As filed with the Securities and Exchange Commission on October 18, 1999
Registration No. 333-80043
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
TO
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 of the Board of Directors
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
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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. |_|
<PAGE>
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|
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. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of each class Amount Proposed Proposed maximum Amount
of securities to be to be maximum offering aggregate offering of registration
registered registered (1) price per share price (2) fee (1) (2)
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<S> <C> <C> <C> <C>
Class A Common Stock 5,476,280 $ 12.125 $ 66,199,061 $ 18,404
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</TABLE>
(1) Includes shares of class A common stock that are issuable upon conversion of
series A convertible redeemable preferred stock and upon the exercise of
warrants. Also includes an additional 974,045 shares of class A common stock
that may be issued upon conversion of the series A convertible redeemable
preferred stock if the conversion price is adjusted as required by the series A
preferred stock or if dividends in the form of class A common stock are paid on
series A preferred stock.
(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 prices per share of the class A
common stock on The Nasdaq SmallCap Market reported on September 13, 1999.
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PROSPECTUS
INTERNET COMMERCE CORPORATION
o This prospectus relates to the public offering from time to time of up
to 4,502,235 shares of our class A common stock that may be sold by the
persons listed on pages 19 to 22 below after they convert or exercise
all or part of their convertible securities. These person are referred
to in this prospectus as selling stockholders. This prospectus also
relates to the sale by the selling stockholders of an additional 974,045
shares of our class A common stock that may be issued upon conversion of
the series A convertible redeemable preferred stock if the conversion
price is adjusted as required by the series A preferred stock or if
dividends in the form of class A common stock are paid on series A
preferred stock.
o Our common stock is traded on The Nasdaq SmallCap Market under the
symbol ICCSA. On October 14, 1999, the last sale price for the common
stock was $12.00.
o 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 vary from
transaction to transaction.
o This investment involves a high degree of risk. You should carefully
consider the risk factors beginning on page 5 of this prospectus before
you decide to invest.
Neither the Securities and Exchange Commission 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.
The date of this prospectus is October 18, 1999
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TABLE OF CONTENTS
Page
Prospectus Summary........................................................... 3
Risk Factors................................................................. 5
Risks Relating to ICC.................................................... 5
Risks Relating to the Internet and Online Commerce Aspects of
our Business ............................................................ 10
Risks Relating to this Offering.......................................... 11
Forward-Looking Statements................................................... 13
Use of Proceeds.............................................................. 13
Business......................................................................14
Selling Stockholders......................................................... 18
Plan of Distribution......................................................... 22
Description of Securities.....................................................24
Legal Matters................................................................ 31
Experts...................................................................... 31
Where You Can Find More Information.......................................... 31
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PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus. This summary may not contain all of the information that you should
consider before purchasing shares of our class A common stock. You should read
the entire prospectus carefully, including Risk Factors commencing on page 5,
before making an investment decision.
Internet Commerce Corporation, or ICC
Business Description
Our CommerceSense service uses the Internet and our proprietary
technology to deliver our customers' documents and data files to members of
their trading communities, many of which may have incompatible systems, by
translating the documents and data files into any format required by the
receiver. We believe that our CommerceSense service has significant advantages
over traditional value added networks, or VANs, and email-based and other
Internet-based systems, including lower cost, higher level of service, greater
transmission speed and more features.
We use CommerceSense to provide the following services:
o Traditional VAN services -- CommerceSense provides the full suite
of traditional VAN services, but uses the Internet to provide
cost savings and increased capabilities for our customers;
o EDI for web-based retailers -- CommerceSense provides an
electronic document and data file delivery link between web-based
retailers and their vendors that require that documents and data
files be transmitted using electronic data interchange, or EDI,
format;
o EDI to fax service -- CommerceSense can translate electronic
documents into fax format and send the documents by fax to our
customers' trading partners that cannot receive electronically
transmitted documents; and
o Large-scale electronic document management and delivery --
CommerceSense can transmit large-scale non-EDI electronic
documents and data files and provides real-time delivery,
archiving, security, authentication and audit services.
Business Strategy
We believe that our CommerceSense service provides a platform with many
applications that will allow our customers to integrate a substantial portion of
their document and data file delivery methods into a single, seamless process
with significantly less administrative effort and cost. We intend to continue to
market CommerceSense as a
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one-stop electronic document and data delivery service to the 2,500 largest
companies in the United States and abroad that use EDI to communicate with their
vendors. We believe that the cost and ease of use of our CommerceSense service
will allow these companies to request or encourage their smaller trading
partners to conduct electronic commerce using CommerceSense.
The address of our principle executive office is 805 Third Avenue, New
York, New York 10022. Our telephone number at that address is (212) 271-7640.
The Offering
Class A common stock offered
by the selling stockholders.....................................5,476,280 shares
Class A common stock to be
outstanding after the offering............................ 6,458,625 shares (1)
Nasdaq SmallCap Market symbol..............................................ICCSA
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(1) This information is based on the number of shares of class A common stock
outstanding at October 11, 1999. It includes all of the shares being offered by
this prospectus by the selling stockholders, whether then held or issuable upon
conversion or exercise of convertible or exercisable securities, but excludes
1,960,000 shares then issuable under outstanding options or reserved for
issuance under our 1994 stock option plan.
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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 class A common stock. Investing in our class A 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 class A common stock and could result in the complete loss
of your investment.
Risks Relating to ICC
We have a limited operating history and there is insufficient historical
information to determine whether we will successfully implement any of our
business strategies. We were founded as Infosafe Systems, Inc. in November 1991
and from 1991 to 1997 we conducted limited operations and developed products
that we were unable to exploit commercially and consequently discontinued. In
1998, 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. We may not be successful in implementing
any of our business strategies.
We have never earned a profit and expect to incur significant losses. We
have incurred significant losses since we were founded in 1991. We have never
earned a profit in any fiscal quarter and, as of April 30, 1999, we had an
accumulated deficit of approximately $20.0 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. In addition, we expect our cost of
revenue and operating expenses to increase significantly, especially in the
areas of marketing, customer installation and customer service. As a result, we
expect to incur additional losses in the future.
We may not achieve profitability. The profit potential of our business
model is unproven. Our revenue is dependent on the number of customers who
subscribe to our CommerceSense VAN service and the volume of the data, documents
or other information they send or retrieve utilizing this service. The success
of our CommerceSense VAN service and our other proposed services depends to a
large extent on the future business-to-business electronic commerce using the
Internet, which is uncertain. If we experience a shortfall in our estimated
revenue, we may be unable to adjust spending in a timely manner and may not
achieve profitability.
We currently depend primarily on our CommerceSense VAN service and may
not be able to continue to expand into new business areas. We are currently
focusing on our CommerceSense VAN service. As a result, our financial condition
will depend heavily on the success or failure of this service. It is difficult
to predict demand and market acceptance for this service in the new and rapidly
evolving business-to-business electronic commerce
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market. If our CommerceSense VAN service is not successful, our revenue may not
increase sufficiently for us to become profitable.
We are expanding our operations by developing and marketing new and
complementary services using our CommerceSense service as a platform to provide
these additional services or systems. We cannot assure you that we will be able
to continue to do so effectively.
If we are unable to manage our growth, our financial results will
suffer. Our ability to implement our business plan successfully in a new and
rapidly-evolving market requires effective planning and growth management. If we
cannot manage our anticipated growth effectively, our business and financial
results will suffer. 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. We also
intend to expand our services, which may require additional resources and
employees.
We may face capacity constraints which impede our revenue growth and
business profitability. 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. Any
significant or prolonged 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. This would decrease our
ability to acquire and retain customers and prevent us from achieving the
necessary growth in revenue to achieve profitability. 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.
If we do not keep pace with rapid technological changes, customer
demands and intense competition, we will not be successful. Our market is
characterized by rapidly changing technology, 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 require us to continue
to develop strategic business and Internet solutions that enhance and improve
the customer service features, functions and responsiveness of our CommerceSense
VAN and other proposed services 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 VAN service or other
proposed services that respond to technological change or customer demands, our
business will suffer.
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If we are unable to obtain necessary future capital, our business will
suffer. As of July 31, 1999, we had cash and marketable securities in the amount
of approximately $4.6 million. We anticipate that we will need to raise
additional funds soon. If we are unable to obtain necessary additional
financing, our business will suffer. We cannot assure you that any additional
financing will be available on reasonable terms or at all. 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.
Even if we are able to obtain additional financing, we will subsequently need to
raise additional funds if we do not become profitable or if achieving
profitability takes longer than we anticipate.
Raising additional funds in the future by issuing securities could
adversely affect our stockholders and negatively impact our operating results.
If we raise additional funds through the issuance of debt securities, the
holders of the debt securities will have a claim to our assets that will have
priority over any claim of our stockholders. The interest on these debt
securities would increase our costs and negatively impact our operating results.
If we raise additional funds through the issuance of class A common stock or
securities convertible into or exchangeable for class A 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 class A common stock.
We may not be able to compete effectively in the business-to-business
electronic commerce market, which could limit our market share and harm our
financial performance. The business-to-business electronic commerce industry is
evolving rapidly and is intensely competitive. If we are not able to compete
effectively against our current and future competitors, we may lose customers,
may need to lower our prices, may experience reductions in gross margins,
increases in marketing costs or losses in market share, or may experience a
combination of these problems and, as a result, our business will suffer.
Many of our current and potential competitors 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. As a result, we may not be successful in competing against
our competitors.
Our principal competitors include: Harbinger Corporation, GE Information
Services, Inc., International Business Machines Corporation Global Services,
Sterling Commerce, Inc., AT&T Corp. and MCI Communications Corporation. 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.
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If we are successful in utilizing our CommerceSense platform to provide
new services, we may enter into different markets and may face the same or
additional competitors, most of which will have substantially greater financial
and other resources than we do.
If we cannot successfully expand our business outside of the United
States, our revenues and operating results will be adversely affected. Our
current and future customers are conducting their businesses internationally. As
a result, an important component of our business strategy is to expand our
international marketing and sales efforts. We have limited experience in
expanding our business outside the United States and if we do not successfully
expand our business in this way, we may lose current and future customers. In
addition, our potential new service offerings may involve delivery of data and
use of the Internet in other countries which may currently have or enact laws or
regulations that restrict our ability to deliver data or use the Internet or
that impose significant taxes for doing so. Loss of customers and restrictions
on delivery of data and use of the Internet will adversely affect our revenues
and operating results.
Losing any of our key personnel could cause our revenues to decline. We
are substantially dependent on the continued services and performance of our
executive officers and other key employees. The loss of the services of any of
our executive officers or other key employees could impede the operation and
growth of our business and cause our revenues to decline. Although all of our
executive officers, except Dr. Geoffrey S. Carroll and Richard Blume, and some
key employees have entered into employment agreements, none of these agreements
prevents any of them from leaving us.
If we cannot hire and retain highly qualified employees, our business
and financial results will suffer. We believe we will need to expand
significantly our information technology, marketing and customer service staffs.
Competition for employees in our industry is intense. If we are unable to
attract, assimilate or retain highly qualified employees, our management may not
be able to effectively manage our business, exploit opportunities and respond to
competitive challenges and our business and financial results will suffer. Many
of our competitors may be able to offer more lucrative compensation packages
which include stock options and other stock-based compensation and
higher-profile employment opportunities than we can.
If we are not able to hire and retain independent contractors, our
business will be harmed. We are substantially dependent on the services of
independent contractors to train customers in the use of CommerceSense. We have
entered into three relationships with independent contractors and need to retain
several other providers of these services to achieve our business plan. If we
fail to hire and retain qualified independent contractors, then our business
will be harmed.
We depend on our intellectual property, which may be difficult and
costly to protect. Other than our decryption/logging/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, we may not be
granted this trademark. Even if we are granted this
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trademark, we may not be able to protect it. If our competitors or others adopt
product or service names similar to CommerceSense, it may impede our ability to
build brand identity and customer loyalty. We may 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. Litigation
is expensive and time-consuming and could divert management's attention away
from running our business.
The validity, enforceability and scope of protection of some types of
proprietary rights in Internet-related businesses are uncertain and still
evolving. If unauthorized third parties try to copy our service or our business
model or use our confidential information to develop competing services, we may
lose customers and our business could suffer. We may not be able to effectively
police unauthorized use of our technology because policing is difficult and
expensive. In particular, 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.
Intellectual property infringement claims against us could harm our
business. Our business activities and our CommerceSense service may infringe
upon the proprietary rights of others and other parties may assert infringement
claims against us. Any such claims and any resulting litigation could subject us
to significant liability for damages and could result in invalidation of our
proprietary rights. We could be required to enter into costly and burdensome
royalty and licensing agreements, which may not be available on terms acceptable
to us, or may not be available at all.
We may suffer systems failures and business interruptions which would
harm our business. Our success depends in part 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
events such as damage from fire, power loss, telecommunications failures,
break-ins and earthquakes. This could lead to interruptions or delays in our
service, loss of data or the inability to accept, transmit and confirm customer
documents and data. Our business may suffer if our service is interrupted.
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.
Year 2000 issues could affect the performance of our business. We may
have substantial exposure to the year 2000 problem, both with our own systems
and with systems we do not control. The year 2000 problem could harm our
business and financial results. Many currently installed computer systems and
software products have been coded to accept or recognize only two digit entries
to define the applicable year. These systems may erroneously recognize the year
2000 as the year 1900. Thus could result in major failures or malfunctions.
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This risk is particularly significant for our business. We rely on
computer programs and systems in connection with our internal and external
communication networks and systems, including transmissions of information over
the 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 the terminal operations software at our facilities and other
date sensitive equipment will be completely successful. In addition, the costs
of implementing these programs may 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 harm our business. The full extent of any adverse
impact on our business is impossible to determine.
In addition, our customers may not become year 2000 compliant in a
timely fashion or at all. The failure of a customer to become year 2000
compliant will adversely affect the ability of that customer's trading partners
to receive or utilize the document or data we transmit. As a result, customers
that are not year 2000 compliant may cease using our CommerceSense service,
decreasing our revenues and harming our results of operations.
Risks Relating to the Internet and Online Commerce Aspects of Our Business
If Internet usage does not continue to grow or its infrastructure fails,
our business will suffer. If the Internet does not gain increased acceptance for
business-to-business electronic commerce, our business will not grow or become
profitable. 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.
Privacy concerns may prevent customers from using our services. Concerns
about 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 may need to incur significant expenses and use significant resources to
protect against the threat of security breaches or to alleviate problems caused
by security breaches. We rely upon encryption and authentication technology to
provide secure transmission of confidential information. If our security
measures do not prevent security breaches, we could suffer operating losses,
damage to our reputation, litigation and possible liability. Advances in
computer capabilities, new discoveries in the field of cryptography or other
developments that render current encryption technology outdated may result in a
breach of our encryption and authentication technology and could enable an
outside party to steal proprietary information or interrupt our operations.
Failure of our third-party providers to provide adequate Internet and
telecommunications service could result in significant losses of revenue. Our
operations depend upon third parties for Internet access and telecommunications
service. Frequent or prolonged interruptions of these services could result in
significant losses of revenues. Each of them has experienced outages in the past
and could experience outages, delays and other
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difficulties due to system failures unrelated to our on-line architecture. These
types of occurrences could also cause users to perceive our services as not
functioning properly and therefore cause them to use other methods to deliver
and receive information. 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 or that the quality of services
that they provide will remain at the levels needed to enable us to conduct our
business effectively.
Government regulation and legal uncertainties relating to the Internet
could harm our business. Changes in the regulatory environment in the United
States and other countries could decrease our revenues and increase our costs.
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,
because of increasing popularity and use of the Internet, any number of laws and
regulations may be adopted in the United States and other countries relating to
the Internet or other online services covering issues such as:
o user privacy;
o security;
o pricing and taxation;
o content; and
o distribution.
Costs of transmitting documents and data could increase, which would
harm our business and operating results. The cost of transmitting documents and
data over the Internet could increase. We may not be able to increase our prices
to cover these rising costs. 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 these providers. Also, foreign and state
laws and regulations relating to the provision of services over the Internet are
still developing. If individual states or foreign countries impose taxes or laws
that negatively impact services provided over the Internet, our cost of
providing our CommerceSense and other services may increase.
Risks Relating to this Offering
Shares eligible for future sale by our existing stockholders may
adversely affect our stock price and may render it difficult to sell class A
common stock. The average weekly trading volume of our class A common stock on
The Nasdaq SmallCap Market was, approximately, 86,100 shares during the quarter
ended December 31, 1998, 133,800 shares during the quarter ended March 31, 1999,
116,500 shares during the quarter ended June 30, 1999 and 75,800 shares during
the quarter ended September 30, 1999. 5,476,280 shares of class A common stock
are being registered under this registration statement. The market price of our
class A common stock could be materially and adversely affected by sales of even
a small percentage of these shares or the perception that these sales could
occur.
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Our stock price may be extremely volatile and this volatility could
affect your ability to sell your shares at a favorable price. The market price
of our class A common stock is likely to fluctuate substantially in the future.
In the past, companies that have experienced volatility in the market price of
their stock have been subject to securities class action litigation. If we were
subject to a securities class action lawsuit, it could result in substantial
costs and a significant diversion of resources, including management time and
attention.
The market for our common stock may be illiquid, which would restrict
your ability to sell your shares. Our class A common stock is currently trading
on The Nasdaq SmallCap Market. Due to the low weekly trading volume and the
large number of shares being registered by this registration statement, a
purchaser of the shares covered by this prospectus may not be able to find a
buyer for the portion of the shares the purchaser wishes to sell at an
acceptable price. It is possible that the trading market for the class A common
stock in the future will be thin and illiquid, which could result in increased
volatility in the trading prices for our class A common stock. The price at
which the class A common stock will trade in the future cannot be predicted and
will be determined by the market. The price may be influenced by investors'
perceptions of our business, financial condition and prospects, the use of the
Internet for business purposes and general economic and market conditions.
Our class A common stock was delisted from The Nasdaq SmallCap Market on
February 22, 1999 because we did not satisfy the listing criteria. Since then we
have been relisted on The Nasdaq SmallCap Market.
If we lose our $20 million net operating loss carryforward, our
financial results will suffer. Section 382 of the Internal Revenue Code contains
rules designed to discourage persons from buying and selling the net operating
losses of companies. These rules generally operate by focusing on ownership
changes among stockholders owning directly or indirectly 5% or more of the
common stock of a company or any change in ownership arising from a new issuance
of stock by a company. In general, the rules limit the ability of a company to
utilize net operating losses after a change of ownership of more than 50% of its
class A common stock over a three-year period. Purchases of our class A common
stock in amounts greater than specified levels could inadvertently create a
limitation on our ability to utilize our net operating losses for tax purposes
in the future. We are currently subject to a limitation on the utilization of
our net operating loss carryforward and we may suffer further limitation as a
result of sales of class A common stock covered by this prospectus.
Our board of directors can issue preferred stock with rights adverse to
the holders of class A 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 class A common stock could be adverse to the holders of class A
common stock.
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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 some 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.
FORWARD-LOOKING STATEMENTS
This prospectus contains a number of forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. 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, intend and plan 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 regarding future events and are
subject to risks, uncertainties and assumptions related to various factors which
include but may not be limited to those listed under the heading Risk Factors
starting on page 5 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, intended or planned. 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.
USE OF PROCEEDS
The selling stockholders are selling all the common stock covered by
this prospectus for their own account. We will not therefore receive any
proceeds from the sale of this class A common stock.
-13-
<PAGE>
BUSINESS
Internet Commerce Corporation
Industry Background
We believe that although the Internet has become an important new sales
channel, its real value will be in achieving business efficiencies and cost
savings by expanding global business-to-business interconnectedness.
We believe that in an increasingly global economy, improvements in speed
and efficiency in the supply chain between businesses are important and
improvements in the capacity of a business to buy and sell goods and services or
raw materials within its business community becomes an important factor in its
ability to compete. Thus, for example, in a just-in-time economy, timeliness,
and not price, may be the most important component in creating competitive
advantage.
The speed and efficiency of the supply chain are hindered by
incompatibilities in technologies and methodologies used to communicate business
information among trading communities, which slow down the flow of information
and create bottlenecks. These incompatibilities stem from the diversity of
trading partners, which may range from members of the Fortune 100 to sole
proprietors providing niche products. Trading partners may therefore have
different communications capabilities and requirements. Some trading partners
may rely on paper or fax to communicate, others exchange data in proprietary
file formats through direct dial-up connections or over the Internet, while the
largest trading partners use electronic methods such as electronic data
interchange, or EDI, over value added networks, or VANs.
The CommerceSense Solution
We believe that our CommerceSense service provides a solution to the
communication difficulties caused by the differences in data formats, networks
and communications methods used by the members of trading communities, and thus
bridges the incompatibility gap and enabling seamless electronic business
communication. Our CommerceSense service can translate incompatible files into a
format any user is capable of receiving and uses the Internet to transmit the
data file by EDI, fax or other format. We believe that users of our
CommerceSense service can thus improve their productivity and reduce their costs
by enabling electronic business-to-business transactions between parties with
different systems.
We believe that our CommerceSense service improves the basic
infrastructure of business-to-business electronic communications by providing
intelligent messaging and routing using the Internet, which, we believe,
improves the security, reliability, ease of use and acceptability of using the
Internet for business-to-business electronic commerce. CommerceSense performs
these functions without requiring that the user purchase any software and at
prices that are, we believe, less than half of the prices currently charged by
traditional VANs.
-14-
<PAGE>
We designed our CommerceSense service to avoid what we believe are
inefficiencies in traditional VAN services, software products and phone and
manual fax processes, which we believe are more expensive, slower and more
difficult to use than our CommerceSense service. CommerceSense incorporates
proprietary technology and is immediately accessible using a standard Internet
connection and a web browser.
Our CommerceSense service uses the Internet to deliver a higher level of
service and more features than traditional VANs:
o Documents are delivered up to 100 times faster, depending upon
the speed of the customer's Internet connections;
o Our customers may more effectively track, monitor and process
business documents and other data files using our real-time
document management browser screen displays;
o Our CommerceSense service allows us to consistently provide
confirmed delivery of documents and other data files;
o Documents can be delivered either in real-time or retrieved when
convenient for the customer. Real-time delivery reduces the
potential for document corruption, bottlenecks and other
problems associated with batch delivery modes, which are
traditionally store-and-forward and in some cases can take
several hours to be delivered;
o Our CommerceSense service can handle transmissions of data other
than standard business documents, such as images, engineering
drawings, architectural blueprints, audio and some types of
video; and
o Our customers enjoy flexibility in creating different document
types and formats for various business applications. For
example, our customers can add their business logo to their
documents and can use their 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 a full
range of VAN services, translation of a wide variety of data into
customer-specified formats, management of business documents or data files of
virtually any size and of a wide variety, including purchase orders, invoices,
statements, inventory tracking and shipping documents, images, engineering
drawings, architectural blueprints, audio and some types of video. CommerceSense
also provides a complete audit trail of content delivery and customer selection
from a variety of security methods.
We believe that CommerceSense is one of the only Internet-based data
transmission services that is approved to interconnect with the eight largest
traditional VANs, which we believe currently provide EDI services for 90% of
companies capable of using EDI. As a result, we can handle EDI traffic between
our customers and any of their trading partners that choose to continue to use a
traditional VAN and between a customer that uses a traditional VAN and its
trading partners that do not. This provides our customers with the possibility
of maximum penetration into their trading partner community.
-15-
<PAGE>
EDI for web-based retailers. We provide an electronic document and data file
delivery link between web-based retailers and their vendors. We believe that
many larger vendors require that product orders and other documents be
transmitted using EDI. Web retailers can use our CommerceSense service to comply
with this requirement and thus can reduce their costs and improve their ability
to locate, order, track and deliver products. Our CommerceSense service can
process purchase orders, invoices, order status reports and other files
transmitted between web-based shopping portals of electronic retailers and their
vendors, distributors, and manufacturers and can also manage critical logistics
delivery files. Due to the special requirements and rapid growth of these new
web-based retail companies, we have a dedicated web retailer sales and support
team that offers the retail companies the option to outsource to us all of their
electronic document and data file delivery requirements.
EDI to fax service. Traditional EDI users convert electronic documents into a
faxable format and fax the documents manually to their trading partners that can
not receive documents transmitted electronically in EDI. Our CommerceSense fax
service allows our customers to send a document electronically, which we will
then electronically convert and fax to any of our customer's trading partners
that cannot receive electronically transmitted documents and specify that they
want to receive the document by fax. We believe that our CommerceSense fax
service will result in lower fax costs for our customers as well as reduced
human involvement in the document delivery process and fewer errors. Recently,
several other VANs began offering similar EDI-fax services; however, we believe
that these services cost 3 to 5 times more per page and are currently only
offered domestically. Our customers currently send documents using our
CommerceSense fax service to approximately 900 trading partners.
Large-scale electronic document management and delivery. Our CommerceSense
service can transmit large-scale non-EDI electronic documents and other large
files, which may include catalogs, engineering drawings, graphics and some types
of video. CommerceSense allows customers to manage and distribute these large
files in real-time and provides archiving, security, authentication and audit
services. CommerceSense will support both a publish/subscribe configuration, in
which a customer can publish any number of files for subscribers authorized by
the customer to view and/or download, and a point-to-point-delivery
configuration that operates like our CommerceSense VAN service.
Business Strategy
We believe that our CommerceSense service provides a platform with many
applications that will allow our customers to fulfill a substantial portion of
their electronic document and data delivery requirements with significantly less
administrative effort and cost. We believe that CommerceSense will allow our
customers to send us the majority of their important documents and data files
which we will then be able to transmit to each of the intended recipients in any
form requested by the recipient. Our customers will thus be able to integrate a
substantial portion of their document and data file delivery methods into a
single, seamless process.
-16-
<PAGE>
A large company that uses EDI to communicate with its vendors is
referred to as a hub; their trading partners, vendors or customers, are referred
to as spokes. We intend to continue to market CommerceSense as a one-stop
electronic document and data delivery service to the 2,500 largest hub companies
in the United States. Due to the cost to the spoke companies of implementing EDI
and using VANs and other electronic document delivery methods, large hub
companies are currently connected electronically to only a small percentage of
their potential spoke companies.
Our current customers conduct their business internationally, and we
intend to service these customers and pursue new international customers by
expanding our marketing and operation to Europe and other places outside the
United States.
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
and, we believe, will also be able to receive electronic documents using our
CommerceSense fax service, 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 intend to encourage the use of our CommerceSense service through
exceptional customer service. We currently offer technical support to our
customers twenty-four hour a day, seven days a week. Due to the multiple
redundancies of all of our systems and the stability of the Securities Industry
Automation Corporation, or SIAC, which is the location of our data center, our
CommerceSense service has been fully operational more than 99% of the time.
We intend to 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 or that we will be able to successfully negotiate and
finance the acquisition if an acquisition candidate is identified. If we make
other types of acquisitions, it will be necessary to assimilate the acquired
services, technologies or customers into our operations. If we consummate one or
more significant acquisitions through the issuance of shares of class A 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 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.
-17-
<PAGE>
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 some of the selling stockholders named below. In July 1999 we
issued to Summerwind Restructuring, Inc. 45 shares of series A preferred stock
for financial consulting and advisory services rendered from January 1, 1999
through April 30, 1999 and 20,000 shares of class A common stock on June 30,
1999 for termination of consulting arrangements. Summerwind Restructuring, Inc.
also received 500,000 warrants as consideration for various consulting services
under a consulting agreement.
In September 1998, ICC purchased the remaining 16.7% minority interest
of its majority-owned subsidiary from the minority stockholders in exchange for
334,495 shares of class A common stock and merged the two companies.
In December 1998 we issued 175 shares of class S preferred stock and
21,248 shares of class A common stock to Schnader Harrison Segal & Lewis LLP in
payment of legal services rendered by Schnader Harrison on our behalf. On July
1, 1999 we issued 13,462 shares of class A common stock to Schnader Harrison in
exchange for all 175 shares of series S preferred stock.
Michael Brooks purchased 80,000 shares of class B common stock in a
private placement in June 1998. At the end of December 1998, Brooks converted
70,000 of these shares into 70,000 shares of class A common stock.
From June 1998 to January 1999 we issued 778,500 warrants to investors
in connection with our 1998 bridge financing. We issued 59,850 warrants and may
issue an additional 6,750 to placements agents in connection with the our 1998
bridge financing and we issued 173,250 warrants to broker/dealers in connection
with our April 1999 private placement of Series A preferred stock.
Through Exchange Agreements each dated as of June 30, 1999 between ICC
and various holders of options to purchase units, each unit consisting of one
share of class A common stock, one class A warrant and one class B warrant, that
were issued in January 1995 and March 1997 to D.H. Blair, and its designees, in
connection with our initial public offering and 1997 private placement of units,
we exchanged 105,000 shares of class A common stock for all of the outstanding
options.
Richard Blume received 18,000 warrants for consulting services performed
for ICC. These warrants are exercisable at $9.94 per share for a total of 18,000
shares of class A common stock.
Richard J. Berman received 38,750 shares of class A common in lieu of
cash payment for his services as chairman and chief executive officer of ICC
from September 15, 1998 to March 15, 1999.
-18-
<PAGE>
Southeast Research Partners received 75,000 warrants pursuant to a
consulting agreement with ICC for services rendered commencing in October 1998.
The warrants were exchanged for 63,000 shares of class A common stock in July
1999.
On July 1, 1999 we issued 14,641 shares of class A common stock as a
dividend on the series A preferred stock to the holders of series A preferred
stock of record as of July 1, 1999 according to the provisions of the
certificate of designation for the series A preferred stock.
Arthur Medici was issued 70,000 shares of class B common stock on
December 17, 1996, upon his hiring as the chief executive officer of our
predecessor, Infosafe Systems, Inc. Upon the merger of Infosafe Systems, Inc.
with ICC and the subsequent reverse split, these shares changed into 14,000
shares of our class B common stock.
For further information about the convertible securities discussed in
this section, see Description of Securities on pages 24 to 31.
In the table below is information, as of October 11, 1999, regarding the
beneficial ownership of the shares by the selling stockholders. The number of
shares shown as beneficially owned by the selling stockholders includes all of
the shares of class A common stock to be issued upon conversion in full of all
of the convertible securities described above. The information regarding the
selling stockholders' beneficial ownership after this offering assumes that all
shares of class A common stock offered by the selling stockholders through this
prospectus are actually sold. The presentation is based on 1,857,941 shares of
our class A common stock outstanding as of October 11, 1999.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Number of Shares Number of Common Stock
of Common Stock Shares of Beneficially Owned
Beneficially Owned Common Stock After Offering
- ----------------------------- --------------------------------
Selling Stockholders Before Offering Offered Number Percent
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JOHN T. ABLAMSKY 14,065 14,065 0 **
STEVEN J. ABLAMSKY 14,399 14,399 0 **
ALBA LTD.
Robert Tucker* 16,744 16,744 0 **
ROLF ALBRECHT 8,371 8,371 0 **
ARAB COMMERCE BANK LTD.
A. De Nazareth* 50,233 50,233 0 **
AUSTOST ANSTALT SCHAAN
Thomas Hackel* 66,933 66,933 0 **
BANCA FINNAT
EURAMERICA, S.P.A.
Dr. Arturo Nattino* 16,744 16,744 0 **
JOSEPH P. BASILICE 8,371 8,371 0 **
</TABLE>
-19-
<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 Before Offering Offered Number Percent
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DOMINIC BASSANI 28,570 28,570 0 **
BEAR STEARNS SECURITIES
CORP . FOR THE BENEFIT
OF STEVEN M. MIZEL,
ROTH IRA 16,744 16,744 0 **
RICHARD J. BERMAN 75,994 70,494 5,500 **
HARVEY BLITZ 16,744 16,744 0 **
RICHARD BLUME 34,744 34,744 0 **
HERBERT BORK 15,871 15,871 0 **
B.R. FRIES & ASSOCIATES
INC.
Barry R. Fries* 16,744 16,744 0 **
MICHAEL T. BROOKS 46,000 45,000 1,000 **
ARCHIBALD M. BROWN, JR. 16,744 16,744 0 **
JAMES BURZOTTA 16,744 16,744 0 **
CANADIAN ADVANTAGE LP
Mark Valentine* 33,488 33,488 0 **
DONALD CASADONTE 5,023 5,023 0 **
RENEE S. CASADONTE 8,371 8,371 0 **
G. MICHAEL CASSIDY 329,461 125,770 203,691 11%
DOMINIC CHANG 66,978 66,978 0 **
VIRGINIA CRAIGHEAD 35,000 35,000 0 **
DOMINICK D'ALLEVA 128,721 128,721 0 **
NIKO DIMITROV 83,361 79,361 4,000 **
ASHISIE DHRUVE 33,488 33,488 0 **
ROSS DWORMAN 63,488 63,488 0 **
E & G GLASBRENNER
Erika and Gerald
Glasbrenner* 9,523 9,523 0 **
ELLIS AG
George Dreyfuss* 8,371 8,371 0 **
EMERSON CAPITAL
MANAGEMENT LTD.
Ingo Schnelle* 41,861 41,861 0 **
THOMAS ENRIGHT 8,371 8,371 0 **
RICHARD FELDMAN 18,418 18,418 0 **
VINCENT FERRARA 33,488 33,488 0 **
FIDUCIARIA OREFICI, SPA
SIM 16,744 16,744 0 **
Carlo Vedani*
FINANCIAL INSTITUTIONS
RETIREMENT FUND
Horace Caulkins* 33,488 33,488 0 **
KERRY M. FLEMING 63,488 63,488 0 **
FLEMINGS (JERSEY)
LIMITED 33,488 33,488 0 **
David Moreley*
JOSEPH FOGLIA 15,910 15,910 0 **
RICHARD FRIEDMAN 20,093 20,093 0 **
JEAN A. FRISA 31,744 31,744 0 **
RONALD C. FROMM 24,244 24,244 0 **
JOSEPH FUSCO 15,871 15,871 0 **
ROBERT GERBOTH 10,371 8,371 2,000 **
</TABLE>
-20-
<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 Before Offering Offered Number Percent
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GARY S. GLUCK 31,744 31,744 0 **
MICHELE GOLDEN 494,112 188,655 305,457 **
KURT GUBLER 8,366 8,366 0 **
HERIOT HOLDINGS LIMITED
Mr. O'Reilly* 63,488 63,488 0 **
JIMMY C.M. HSU 21,768 21,768 0 **
TOMMY HSU 28,465 28,465 0 **
ICN CAPITAL LIMITED
Ann Nicholoson* 215,860 215,860 0 **
JOSEPH IDY 48,488 48,488 0 **
KAS ASSOCIATES A/C
FALCON SECURITIES (UK) 8,371 8,371 0 **
LTD.
KLAUS KAPOSI 33,488 33,488 0 **
JODI KIRSCH 77,211 77,211 0 **
ELISE G. KLEIN 12,698 12,698 0 **
LADNER INVESTMENTS LTD.
James G. Spartz* 15,871 15,871 0 **
JOHN D. LANE 25,116 25,116 0 **
JOERG LANGLITZ 12,698 12,698 0 **
CLAUDE LEMIEUX 33,488 33,488 0 **
LONDON VENTURE CAPITAL
CORP.
Arle L. Pierro* 15,871 15,871 0 **
LONG ISLAND TITLE
AGENCY, INC.
Kerry Fleming* 167,444 167,444 0 **
RONALD SHERWOOD LOSHIN 127,478 96,978 30,500 2%
DAVID C. LYLE 5,023 5,023 0 **
JEFFREY MARKOWITZ 20,093 20,093 0 **
JAMES J. MCANDREWS JR. 8,371 8,371 0 **
RANDALL MCCATHREN 157,368 96,978 60,390 3%
ARTHUR MEDICI 250,000 14,000 236,000 13%
KATHLEEN F. MEDICI 69,488 63,488 6,000 **
ALEXANDER MITCHELL 41,861 41,861 0 **
DAVID JAN MITCHELL 105,350 105,350 0 **
JAN MITCHELL 41,861 41,861 0 **
ROLAND MUELLER 10,040 10,040 0 **
ANTHONY G. ORPHANOS 34,488 33,488 1,000 **
JAMES A. ORTENZIO 96,978 96,978 0 **
</TABLE>
-21-
<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 Before Offering Offered Number Percent
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WILLIAM PATTERSON 3,348 3,348 0 **
THOMAS W. PEW, JR. 16,744 16,744 0 **
PICTET NOMINEE
Daniel Binkert* 33,466 33,466 0 **
CYRILLE PLACE 9,523 9,523 0 **
GUILLAUME ZOLA-PLACE 9,523 9,523 0 **
VINCENT J. PONTE 15,833 15,833 0 **
RBB BANK AG/MANFRED
ZAUNER
Manfred Zauner* 50,233 50,233 0 **
ORHAN I. SADIK KHAN 65,233 65,233 0 **
MAKOTO SASAKI 33,488 33,488 0 **
DRS. AJ SCHACHTER 8,371 8,371 0 **
GORDON SCHAEFFER 33,488 33,488 0 **
WALTER SCHENKER 48,488 48,488 0 **
OUGLAS SCHMIDT 32,616 32,616 0 **
SCHNADER HARRISON SEGAL
& LEWIS LLP
Christine Carty* 47,172 34,710 12,462 1%
INGO SCHNELLE 84,163 84,163 0 **
BENNY SHABTAI 190,944 167,444 23,500 1%
SONEM PARTNERS LTD.
Steven Mizel* 16,744 16,744 0 **
Donald Casadonte* 150,000 150,000 0 **
KEVIN R. STEELE 46,465 46,465 0 **
SUMMERWIND
RESTRUCTURING, INC.
Dominic Bassani* 535,000 535,000 0 **
LESLIE TRAGER 5,500 5,500 0 **
THOMAS R. ULIE 33,744 31,744 2,000 **
MARKUS WALLNEY 15,871 15,871 0 **
SHOU-CHUNG WANG 16,744 16,744 0 **
ALTA WEHNERT 31,744 31,744 0 **
DIETER WITTRIN 15,871 15,871 0 **
GARY WRUBLE 16,744 16,744 0 **
SALVATORE ZIZZA 40,116 40,116 0 **
</TABLE>
* Control Persons
** Less than 1%
-22-
<PAGE>
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, on other securities exchanges or in private transactions, 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 a broker or dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal
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 regarding 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, 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 class A common stock
short and deliver the shares to close out their short positions;
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. If so, commissions
received by any of these brokers, dealers or agents and profit on any resale of
the shares may be considered to be underwriting commissions under the Securities
Act. These commissions received by a broker, dealer or agent may be in excess of
customary compensation.
-23-
<PAGE>
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 Securities Exchange Act of 1934 and its rules and
regulations, including, among others, 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, for an account in which the
selling stockholders or affiliated purchasers have a beneficial interest, 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 class A 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 read our
certificate of incorporation and bylaws very carefully. The relevant provisions
of our certificate of incorporation and bylaws and the Delaware General
Corporation Law are discussed under the heading Delaware Law and Certificate of
Incorporation and Bylaw Provisions on page 29 of this prospectus.
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.
Common Stock
Class A common stock
As of July 31, 1999, there were 1,810,936 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
-24-
<PAGE>
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 July 31, 1999, there were 115,599 shares of class B common stock
outstanding, held of record by five stockholders.
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 before 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
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. On July 31, 1999 there were no shares of class E-1
or E-2 common stock outstanding.
Preferred stock
Our certificate of incorporation authorizes our 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.
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Series A preferred stock
As of July 31, 1999, ICC had 9,590 shares of series A preferred stock
outstanding, held by approximately 100 stockholders.
Series A preferred stock is convertible, at the option of the holder,
into class A common stock. Each share of series A preferred stock is convertible
into a number of shares of class A common stock determined by dividing $1,000 by
the average market price of the class A common stock for the ten trading days
before the conversion date. However,
o if this average market price is less than $3 per share, the
series A preferred stock provides that the average market price
will be considered to be $3 per share, which results in a maximum
of 333 shares which may be issued upon conversion of one share of
series A preferred stock;
o if this average market price is greater than $5 per share, the
series A preferred stock provides that the average market price
will be considered to be $5 per share, which results in a minimum
of 200 shares which may be issued upon conversion of one share of
series A preferred stock; and
o until December 31, 1999 each of 8,505 shares of series A
preferred stock is convertible into a maximum of 200 shares of
class A common stock.
As a result of this formula, if all of the series A preferred stock were
converted before January 1, 2000, a maximum of 2,064,334 shares of class A
common stock could be issued in this conversion. If all of the series A
preferred stock were converted after December 31, 1999, a maximum of 3,213,334
shares of class A common stock would be issued in this conversion. The minimum
and maximum conversion rates apply even if the class A common stock is not
traded on The Nasdaq SmallCap Market after January 1, 2000. No fewer than 25
shares may be converted at one time unless the holder then holds fewer than 25
shares and converts all of the holder's shares at that time.
Series A preferred stock is redeemable, in whole or in part, by ICC,
commencing on the third anniversary of the date of issuance. The redemption
price for each share of series A preferred stock is $1,000 plus unpaid
dividends. Notice of redemption must be given 30 days before the redemption
date.
Subject to the rights of stockholders holding any series of ICC
preferred stock that is senior to the series A preferred stock, upon 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 before any distribution is made to holders of common stock.
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. Thus dividends are payable on each July 1
commencing on July 1, 1999. ICC elected to
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issue 14,641 shares of class A common stock in payment of the dividend due on
July 1, 1999.
Series A preferred stock has no voting rights except as expressly
required by law.
Series S preferred stock
As of July 1, 1999, ICC had no outstanding shares of series S preferred
stock. ICC does not intend to issue any shares of series S preferred stock in
the future.
Voting Trust. Thomas H. Lipscomb, former chairman of the board of
directors and president of ICC, and Alan N. Alpern, former chief financial
officer of ICC, 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 until February 18, 2000. As of May 1,
1998, 123,739 shares of class B common stock were forfeited according to the
terms of an escrow agreement dated as of September 11, 1992, as amended
September 20, 1994, and these shares were delivered by the escrow agent to ICC
which holds the shares in treasury. As of September 10, 1999, the shares in the
voting trust represented 20.3% of the total voting power of ICC. However, the
shares in the voting trust would currently represent only 6.4% of the total
voting power of ICC if all of the shares of class A common stock registered by
this registration statement were currently outstanding and none of the currently
outstanding shares of class B common stock was converted into class A common
stock. 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 ICC and Richard J.
Berman, the chairman of ICC, and Arthur R. Medici, former president and a
current director of ICC.
Warrants
As of June 30, 1999, there were 1,184,715 class A warrants outstanding
and 950,490 class B warrants outstanding. On June 30, 1999, we commenced an
offer to exchange one share of class A common stock for each 8 outstanding class
A warrants and one share of class A common stock for each 16 outstanding class B
warrants. The exchange offer was completed on July 30, 1999 and, as a result,
ICC issued a total of 148,651 shares of class A common stock in exchange for
868,500 class A warrants and 639,002 class B warrants.
As of July 31, 1999, there were 316,215 class A warrants outstanding.
Each class A warrant entitles the holder upon exercise to purchase one class B
warrant, which is described below, and one share of class A common stock. Each
class A warrant is exercisable for $23.20 and expires in February 2002.
As of July 31, 1999, there were 311,488 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 $31.22 and expires
in February 2002.
The class A and class B warrants are traded in the over-the-counter
market on the OTC Bulletin Board. The number of class A and class B warrants and
the exercise prices of
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the class A and class B warrants 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 market price of
the class A common stock at that time. If 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 outstanding
as of July 31, 1999 would increase to 405,763 and the number of class B warrants
outstanding as of July 31, 1999 would increase to 399,534, and the exercise
prices of the class A warrants would decrease to $18.08 and the exercise price
of the class B warrants would decrease to $24.34.
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 would be substantial.
On June 30, 1999, D.H. Blair and its designees exchanged all of these unit
purchase options for a total of 105,000 shares of class A common stock.
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 173,250 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.
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 until 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.
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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 as
consideration for various consulting services under a consulting agreement with
our predecessor, Infosafe Systems, Inc. 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 is a summary description of material provisions of the
Delaware General Corporation Law and our certificate of incorporation and
bylaws. For further information you should refer to our certificate of
incorporation and bylaws.
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.
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. This could
depress our stock price. However, 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.
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Classified Board of Directors
We received stockholder authorization on June 26, 1998 to amend our
certificate of incorporation to divide the board of directors into three classes
of directors. The classes must be as nearly equal in number as possible and
serve staggered three-year terms. We intend to elect directors for each class at
our next annual meeting of stockholders. As a result, after out next annual
meeting, 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 our directors for monetary
damages resulting from breaches of their fiduciary duty to the extent permitted
by the Delaware General Corporation Law and (2) indemnify our 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.
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 stated 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. This report contained an explanatory paragraph which indicated
that substantial doubt existed regarding ICC's ability
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<PAGE>
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 an amended registration statement on form
S-3/A to register the shares of common stock to be offered. This prospectus is
part of that amended registration statement and, as permitted by the SEC's
rules, does not contain all the information included in the amended registration
statement. For further information about us and our class A 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 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 class A 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, January 31, 1999 and April 30, 1999;
o Our quarterly reports on form 10-QSB/A for the quarters ended
October 31, 1998, January 31, 1999 and April 30, 1999;
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<PAGE>
o Our proxy statement for a special meeting of stockholders held
on March 15, 1999;
o Our current reports on Form 8-K, filed with the SEC on April 20,
1999 and July 1, 1999 and our amendment on form 8-K/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 the description. See also Description of Securities on
pages 24 to 31.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Internet Commerce Corporation
805 Third Avenue
New York, New York 10022
(212) 271-7640
Attn: Victor Bjorge
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. We have not authorized anyone to
provide you with, and you should not rely on, information other than that which
is in this prospectus, any prospectus supplement or which is incorporated in
this prospectus by reference.
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<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 ICC except as otherwise indicated.
SEC Registration Fee (actual)...................................$ 18,404
Nasdaq SmallCap Market listing fee (actual).....................$ 7,500
Blue Sky fees and expenses......................................$ 5,000
Printing and engraving fees and expenses........................$ 5,000
Legal fees and expenses.........................................$ 40,000
Accounting fees and expenses....................................$ 5,000
Miscellaneous .................................................$ 2,596
Total...........................................................$ 78,000
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware,
referred to as 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, known as 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 the action, and the statute 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 of 1933, as it may be amended
from time to time.
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 unlawful
stock purchases or redemptions, or (iv) any transaction from which the director
derived an improper personal benefit.
<PAGE>
Article VII of our by-laws and Article Seventh of our Amended and
Restated Certificate of Incorporation, as further amended, both provide 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 VIII of our
by-laws and Article Seventh of our Amended and Restated Certificate of
Incorporation, as further amended, both provide that no director shall be liable
to us 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.
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. If 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 ICC under the Securities Act or the Exchange
Act as indicated in parenthesis:
Exhibit
Number Description
- ------ -----------
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
23(ii).1 Consent of Richard A. Eisner & Company, LLP
(b) Financial Statement Schedules:
Not Applicable.
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<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
15th day of October, 1999.
Internet Commerce Corporation
by: /s/ Dr. Geoffrey S. Carroll
------------------------------------
Dr. Geoffrey S. Carroll
President and Chief Executive Officer
<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/ Dr. Geoffrey S. Carroll President and Chief October 15, 1999
- ---------------------------------- Executive Officer
Dr. Geoffrey S. Carroll (Principal Executive Officer)
Director
/s/ Walter M. Psztur Chief Financial Officer October 15, 1999
- ----------------------------------- (Principal Financial
Walter M. Psztur and Accounting Officer)
/s/ Richard J. Berman Director October 15, 1999
- ----------------------------------
Richard J. Berman
/s/ G. Michael Cassidy Director October 15, 1999
- ----------------------------------
G. Michael Cassidy
/s/ Michele Golden Director October 15, 1999
- -----------------------------------
Michele Golden
- ----------------------------------- Director October __, 1999
Charles C. Johnston
/s/ Arthur R. Medici Director October 15, 1999
- -----------------------------------
Arthur R. Medici
/s/ James Ortenzio Director October 15, 1999
- -----------------------------------
James Ortenzio
Director October __, 1999
- -----------------------------------
Peter Ruel
KRAMER LEVIN NAFTALIS & FRANKEL LLP
919 THIRD AVENUE
NEW YORK, N.Y. 10022-3852
(212) 715-9100
FACSIMILE
(212) 715-8000
______
WRITER'S DIRECT NUMBER
(212) 715-9100
October 18, 1999
Internet Commerce Corporation
805 Third Avenue
New York, New York 10022
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Internet Commerce Corporation, a
Delaware corporation (the "Registrant"), in connection with the preparation and
filing of a Registration Statement on Form S-3 (the "Registration Statement")
with the Securities and Exchange Commission (the "Commission"), with respect to
the registration under the Securities Act of 1933, as amended (the "Act"), of an
aggregate of 5,476,280 shares (the "Shares") of Class A Common Stock, par value
$.01 per share, including shares which may be issued upon conversion of shares
of the Registrant's Series A Convertible Redeemable Preferred Stock (the "Series
A Preferred Stock") and Class B Common Stock, par value $.01 per share (the
"Class B Common Stock"), and upon exercise of warrants.
In connection with the registration of the Shares, we have
reviewed copies of the Registration Statement, the Amended and Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
the By-laws of the Registrant, resolutions of the Board of Directors of the
Registrant and such other documents and records as we have deemed necessary to
enable us to express an opinion on the matters covered hereby. In rendering this
opinion, we have (a) assumed (i) the genuineness of all signatures on all
documents examined by us, (ii) the authenticity of all documents submitted to us
as originals and (iii) the conformity to original documents of all documents
submitted to us as photostatic or conformed copies and the authenticity of the
originals of such copies; and (b) relied on (i) representations, statements and
certificates of public officials and others and (ii) as to matters of fact,
statements, representations and certificates of officers and representatives of
the Registrant.
Based upon the foregoing, we are of the opinion that the Shares
covered by the Registration Statement are or, in the case of Shares
issuable upon conversion or exercise of Series A Preferred Stock, Class B Common
Stock and warrants, will be, when issued in accordance with the terms of such
Series A Preferred Stock, Class B Common Stock or warrants, as the case may be,
validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement. In giving the foregoing consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act or the rules and regulations of the Commission thereunder.
We are delivering this opinion to the Registrant, and no person
other than the Registrant may rely upon it.
Very truly yours,
/s/ Kramer Levin Naftalis & Frankel LLP
Kramer Levin Naftalis & Frankel LLP
INDEPENDENT AUDITORS' CONSENT
We consent to incorporation by reference in Amendment No. 3 to 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 stage 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.
/s/ Richard A. Eisner & Company, LLP
New York, New York
October 15, 1999
