As filed with the Securities and Exchange Commission on September 9, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT 0F 1933
INNODATA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3475943
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
56 PINE STREET, NEW YORK, NEW YORK 10005
(Address of principal executive offices)
1996 STOCK OPTION PLAN
OPTIONS
(Full Title of Plan)
MARTIN KAYE, EXECUTIVE VICE PRESIDENT
95 ROCKWELL PLACE, BROOKLYN, NEW YORK 11217
(Name and address of agent for service)
(718) 522-0222
(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
CALCULATION OF REGISTRATION FEE
-------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED (1) PER SHARE (2) OFFERING PRICE (2) FEE
Common Stock, $.01 par value 279,999 shares $4.25 $1,189,995.75 $351.05
(1) The Registration Statement also includes an undeterminable number of
additional shares that may become issuable pursuant to anti-dilution provisions
of the Plan.
(2) Estimated for purposes of computing the registration fee pursuant to
Rule 457(c) based upon the average of the high and low prices of the Common
Stock as reported by Nasdaq on September 3, 1998.
PROSPECTUS
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INNODATA CORPORATION
____________________
279,999 Shares of Common Stock
____________________
This Prospectus relates to 279,999 shares of Common Stock, $.01 par value,
(the "Shares") of which 166,666 shares are issuable pursuant to the 1996 Stock
Option Plan (the "Plan") of Innodata Corporation (the "Company") and 113,333
shares issuable pursuant to options ("Options") granted to the Company's
President and CEO upon commencement of employment. Any shares which are offered
will be offered for the respective accounts of the Selling Shareholders. This
Prospectus does not relate to the sale or issuance by the Company of any
securities. The Company will not receive any proceeds from the sale of the
Shares by the Selling Shareholders. The Company will receive proceeds at the
respective exercise prices upon exercise of the options.
The Company has been advised by the Selling Shareholders that there are no
underwriting arrangements with respect to the sale of the Shares, that the
Shares will be sold from time to time in brokerage transactions at then
prevailing prices and in private transactions at negotiated prices, and that
usual and customary brokerage fees will be paid by the Selling Shareholders in
connection therewith.
The Company's Common Stock is traded on the Nasdaq SmallCap Market under
the symbol INOD. On September 3, 1998 the closing price for the Company's Common
Stock as reported by Nasdaq was $4.00 per share.
____________________
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 4
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE
THE PRICE TO PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO
SELLING SHAREHOLDERS ARE NOT DETERMINABLE AT THIS TIME.
THE DATE OF THIS PROSPECTUS IS , 1998
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports and other information may be inspected at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices: Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois; Seven
World Trade Center - 13th Floor, New York, New York; and Suite 500, 5757
Wilshire Boulevard, Los Angeles, California. Copies of such materials may be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, the Commission
maintains a website (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding electronic filings with
the Commission.
The Company undertakes to provide without charge to each person to whom
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any and all of the information that has been incorporated by reference
in the Prospectus (not including exhibits to the information that is
incorporated by reference unless such exhibits are specifically incorporated by
reference into the information that the Prospectus incorporates). Such request
should be directed to the Secretary, Innodata Corporation, 95 Rockwell Place,
Brooklyn, New York 11217.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION TO ANY PERSON TO
WHOM SUCH OFFER WOULD BE UNLAWFUL OR AN OFFERING OF ANY SECURITIES OTHER THAN
THE REGISTERED SECURITIES TO WHICH IT RELATES. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER AT ANY TIME SHALL IMPLY THAT THE
INFORMATION PROVIDED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THE COMPANY
INNODATA CORPORATION (the "Company") was incorporated in Delaware in June
1988, maintains its executive offices in New York City and employs a work force
in other locations in the U.S. and approximately 2,500 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 and data capture and conversion to enable its customers to publish
vast amounts of information via the Internet and on-line. Innodata's customers
represent an array of major secondary 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 intends to utilize its labor force to perform such additional
tasks in the high-tech information and related industries as may be economically
performed by large labor forces at competitive wage rates. As technology
develops in these industries, the Company will seek to employ persons with
advanced skills to exploit these areas of opportunity. At the same time, the
Company intends to diminish or eliminate areas of its business which may become,
or may be rendered, less important or obsolete by advancing technology. The
Company may also seek to establish and operate labor forces in additional
countries for work in these and related fields.
The executive offices of the Company are located at 56 Pine Street, New
York, New York 10005. Its telephone number is 212-277-9900. 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 COMMON STOCK INVOLVES A HIGH DEGREE OF RISK AND SHOULD
BE MADE ONLY BY INVESTORS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
PROSPECTIVE PURCHASERS, PRIOR TO MAKING AN INVESTMENT IN THE SECURITIES, SHOULD
CAREFULLY CONSIDER, ALONG WITH OTHER MATTERS REFERRED TO HEREIN, THE FOLLOWING
RISK FACTORS AND SHOULD CONSULT WITH THEIR OWN LEGAL, TAX AND FINANCIAL ADVISORS
WITH RESPECT THERETO.
Reliance on Foreign Operations.
- ----------------------------------
Most of the Company's operations take place in the Philippines, India and
Sri Lanka. The majority of the Company's fixed assets are at these locations.
The Company is 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 the Company's operations and
financial condition, or could have a significant adverse impact on the Company's
ability to perform and deliver its services on a competitive and timely basis.
Political Risks.
- -----------------
While the political situation currently appears to be stable, the Company's
operations may be adversely affected by political instability in its foreign
locations. Political instability could also change the current satisfactory
legal environment for the Company through the imposition of restrictions on
foreign ownership, repatriation of funds, adverse labor laws, and the like.
Moreover, even if political conditions were stable, other factors could cause
legal wage rates to be increased.
Risks of Power Failures and Natural Disasters.
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Frequent power outages occur in the Philippines and India which have lasted
for as long as eight hours per day. The Company's facilities are equipped with
standby generators to produce electric power during such power failures but the
general impact of such power failures outside the Company's offices may still be
very disruptive to the Company's overall operations. There can be no assurance
that municipal power production capacity will not remain adequate, or
deteriorate further, with the result that the Company's operations could be
adversely affected. The Philippines is subject to relatively frequent
earthquakes, volcanic eruptions, floods and other natural disasters, which may
disrupt the Company's operations.
Customer Perception of Political and Natural Risks.
- ---------------------------------------------------------
While the Company has not experienced any material disruptions in its
ability to service its customers from its foreign locations, frequent adverse
news coverage about conditions could lead to hesitancy on the part of customers
to employ the Company's services there. There can be no assurance that
continued or renewed adverse news coverage will not reduce the Company's sales
even if the conditions being reported do not actually impede the Company's
operations.
Currency Fluctuation and Inflation.
- --------------------------------------
The Company funds its foreign operations through the transfer of dollars
from the United States. The Company generally remits funds to its foreign
operations only as needed and does 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 the Company's operations and financial condition.
Year 2000.
- -----------
The Company has initiated a program to prepare computer systems and
applications for the Year 2000. The Company expects to incur internal staff
costs as well as consulting and other expenses related to infrastructure and
facilities enhancements necessary to prepare the systems for the Year 2000. A
portion of such costs are not likely to be incremental costs to the Company, but
rather will represent the redeployment of existing information technology
resources. The Company is also communicating with customers and suppliers with
whom it conducts business to help identify and resolve the Year 2000 issue. It
is possible that if all aspects of the Year 2000 issues are not adequately
resolved by these parties, the Company's future business operations and, in
turn, its financial position and results of operations could be negatively
impacted. Management has not yet quantified the Year 2000 compliance and other
related expenses, however, management believes these costs will not have a
material affect on its financial position.
Concentration of Customers.
- -----------------------------
During 1997, 1996 and 1995, one customer that is comprised of twelve
affiliated companies, accounted for 14%, 24% and 29% of the Company's revenues,
respectively. No other customer accounted for 10% or more of the Company's
revenues. Further, in 1997, 1996 and 1995, export revenues, all of which were
derived from European customers, accounted for 22%, 19% and 18%, respectively,
of total revenues.
Competition.
- ------------
The Company's ability to compete favorably is, in significant part,
dependent upon its ability to control costs, react timely and appropriately to
short and long-term trends and competitively price its services. 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 which they can
perform on an economic basis. Major competitors operating in the Philippines
are Saztec Philippines, Inc., Systems and Encoding Corporation (Sencor), Unidata
Corporation, ASEC International Phils., Inc., Equidata Philippines, Inc., Data
Solutions, Inc., Phil Database and Services, Inc. and Direct Data Capture, Ltd.
QHData and Beijing Formax are major competitors that perform work in mainland
China and APEX Data Services, Inc. performs work primarily in India. Saztec
International, Inc., First Image Data Input division of First Financial
Management Corporation and ASEC International, Inc. are the Company's major
competitors with operations in the United States. There are also numerous other
companies worldwide, with a concentration in third world countries (including
India, Mexico, Sri Lanka and the Caribbean Basin) which may be regarded as
competitive with the Company. The Company may also be considered in competition
with customers' and potential customers' in-house personnel who may attempt to
duplicate the Company's services.
The Company makes substantial efforts to maintain the quality of its work
force. The Company also competes on the basis of its perceived proximity to its
customers. Many offshore conversion companies do not maintain a presence
outside of the country in which their production facility is located. While
such companies are compelled to conduct business and service customers through
brokers or via fax and telephone calls, many of the Company's customer related
functions, including sales, delivery of completed data products and customer
service, are performed in the United States.
The Company's scanning conversion services conducted through its Imaging
Services division competes with numerous companies which may have substantially
greater financial, technical and other resources than the Company. 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 which
they can perform on an economic basis. Major national competitors include Wesco
and Docucon. The Company may also be considered in competition with customers'
and potential customers' in-house personnel who may attempt to duplicate the
Company's services.
OCR and Similar Technologies.
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The Company recognizes that optical character recognition ("OCR") or other
technologies could render straight data entry obsolete. OCR involves first
producing an image which is a digital representation of a document and then
using one of many OCR engines to convert that image into a text file
corresponding to the characters on the page. Advances in OCR or other
technologies, such as voice recognition, will increase the relative importance
to the Company of its higher level services such as indexing, abstracting and
photocomposition and developing document management systems, and of
opportunities which will arise as a result of new technologies or other factors.
There can be no assurance that new technological developments will not affect
the Company adversely.
Lack of Patent Protection.
- -----------------------------
The Company has no material proprietary technology or software. As a
result, there are no technological or patent barriers to entry by other
companies into the Company's business.
Broad Discretion in Application of Proceeds
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Management has designated the proceeds from the exercise of options to be
used for general corporate and working capital purposes and they may be expended
at the discretion of the Company's management. The Company has not made any
specific allocations as to the use of any such proceeds. As a result of the
foregoing, any return on investment to investors will be substantially dependent
upon the discretion and judgment of the Company's management with respect to the
application of the net proceeds of the offering.
Pending their use, the net proceeds from the exercise of options may be
invested by the Company in short-term, interest-bearing securities or money
market funds. The Company does not require that any specific minimum investment
criteria be used in selecting such short-term investments, but will select such
investments as it deems appropriate, taking into consideration such factors as
liquidity, return on and safety of investment. See "Use of Proceeds".
Shares Eligible for Future Sale.
- ------------------------------------
394,730 shares of the Company's 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.
Issuance of Preferred Stock
- ------------------------------
The Board of Directors has the authority to issue up to 5,000,000 shares of
Preferred Stock, $.01 par value per share, in one or more series and to fix the
number of shares constituting any such series, the voting powers, designation,
preferences and relative participation, optional or other special rights and
qualifications, limitations or restrictions thereof, including the dividend
rights and dividend rate, terms of redemption (including sinking fund
provisions), redemption price or prices, conversion rights and liquidation
preferences of the shares constituting any series, without any further vote or
action by the stockholders. The issuance of Preferred Stock by the Board of
Directors could affect the rights of the holders of Common Stock. For example,
such issuance could result in a class of securities outstanding that would have
preferential voting, dividend, and liquidation rights over the Common Stock, and
could (upon conversion or otherwise) enjoy all of the rights appurtenant to the
shares of Common Stock. The authority possessed by the Board of Directors to
issue Preferred Stock could potentially be used to discourage attempts by others
to obtain control of the Company through merger, tender offer, proxy contest or
otherwise by making such attempts more difficult or costly to achieve. The
Board of Directors may issue the Preferred Stock without stockholder approval
and with voting and conversion rights which could adversely affect the voting
power of holders of Common Stock. There are no agreements or understandings for
the issuance of Preferred Stock and the Board of Directors has no present
intention to issue Preferred Stock.
Continued Listing Requirements for Nasdaq Securities; Penny Stock Rules
- -------------------------------------------------------------------------------
While the Common Stock is presently listed on the Nasdaq SmallCap Market,
there can be no assurance that the Company will continue to meet the maintenance
criteria for continued listing of its 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 the Company will
continue to satisfy these criteria. If the Company became unable to meet the
continued listing criteria of the Nasdaq SmallCap Market and became delisted
therefrom, trading, if any, in the 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 the Company's 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.
No Dividends.
- --------------
The Company has not paid any cash dividends since its inception and does
not anticipate paying any cash dividends in the foreseeable future. There can
be no assurance that the operations of the Company will result in sufficient
earnings to enable the Company to pay dividends. It is anticipated that
earnings, if any, will be used to finance the Company's growth.
USE OF PROCEEDS
Management has designated the proceeds from options to be issued and, 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. The Company
has not made any specific allocations as to the use of any such proceeds.
The Company may, when and if the opportunity arises, acquire other
businesses which are in some manner related to the Company's business. If such
an opportunity arises, the Company may use a portion of its funds for that
purpose. The Company has no specific arrangements with respect to any such
acquisition at the present time and is not presently involved in any
negotiations with respect to any such acquisition. There can be no assurance
that any acquisition will be made.
Prior to expenditure, the net proceeds will be invested in short-term,
interest bearing securities or money market funds. The Company does not require
that any specific minimum investment criteria be used in selecting such
short-term investments, but will select such investments as it deems
appropriate, taking into consideration such factors as liquidity, return on and
safety of investments.
MATERIAL DEVELOPMENTS
Since the Company's most recent filing of its Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1997 and subsequent filing of its Form
10-QSB for the quarter ended June 30, 1998, no material developments have
occurred.
SELLING SHAREHOLDERS
The securities covered by the Plan and Options not granted pursuant to any
Plan are being offered on behalf of a number of employees, officers, directors
and consultants of the Company. The list below sets forth the current officers
and directors on whose behalf securities are being offered hereby. Unless
otherwise indicated, the addresses for all of the Selling Shareholders is 56
Pine Street, New York, NY 10005.
SECURITIES SECURITIES
OWNED SECURITIES OWNED
NAME AND BEFORE TO BE AFTER
ADDRESS OFFERING(1) SOLD OFFERING(4)
Barry Hertz (2) 231,548 14,000 217,548
Todd Solomon 190,482 10,500 179,982
Jack Abuhoff 132,833 123,833 9,000
Martin Kaye 13,833 10,500 3,333
Stephen Agress 16,000 16,000 -0-
William Schieffelin 4,000 4,000 -0-
Jurgen Tanpho 16,000 16,000 -0-
Dr. Albert Drillick (3) 5,003 850 4,153
Morton Mackof (3) 5,003 850 4,153
<FN>
(1) Includes shares issuable upon the exercise of all outstanding options
pursuant to the 1996 Stock Option Plan, and as to Mr. Abuhoff, options granted
without a Plan, including those options which are not presently exercisable.
Shares issuable under options are owned beneficially but not of record. Does
not include presently exercisable options to purchase the Company's Common Stock
pursuant to other Stock Option Plans, or other exercisable options held.
(2) Includes 214,748 shares owned by Track Data Corporation, of which Mr.
Hertz is the majority stockholder and 2,800 shares held in a pension plan for
the benefit of Mr. Hertz.
(3) Includes 4,153 shares held in the Track Data Phantom Unit Trust to be
released upon termination of association with the Company or Track Data
Corporation, or earlier with approval of the Track Data Board of Directors.
(4) The percentage of securities owned after offering, assuming no sales
other than by the respective individuals, is 14.6% and 12.1% for Messrs. Hertz
and Solomon, respectively.
PLAN OF DISTRIBUTION
The shares are being offered for the respective accounts of the Selling
Shareholders. The Company will not receive any proceeds from the sale of any
Shares by the Selling Shareholders. The Company will receive proceeds from the
exercise prices of any options which are exercised by the Selling Shareholders.
The sale of Shares by the Selling Shareholders may be effected from time to
time in brokerage transactions, in negotiated transactions, through the writing
of options on the Shares, or through a combination of such methods of sale, at
fixed prices, which may be charged at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders and/or the purchasers of the Shares for which such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary compensation).
The Selling Shareholders and any broker-dealers who act in connection with
the sale of the shareholders hereunder may be deemed to be "underwriters" within
the meaning of section 2(11) of the Securities Act, and any commissions received
by them and profit on any sale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
EXPERTS
The financial statements incorporated in this Prospectus by reference from
the Company's Annual Report on Form 10-KSB for the year ended December 31, 1997
have been audited by Grant Thornton LLP, independent auditors, and as to 1996
and 1995 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, 1997,
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 June 30, 1998,
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.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS
The Company's Certificate of Incorporation includes a provision that
eliminates or limits the personal financial liability of the Company's
directors, except in situations where there has been a breach of the director's
duty of loyalty to the Company or its stockholders, acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, liability under Section 174 of the Delaware General Corporation Law
relative to unlawful payment of dividends, stock purchases or redemptions, or
any transaction from which the director derived an improper personal benefit. In
addition, under its Certificate of Incorporation and By-Laws as well as under
separate agreements, the Company is required to indemnify its officers and
directors to the fullest extent permitted by law.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed 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.
FURTHER INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement on Form S-8 under the Securities Act
of 1933, as amended, with respect to the securities offered by this Prospectus.
This Prospectus omits certain information contained in the Registration
Statement, as permitted by the rules and regulations of the Securities and
Exchange Commission. For further information, reference is made to the
Registration Statement which may be examined without charge at the Washington,
D.C. office of the Commission and copies of all or any part thereof may be
obtained from the Commission's office in Washington, D.C. upon payment of the
Commission's charge for copying. Statements contained in this Prospectus as to
the contents of any contract or other document which is an exhibit to the
Registration Statement, each such statement is deemed to be qualified and
amplified in all respects by the provisions of the exhibit.
INNODATA CORPORATION
279,999 SHARES OF COMMON STOCK
--------------------
PROSPECTUS
--------------------
, 1998
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 REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
--------------------------------------------
See "Incorporation of Certain Information by Reference."
ITEM 4. Description of Securities.
----------------------------
Not Applicable.
ITEM 5. Interests of Named Experts and Counsel.
--------------------------------------------
See "Legal Matters."
ITEM 6. 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 7. Exemption from Registration Claimed. Not Applicable.
---------------------------------------
ITEM 8. Exhibits.
---------
(5) Opinion of Oscar D. Folger as to legality
(24)(a) Consent of Oscar D. Folger (included in Exhibit 5)
(24)(b) Consent of Grant Thornton LLP
(24)(c) Consent of Margolin, Winer & Evens LLP
(28) Form of 1996 Stock Option Plan (1)
(1) Incorporated by reference to the Company's Proxy Statement for its
Annual Meeting of Stockholders on November 7, 1996.
ITEM 9. Undertakings.
-------------
The undersigned registrant hereby undertakes:
A. To file, during any period in which offers or sales are being made,
a post-effective amendment of this Registration Statement:
(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 which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) To include any additional or changed material information on the
plan of distribution.
Provided, however, that paragraphs (A)(i) and (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.
D. The undersigned registrant hereby undertakes that for purposes of
determining any liability under the Securities Act of 1933, each filing of
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 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.
E. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registant pursuant to any charter provisions, by-laws, contract,
arrangements, statute 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 such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit, or proceeding) is asserted by such director, officer or
controlling person in connection with with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by a 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-8 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 3rd day of
September 1998.
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
- ----------------------- ------------------------------- -----------------
/s/ Chairman of the Board September 3, 1998
- -----------------------
Barry Hertz
/s/ Vice Chairman of the Board September 3, 1998
- -----------------------
Todd Solomon
/s/ President, Chief Executive September 3, 1998
- ----------------------- Officer and Director
Jack Abuhoff
/s/ Executive Vice President September 3, 1998
- ----------------------- (Principal Financial Officer)
Martin Kaye and Director
/s/ Director September 3, 1998
- -----------------------
Dr. Albert Drillick
/s/ Director September 3, 1998
- -----------------------
Dr. E. Bruce Fredrikson
/s/ Director September 3, 1998
- -----------------------
Morton Mackof
/s/ Director September 3, 1998
- -----------------------
Stanley Stern
EXHIBIT 24(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 279,999 shares
of its common stock, $.01 par value (the "Shares") which are issuable under the
Company's 1996 Stock Option Plan (the "Plan") and 113,333 shares issuable
pursuant to options ("Options") granted to the Company's President and CEO upon
commencement of employment. All of the Shares are the subject of a Registration
Statement on Form S-8 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
September 3, 1998
EXHIBIT 24(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated March 4, 1998 accompanying the consolidated
financial statements included in the Annual Report of Innodata Corporation on
Form 10-K for the year ended December 31, 1997. We hereby consent to the
incorporation by reference of said report in the Registration Statement of
Innodata Corporation on Form S-8 and to the use of our name as it appears under
the caption "Experts."
GRANT THORNTON LLP
New York, New York
September 3, 1998
EXHIBIT 24(c)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of Innodata Corporation on Form S-8 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, 1997 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
September 3, 1998