issue of any Warrant Share or certificate
therefor.
5. Transferability.
The Company may treat the registered Holder of this Warrant as he or it
appears on the Company's books at any time as the Holder for all
purposes. The Company shall permit any Holder of a Warrant or his duly
authorized attorney, upon written request during ordinary business
hours, to inspect and copy or make extracts from its books showing the
registered holders of Warrants. All warrants issued upon the transfer or
assignment or this Warrant will be dated the same date as this Warrant,
and all rights of the Holder thereof shall be identical to those of the
Holder. The holder shall have the right to assign all or any part of
this Warrant, subject to compliance with applicable federal and/or state
securities laws.
6. Loss, etc., of Warrant.
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and of indemnity reasonably
satisfactory to the Company, if lost, stolen or destroyed, and upon
surrender and cancellation for this Warrant, if mutilated, the Company
shall execute and deliver to the Holder a new Warrant of like date,
tenor and denomination.
7. Warrant Holder Not Shareholders.
Except as otherwise provided herein, this Warrant does not confer upon
the Holder any right to vote or to consent to or receive notice a
shareholder of the Company, as such, in respect of any matters
whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof.
8. Communication.
No notice or other communication under this Warrant shall be effective
unless, but any notice or other communication shall be effective and
shall be deemed to have been given if, the same is in writing and is
mailed by first-class mail, postage prepaid, or sent by overnight
courier or facsimile, addressed to:
a) the Company at:
Infosafe Systems. Inc.
805 Third Avenue
Ninth Floor
New York, New York
Tel: (212) 867-7200
Fax: (212) 867-7227
6
<PAGE>
or such other address as the Company has designated in writing
to the Holder; or
b) the Holder at:
Summerwind Restructuring, Inc.
64 Village Hill Drive
Dix Hills, New York 11746
Tel: (516) 499-4930
Fax: (516) 499-4718
or such other address as the Holder has designated in writing to
the Company.
9. Headings.
The headings of this Warrant have been inserted as a matter of
convenience and shall not affect the construction hereof.
10. Applicable Law.
This Warrant shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to the principles of
conflicts of law thereof.
7
<PAGE>
IN WITNESS WHEREOF, Infosafe Systems, Inc. has caused this Warrant to be signed
by its President and its corporate seal to be hereunto affixed by its Secretary
this 12th day of June, 1998.
INFOSAFE SYSTEMS, INC.
By:______________________
President
ATTEST:
Secretary
[Corporate Seal]
8
<PAGE>
SUBSCRIPTION
The undersigned, __________________, pursuant to the provisions of the foregoing
Warrant, hereby agrees to subscribe for and purchase shares of the Common Stock
of covered by said Warrant, and makes payment therefor in full at the price per
share provided by said Warrant.
Dated:______________________ Signature:___________________
Address:_____________________
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto ______________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint attorney, to
transfer said Warrant on the books of . e
Dated: Signature:___________________
Address:_____________________
<PAGE>
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _______ hereby assigns and transfers unto ________ the right
to purchase _______ shares of the Common Stock of ________ by the foregoing
Warrant, and a proportionate part of said Warrant and the rights evidenced
hereby, and does irrevocably constitute and appoint ____________ attorney, to
transfer that part of said Warrant on the books of _________________.
Dated: Signature:___________________
Address:_____________________
<PAGE>
CASHLESS EXERCISE SUBSCRIPTION
The undersigned ____________ pursuant to the provisions of the foregoing
Warrant, hereby agrees to subscribe to that number of shares of stock ________
_______________ as are issuable in accordance with the formula set forth in
paragraph 1(b) the of the Warrant, and makes payment therefore in full by
surrender and delivery of this Warrant.
Dated: Signature:___________________
Address:_____________________
EMPLOYMENT AGREEMENT EXHIBIT 10.9
Agreement made and entered into as of the Fifteenth day of September,
1998, by and between INTERNET COMMERCE CORPORATION, a Delaware corporation,
having a place of business at 805 Third Avenue, New York, New York 10022
("Employer" or "Company"), and Richard Berman, residing at 315 East 73rd Street,
New York, New York 10021 ("Employee").
WHEREAS, Employer is engaged in the business of designing and marketing
electronic document interchange systems and desires to employ Employee as
Chairman and Chief Executive Officer of Employer and Employee desires to be
employed by Employer, all pursuant to the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES.
------------------
Employer hereby agrees to employ Employee, and Employee hereby agrees to
accept employment during the term hereof on a full-time basis, as Chairman and
Chief Executive Officer, and shall perform such services as are customarily
performed by persons holding such office, and shall be subject at all times to
the direction of the Board of Directors of Employer. Place of employment, when
Employee is not engaged in travel on Company business, shall be the New York
City area, unless otherwise agreed. Nothing herein contained shall be construed
as (a) preventing Employee from investing his personal assets in any business
which does not compete directly or indirectly with Employer and does not involve
any diversion of employee's business time, or (b) preventing Employee from
purchasing securities in any corporation whose securities are regularly traded,
if such purchases shall not result in his owning beneficially at any time 1% or
more of the equity of any corporation engaged in a business which is
competitive, directly or indirectly, to that of Employer.
2. TERM.
----
(a) Employee's employment hereunder shall be for a term commencing on
September 15, 1998 and ending two years thereafter.
3. COMPENSATION.
------------
(a) As full compensation for the performance of his duties on behalf of
Employer, Employer shall pay Employee a base salary at the rate of $180,000 per
annum, payable in installments in accordance with the usual practice of
Employer. Employee's first 6 months salary will accrue and be paid in equivalent
shares of Class A Common Stock at the market value on March 15, 1999. On or
about March 16, 1999, the Board of Directors will conduct a review and determine
method of compensation from that date forward.
<PAGE>
(b) Employer shall reimburse Employee only for reasonable expenses
incurred by Employee in connection with his duties hereunder upon presentation
by Employee of the details of and vouchers for such expenses in accordance with
customary Employer practice.
(c) Employee shall be eligible for all executive benefits approved by
the Board of Directors which shall include the same medical benefits provided
for executives of Infosafe Systems, Inc.
(d) Employee shall be entitled to 20 days of vacation per year, of which
5 may be carried over into the following year up to a cumulative total of 10
days carried over.
(e) Employee shall be granted 1,250,000 options to purchase the
Company's Class A Common Stock pursuant to the Company's Employee Stock Option
Plan, one-third of which will vest upon employment and the balance of which vest
in 20% increments when the Company's Class A Common Stock attains or exceeds
each of the following per share bid prices for 20 consecutive trading days:
$1.50, $2.00, $2.50, $3.00 and $3.50. Upon the effective date of the Company's
reorganization including its 1 for 5 reverse stock split, the number of options
and target bid prices will be adjusted accordingly.
4. INTELLECTUAL PROPERTY.
---------------------
(a) The Employee hereby assigns to the Company all of his right, title
and interest in and to all inventions, discoveries, improvements, ideas,
formulas, systems and related documentation and other works of authorship which
are directly or indirectly related to the actual or presently anticipated
business activities of the Company or its affiliates (hereinafter referred to as
"Intellectual Property"), whether or not patentable, copyrightable or entitled
to or eligible for other forms of protection, which during the term of the
Employee's employment by the Company the Employee may create, develop, write or
conceive, whether during or outside of regular working hours on the Company's
premises, either alone or together with others (including others not employed by
the Company or any subsidiary or affiliate of the Company), in whole or in part,
either (i) in the course of such employment, (ii) relating to the business or
research and development efforts of the Company or any of its subsidiaries or
(iii) with the use of the time, materials, private or proprietary information or
facilities of the Company or any of its subsidiaries.
(b) The Employee further agrees, without charge to the Company, but at
the Company's expense, (i) to disclose promptly to the Company all such
Intellectual Property, (ii) at the Company's request, to execute and deliver
promptly a specific assignment to the Company of any right, title and interest
to such Intellectual Property, including proprietary rights arising from patent
applications, and (iii) to take promptly any other action that may be reasonably
necessary on the part of the Employee to enable the Company to obtain patents,
copyrights or other forms of protection for such Intellectual Property in the
United States and other countries.
<PAGE>
5. NON-COMPETITION.
---------------
The Employee acknowledges that his employment by the Company brings him
into close contact with many confidential affairs of the Company, including,
without limitation, information about inventions, improvements, modifications,
discoveries, costs, profits, markets, sales, products, key personnel, pricing
policies, operational methods, concepts, technical processes and applications
and other business affairs and methods of the Company (collectively referred to
hereinafter as Information). The Employee further acknowledges that his
employment by the Company involves the performance of services that are of a
special, unique, unusual, extraordinary and intellectual character, and that the
relationships between the Company and its officers, employees, agents,
consultants, suppliers, independent contractors and customers constitute a
valuable asset of the Company. In recognition of the foregoing, the Employee
covenants and agrees:
(a) During the term of this Agreement and for a period of twenty-four
(24) months from date of termination of his employment hereunder for whatever
reason, that he will not solicit any customers who are presently or may
hereafter become customers of Employer unless such solicitation is entirely
unrelated to Employer's business, or compete in any way with Employer alone or
together with others in any state or foreign country in which (i) a facility of
the Employer is located, (ii) Employer is engaged in business at the time of
termination of employment, or (iii) where Employee knows Employer intends to
carry on business in such area by expansion of its activities within two (2)
years following termination.
(b) Subsequent to the termination of this agreement, Employee will not
interfere with or disrupt or attempt to disrupt Employer's business relationship
with its customers or suppliers or solicit the employees of Employer.
(c) During the term of this Agreement and after termination of the
Employment Period, for whatever reason, except in connection with his employment
Employee will not disclose or use or enable anyone else to use any Information
which may be obtained by him or available to him during the term of employment
whether or not the Information will be considered proprietary or secret.
(d) In the event that Employee breaches any provisions of this paragraph
5, or there is a threatened breach, then, in addition to any other rights which
Employer may have, Employer shall be entitled to injunctive relief to enforce
the restrictions contained herein. In the event that an actual proceeding is
brought in equity to enforce the provisions of this paragraph, Employee shall
not urge as a defense that them is an adequate remedy at law nor shall Employer
be prevented from seeking any other remedies which may be available.
(e) The existence of any claim or cause of action by Employee against
Employer; whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of the foregoing restrictive
covenants but shall be litigated separately.
<PAGE>
6. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE.
------------------------------------------
Employee represents and warrants to Employer that (a) Employee is under
no contractual or other restriction or obligation which is inconsistent with the
execution of this Agreement, the performance of his duties hereunder, or the
rights of Employer hereunder and (b) Employee is under no physical or mental
disability that would hinder his performance of duties under this Agreement.
7. TERMINATION.
-----------
(a) Anything to the contrary notwithstanding, this Agreement shall
terminate before the expiration of the term hereof in the event of the
Employee's (i) death or (ii), at the discretion of Employer, disability for a
period of twenty (20) consecutive weeks.
(b) Employee's employment may also be terminated by the Employer before
the expiration of the term hereof only for cause as herein defined. Cause shall
mean any of the following occurrences:
(i) The Employee's conviction of a felony by a court of competent
jurisdiction (which conviction, through lapse of time or otherwise is not
subject to appeal); or
(ii) The Employee's commission of an act of fraud or embezzlement upon
the Employer; or
(iii) The failure by the Employee to devote such time or perform such
services as are required hereunder.
8. NOTICES.
-------
All notices hereunder shall be in writing and shall be delivered in
person or given by registered or certified mail, postage prepaid, and sent to
the parties all the respective addresses above set forth. Either party may
designate any other address to which notice shall be given, by giving notice to
the other of such change of address in the manner herein provided.
9. SEVERABILITY OF PROVISIONS.
--------------------------
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any other covenant or provision unless so expressed herein.
<PAGE>
10. GOVERNING LAW.
-------------
This Agreement shall be construed and governed by the laws of the State
of New York.
11. NON-WAIVER.
----------
The failure of either party to insist upon the strict performance of any
term or condition in this Agreement shall not be considered a waiver or
relinquishment of future compliance therewith.
12. BINDING EFFECT.
--------------
Employee's rights and obligations under this Agreement shall not be
transferable by assignment or otherwise, such rights shall not be subject to
commutation, encumbrances, or the claims of Employee's creditors, and any
attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of Employee and his
heirs and personal representatives.
13. NO THIRD PARTY BENEFICIARIES.
----------------------------
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement (except as
provided in Section 12).
14. HEADINGS.
--------
The headings in this Agreement are solely for the convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
15. ENTIRE AGREEMENT: MODIFICATION.
------------------------------
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof. No modification of this Agreement shall
be valid unless it is made in writing and signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
INTERNET COMMERCE CORPORATION, Employer
By: /s/ /s/ Richard Berman
--------------------------- -----------------------------
For the Board of Directors Richard Berman
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
Agreement made and entered into as of the Sixteenth day of April, 1997,
by and between INTERNET COMMERCE CORPORATION, a Delaware corporation, having a
place of business at 342 Madison Ave., Suite 622, New York, New York 10173
("Employer" or "Company"), and George M. Cassidy, residing at 71 Hillside Road,
Cumberland, RI 02864 ("Employee").
WHEREAS, Employer is engaged in the business of designing and marketing
electronic document interchange systems and desires to employ Employee as
Executive Vice President (EVP) and General Manager of Employer, and Employee
desires to be employed by Employer, all pursuant to the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES.
Employer hereby agrees to employ Employee, and Employee hereby agrees to
accept employment during the term hereof on a full-time basis, as EVP and
General Manager of Employer, and shall perform such services as are customarily
performed by persons holding such office, and shall be subject at all times to
the direction of the Board of Directors and the Chief Executive Officer of
Employer. Place of employment, when Employee is not engaged in travel on Company
business, shall be the New York City area, unless otherwise agreed. Nothing
herein contained shall be construed as (a) preventing Employee from investing
his personal assets in any business which does not compete directly or
indirectly with Employer and does not involve any diversion of employees'
business time, or (b) preventing Employee from purchasing securities in any
corporation whose securities are regularly traded, if such purchases shall not
result in his owning beneficially at any time 1% or more of the equity
securities of any corporation engaged in a business which is competitive,
directly or indirectly, to that of Employer.
2. TERM.
(a) Employee's employment hereunder shall be for a term commencing on
April 16, 1997, and ending three years thereafter.
3. COMPENSATION.
(a) As full compensation for the performance of his duties on behalf of
Employer, Employer shall pay Employee a base salary at the rate of $100,000 per
annum, payable in installments in accordance with the usual practice of
Employer.
(b) Employer shall reimburse Employee only for reasonable expenses
incurred by Employee in connection with his duties hereunder upon presentation
by Employee of the details of and vouchers for such expenses in accordance with
customary Employer practice.
<PAGE>
(c) Employee shall be eligible for all executive benefits approved by
the Board of Directors, which shall include the same medical benefits provided
for executives of Infosafe Systems, Inc.
(d) Employee shall be entitled to 20 days of vacation per year, of which
5 may be carried over into the following year up to a cumulative total of 10
days carried over.
4. INTELLECTUAL PROPERTY.
(a) The Employee hereby assigns to the Company all of his right, title
and interest in and to all inventions, discoveries, improvements, ideas,
formulas, systems and related documentation and other activities of the Company
or its affiliates (hereinafter referred to as "Intellectual Property"), whether
or not patentable, copyrightable or entitled to or eligible for other forms of
protection, which during the term of the Employee's employment by the Company
the Employee may create, develop, write or conceive, whether during or outside
of regular working hours on the Company's premises, either alone or together
with others (including others not employed by the Company or any subsidiary or
affiliate of the Company), in whole or in part, either (i) in the course of such
employment, (ii) relating to the business or research and development efforts of
the Company or any of its subsidiaries or (iii) with the use of the time,
materials, private or proprietary information or facilities of the Company or
any of its subsidiaries.
(b) The Employee further agrees, without charge to the Company, but at
the Company's expense, (i) to disclose promptly to the Company all such
Intellectual Property, (ii) at the Company's request, to execute and deliver
promptly a specific assignment to the Company of any right, title and interest
to such Intellectual Property, including proprietary rights arising from patent
applications, and (iii) to take promptly any other action that may be reasonably
necessary on the part of the Employee to enable the Company to obtain patents,
copyrights or other forms of protection for such Intellectual Property in the
United States and other countries.
5. NON-COMPETITION.
The Employee acknowledges that his employment by the Company brings him
into close contact with many confidential affairs of the Company, including,
without limitation, information about inventions, improvements, modifications,
discoveries, costs, profits, markets, sales, products, key personnel, pricing
policies operational methods, concepts, technical processes and applications and
other business affairs and methods of the Company (collectively referred to
hereinafter as Information). The Employee further acknowledges that his
employment by the Company involves the performance of services that are of a
special, unique, unusual, extraordinary and intellectual character, and that the
relationships between the Company and its officers, employees, agents,
consultants, suppliers, independent contractors and customers constitute a
valuable asset of the Company. In recognition of the foregoing, the Employee
covenants and agrees:
<PAGE>
(a) During the term of this Agreement and for a period of twenty-four
(24) months from date of termination of his employment hereunder for whatever
reason, that he will not solicit any customers who are presently or may
hereafter become customers of Employer unless such solicitation is entirely
unrelated to Employer's business, or compete in any way with Employer alone or
together with others in any state or foreign country in which (i) a facility of
the Employer is located, (ii) Employer is engaged in business at the time of
termination of employment, or (iii) where Employee knows Employer intends to
carry on business in such area by expansion of its activities within two (2)
years following termination.
(b) Subsequent to the termination of this agreement, Employee will not
interfere with or disrupt or attempt to disrupt Employer's business relationship
with its customers or suppliers or solicit the employees of Employer.
(c) During the term of this Agreement and after termination of the
Employment Period, for whatever reason, except in connection with his employment
Employee will not disclose or use or enable anyone else to use any Information
which may be obtained by him or available to him during the term of employment
whether or not the Information will be considered proprietary or secret.
(d) In the event that Employee breaches any provisions of this paragraph
5, or there is a threatened breach, then, in addition to any other rights which
Employer may have, Employer shall be entitled to injunctive relief to enforce
the restrictions contained herein. In the event that an actual proceeding is
brought in equity to enforce the provisions of this paragraph, Employee shall
not urge as a defense that there is an adequate remedy at law nor shall Employer
be prevented from seeking any other remedies which may be available.
(e) The existence of any claim or cause of action by Employee against
Employer; whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of the foregoing restrictive
covenants but shall be litigated separately.
6. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE.
Employee represents and warrants to Employer that (a) Employee is under
no contractual or other restriction or obligation which is inconsistent with the
execution of this Agreement, the performance of his duties hereunder, or the
rights of Employer hereunder and (b) Employee is under no physical or mental
disability that would hinder his performance of duties under this Agreement.
7. TERMINATION.
(a) Anything to the contrary notwithstanding, this Agreement shall
terminate before the expiration of the term hereof in the event of the
Employee's (i) death or (ii), at the discretion of Employer, disability for a
period of twenty (20) consecutive weeks.
<PAGE>
(b) Employee's employment may also be terminated by the Employer before
the expiration of the term hereof only for cause as herein defined. Cause shall
mean any of the following occurrences:
(i) The Employee's conviction of a felony by a court of competent
jurisdiction (which conviction, through lapse of time or otherwise, is not
subject to appeal); or
(ii) The Employee's commission of an act of fraud or embezzlement
upon the Employer; or
(iii) The failure by the Employee to devote such time or perform
such services as are required to fully discharge Employee's responsibility as
EVP and General Manager hereunder.
8. NOTICES.
All notices hereunder shall be in writing and shall be delivered in
person or given by registered or certified mail, postage prepaid, and sent to
the parties at the respective addresses above set forth. Either party may
designate any other address to which notice shall be given, by giving notice to
the other of such change of address in the manner herein provided.
9. SEVERABILITY OF PROVISIONS.
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any other covenant or provision unless so expressed herein.
10. GOVERNING LAW.
This Agreement shall be construed and governed by the laws of the State
of New York.
11. NON-WAIVER.
The failure of either party to insist upon the strict performance of any
term or condition in this Agreement shall not be considered a waiver or
relinquishment of future compliance therewith.
<PAGE>
12. BINDING EFFECT.
Employee's rights and obligations under this Agreement shall not be
transferable by assignment or otherwise, such rights shall not be subject to
commutation, encumbrances, or the claims of Employee's creditors, and any
attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of Employee and his
heirs and personal representatives.
13. NO THIRD PARTY BENEFICIARIES.
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement (except as
provided in Section 12).
14. HEADINGS.
The headings in this Agreement are solely for the convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
15. ENTIRE AGREEMENT: MODIFICATION.
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof. No modification of this Agreement shall
be valid unless it is made in writing and signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
INTERNET COMMERCE CORPORATION, Employer
By:/s/ Arthur R. Medici /s/ George M. Cassidy
----------------------- ---------------------
Arthur R. Medici, President and CEO George M. Cassidy
EMPLOYMENT AGREEMENT EXHIBIT 10.11
Agreement made and entered into as of the Sixteenth day of April, 1997,
by and between INTERNET COMMERCE CORPORATION, a Delaware corporation, having a
place of business at 342 Madison Ave., Suite 622, New York, New York 10173
("Employer" or "Company"), and Michele Golden, residing at 945 Fifth Avenue, New
York, NY 10173 ("Employee").
WHEREAS, Employer is engaged in the business of designing and marketing
electronic document interchange systems and desires to employ Employee as
Executive Vice President (EVP) of New Business Development of Employer, and
Employee desires to be employed by Employer, all pursuant to the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES.
Employer hereby agrees to employ Employee, and Employee hereby agrees to
accept employment during the term hereof on a full-time basis, as EVP of
Employer, and shall perform such services as are customarily performed by
persons holding such office, and shall be subject at all times to the direction
of the Board of Directors and the Chief Executive Officer of Employer. Place of
employment, when Employee is not engaged in travel on Company business, shall be
the New York City area, unless otherwise agreed. Nothing herein contained shall
be construed as (a) preventing Employee from investing his personal assets in
any business which does not compete directly or indirectly with Employer and
does not involve any diversion of employee's business time, or (b) preventing
Employee from purchasing securities in any corporation whose securities are
regularly traded, if such purchases shall not result in his owning beneficially
at any time 1% or more of the equity securities of any corporation engaged in a
business which is competitive, directly or indirectly, to that of Employer.
2. TERM.
(a) Employee's employment hereunder shall be for a term commencing on
April 16, 1997, and ending three years thereafter.
3. COMPENSATION.
(a) As full compensation for the performance of his duties on behalf of
Employer, Employer shall pay Employee a base salary at the rate of $100,000 per
annum, payable in installments in accordance with the usual practice of
Employer.
(b) Employer shall reimburse Employee only for reasonable expenses
incurred by Employee in connection with his duties hereunder upon presentation
by Employee of the details of and vouchers for such expenses in accordance with
customary Employer practice.
<PAGE>
(c) Employee shall be eligible for all executive benefits approved by
the Board of Directors which shall include the same medical benefits provided
for executives of Infosafe Systems, Inc.
(d) Employee shall be entitled to 20 days of vacation per year, of which
5 may be carried over into the following year up to a cumulative total of 10
days carried over.
4. INTELLECTUAL PROPERTY.
(a) The Employee hereby assigns to the Company all of his right, title
and interest in and to all inventions, discoveries, improvements, ideas,
formulas, systems and related documentation and other works of authorship which
are directly or indirectly related to the actual or presently anticipated
business activities of the Company or its affiliates (hereinafter referred to as
"Intellectual Property"), whether or not patentable, copyrightable or entitled
to or eligible for other forms of protection, which during the term of the
Employee's employment by the Company the Employee may create, develop, write or
conceive, whether during or outside of regular working hours on the Company's
premises, either alone or together with others (including others not employed by
the Company or any subsidiary or affiliate of the Company), in whole or in part,
either (i) in the course of such employment, (ii) relating to the business or
research and development efforts of the Company or any of its subsidiaries or
(iii) with the use of the time, materials, private or proprietary information or
facilities of the Company or any of its subsidiaries.
(b) The Employee further agrees, without charge to the Company, but at
the Company's expense, (i) to disclose promptly to the Company all such
Intellectual Property, (ii) at the Company's request, to execute and deliver
promptly a specific assignment to the Company of any right, title and interest
to such Intellectual Property, including proprietary rights arising from patent
applications, and (iii) to take promptly any other action that may be reasonably
necessary on the part of the Employee to enable the Company to obtain patents,
copyrights or other forms of protection for such Intellectual Property in the
United States and other countries.
5. NON-COMPETITION.
The Employee acknowledges that his employment by the Company brings him
into close contact with many confidential affairs of the Company, including,
without limitation, information about inventions, improvements, modifications,
discoveries, costs, profits, markets, sales, products, key personnel, pricing
policies, operational methods, concepts, technical processes and applications
and other business affairs and methods of the Company (collectively referred to
hereinafter as Information). The Employee further acknowledges that his
employment by the Company involves the performance of services that are of a
special, unique, unusual, extraordinary and intellectual character, and that the
relationships between the Company and its officers, employees, agents,
consultants, suppliers, independent contractors and customers constitute a
valuable asset of the Company. In recognition of the foregoing, the Employee
covenants and agrees:
<PAGE>
(a) During the term of this Agreement and for a period of twenty-four
(24) months from date of termination or his employment hereunder for whatever
reason, that he will not solicit any customers who are presently or may
hereafter become customers of Employer unless such solicitation is entirely
unrelated to Employer's business, or compete in any way with Employer alone or
together with others in any state or foreign country in which (i) a facility of
the Employer is located, (ii) Employer is engaged in business at the time of
termination of employment, or (iii) where Employee knows Employer intends to
carry on business in such area by expansion of its activities within two (2)
years following termination.
(b) Subsequent to the termination of this agreement, Employee will not
interfere with or disrupt or attempt to disrupt Employer's business relationship
with its customers or suppliers or solicit the employees of Employer.
(c) During the term of this Agreement and after termination of the
Employment Period, for whatever reason, except in connection with his
employment, Employee will not disclose or use or enable anyone else to use any
Information which may be obtained by him or available to him during the term of
employment whether or not the Information will be considered proprietary or
secret.
(d) In the event that Employee breaches any provisions of this paragraph
5, or there is a threatened breach, then, in addition to any other rights which
Employer may have, Employer shall be entitled to injunctive relief to enforce
the restrictions contained herein. In the event that an actual proceeding is
brought in equity to enforce the provisions of this paragraph, Employee shall
not urge as a defense that there is an adequate remedy at law nor shall Employer
be prevented from seeking any other remedies which may be available.
(e) The existence of any claim or cause of action by Employee against
Employer; whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of the foregoing restrictive
covenants but shall be litigated separately.
6. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE.
Employee represents and warrants to Employer that (a) Employee is under
no contractual or other restriction or obligation which is inconsistent with the
execution of this Agreement, the performance of his duties hereunder, or the
rights of Employer hereunder and (b) Employee is under no physical or mental
disability that would hinder his performance of duties under this Agreement.
7. TERMINATION.
(a) Anything to the contrary notwithstanding, this Agreement shall
terminate before the expiration of the term hereof in the event of the
Employee's (i) death or (ii), at the discretion of Employer, disability for a
period of twenty (20) consecutive weeks.
<PAGE>
(b) Employee's employment may also be terminated by the Employer before
the expiration of the term hereof only for cause as herein defined. Cause shall
mean any of the following occurrences:
(i) The Employee's conviction of a felony by a court of competent
jurisdiction (which conviction, through lapse of time or otherwise, is not
subject to appeal); or
(ii) The Employee's commission of an act of fraud or embezzlement
upon the Employer; or
(iii) The failure by the Employee to devote such time or perform
such services as are required to fully discharge Employee's responsibility as
EVP hereunder.
8. NOTICES.
All notices hereunder shall be in writing and shall be delivered in
person or given by registered or certified mail, postage prepaid, and sent to
the parties at the respective addresses above set forth. Either party may
designate any other address to which notice shall be given, by giving notice to
the other of such change of address in the manner herein provided.
9. SEVERABILITY OF PROVISIONS.
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any other covenant or provision unless so expressed herein.
10. GOVERNING LAW.
This Agreement shall bc construed and governed by the laws of the State
of New York.
11. NON-WAIVER.
The failure of either party to insist upon the strict performance of any
term or condition in this Agreement shall not be considered a waiver or
relinquishment of future compliance therewith.
12. BINDING EFFECT.
Employee's rights and obligations under this Agreement shall not be
transferable by assignment or otherwise, such rights shall not be subject to
commutation, encumbrances, or
<PAGE>
the claims of Employee's creditors, and any attempt to do any of the foregoing
shall be void. The provisions of this Agreement shall be binding upon and inure
to the benefit of Employee and his heirs and personal representatives.
13. NO THIRD PARTY BENEFICIARIES.
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement (except as
provided in Section 12).
14. HEADINGS.
The headings in this Agreement are solely for the convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
15. ENTIRE AGREEMENT: MODIFICATION.
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof. No modification of this Agreement shall
be valid unless it is made in writing and signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written
INTERNET COMMERCE CORPORATION, Employer
By: /s/ Arthur R. Medici /s/ Michele Golden
-------------------- ------------------
Arthur R. Medici, President and CEO Michele Golden
EMPLOYMENT AGREEMENT EXHIBIT 10.12
Agreement made and entered into as of the Eighteenth day of December
1998, by and between INTERNET COMMERCE CORPORATION, a Delaware corporation,
having a place of business at 805 Third Avenue, New York, New York 10022
("Employer" or "Company"), and Donald Gordon, residing at 2205 H Spring Harbor
Drive, Delray Beach, Florida 33445 ("Employee").
WHEREAS, Employer is engaged in the business of designing and marketing
electronic document interchange systems and desires to employ Employee as
Chairman and Chief Executive Officer of Employer and Employee desires to be
employed by Employer, all pursuant to the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES.
Employer hereby agrees to employ Employee, and Employee hereby agrees to
accept employment during the term hereof on a full-time basis, as Chief
Operating Officer, and shall perform such services as are customarily performed
by persons holding such office, and shall be subject at all times to the
direction of the Chief Executive Officer and Board of Directors of Employer.
Place of employment, when Employee is not engaged in travel on Company business,
shall be the New York City area, unless otherwise agreed. Nothing herein
contained shall be construed as (a) preventing Employee from investing his
personal assets in any business which does not compete directly or indirectly
with Employer and does not involve any diversion of employee's business time, or
(b) preventing Employee from purchasing securities in any corporation whose
securities are regularly traded, if such purchases shall not result in his
owning beneficially at any time 1% or more of the equity securities of any
corporation engaged in a business, which is competitive, directly or indirectly,
to that of Employer.
2. TERM.
(a) The term of this agreement shall be for a term commencing on
December 18, 1998 and ending two years thereafter.
3. COMPENSATION.
(a) As full compensation for the performance of his duties on behalf of
Employer, Employer shall pay Employee a bast salary at the rate of $120,000 per
annum, payable in installments in accordance with the usual practice of
Employer.
(b) Employer shall reimburse Employee only for reasonable expenses
incurred by Employee in connection with his duties hereunder upon presentation
by Employee of the details of and vouchers for such expenses in accordance with
customary Employer practice.
<PAGE>
(c) Employee shall be eligible for all executive benefits approved by
the Board of Directors which shall include the same medical benefits provided
for executives of Internet Commerce Corporation.
(d) Employee shall be entitled to 20 days of vacation per year, of which
5 may be carried over into the following year up to a cumulative total of 10
days carried over.
(e) Employee shall be granted 50,000 options to purchase the Company's
Class A Common Stock pursuant to the Company's Employee Stock Option Plan at
$3.875 per share, one-third of which will vest upon employment and the balance
of which vest in 20% increments when the Company's Class A Common Stock attains
or exceeds each of the following per share bid prices for 20 consecutive trading
days: $7.50, $10.00, $12.50, $15.00 and $ 17.50.
4. INTELLECTUAL PROPERTY.
(a) The Employee hereby assigns to the Company all of his right, title
and interest in and to all inventions, discoveries, improvements, ideas,
formulas, systems and related documentation and other works of authorship which
are directly or indirectly related to the actual or presently anticipated
business activities of the Company or its affiliates (hereinafter referred to as
"Intellectual Property"), whether or not patentable, copyrightable or entitled
to or eligible for other forms of protection, which during the term of the
Employee's employment by the Company the Employee may create, develop, write or
conceive, whether during or outside of regular working hours on the Company's
premises, either alone or together with others (including others not employed by
the Company or any subsidiary or affiliate of the Company), in whole or in part,
either (i) in the course of such employment, (ii) relating to the business or
research and development efforts of the Company or any of its subsidiaries or
(iii) with the use of the time, materials, private or proprietary information or
facilities of the Company or any of its subsidiaries.
(b) The Employee further agrees, without charge to the Company, but at
the Company's expense, (i) to disclose promptly to the Company all such
Intellectual Property, (ii) at the Company's request, to execute and deliver
promptly a specific assignment to the Company of any right, title and interest
to such Intellectual Property, including proprietary rights arising from patent
applications, and (iii) to take promptly any other action that may be reasonably
necessary on the part of the Employee to enable the Company to obtain patents,
copyrights or other forms of protection for such Intellectual Property in the
United States and other countries.
5. NON-COMPETITION.
The Employee acknowledges that his employment by the Company brings him
into close contact with many confidential affairs of the Company, including,
without limitation, information about inventions, improvements, modifications,
discoveries, costs, profits, markets, sales, products, key personnel, pricing
policies, operational methods, concepts, technical processes and applications
and other business affairs and methods of the Company
<PAGE>
(collectively referred to hereinafter as Information). The Employee further
acknowledges that his employment by the Company involves the performance of
services that are of a special, unique, unusual, extraordinary and intellectual
character, and that the relationships between the Company and its officers,
employees, agents, consultants, suppliers, independent contractors and customers
constitute a valuable asset of the Company. In recognition of the foregoing, the
Employee covenants and agrees:
(a) During the term of this Agreement and for a period of twenty-four
(24) months from date of termination of his employment hereunder for whatever
reason, that he will not solicit any customers who are presently or may
hereafter become customers of Employer unless such solicitation is entirely
unrelated to Employer's business, or compete in any way with Employer alone or
together with others in any state or foreign country in which (i) a facility of
the Employer is located, (ii) Employer is engaged in business at the time of
termination of employment, or (iii) where Employee knows Employer intends to
carry on business in such area by expansion of its activities within two (2)
years following termination.
(b) Subsequent to the termination of this agreement, Employee will not
interfere with or disrupt or attempt to disrupt Employer's business relationship
with its customers or suppliers or solicit the employees of Employer.
(c) During the term of this Agreement and after termination of the
Employment Period, for whatever reason, except in connection with his employment
Employee will not disclose or use or enable anyone else to use any Information
which may be obtained by him or available to him during the term of employment
whether or not the Information will be considered proprietary or secret.
(d) In the event that Employee breaches any provisions of this paragraph
5, or there is a threatened breach, then, in addition to any other rights which
Employer may have, Employer shall be entitled to injunctive relief to enforce
the restrictions contained herein. In the event that an actual proceeding is
brought in equity to enforce the provisions of this paragraph, Employee shall
not urge as a defense that there is an adequate remedy at law nor shall Employer
be prevented from seeking any other remedies which may be available.
(e) The existence of any claim or cause of action by Employee against
Employer; whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of the foregoing restrictive
covenants but shall be litigated separately.
6. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE.
Employee represents and warrants to Employer that (a) Employee is under
no contractual or other restriction or obligation which is inconsistent with the
execution of this Agreement, the performance of his duties hereunder, or the
rights of Employer hereunder and (b) Employee is under no physical or mental
disability that would hinder his performance of duties under this Agreement.
<PAGE>
7. TERMINATION.
(a) Anything to the contrary notwithstanding, this Agreement shall
terminate before the expiration of the term hereof in the event of the
Employee's (i) death or (ii), at the discretion of Employer, disability for at
period of twenty (20) consecutive weeks.
(b) Employee's employment may also be terminated by the Employer before
the expiration of the term hereof only for cause as herein defined. Cause shall
mean any of the following occurrences:
(i) The Employee's conviction of a felony by a court of competent
jurisdiction (which conviction, through lapse of time or otherwise, is not
subject to appeal); or
(ii) The Employee's commission of an act of fraud or embezzlement upon
the Employer; or
(iii) The failure by the Employee to devote such time or perform such
services as are required hereunder.
8. NOTICES.
All notices hereunder shall be in writing and shall be delivered in
person or given by registered or certified mail, postage prepaid, and sent to
the parties at the respective addresses above set forth. Either party may
designate any other address to which notice shall be given, by giving notice to
the other of such change of address in the manner herein provided.
9. SEVERABILITY OF PROVISIONS.
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any other covenant or provision unless so expressed herein.
10. GOVERNING LAW.
This Agreement shall be construed and governed by the laws of the State
of New York.
11. NON-WAIVER.
The failure of either party to insist upon the strict performance of any
term or condition in this Agreement shall not be considered a waiver or
relinquishment of future compliance therewith.
<PAGE>
12. BINDING EFFECT.
Employee's rights and obligations under this Agreement shall not be
transferable by assignment or otherwise, such rights shall not be subject to
commutation, encumbrances, or the claims of Employee's creditors, and any
attempt to do any of the foregoing shall be void. The provisions of the
Agreement shall be binding upon and inure to the benefit of Employee and his
heirs and personal representatives.
13. NO THIRD PARTY BENEFICIARIES.
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement (except as
provided in Section 12).
14. HEADINGS.
The headings in this Agreement are solely for the convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
15. ENTIRE AGREEMENT: MODIFICATION.
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof. No modification of this Agreement shall
be valid unless it is made in writing and signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
INTERNET COMMERCE CORPORATION, Employer
By: _____________________ /s/ Donald Gordon
-----------------
Donald Gordon
EMPLOYMENT AGREEMENT EXHIBIT 10.13
Agreement made and entered into as of the Sixteenth day of April, 1997,
by and between INTERNET COMMERCE CORPORATION, a Delaware corporation, having a
place of business at 342 Madison Ave., Suite 622, New York, New York 10173
("Employer" or "Company"), and David Hubbard, residing at 234 Atlantic Place,
Hauppauge, New York 11788 ("Employee").
WHEREAS, Employer is engaged in the business of designing and marketing
electronic document interchange systems and desires to employ Employee as Vice
President of Engineering and Chief Technology Officer of Employer and of its
affiliate, Infosafe Systems, Inc., and Employee desires to be employed by
Employer, all pursuant to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT; DUTIES.
------------------
Employer hereby agrees to employ Employee, and Employee hereby agrees to
accept employment during the term hereof on a full-time basis, as VP of Employer
and of its affiliate, Infosafe Systems, Inc., and shall perform such services as
are customarily performed by persons holding such office, and shall be subject
at all times to the direction of the Board of Directors and the Chief Executive
Officer of Employer. Place of employment, when Employee is not engaged in travel
on Company business, shall be the New York City area, unless otherwise agreed.
Nothing herein contained shall be construed as (a) preventing Employee from
investing his personal assets in any business which does not compete directly or
indirectly with Employer and does not involve any diversion of employee's
business time, or (b) preventing Employee from purchasing securities in any
corporation whose securities are regularly traded, if such purchases shall not
result in his owning beneficially at any time 1% or more of the equity
securities of any corporation engaged in a business which is competitive,
directly or indirectly, to that of Employer.
2. TERM.
----
(a) Employee's employment hereunder shall be for a term commencing on
April 16, 1997, and ending three years thereafter.
3. COMPENSATION.
------------
(a) As full compensation for the performance of his duties on behalf of
Employer, Employer shall pay Employee a base salary at the rate of $140,000 per
annum, payable in installments in accordance with the usual practice of
Employer.
<PAGE>
(b) Employer shall reimburse Employee only for reasonable expenses
incurred by Employee in connection with his duties hereunder upon presentation
by Employee of the details of and vouchers for such expenses in accordance with
customary Employer practice.
(c) Employee shall be eligible for all executive benefits approved by
the Board of Directors which shall include the same medical benefits provided
for executives of Infosafe Systems, Inc.
(d) Employee shall be entitled to 20 days of vacation per year, of which
5 may be carried over into the following year up to a cumulative total of 10
days carried over.
4. INTELLECTUAL PROPERTY.
---------------------
(a) The Employee hereby assigns to the Company all of his right, title
and interest in and to all inventions, discoveries, improvements, ideas,
formulas, systems and related documentation and other works of authorship which
are directly or indirectly related to the actual or presently anticipated
business activities of the Company or its affiliates (hereinafter referred to as
("Intellectual Property"), whether or not patentable, copyrightable or entitled
to or eligible for other forms of protection, which during the term of the
Employee's employment by the Company the Employee may create, develop, write or
conceive, whether during or outside of regular working hours on the Company's
premises, either alone or together with others (including others not employed by
the Company or any subsidiary or affiliate of the Company), in whole or in part,
either (i) in the course of such employment, (ii) relating to the business or
research and development efforts of the Company or any of its subsidiaries or
(iii) with the use of the time, materials, private or proprietary information or
facilities of the Company or any of its subsidiaries.
(b) The Employee further agrees, without charge to the Company, but at
the Company's expense, (i) to disclose promptly to the Company all such
Intellectual Property, (ii) at the Company's request, to execute and deliver
promptly a specific assignment to the Company of any right, title and interest
to such Intellectual Property, including proprietary rights arising from patent
applications, and (iii) to take promptly any other action that may be reasonably
necessary on the part of the Employee to enable the Company to obtain patents,
copyrights or other forms of protection for such Intellectual Property in the
United States and other countries.
5. NON-COMPETITION.
---------------
The Employee acknowledges that his employment by the Company brings him
into close contact with many confidential affairs of the Company, including,
without limitation, information about inventions, improvements, modifications,
discoveries, costs, profits, markets, sales, products, key personnel, pricing
policies, operational methods, concepts, technical processes and applications
and other business affairs and methods of the Company (collectively referred to
hereinafter as Information). The Employee further acknowledges that his
employment by the Company involves the performance of services that are of a
special, unique, unusual, extraordinary and intellectual character, and that the
relationships between
<PAGE>
the Company and its officers, employees, agents, consultants, suppliers,
independent contractors and customers constitute a valuable asset of the
Company.
In recognition of the foregoing, the Employee covenants and agrees:
(a) During the term of this Agreement and for a period of twenty-four
(24) months from date of termination of his employment hereunder for whatever
reason, that he will not solicit any customers who are presently or may
hereafter become customers of Employer unless such solicitation is entirely
unrelated to Employer's business, or compete in any way with Employer alone or
together with others in any state or foreign country in which (i) a facility of
the Employer is located, (ii) Employer is engaged in business at the time of
termination of employment, or (iii) where Employee knows Employer intends to
carry on business in such area by expansion of its activities within two (2)
years following termination.
(b) Subsequent to the termination of this agreement, Employee will not
interfere with or disrupt or attempt to disrupt Employer's business relationship
with its customers or suppliers or solicit the employees of Employer.
(c) During the term of this Agreement and after termination of the
Employment Period, for whatever reason, except in connection with his employment
Employee will not disclose or use or enable anyone else to use any Information
which may be obtained by him or available to him during the term of employment
whether or not the Information will be considered proprietary or secret.
(d) In the event that Employee breaches any provisions of this paragraph
5, or there is a threatened breach, then, in addition to any other rights which
Employer may have, Employer shall be entitled to injunctive relief to enforce
the restrictions contained herein. In the event that an actual proceeding is
brought in equity to enforce the provisions of this paragraph, Employee shall
not urge as a defense that there is an adequate remedy at law nor shall Employer
be prevented from seeking any other remedies which may be available.
(e) The existence of any claim or cause of action by Employee against
Employer, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of the foregoing restrictive
covenants but shall be litigated separately.
6. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE.
------------------------------------------
Employee represents and warrants to Employer that (a) Employee is under
no contractual or other restriction or obligation which is inconsistent with the
execution of this Agreement, the performance of his duties hereunder, or the
rights of Employer hereunder and (b) Employee is under no physical or mental
disability that would hinder his performance of duties under this Agreement.
7. TERMINATION.
-----------
<PAGE>
(a) Anything to the contrary notwithstanding, this Agreement shall
terminate before the expiration of the term hereof in the event of the
Employee's (i) death or (ii), at the discretion of Employer, disability for a
period of twenty (20) consecutive weeks.
(b) Employee's employment may also be terminated by the Employer before
the expiration of the term hereof only for cause as herein defined. Cause shall
mean any of the following occurrences:
(i) The Employee's conviction of a felony by a court of competent
jurisdiction (which conviction, through lapse of time or otherwise, is not
subject to appeal); or
(ii) The Employee's commission of an act of fraud or embezzlement
upon the Employer; or
(iii) The failure by the Employee to devote such time or perform
such services as are required to fully discharge Employee's responsibility as VP
of Engineering and Chief Technology Officer hereunder.
8. NOTICES.
-------
All notices hereunder shall be in writing and shall be delivered in
person or given by registered or certified mail, postage prepaid, and sent to
the parties at the respective addresses above set forth. Either party may
designate any other address to which notice shall be given, by giving notice to
the other of such change of address in the manner herein provided.
9. SEVERABILITY OF PROVISIONS.
--------------------------
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any other covenant or provision unless so expressed herein.
10. GOVERNING LAW.
-------------
This Agreement shall be construed and governed by the laws of the State
of York.
11. NON-WAIVER.
----------
The failure of either party to insist upon the strict performance of any
term or condition in this Agreement shall not be considered a waiver or
relinquishment of future compliance therewith.
<PAGE>
12. BINDING EFFECT.
--------------
Employee's rights and obligations under this Agreement shall not be
transferable by assignment or otherwise, such rights shall not be subject to
commutation, encumbrances, or the claims of Employee's creditors, and any
attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of Employee and his
heirs and personal representatives.
13. NO THIRD PARTY BENEFICIARIES.
----------------------------
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement (except as
provided in Section 12).
14. HEADINGS.
--------
The headings in this Agreement are solely for the convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
15. ENTIRE AGREEMENT: MODIFICATION.
------------------------------
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof. No modification of this Agreement shall
be valid unless it is made in writing and signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
INTERNET COMMERCE CORPORATION, Employer
By: /s/ Arthur R. Medici /s/ David Hubbard
-------------------------- -------------------------
Arthur R. Medici, President David Hubbard
and CEO
EMPLOYMENT AGREEMENT EXHIBIT 10.14
Agreement made and entered into as of the 21st day of August 1998, by
and between INFOSAFE SYSTEMS, INC., a Delaware corporation, having a place of
business at 805 Third Avenue, 9th Floor, New York, New York 10022 ("Employer" or
"Company"), and Walter M. Psztur of 29 Patton Place, Dumont, New Jersey.
WHEREAS, Employer is engaged in the business of designing and marketing
electronic document interchange systems and desires to employ Employee as Vice
President of Employer, and Employee desires to be employed by Employer, all
pursuant to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES.
------------------
Employer hereby agrees to employ Employee, and Employee hereby agrees to
accept employment during the term hereof on a full-time basis, as Vice President
of Finance and Administration and shall perform such services as are customarily
performed by persons holding such office, and shall be subject at all times to
the direction of the Board of Directors and the Chief Executive Officer of
Employer. Nothing herein contained shall be construed as (a) preventing Employee
from investing his personal assets in any business which does not compete
directly or indirectly with Employer and does not involve any diversion of
employee's business time, or (b) preventing Employee from purchasing securities
in any corporation whose securities are regularly traded, if such purchases
shall not result in his owning beneficially at any time 1% or more of the equity
securities of any corporation engaged in a business which is competitive,
directly or indirectly, to that of Employer.
2. TERM.
----
(a) Employee's employment hereunder shall be for a term commencing on
August 1, 1998, and ending two years thereafter.
3. COMPENSATION.
------------
(a) As full compensation for the performance of his duties on behalf of
Employer, Employer shall pay Employee a base salary at the rate of $100,000 per
annum, payable in installments in accordance with the usual practice of
Employer.
(b) Employer shall reimburse Employee only for reasonable expenses
incurred by Employee in connection with his duties hereunder upon presentation
by Employee of the details of and vouchers for such expenses in accordance with
customary Employer practice.
<PAGE>
(c) Employee shall be eligible for all executive benefits approved by
the Board of Directors.
(d) Employee shall be entitled to 20 days of vacation per year, of which
5 may be carried over into the following year up to a cumulative total of 10
days.
4. INTELLECTUAL PROPERTY.
---------------------
(a) The Employee hereby assigns to the Company all of his right, title
and interest in and to all inventions, discoveries, improvements, ideas,
formulas, systems and related documentation and other works of authorship which
are directly related to the actual or presently anticipated business activities
of the Company (hereinafter referred to as "Intellectual Property"), whether or
not patentable, copyrightable or entitled to or eligible for other forms of
protection, which during do term of the Employee's employment by the Company the
Employee may create, develop, write or conceive, whether during or outside of
regular working hours on the Company's premises, either alone or together with
others (including others not employed by the Company or any subsidiary or
affiliate of the Company), in whole or in part, either (i) in the course of such
employment, (ii) relating to the business or research and development efforts of
the Company or any of its subsidiaries or (iii) with the use of the time,
materials, private or proprietary information or facilities of the Company or
any of its subsidiaries.
(b) The Employee further agrees, without charge to the Company, but at
the Company's expense, (i) to disclose promptly to the Company all such
Intellectual Property, (ii) at the Company's request, to execute and deliver
promptly a specific assignment to the Company of any right, title and interest
to such Intellectual Property, including proprietary rights arising from patent
applications, and (iii) to take promptly any other action that may be reasonably
necessary on the part of the Employee to enable the Company to obtain patents,
copyrights or other forms of protection for such Intellectual Property in the
United States and other countries.
5. NON-COMPETITION.
---------------
The Employee acknowledges that his employment by the Company brings him
into close contact with many confidential affairs of the Company, including,
without limitation, information about inventions, improvements, modifications,
discoveries, costs, profits, markets, sales, products, key personnel, pricing
policies, operational methods, concepts, technical processes and applications
and other business affairs and methods of the Company (collectively referred to
hereinafter as Information). The Employee further acknowledges that his
employment by the Company involves the performance of services that are of a
special, unique, unusual, extraordinary and intellectual character, and that the
relationships between the Company and its officers, employees, agents,
consultants, suppliers, independent contractors and customers constitute a
valuable asset of the Company. In recognition of the foregoing, the Employee
covenants and agrees:
<PAGE>
(a) During the term of this Agreement and for a period of twenty-four
(24) months from date of termination of this employment hereunder for whatever
reason, that he will not solicit any customers who are presently or may
hereafter become customers of Employer unless such solicitation is entirely
unrelated to Employer's business, or compete in any way with Employer alone or
together with others in any state or foreign country in which (i) a facility of
the Employer is located, (ii) Employer is engaged in business at the time of
termination of employment, or (iii) where Employee knows Employer intends to
carry on business in such area by expansion of its activities with two (2) years
following termination.
(b) Subsequent to the termination of this agreement, Employee will not
interfere with or disrupt or attempt to disrupt Employer's business relationship
with its customers or suppliers or solicit the employees of Employer.
(c) During the term of this Agreement and for a period of twenty-four
(24) months from the date of termination of the Employment Period or any
consulting period hereunder, for whatever reason, except in connection with his
employment Employee will not disclose or use or enable anyone else to use any
Information which may be obtained by him or available to him during the term of
employment whether or not the Information will be considered proprietary or
secret.
(d) In the event that Employee breaches any provisions of this paragraph
5, or there is a threatened breach, then, in addition to any other rights which
Employer may have, Employer shall be entitled to injunctive relief to enforce
the restrictions contained herein. In the event that an actual proceeding is
brought in equity to enforce the provisions of this paragraph, Employee shall
not urge as a defense that there is an adequate remedy at law nor shall Employer
be prevented from seeking any other remedies which may be available.
(e) The existence of any claim or cause of action by Employee against
Employer; whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of the foregoing restrictive
covenants but shall be litigated separately.
6. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE.
------------------------------------------
Employee represents and warrants to Employer that (a) Employee is under
no contractual or other restriction or obligation which is inconsistent with the
execution of this Agreement, the performance of his duties hereunder, or the
rights of Employer hereunder and (b) Employee is under no physical or mental
disability that would hinder his performance of duties under this Agreement.
7. TERMINATION.
-----------
(a) Anything to the contrary notwithstanding, this Agreement shall
terminate before the expiration of the term hereof in the event of the
Employee's (i) death or (ii), at
<PAGE>
the discretion of Employer, disability for a period of thirteen (13) or less (3
months) consecutive weeks.
(b) Employee's employment may also be terminated by the Employer before
the expiration of the term hereof only for cause as herein defined. Cause shall
mean any of the following occurrences:
(i) The Employee's conviction of a felony by a court of competent
jurisdiction (which conviction, through lapse of time or otherwise, is not
subject to appeal); or
(ii) The Employee's commission of an act of fraud or embezzlement upon
the Employer; or
(iii) The failure by the Employee to devote such time or perform such
services as are required hereunder.
8. NOTICES.
-------
All notices hereunder shall be in writing and shall be delivered
in person or given by registered or certified mail, postage prepaid, and sent to
the parties at the respective addresses above set forth. Either party may
designate any other address to which notice shall be given, by giving notice to
the other of such change of address in the manner herein provided.
9. SEVERABILITY OF PROVISIONS.
--------------------------
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any other covenant or provision unless so expressed herein.
10. GOVERNING LAW.
-------------
This Agreement shall be construed and governed by the laws of the State
of New York.
11. NON-WAIVER.
----------
The failure of either party to insist upon the strict performance of any
term or condition in this Agreement shall not be considered a waiver or
relinquishment of future compliance therewith.
12. BINDING EFFECT.
--------------
- 4 -
<PAGE>
Employee's rights and obligations under this Agreement shall not be
transferable by assignment or otherwise, such rights shall not be subject to
commutation, encumbrances, or the claims of Employee's creditors, and any
attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of Employee and his
heirs and personal representatives.
13. NO THIRD PARTY BENEFICIARIES.
----------------------------
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement (except as
provided in Section 12).
14. HEADINGS.
--------
The headings in this Agreement are solely for the convenience of
reference and shall be given on effect in the construction or interpretation of
this Agreement.
15. ENTIRE AGREEMENT: MODIFICATION.
------------------------------
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof. No modification of this Agreement shall
be valid unless it is made in writing and signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written
INFOSAFE SYSTEMS, INC. Employer
By: /s/ Arthur R. Medici /s/ Walter M. Psztur
------------------------------- -----------------------------
Arthur R. Medici, President and CEO Walter M. Psztur
EXHIBIT 23(ii).1
INDEPENDENT AUDITORS' CONSENT
We consent to incorporation by reference in the Registration Statement on Form
S-3 of Internet Commerce Corporation (formerly Infosafe Systems Inc.) of our
report dated September 23, 1998 (September 25, 1998 with respect to Note A,
October 23, 1998 with respect to Note L and October 28, 1998 with respect to
Note J[3]), relating to the consolidated balance sheet of Internet Commerce
Corporation (formerly Infosafe Systems Inc.) and subsidiary as of July 31, 1998,
and the related consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the years in the two-year period ended July
31, 1998 and for the period from November 18, 1991 (inception) through July 31,
1998, which report appears in the July 31, 1998 annual report on Form 10- KSB of
Internet Commerce Corporation (formerly Infosafe Systems Inc.) and subsidiary.
Our report dated September 23, 1998 (September 25, 1998 with respect to Note A,
October 23, 1998 with respect to Note L and October 28, 1998 with respect to
Note J[3]), contains an explanatory paragraph that states that the Company is in
the development state and has incurred operating losses since inception which
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
We also consent to the reference to our firm as Experts in the
accompanying form S-3.
/s/: Richard A. Eisner & Company, LLP
New York, New York
June 4, 1999
