As filed with the Securities and Exchange Commission on November 24, 1999
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT 0F 1933
INNODATA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
7374
(Primary Standard Industrial
Classification Code Number)
13-3475943
(IRS Employer
Identification Number)
Three University Plaza
Hackensack, NJ 07601
(201) 488-1200
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
Martin Kaye, Executive Vice President
95 Rockwell Place
Brooklyn, New York 11217
(718) 522-0222
(Name, address, including zip code
and telephone number, including
area code, of agent for service)
Copies of all Communications to:
Oscar D. Folger, Esq.
521 Fifth Avenue
New York, New York 10175
(212) 697-6464
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box./ /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment 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 statement 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 statement number of the earlier effective registration statement
for the same offering./ /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box./ /
<TABLE>
<CAPTION>
<BTB>
CALCULATION OF PROPOSED
registration fee maximum
Title of each Amount Proposed maximum aggregate Amount of
class of securities to be offering price offering registration
to be registered registered per unit price fee
<S> <C> <C> <C> <C>
Common Stock, 50,000(1) $9.00(1) $450,000(1) $118.80
$.01 par value
<FN>
(1) Estimated solely for purposes of computing the registration fee in
accordance with Rule 457 of the Securities Act of 1933 and based upon the
average of the high and low sales of the Common Stock on November 19, 1999, a
date within five (5) days prior to the date of initial filing of this
registration statement, as reported on Nasdaq.
</TABLE>
Innodata Corporation hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
If, as a result of stock splits, stock dividends or similar transactions, the
number of securities purported to be registered on this registration statement
increases, the provisions of Rule 416 shall apply, and this registration
statement shall be deemed to cover any such additional shares of common stock.
Subject To Completion, Dated November 24, 1999
PROSPECTUS
INNODATA CORPORATION
50,000 SHARES OF COMMON STOCK
These shares may be offered and sold from time to time by the security holder of
Innodata Corporation identified in this prospectus. The shares that may be
offered and sold in reliance on this prospectus consist of 50,000 shares of
common stock ("Shares"), issuable upon exercise of options which were issued to
Linkages, Inc. in a private transaction for services rendered. The options
expire on December 18, 2000 and are exercisable at $3.8125 per share.
The selling security holder will receive all of the proceeds and will pay all
underwriting discounts and selling commissions, if any, from the sale of the
shares.
__________________________
Our Common Stock is traded on the Nasdaq SmallCap Market under the symbol
"INOD." On November 19, 1999, the last reported sale price of the Common Stock
on Nasdaq was $8.81 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
You should read the entire prospectus carefully before you make your investment
decision. You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. The selling security holder is offering to
sell, and seeking offers to buy, shares of Innodata Corporation Common Stock
only in jurisdictions where offers and sales are permitted. The information
contained in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of the
shares.
__________________________
The SEC and state regulatory authorities have not approved or disapproved these
securities, or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
__________________________
Information contained herein is subject to completion or amendment. A
registration statement for these securities has been filed with the SEC. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of any offer to buy nor shall
there be any sale of these securities in any state in which an offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state.
The date of this prospectus is _________, 1999.
THE COMPANY
INNODATA Corporation (the "Company") incorporated in Delaware in June 1988,
maintains its executive offices in Hackensack, New Jersey and employs a work
force in other locations in the U.S. and in excess of 5,000 persons in the
Philippines, India and Sri Lanka. The Company is a leading provider of Internet
and on-line publishing services, providing all the necessary steps for product
development, data conversion and content management to enable its customers to
publish vast amounts of information both on-line and via the Internet.
Innodata's customers represent an array of major electronic publishers of legal,
scientific, educational, and medical information, as well as document-intensive
companies repurposing their proprietary information into electronic resources
that can be referenced via web-centric applications.
The Company also provides imaging and scanning conversion services
assisting companies in CAD and imaging applications. It supports the latest in
state-of-the-art equipment from high-end document scanners to large format and
film scanners. Capabilities include the scanning and indexing of all different
types of business documents, technical manuals, engineering drawings, 35mm
aperture cards and microfilm.
The executive offices of the Company are located at Three University Plaza,
Hackensack, New Jersey 07601. Its telephone number is 201-488-1200. Its
operations in the Philippines are conducted at 2900 Faraday Street in Manila,
and at Fuente Osmena, Cebu City, in Cebu. The Company's facilities in Manila
are accessible by calling its New Jersey offices, 201-488-1200, Ext. 5551.
RISK FACTORS
An investment in the offered shares involves a high degree of risk. Prospective
investors should understand that they may lose their investment and should
consider carefully the following risk factors in making their investment
decision. This prospectus contains and incorporates by reference forward-looking
statements which are intended to fall within the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. Examples include the
discussion under "Business" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Form 10-K for the year
ended December 31, 1998. These statements are based on current expectations that
involve a number of uncertainties including those set forth in the following
risk factors. Actual results could differ materially from those results
projected in these forward-looking statements.
We Rely on Operations Conducted Primarily in Foreign Countries.
- ---------------------------------------------------------------
Most of our operations take place in the Philippines, India and Sri Lanka.
The majority of our fixed assets are at these locations. We are subject to
risks associated with foreign operations in general, including political or
economic instability or disruptions, foreign regulatory approval requirements,
embargoes, transportation delays and trade restrictions, all of which could
materially adversely affect our operations and financial condition, or could
have a significant adverse impact on our ability to perform and deliver services
on a competitive and timely basis.
While the political situation currently appears to be stable, our
operations may be adversely affected by political instability in the foreign
locations in which we operate. Political instability could also change the
current satisfactory legal environment for us through the imposition of
restrictions on foreign ownership, repatriation of funds, adverse labor laws,
and the like.
We Are Subject to Risks of Power Failures and Natural Disasters in Foreign
- --------------------------------------------------------------------------
Countries.
- ----------
Frequent power outages occur in the Philippines and India which have lasted
for as long as eight hours per day. Our facilities are equipped with standby
generators to produce electric power during such power failures but the general
impact of such power failures outside our offices may still be very disruptive
to our overall operations. There can be no assurance that municipal power
production capacity will not remain adequate, or deteriorate further, with the
result that our operations could be adversely affected. The Philippines is
subject to relatively frequent earthquakes, volcanic eruptions, floods and other
natural disasters, which may disrupt our operations.
We Are Subject to Risks of Currency Fluctuation and Inflation.
- --------------------------------------------------------------
We fund our foreign operations through the transfer of dollars from the
United States. We generally remit funds to our foreign operations only as
needed and do not maintain any significant amount of funds or monetary assets in
those countries. Inflation without corresponding devaluation of foreign
currencies against the dollar, or any other increase in value of foreign
currency relative to the dollar, may have a material adverse effect on our
operations and financial condition.
We May Be Adversely Affected If We Or Our Vendors Are Not Year 2000 Compliant.
- ------------------------------------------------------------------------------
We rely on certain hardware, software and operating systems (collectively,
"Systems") for production, financial reporting and general administration. We
have been evaluating these Systems to identify potential Year 2000 compliance
problems and have been planning appropriate remedial efforts and testing, where
required. In addition, we have been evaluating our external interfaces with
customers and service suppliers to coordinate Year 2000 compliance. Achieving
Year 2000 compliance is dependent upon many factors, some of which are not
completely within our control. Should either one or more of our critical
Systems components or one or more of our critical vendors, including those
vendors providing services in foreign countries in which we operate, fail to
achieve Year 2000 compliance, our business and results of operations could be
adversely affected.
We Rely On Certain Customers For A Large Portion of Our Business.
- -----------------------------------------------------------------
During the nine months ended September 30, 1999, one customer accounted for
23% of the Company's Internet and on-line data conversion and content management
services revenues. Another customer that is comprised of twelve affiliated
companies, accounted for 21% of such revenues in 1998. During 1998, 1997 and
1996, one customer that is comprised of twelve affiliated companies, accounted
for 21%, 16% and 28% of our Internet and on-line publishing services revenues,
respectively. One other customer accounted for 13%, 10% and 10% of such revenues
in 1998, 1997 and 1996, respectively. No other customer accounted for 10% or
more of such revenues.
During the nine months ended September 30, 1999 two customers accounted for
34% and 18% of our document imaging service revenues, respectively. During the
same period in 1998, two other customers accounted for 52% and 12% of such
revenues. During 1998, 1997 and 1996 one customer accounted for 53%, 11% and 12%
of our imaging and scanning conversion service revenues, respectively. The
Company has no present arrangements with this customer for 1999. Another
customer accounted for 10% and 12% of such revenues in 1997 and 1996. No other
customer accounted for 10% or more of such revenues.
If any of such customers were to discontinue employing the Company's
services, there could be an adverse affect on the Company's business.
We Have Substantial Competition.
- --------------------------------
Internet and On-Line Data Conversion and Content Management Services
Our ability to compete favorably is, in significant part, dependent upon
our ability to control costs, react swiftly and appropriately to short and
long-term trends, harness technology and competitively price our services. Firms
compete based on quality, speed, accuracy, and "customer intimacy," as well as
on the relative ability to accomplish massive and complex data conversions
economically. Major competitors include: for document and information
outsourcing, F.Y.I. Inc. and Lason Inc.; for data conversion services, Saztec
Philippines, Inc., Access Innovations, Inc., APEX Data Services, Inc. and Jouve
S.A.; for SGML/XML and related consulting services, Database Publishing Systems
Ltd. and KPMG Consulting. We may also be considered in competition with
customers' and potential customers' in-house personnel who may attempt to
duplicate our services.
Document Imaging Services
Our scanning conversion services division competes with numerous companies
that may have substantially greater financial, technical, and other resources
than us. Firms compete based on price, geographic location, quality, and speed
of turn-around, as well as on the size of project and the complexity and level
of work that they can perform on an economic basis. Major national competitors
include Lason Inc. and IKON Office Solutions Inc. We may also be considered in
competition with customers' and potential customers' in-house personnel who may
attempt to duplicate our services.
Sale of Shares Eligible for Future Sale Could Adversely Affect Our Stock Price.
- -------------------------------------------------------------------------------
1,169,190 shares of our presently outstanding Common Stock may be deemed
"restricted securities," and may not be sold except in compliance with Rule 144
under the Securities Act. Rule 144 generally provides that a person holding
restricted securities for a period of one year may publicly sell in brokerage
transactions an amount equal to 1% of the Company's outstanding Common Stock
every three months or, if greater, a percentage of the shares publicly traded
during a designated period. All of such shares are currently eligible for sale
under Rule 144.
Our Right To Issue Preferred Stock Could Make A Third-Party Acquisition Of Us
- -----------------------------------------------------------------------------
Difficult.
- ----------
Certain provisions of the Delaware General Corporation Law may delay,
discourage or prevent a change in control. These provisions may discourage bids
for our Common Stock at a premium over the market price and may adversely affect
the market price and the voting and other rights of the holders of our common
stock. In addition, our governing documents authorize the issuance of up to one
million shares of preferred stock without stockholder approval, with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of our Common Stock. In the event
of issuance, the preferred stock could be utilized, under certain circumstances,
as a method of discouraging, delaying or preventing a change in control of the
Company. Although we have no present intention to issue any shares of preferred
stock, there can be no assurance that we will not do so in the future.
Depending on the designations, rights and preferences of a particular issuance
of preferred stock, such issuance could adversely affect the market value of the
Company's Common Stock.
We Have Certain Requirements For Continued Listing of Our Common Stock or
- -------------------------------------------------------------------------
Nasdaq; Penny Stock Rules.
- --------------------------
While the Common Stock is presently listed on the Nasdaq SmallCap Market,
there can be no assurance that we will continue to meet the maintenance criteria
for continued listing of our securities on Nasdaq. These continued listing
criteria include, among other things, $2,000,000 in net tangible assets, a
public float of 500,000 shares with a market value equal to $1,000,000 held by
at least 300 stockholders, two market makers and a minimum bid price of $1.00
per share of common stock. There can be no assurance that we will continue to
satisfy these criteria. If we are became unable to meet the continued listing
criteria of the Nasdaq SmallCap Market and became delisted therefrom, trading,
if any, in our Common Stock would thereafter have to be conducted in the
so-called "pink sheets" or, if then available, the Nasdaq "Electronic Bulletin
Board". As a result, an investor would find it more difficult to dispose of,
and to obtain accurate quotations as to the value of the Common Stock.
In addition, if the Company fails to maintain a Nasdaq SmallCap Market
listing for its securities, and no other exclusion from the definition of a
"penny stock" under the Exchange Act is available, then any broker engaging in a
transaction in our securities would be required to provide any customer with a
risk disclosure document, disclosure of market quotations, if any, disclosure of
the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market values of the Company's securities
held in the customer's accounts. The bid and offer quotation and compensation
information must be provided prior to effecting the transaction and must be
contained on the customer's confirmation. If brokers become subject to the
"penny stock" rules when engaging in transactions in the Company's securities,
they would become less willing to engage in such transactions, thereby making it
more difficult for purchasers in this offering to dispose of their shares.
Our Directors' Liability For Their Actions is Limited and We May Indemnify Them
- -------------------------------------------------------------------------------
If They Are Sued.
- -----------------
Our governing documents limit the liability of our directors for breach of
their fiduciary duty of care. The effect is to eliminate liability of directors
for monetary damages arising out of negligent or grossly negligent conduct.
Stockholder actions against a director of our Company for monetary damages can
only be maintained upon a showing of a breach of the individual director's duty
of loyalty to the Company, a failure to act in good faith, intentional
misconduct, a knowing violation of the law, an improper personal benefit, or an
illegal dividend or stock purchase, and not for such director's negligence or
gross negligence in satisfying his duty of care. These documents also provide
for indemnification as permitted by Delaware law. However, insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers or persons controlling our Company pursuant to
the foregoing provisions, we have been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the Act
and is therefore unenforceable.
It Is Unlikely That We Will Pay Dividends.
- ------------------------------------------
We have not paid any cash dividends since our inception and do not
anticipate paying any cash dividends in the foreseeable future. There can be no
assurance that our operations will result in sufficient earnings to enable us to
pay dividends. It is anticipated that earnings, if any, will be used to finance
our growth.
USE OF PROCEEDS
All of the Shares of Common Stock are being sold by the selling security
holder for his own account. Management has designated the proceeds from
warrants, if exercised, to be used for general corporate and working capital
purposes and they may be expended at the discretion of the Company's management.
We have not made any specific allocations as to the use of any such proceeds.
PLAN OF DISTRIBUTION
The selling security holder has indicated he is acting independently from us in
determining the manner and extent of sales of the shares of our Common Stock.
Although all of the shares are being registered for public sale, the sale of any
or all of such shares by the selling security holder may depend on the sale
price of such shares and market conditions generally prevailing at the time.
The selling security holder has advised us that:
- - the Shares may be sold by the selling security holder or his respective
pledgees, donees, transferees or successors in interest, in sales occurring in
the public market, in privately negotiated transactions, in block trades,
through the writing of options on shares, hedging transactions, short sales,
direct sales to one or more purchasers, or in a combination of such
transactions;
- - each sale may be made either at market prices prevailing at the time of
such sale, at a fixed offering price, at varying prices determined at the time
of sale, or at negotiated prices;
- - some or all of the Shares may be sold through brokers acting on behalf of
the selling security holder or to dealers for resale by such dealers;
- - in connection with such sales, such brokers and dealers may receive
compensation in the form of discounts and commissions from the selling
stockholder and may receive commissions from the purchasers of shares for whom
they act as broker or agent (which discounts and commissions may be less than or
exceed those customary in the types of transactions involved). Any broker or
dealer participating in any such sale may be deemed to be an "underwriter"
within the meaning of the Securities Act and will be required to deliver a copy
of this prospectus to any person who purchases any common stock from or through
such broker or dealer.
In offering the Common Stock covered by this prospectus, the selling security
holder and any broker-dealers and any other participating broker-dealers who
execute sales for the selling stockholder could be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such sales, and any
profits realized by the selling stockholders and the compensation of such
broker-dealer may be deemed to be underwriting discounts and commissions. In
addition, any shares of Common Stock covered by this prospectus which qualify
for sale pursuant to Rule 144 of the Securities Act may be sold under Rule 144
rather than pursuant to this prospectus.
In order to comply with certain states' securities laws, if applicable, the
shares of Common Stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states, the shares of
Common Stock may not be sold unless they have been registered or qualified for
sale in such state or an exemption from registration or qualification is
available and is complied with.
The selling security holder has agreed to indemnify and hold us and our officers
and directors harmless, with respect to any losses resulting from any untrue
statement of a material fact in, or omission of a material fact from, this
prospectus or the registration statement of which it is a part, including
amendments and supplements, if such statement or omission was contained in
information furnished to us by such selling security holder. We will not pay
selling or other expenses incurred in the offering, including the discounts and
commissions of broker-dealers.
MATERIAL DEVELOPMENTS
Since the Company's most recent filing of its Quarterly Report on Form
10-QSB for the quarter ended September 30, 1999, no material developments have
occurred.
SELLING SECURITY HOLDER
The following table sets forth the name of the selling security holder, the
number of shares of common stock owned beneficially by such holder as of the
date of this prospectus and the number of shares that may be offered pursuant to
this prospectus. This information is based upon information provided by the
selling security holder.
No estimate can be given as to the number of shares that will be held by any
selling security holder after completion of this offering because they may offer
all or some of the shares and because there currently are no agreements,
arrangements or understandings with respect to the sale of any of the shares.
The shares offered by this prospectus may be offered from time to time by the
selling security holder named below.
<TABLE>
<CAPTION>
Number Number of
<S> <C> <C>
<BTB> of Shares Shares
BENEFICIALLY REGISTERED
Name of Selling Security Holder Owned for Sale(1)
- ------------------------------- ------------ -----------
Linkages, Inc. 50,000 50,000
</TABLE>
This registration statement also shall cover any additional shares of common
stock which become issuable in connection with any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt of
consideration which results in an increase in the number of the Company's
outstanding shares of Common Stock.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-KSB for the years ended
December 31, 1998 and 1997 have been audited by Grant Thornton LLP, independent
certified public accountants, and as to the year ended December 31, 1996 by
Margolin, Winer & Evens LLP, as stated in their reports, which are incorporated
herein by reference, and have been so incorporated in reliance upon the reports
of such firms given upon their authority as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with the validity of the securities
offered by this Prospectus will be passed on for the Company by Oscar D. Folger,
Esq., New York, New York. Mr. Folger's wife owns 29,813 shares of the Common
Stock of the Company, and Mr. Folger's pension plan, of which he is a trustee
and principal beneficiary, owns 11,347 shares of Common Stock.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents are incorporated in this Prospectus and made a part
hereof by reference:
1. The Company's report on Form 10-KSB for the year ended December 31, 1998,
filed with the Commission pursuant to Section 13 of the Securities Exchange Act
of 1934.
2. The Company's report on Form 10-QSB for the Quarter ended September 30,
1999, filed with the Commission pursuant to Section 13 of the Securities
Exchange Act of 1934.
3. The section entitled "Description of Common Stock" contained in
Post-Effective Amendment No. 1 to the Company's Registration Statement No.
33-62012 on Form SB-2 filed with the Commission, under the Securities Act of
1933, and effective as of June 21, 1994.
In addition, all reports, proxy statements and other documents of the
Company hereafter filed with the Commission pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, prior to the termination of
the offering of the securities covered by this Prospectus or the filing of a
post-effective amendment which indicates that all securities have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated in this Prospectus and made a part hereof by reference from the
date of filing each such document. Any statement contained in an earlier
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and other
documents with the SEC. You may read and copy any document we file at the SEC's
public reference room at Judiciary Plaza Building, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549. You should call 1-800-SEC-0330 for more
information on the public reference room. The SEC maintains an Internet site at
http://www.sec.gov where certain information regarding issuers, including
Innodata Corporation, may be found. This prospectus is part of a registration
statement that we filed with the SEC, registration No. 333-________. The
registration statement contains more information than this prospectus regarding
the Company and its common stock, including certain exhibits and schedules. You
can get a copy of the registration statement from the SEC at the address listed
above or from its Internet site.
INNODATA Corporation
50,000 Shares of Common Stock
____________________
PROSPECTUS
____________________
1999
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and if given or made, such information or representations must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of any offer to buy any
securities in any jurisdiction in which such an offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof.
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee $ 118.80
Accounting Fees and Expense 8,000.00
Legal Fees and Expenses 4,000.00
Miscellaneous 381.20
Total $12,500.00
<FN>
All fees and expenses other than the SEC registration fee are estimated.
</TABLE>
ITEM 15. Indemnification of Directors and Officers.
------------------------------------------
The Company has entered into agreements with each director in which the Company
agrees to indemnify each director and officer to the maximum extent permitted by
law.
The Company's Certificate of Incorporation provides that all directors,
officers, employees and agents of the Registrant shall be entitled to be
indemnified by the Company to the fullest extent permitted by law. The
Certificate of Incorporation also provides as follows:
A director, or former director, shall not be liable to the corporation or to any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this provision shall not eliminate or limit the
liability of a director: (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) under Section 174 of the General Corporation Law of the State of Delaware,
pertaining to the liability of directors for unlawful payment of dividends or
unlawful stock purchase or redemption; or (iv) for any transaction from which
the director derived an improper personal benefit.
Section 145 of the Delaware General Corporation Law concerning indemnification
of officers, directors, employees and agents is set forth below.
Section 145. Indemnification of officers, directors, employees and agents;
insurance.
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he 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 his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he 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 reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such persons shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer, to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, (the "Securities Act") may be permitted to directors,
officers, and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company 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, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to the court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
ITEM 16. Exhibits.
---------
<TABLE>
<CAPTION>
(5) Opinion of Oscar D. Folger as to legality
<S> <C> <C>
(23) (a) Consent of Oscar D. Folger (included in Exhibit 5)
(23) (b) Consent of Grant Thornton LLP
(23) (c) Consent of Margolin, Winer & Evens LLP
ITEM 17. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
<FN>
(a) To file, during any period in which offers or sales are being made, a post-effective amendment
to this registration statement:
</TABLE>
(i) To include any prospectus required by section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change to such information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) under the Securities Act if,
in the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change in the information set forth in the registration statement;
Provided, however, that paragraphs (1)(a)(i) and (1)(a)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(b) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of Track
Data Corporation 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, Track Data Corporation will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, State of New York on the 22 day of November
1999.
INNODATA CORPORATION
By /s/
-------------------------------------
Barry Hertz
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date stated.
Signature Title Date
- --------- ----- ----
<BTB>
Chairman of the Board November 22, 1999
- ----------------------
Barry Hertz
/s/ Vice Chairman of the Board November 22, 1999
- -----------------------
Todd Solomon
/s/ President, Chief Executive November 22,1999
- ----------------------- Officer and Director
Jack Abuhoff
/s/ Executive Vice President (Principal November 22, 1999
- ----------------------- Financial Officer) and Director
Martin Kaye
/s/ Director November 22, 1999
- -----------------------
Dr. Albert Drillick
/s/ Director November 22, 1999
- -----------------------
Dr. E. Bruce Fredrikson
/s/ Director November 22, 1999
- -----------------------
Morton Mackof
/s/ Director November 22, 1999
- -----------------------
Stanley Stern
EXHIBIT 23(a)
LAWYERS OPINION AND CONSENT
We have acted as counsel to Innodata Corporation, a Delaware corporation (the
"Company") in connection with the registration by the Company of 50,000 shares
of its common stock, $.01 par value (the "Shares") which are issuable pursuant
to warrants. All of the Shares are the subject of a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Act"). As counsel
to the Company we have examined and relied upon the original or copies,
certified or otherwise identified to our satisfaction, of such documents,
corporate records and other instruments as we have deemed necessary in order to
render the following opinion.
Based upon the foregoing, we are of the opinion that the Shares to be issued by
the Company pursuant to the Plan and Options are duly authorized and, when
issued and paid for in accordance with the Plan as described in the Registration
Statement, will be validly issued, fully paid and nonassessable.
We are aware that we are referred to under the caption "Legal Matters" in the
Reoffer Prospectus included in the Registration Statement and we hereby consent
to such reference to us and to the filing of this opinion as Exhibit 5 to the
Registration Statement. In giving such consent, however, we do not hereby imply
or admit that we are within the category of persons whose consent is required
under Section 7 of the Act or under the General Rules and Regulations of the
Securities and Exchange Commission adopted thereunder.
Oscar D. Folger
Law Offices of Oscar D. Folger
New York, New York
November 22, 1999
EXHIBIT 23(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 25, 1999 accompanying the consolidated
financial statements of Innodata Corporation and subsidiaries appearing in the
1998 Annual Report of the Company to its shareholders included in the Annual
Report on Form 10-K for the year ended December 31, 1998 which is incorporated
by reference in this Registration Statement. We consent to the incorporation by
reference in the Registration Statement of the aforementioned report and to the
use of our name as it appears under the caption "Experts."
GRANT THORNTON LLP
New York, New York
November 22, 1999
EXHIBIT 23(c)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of Innodata Corporation on Form S-3 of our report dated March 14, 1997,
appearing in the Annual Report on Form 10-KSB of Innodata Corporation for the
year ended December 31, 1998 and to the reference to our firm under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
MARGOLIN, WINER & EVENS LLP
Garden City, New York
November 22, 1999
