As filed with the Securities and Exchange Commission on June 7, 2001
Registration No. 333-52450
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INTERNET COMMERCE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3645702
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
805 Third Avenue
New York, New York 10022
(212) 271-7640
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive office)
G. MICHAEL CASSIDY
President and Chief Executive Officer
INTERNET COMMERCE CORPORATION
805 Third Avenue
New York, New York 10022
(212) 271-7640
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copy to:
PETER S. KOLEVZON, ESQ.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022-3903
(212) 715-9100
--------------------
Approximate date of commencement of proposed sale to the public: at such
time or times after the effective date of this Registration Statement as the
selling stockholders may determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. | |
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reimbursement plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. | |
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. | |
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. | |
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------
Title of each class Amount Proposed Proposed maximum Amount
of securities to be to be maximum offering aggregate offering of registration
registered registered (1) price per share (2) price (2) fee (2)
- -----------------------------------------------------------------------------------------------------------
Class A Common Stock,
par value $.01 per share 2,590,386 $ 3.145 $ 8,146,764 $ 2,150.75
- -----------------------------------------------------------------------------------------------------------
(1) Includes shares of class A common stock that are issuable upon exercise of
warrants.
(2) The proposed maximum aggregate offering price was estimated solely to
calculate the registration fee under Rule 457(c) of the Securities Act of
1933, as amended, based upon the average of the highest and lowest prices
per share of the class A common stock on the Nasdaq National Market
reported on June 4, 2001. A filing fee of $2,126.81 was previously paid in
connection with the filing of the Company's Registration Statement on Form
S-3 filed December 21, 2000.
The information in this prospectus is not complete and may be changed. The
selling securityholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION DATED JUNE 7, 2001
PROSPECTUS
INTERNET COMMERCE CORPORATION
o This prospectus relates to the public offering from time to time by the
persons listed on page 15 below, referred to in this prospectus as selling
stockholders, of up to 2,590,386 shares of our class A common stock.
o Our class A common stock is traded on the Nasdaq National Market under the
symbol ICCA. On June 6, 2001, the last sale price for the class A common
stock was $3.24.
o Any selling stockholder may sell the class A common stock on the Nasdaq
National Market or in privately negotiated transactions, whenever he
decides and at the price he sets. The price at which any of the shares of
class A common stock are sold and the commissions paid, if any, may vary
from transaction to transaction. We will not receive any proceeds from the
sale of these shares.
o We filed a registration statement on form S-3 (file no. 333-80043) which
became effective on October 18, 1999 covering the resale of up to
5,476,280 shares of our class A common stock, of which 798,357 shares have
not been sold as of the date of this prospectus.
o We filed a registration statement on form S-3 (file no. 333-93301) which
became effective on March 1, 2000 covering the resale of up to 955,289
shares of our class A common stock, of which 212,854 shares have not been
sold as of the date of this prospectus.
o In connection with our acquisition of Intercoastal Data Corporation, or
IDC, we filed a registration statement on form S-3 (file no. 333-45868)
which became effective on December 7, 2000 covering the resale of up to
238,579 shares of our class A common stock, none of which have been sold
as of the date of this prospectus.
o This investment involves a high degree of risk. You should carefully
consider the risk factors beginning on page 4 of this prospectus before
you decide to invest.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is June __, 2001
TABLE OF CONTENTS
Page
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Risks Relating to ICC................................................ 4
Risks Relating to the Internet and Online
Commerce Aspects of our Business .................................... 8
Risks Relating to this Offering...................................... 9
Forward-Looking Statements................................................. 11
Use of Proceeds............................................................ 11
Business................................................................... 12
Selling Stockholders....................................................... 13
Plan of Distribution....................................................... 16
Description of Securities.................................................. 17
Legal Matters.............................................................. 23
Experts.................................................................... 23
Where You Can Find More Information........................................ 24
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus. This summary may not contain all of the information that you should
consider before purchasing shares of our class A common stock. You should read
the entire prospectus carefully, including Risk Factors commencing on page 4,
before making an investment decision.
Internet Commerce Corporation, or ICC
Internet Commerce Corporation is a leader in the e-commerce, or EC,
business-to-business communication services market. ICC.NET, our global
Internet-based value added network, or VAN, provides complete supply chain
connectivity solutions for electronic data interchange, or EDI, and e-commerce
and offers users a sophisticated vehicle to securely send and receive files of
any format and size. ICC offers a broad range of consulting services, including
XML technologies, data transformations, custom application development, an EDI
service bureau and comprehensive e-commerce education. ICC bridges the legacy
investments of yesterday to today's Internet technologies.
The Offering
Class A common stock offered
by the selling stockholders...................................2,590,386 shares
Class A common stock to be
outstanding after the offering............................9,704,180 shares (1)
Nasdaq National Market symbol.............................................ICCA
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(1) This information is based on the number of shares of class A common stock
(including restricted stock) outstanding on June 6, 2001. It includes all
of the shares of class A common stock being offered by this prospectus by
the selling stockholders. It excludes (a) 2,214,503 shares of class A
common stock issuable upon exercise of warrants or upon conversion of
series A convertible redeemable preferred stock, series C convertible
redeemable preferred stock and class B common stock outstanding on that
date and (b) 6,578,734 shares then issuable under outstanding options or
reserved for issuance under our stock option plans.
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RISK FACTORS
You should carefully consider each of the following risk factors in
addition to the other information contained in this prospectus before purchasing
shares of our class A common stock. Investing in our class A common stock
involves a high degree of risk. Any of the following risks could materially and
adversely affect our business, operating results, financial condition and the
market price of our class A common stock and could result in the complete loss
of your investment.
Risks Relating to ICC
We have a limited operating history and there is insufficient historical
information to determine whether we will successfully implement any of our
business strategies. We were founded in November 1991 under the name Infosafe
Systems, Inc. and from 1991 to 1997 we conducted limited operations and
developed certain products that we were unable to exploit commercially and
consequently discontinued. In 1997, we shifted our business emphasis to focus
exclusively on the development and marketing of our ICC.NET service, formerly
known as our CommerceSense(R) service, and changed our name to Internet Commerce
Corporation in September 1998 to reflect this shift. In the fourth quarter of
fiscal year 1999, we became an operating company and were no longer considered a
development stage company. We launched the current version of our ICC.NET
service commercially in April 1999. As a result, we have only a limited
operating history and there is little historical information on which to
evaluate our business and prospects. We may not be successful in implementing
any of our business strategies.
We have never earned a profit and expect to incur significant losses. We
have incurred significant losses since we were founded in 1991. We have never
earned a profit in any fiscal quarter and, as of January 31, 2001, we had an
accumulated deficit of approximately $46.4 million. We expect our cost of
revenue and operating expenses to increase significantly, especially in the
areas of marketing, customer installation and customer service. As a result, we
expect to incur additional losses in the future.
We may not achieve profitability. The profit potential of our business
model is unproven. Our revenue is dependent on the number of customers who
subscribe to our ICC.NET VAN service and the volume of the data, documents or
other information they send or retrieve utilizing this service. The success of
our ICC.NET VAN service and our other proposed services depends to a large
extent on the future of business-to-business electronic commerce using the
Internet, which is uncertain. In addition, we expect our expenses to increase,
especially in the areas of sales and marketing. As a result, we expect to incur
additional losses in the future. If we experience a shortfall in our estimated
revenue, we may be unable to adjust spending in a timely manner and may not
achieve profitability.
We currently depend primarily on our ICC.NET service and may not be able
to continue to expand into new business areas. We are currently focusing on our
ICC.NET service and as a result, our revenue for the foreseeable future is
almost entirely dependent on the success of this service, including, but not
limited to, the number of customers who subscribe to the service and the volume
(in kilocharacters) of the data, documents or other information they
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send or retrieve utilizing our service and revenue derived from our acquisitions
of Research Triangle Commerce, Inc., or RTCI, and IDC. We expect our expenses to
increase, especially in the areas of sales and marketing. We will need to
generate significant revenue to achieve and maintain profitability. If we do not
increase our revenue significantly, we will continue to be unprofitable.
We are expanding our operations by developing and marketing new and
complementary services using our ICC.NET service as a platform to provide these
additional services or systems. We cannot assure you that we will be able to
continue to do so effectively.
If we are unable to obtain necessary future capital, our business will
suffer. As of January 31, 2001, we had unrestricted cash in the amount of
approximately $6.7 million, which will not be sufficient if achieving
profitability takes longer than we anticipate. If we are unable to obtain
necessary additional financing, our business will suffer and we may be unable to
continue our operations. In addition, we may need to raise additional funds if
we attempt to expand more rapidly or if competitive pressures or technological
changes are greater than anticipated. We cannot assure you that any additional
financing will be available on reasonable terms or at all.
Raising additional funds in the future by issuing securities could
adversely affect our stockholders and negatively impact our operating results.
If we raise additional funds through the issuance of debt securities, the
holders of the debt securities will have a claim to our assets that will have
priority over any claim of our stockholders. The interest on these debt
securities would increase our costs and negatively impact our operating results.
If we raise additional funds through the issuance of class A common stock or
securities convertible into or exchangeable for class A common stock, the
percentage ownership of our then-existing stockholders will decrease and they
may experience additional dilution. In addition, any convertible or exchangeable
securities may have rights, preferences and privileges more favorable to the
holders than those of the class A common stock.
If we are unable to manage our growth, our financial results will suffer.
Our ability to implement our business plan successfully in a new and
rapidly-evolving market requires effective planning and growth management. If we
cannot manage our anticipated growth effectively, our business and financial
results will suffer. We expect that we will need to continue to manage and to
expand multiple relationships with customers, Internet service providers and
other third parties. We also expect that we will need to continue to improve our
financial systems, procedures and controls and will need to expand, train and
manage our workforce, particularly our information technology staff.
We may face capacity constraints which impede our revenue growth and
business profitability. The satisfactory performance, reliability and
availability of our network infrastructure, customer support and document
delivery systems and our web site are critical to our reputation and our ability
to attract customers and maintain adequate customer service levels. Any
significant or prolonged capacity constraints could prevent customers from
sending or gaining access to their documents or other data or accessing our
customer support services for extended periods of time. This would decrease our
ability to acquire and retain customers and prevent us from achieving the
necessary growth in revenue to achieve profitability. If the
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amount of traffic increases substantially and we experience capacity
constraints, we will need to expand further and upgrade our technology and
network infrastructure. We may be unable to predict the rate or timing of
increases in the use of our services to enable us to upgrade our operating
systems in a timely manner.
If we do not keep pace with rapid technological changes, customer demands
and intense competition, we will not be successful. Our market is characterized
by rapidly changing technology, customer demands and intense competition. If we
cannot keep pace with these changes, our ICC.NET service could become
uncompetitive and our business will suffer. The Internet's recent growth and the
intense competition in our industry require us to continue to develop strategic
business and Internet solutions that enhance and improve the customer service
features, functions and responsiveness of our ICC.NET VAN and other proposed
services and that keep pace with continuing changes in information technology
and customer requirements. If we are not successful in developing and marketing
enhancements to our ICC.NET VAN service or other proposed services that respond
to technological change or customer demands, our business will suffer.
We may not be able to compete effectively in the business-to-business
electronic commerce market, which could limit our market share and harm our
financial performance. The business-to-business electronic commerce industry is
evolving rapidly and is intensely competitive. If we are not able to compete
effectively against our current and future competitors, we may lose customers,
may need to lower our prices, may experience reductions in gross margins,
increases in marketing costs or losses in market share, or may experience a
combination of these problems, and, as a result of any of the foregoing, our
business will suffer.
Many of our current and potential competitors have significant existing
customer relationships and vastly larger financial, marketing, customer support,
technical and other resources than we do. As a result, they may be able to
respond more quickly to changing technology and changes in customer requirements
or be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to potential
customers and employees, or be able to devote greater resources to the
development, promotion and sale of their services than we can. As a result, we
may not be successful in competing against our competitors.
Our principal competitors include: Peregrine Systems, Inc., GE Global
eXchange Services, a subsidiary of GE Information Services, Inc., International
Business Machines Corporation Global Services, Sterling Commerce, Inc., a
subsidiary of SBC Communications Inc., AT&T Corp. and WorldCom, Inc. Each of
these competitors has an established VAN that has provided EDI for at least
several years and has long-established relationships with the users of EDI,
including many of our prospective customers.
If we are successful in utilizing our ICC.NET platform to provide new
services, we may enter into different markets and may face the same or
additional competitors, most of which will have substantially greater financial
and other resources than we do.
If we cannot successfully expand our business outside of the United
States, our revenues and operating results will be adversely affected. Our
current and future customers
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are conducting their businesses internationally. As a result, an important
component of our business strategy is to expand our international marketing and
sales efforts and if we do not successfully expand our business in this way, we
may lose current and future customers. Although we have established alliances
with Cable & Wireless and ThyssenKrupp to sell our service in certain foreign
markets, we cannot predict their success. In addition, our potential new service
offerings may involve delivery of data and use of the Internet in other
countries which currently have or may enact laws or regulations that restrict
our ability to deliver data or use the Internet or that impose significant taxes
for doing so. Loss of customers and restrictions on delivery of data and use of
the Internet will adversely affect our business, operating results and financial
condition.
If we cannot hire and retain highly qualified employees, our business and
financial results will suffer. We are substantially dependent on the continued
services and performance of our executive officers and other key employees.
Competition for employees in our industry is intense. If we are unable to
attract, assimilate and retain highly qualified employees, our management may
not be able to effectively manage our business, exploit opportunities and
respond to competitive challenges and our business and financial results will
suffer. Many of our competitors may be able to offer more lucrative compensation
packages which include stock options and other stock-based compensation and
higher-profile employment opportunities than we can.
We depend on our intellectual property, which may be difficult and costly
to protect. Other than our decryption/logging/branding patent, our intellectual
property consists of proprietary or confidential information that is not
currently subject to patent or similar protection. CommerceSense, ICC.NET and
B2B4B2C have been registered as trademarks. The applications to register AUDINET
and B to B for B to C have now been allowed as trademarks and await
registration. We intend to apply for additional name and logo marks in the
United States and in foreign jurisdictions. No assurance can be given that
registrations will be issued on the non-allowed applications or that interested
third parties will not petition the United States Patent and Trademark Office to
cancel our registration. We may not be able to protect these trademarks. If our
competitors or others adopt product or service names similar to ICC.NET, it may
impede our ability to build brand identity and customer loyalty. We may need to
file lawsuits to defend the validity of our intellectual property rights and
trade secrets, or to determine the validity and scope of the proprietary rights
of others. Litigation is expensive and time-consuming and could divert
management's attention away from running our business.
The validity, enforceability and scope of protection of some types of
proprietary rights in Internet-related businesses are uncertain and still
evolving. If unauthorized third parties try to copy our service or our business
model or use our confidential information to develop competing services, we may
lose customers and our business could suffer. We may not be able to effectively
police unauthorized use of our technology because policing is difficult and
expensive. In particular, the global nature of the Internet makes it difficult
to control the ultimate destination or security of software or other data
transmitted. The laws of other countries may not adequately protect our
intellectual property.
Intellectual property infringement claims against us could harm our
business. Our business activities and our ICC.NET service may infringe upon the
proprietary rights of others
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and other parties may assert infringement claims against us. Any such claims and
any resulting litigation could subject us to significant liability for damages
and could result in invalidation of our proprietary rights. We could be required
to enter into costly and burdensome royalty and licensing agreements, which may
not be available on terms acceptable to us, or may not be available at all.
We may suffer systems failures and business interruptions which would harm
our business. Our success depends in part on the efficient and uninterrupted
operation of our service that is required to accommodate a high volume of
traffic. Almost all of our network operating systems are located at the
Securities Industry Automation Corporation, or SIAC. SIAC runs all computing
operations for the New York Stock Exchange and the American Stock Exchange. Our
systems are vulnerable to events such as damage from fire, power loss,
telecommunications failures, break-ins and earthquakes. This could lead to
interruptions or delays in our service, loss of data or the inability to accept,
transmit and confirm customer documents and data. Our business may suffer if our
service is interrupted. Although we have implemented network security measures,
our servers may be vulnerable to computer viruses, electronic break-ins,
attempts by third parties deliberately to exceed the capacity of our systems and
similar disruptions.
Risks Relating to the Internet and Online Commerce Aspects of Our Business
If Internet usage does not continue to grow or its infrastructure fails,
our business will suffer. If the Internet does not gain increased acceptance for
business-to-business electronic commerce, our business will not grow or become
profitable. We cannot be certain that the infrastructure or complementary
services necessary to maintain the Internet as a useful and easy means of
transferring documents and data will continue to develop. The Internet
infrastructure may not support the demands that growth may place on it and the
performance and reliability of the Internet may decline.
Privacy concerns may prevent customers from using our services. Concerns
about the security of online transactions and the privacy of users may inhibit
the growth of the Internet as a means of delivering business documents and data.
We may need to incur significant expenses and use significant resources to
protect against the threat of security breaches or to alleviate problems caused
by security breaches. We rely upon encryption and authentication technology to
provide secure transmission of confidential information. If our security
measures do not prevent security breaches, we could suffer operating losses,
damage to our reputation, litigation and possible liability. Advances in
computer capabilities, new discoveries in the field of cryptography or other
developments that render current encryption technology outdated may result in a
breach of our encryption and authentication technology and could enable an
outside party to steal proprietary information or interrupt our operations.
Failure of our third-party providers to provide adequate Internet and
telecommunications service could result in significant losses of revenue. Our
operations depend upon third parties for Internet access and telecommunications
service. Frequent or prolonged interruptions of these services could result in
significant losses of revenues. Each of them has experienced outages in the past
and could experience outages, delays and other difficulties due to system
failures unrelated to our on-line architecture. These types of occurrences could
also
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cause users to perceive our services as not functioning properly and therefore
cause them to use other methods to deliver and receive information. We have
limited control over these third parties and cannot assure you that we will be
able to maintain satisfactory relationships with any of them on acceptable
commercial terms or that the quality of services that they provide will remain
at the levels needed to enable us to conduct our business effectively.
Government regulation and legal uncertainties relating to the Internet
could harm our business. Changes in the regulatory environment in the United
States and other countries could decrease our revenues and increase our costs.
The Internet is largely unregulated and the laws governing the Internet remain
unsettled, even in areas where there has been some legislative action. It may
take years to determine whether and how existing laws such as those governing
intellectual property, privacy and taxation apply to the Internet. In addition,
because of increasing popularity and use of the Internet, any number of laws and
regulations may be adopted in the United States and other countries relating to
the Internet or other online services covering issues such as:
o user privacy;
o security;
o pricing and taxation;
o content; and
o distribution.
Costs of transmitting documents and data could increase, which would harm
our business and operating results. The cost of transmitting documents and data
over the Internet could increase. We may not be able to increase our prices to
cover these rising costs. Also, foreign and state laws and regulations relating
to the provision of services over the Internet are still developing. If
individual states or foreign countries impose taxes or laws that negatively
impact services provided over the Internet, our cost of providing our ICC.NET
and other services may increase.
Risks Relating to this Offering
Shares eligible for future sale by our existing stockholders may adversely
affect our stock price and may render it difficult to sell class A common stock.
The average weekly trading volume of our class A common stock on The Nasdaq
SmallCap Market was, approximately, 809,100 shares during the quarter ended June
30, 2000 and 270,400 shares for the period from July 1, 2000 to September 19,
2000. Since September 20, 2000, our class A common stock has been traded on the
Nasdaq National Market. The average weekly trading volume of our class A common
stock on the Nasdaq National Market was, approximately, 566,000 shares for the
period from September 22, 2000 to December 31, 2000. The average weekly trading
volume of our class A common stock on the Nasdaq National Market was,
approximately, 284,600 shares for the period from January 1, 2001 to June 1,
2001. On October 18, 1999, our registration statement on form S-3 became
effective. This registration statement covers the sale of up to 5,476,280 shares
of class A common stock by holders of our class A common stock and holders of
our series A preferred stock, class B common stock and warrants that may be
converted into or exchanged for class A common stock, of which 798,357 shares
have not been sold as of the date of this prospectus. On March 1, 2000, another
registration
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statement on form S-3 became effective. This registration statement covers the
sale of up to 955,289 shares of class A common stock by holders of our class A
common stock and by holders of our series A preferred stock and warrants that
may be converted into or exchanged for class A common stock, of which 212,854
shares have not been sold as of the date of this prospectus. In connection with
our acquisition of IDC, we filed a registration statement on form S-3, which
became effective on December 7, 2000, covering the resale of up to 238,579
shares of our class A common stock, none of which have been sold as of the date
of this prospectus. The market price of our class A common stock could be
materially and adversely affected by sales of even a small percentage of these
shares or the perception that these sales could occur.
Our stock price may be extremely volatile and this volatility could affect
your ability to sell your shares of class A common stock at a favorable price.
From January 1, 2001 through June 1, 2001, the price of our class A common stock
has fluctuated from a low of $1.86 to a high of $7.50. The market price of our
class A common stock is likely to fluctuate substantially in the future. In the
past, companies that have experienced volatility in the market price of their
stock have been subject to securities class action litigation. If we were
subject to a securities class action lawsuit, it could result in substantial
costs and a significant diversion of resources, including management time and
attention.
The market for our class A common stock may be illiquid, which would
restrict your ability to sell your shares of class A common stock. Our class A
common stock is currently trading on the Nasdaq National Market. A purchaser of
the shares of class A common stock covered by this prospectus may not be able to
find a buyer for the portion of the shares of class A common stock the purchaser
wishes to sell at an acceptable price. It is possible that the trading market
for the class A common stock in the future will be thin and illiquid, which
could result in increased volatility in the trading prices for our class A
common stock. The price at which our class A common stock will trade in the
future cannot be predicted and will be determined by the market. The price may
be influenced by investors' perceptions of our business, financial condition and
prospects, the use of the Internet for business purposes and general economic
and market conditions.
If we lose our $58 million net operating loss carryforward, our financial
results will suffer. Section 382 of the Internal Revenue Code contains rules
designed to discourage persons from buying and selling the net operating losses
of companies. These rules generally operate by focusing on ownership changes
among stockholders owning directly or indirectly 5% or more of the common stock
of a company or any change in ownership arising from a new issuance of stock by
a company. In general, the rules limit the ability of a company to utilize net
operating losses after a change of ownership of more than 50% of its common
stock over a three-year period. Purchases of our class A common stock in amounts
greater than specified levels could inadvertently create a limitation on our
ability to utilize our net operating losses for tax purposes in the future. We
are currently subject to a limitation on the utilization of our net operating
loss carryforward and we may suffer further limitation as a result of sales of
class A common stock covered by this prospectus.
Our board of directors can issue preferred stock with rights adverse to
the holders of class A common stock. Our board of directors is authorized,
without further stockholder approval, to determine the provisions of and to
issue up to 4,979,825 shares of preferred stock.
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Issuance of preferred shares with rights to dividends and other distributions,
voting rights or other rights superior to the class A common stock could be
adverse to the holders of class A common stock.
We may have to spend significant resources indemnifying our officers and
directors or paying for damages caused by their conduct. The Delaware General
Corporation Law provides for broad indemnification by corporations of their
officers and directors and permits a corporation to exculpate its directors from
liability for their actions. Our bylaws and certificate of incorporation
implement this indemnification and exculpation to the fullest extent permitted
under this law as it currently exists or as it may be amended in the future.
Consequently, subject to this law and to some limited exceptions in our
certificate of incorporation, none of our directors will be liable to us or to
our stockholders for monetary damages resulting from conduct as a director.
FORWARD-LOOKING STATEMENTS
This prospectus contains a number of forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Specifically, all statements other than
statements of historical facts included in this prospectus, or incorporated by
reference in this prospectus, regarding our financial position, business
strategy and plans and objectives of management for future operations are
forward-looking statements. These forward-looking statements are based on the
beliefs of management, as well as assumptions made by and information currently
available to management. When used in this prospectus, including the information
incorporated by reference, the words anticipate, believe, estimate, expect, may,
will, continue, intend and plan and words or phrases of similar import, as they
relate to our financial position, business strategy and plans, or objectives of
management, are intended to identify forward-looking statements. These
cautionary statements reflect our current view regarding future events and are
subject to risks, uncertainties and assumptions related to various factors which
include but may not be limited to those listed under the heading Risk Factors
starting on page 4 and other cautionary statements in this prospectus and in the
information incorporated in this prospectus by reference.
Although we believe that our expectations are reasonable, we cannot assure
you that our expectations will prove to be correct. Based upon changing
conditions, should any one or more of these risks or uncertainties materialize,
or should any underlying assumptions prove incorrect, actual results may vary
materially from those described in this prospectus as anticipated, believed,
estimated, expected, intended or planned. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by these cautionary statements.
USE OF PROCEEDS
The selling stockholders are selling all the shares of class A
common stock covered by this prospectus for their own account. We will not
receive any proceeds from the sale of these shares of class A common stock.
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BUSINESS
Internet Commerce Corporation, or ICC
Business Description
Internet Commerce Corporation is a leader in the e-commerce
business-to-business communication services market that provides complete EC
infrastructure solutions.
Our business operates in three segments. These three segments are:
o ICC.NET (formerly named CommerceSense(TM)) - Our ICC.NET service, the
company's global Internet-based value added network or VAN, uses the Internet
and our proprietary technology to deliver our customers' documents and data
files to members of their trading communities, many of which may have
incompatible systems, by translating the documents and data files into any
format required by the receiver. We believe that our ICC.NET service has
significant advantages over traditional VANs, and email-based and other
Internet-based systems, because our service has lower cost, higher level of
service, greater transmission speed and more features. ICC.NET provides the
following services:
o Traditional VAN services -- our ICC.NET service provides the
full suite of traditional VAN services, but uses the Internet
to provide cost savings and increased capabilities for our
customers;
o EDI for web-based retailers -- our ICC.NET service provides an
electronic document and data file delivery link between
web-based retailers and their vendors that require that
documents and data files be transmitted using electronic data
interchange, or EDI, format;
o EDI to fax service -- our ICC.NET service can translate
electronic documents into fax format and send the documents by
fax to our customers' trading partners that cannot receive
electronically transmitted documents; and
o Large-scale electronic document management and delivery -- our
ICC.NET service can transmit large-scale non-EDI electronic
documents and data files and provides real-time delivery,
archiving, security, authentication and audit services.
o Professional Services - Our professional services segment facilitates
the development and operations of comprehensive business-to-business
e-commerce solutions. We provide the following professional services:
o EC infrastructure solutions by providing mission critical
e-commerce consulting, software, outsourced services,
translation/mapping and technical resource management.
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o On-site and off-site data mapping services to maximize
productivity and efficiency in managing inter-company and
intra-company data transaction requirements.
o A series of product-independent one-day EDI seminars for
e-commerce users. The seminars are hosted by leading
universities and training facilities in the United States. We
also develop in-house EDI training programs.
o Service Bureau - Our service bureau manages and translates the data
of small and mid-sized companies that exchange EDI data with large
companies and provides the following services:
o Receives electronic purchase orders from large retailers and
converts the purchase orders into hard copies for their
suppliers that are our customers.
o Converts paper invoices for our customers into EDI which is
transmitted to the large companies.
o Provides UPC (Universal Product Code ) services for ASN
(Advanced Ship Notice) Casing & UCC (Uniform Code Council) 128
labels.
o Maintains UPC catalogs for its customers allowing the
customers to generate the UPC numbers and tickets for the
items in the UPC catalogs.
Business Strategy
We believe that our ICC.NET service provides a platform with many
applications that will allow our customers to integrate a substantial portion of
their document and data file delivery methods into a single, seamless process
with significantly less administrative effort and cost. We intend to continue to
market ICC.NET to new customers with an increasing focus on industries in which
ICC.NET has enjoyed significant penetration and revenues. Those industries
include book retailing and publishing, pharmaceutical manufacturing, footwear
manufacturing, office supplies and transportation logistics.
Additionally, we will focus on marketing ICC.NET to other members of the
trading communities of our existing customers and we will pursue opportunities
to cross-sell our services to the customers of our several business segments.
The address of our principle executive office is 805 Third Avenue, New York, New
York 10022. Our telephone number at that address is (212) 271-7640.
SELLING STOCKHOLDERS
On November 6, 2000, we acquired RTCI by merger. The selling stockholders
received their shares of class A common stock in exchange for their ownership
interests in RTCI. In addition, warrants to purchase shares of common stock of
RTCI held by certain selling
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stockholders were converted in the RTCI Merger into warrants to purchase an
aggregate of 45,760 shares of ICC class A common stock.
The table below sets forth information, as of June 6, 2001, regarding the
beneficial ownership of the shares of class A common stock by the selling
stockholders. The information regarding the selling stockholders' beneficial
ownership after this offering assumes that all the shares of class A common
stock offered by this prospectus are sold. The presentation is based on
9,659,262 shares of our class A common stock outstanding as of June 6, 2001,
which includes all of the shares of class A common stock being offered by this
prospectus.
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Number of
Shares
Of Class A Class A Common Stock
Common Stock Number of Beneficially Owned
Beneficially Shares of Class A After Offering
Owned Common Stock
Selling Stockholders Before Offering Offered Number Percent
-------------------- --------------- ------- ------ -------
Blue Water Venture Fund II 763,638 763,638 0 *
LLC
Jennifer M. Boyle 1,048 1,048 0 *
Benjamin T. Brooks III 3,048** 3,048** 0 *
Judith A. Butler 1,048 1,048 0 *
Norbert Duttlinger 1,048 1,048 0 *
Louis R. Fattarusso, Jr 699 699 0 *
Joseph T. Freeman 1,048 1,048 0 *
Tammy L. Kinane 262 262 0 *
Jeffrey W. LeRose 1,754,675 1,754,675 0 *
Joanne F. LeRose 10,476 10,476 0 *
Joanne F. LeRose as 1,048 1,048 0 *
Trustee FBO Kaitlin Butler
Joanne F. LeRose as 1,048 1,048 0 *
Trustee FBO Evan Boyle
Joanne F. LeRose as 1,048 1,048 0 *
Trustee FBO Kayla Boyle
Janine K. LeRose 1,048 1,048 0 *
Marion Bass Securities 27,036** 27,036** 0 *
Corporation
Dean C. Paizis 1,048 1,048 0 *
Rene Matthews Usher 14,834** 14,834** 0 *
Kenneth W. Vanderford 5,238 5,238 0 *
Crystal Yannell 1,048 1,048 0 *
- -------------------------
* Less than 1%
** Consists of shares issuable upon exercise of warrants
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PLAN OF DISTRIBUTION
ICC is registering the shares of class A common stock on behalf of the
selling stockholders. As used herein, "selling stockholders" includes donees and
pledgees selling shares of class A common stock received from a named selling
stockholder after the date of this prospectus. We anticipate that the selling
stockholders may sell all or a portion of the shares of class A common stock
offered by this prospectus from time to time on the Nasdaq National Market, on
other securities exchanges or in private transactions, at fixed prices, at
market prices prevailing at the time of sale or at prices reasonably related to
the market price, at negotiated prices, or by a combination of these methods of
sale through:
o ordinary brokerage transactions and transactions in which the broker
solicits purchases;
o sales to one or more brokers or dealers as principal, and the resale by
those brokers or dealers for their account, including resales to other
brokers and dealers;
o block trades in which a broker or dealer will attempt to sell the shares
of class A common stock as agent but may position and resell a portion of
the block as principal to facilitate the transaction; or
o privately negotiated transactions with purchasers.
We are not aware as of the date of this prospectus of any agreements
between the selling stockholders and any broker-dealers regarding the sale of
the shares of class A common stock offered by this prospectus, although we have
made no inquiry in that regard. In connection with distributions of the shares
of class A common stock, the selling stockholders may enter into hedging
transactions with broker-dealers. In connection with these transactions:
o broker-dealers may engage in short sales of the shares of class A common
stock covered by this prospectus in the course of hedging the positions
they assume with selling stockholders;
o the selling stockholders may sell shares of class A common stock short and
deliver the shares of class A common stock offered by this prospectus to
close out their short positions;
o the selling stockholders may enter into option or other transactions with
broker-dealers that require the delivery to the broker-dealer of the
shares of class A common stock offered by this prospectus, which the
broker-dealer may resell according to this prospectus; and
o the selling stockholders may pledge the shares of class A common stock
offered by this prospectus to a broker or dealer and upon a default, the
broker or dealer may effect sales of the pledged shares of class A common
stock according to this prospectus.
The selling stockholders and any broker, dealer or other agent executing
sell orders on behalf of the selling stockholders may be considered to be
underwriters within the meaning of the Securities Act. If so, commissions
received by any of these brokers, dealers or agents and
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profit on any resale of the shares of class A common stock may be considered to
be underwriting commissions under the Securities Act. These commissions received
by a broker, dealer or agent may be in excess of customary compensation.
All costs, fees and expenses of registration incurred in connection with
the offering will be borne by us. All selling and other expenses incurred by the
selling stockholders will be borne by the selling stockholders.
The selling stockholders also may resell all or a portion of the shares of
class A common stock offered by this prospectus in reliance upon Rule 144 under
the Securities Act of 1933, provided that they meet the criteria and conform to
the requirements of that Rule.
We have notified the selling stockholders that they will be subject to
applicable provisions of the Securities Exchange Act of 1934 and its rules and
regulations, including, among others, Rule 102 under Regulation M. These
provisions may limit the timing of purchases and sales of any of the shares of
class A common stock by the selling stockholders. Rule 102 under Regulation M
provides, with some exceptions, that it is unlawful for the selling stockholders
or their affiliated purchasers to, directly or indirectly, bid for or purchase,
or attempt to induce any person to bid for or purchase, for an account in which
the selling stockholders or affiliated purchasers have a beneficial interest,
any securities that are the subject of the distribution during the applicable
restricted period under Regulation M. All of the above may affect the
marketability of the shares of class A common stock. To the extent required by
law, we may require the selling stockholders, and their brokers if applicable,
to provide a letter that acknowledges compliance with Regulation M under the
Exchange Act before authorizing the transfer of the selling stockholders' shares
of class A common stock.
DESCRIPTION OF SECURITIES
The following summary description of the material terms of our capital
stock and warrants is not intended to be complete. Since the terms of our
capital stock must comply with the provisions of our certificate of
incorporation and bylaws, which are included as exhibits to the registration
statement, and the Delaware General Corporation Law, you should read our
certificate of incorporation and bylaws very carefully. The relevant provisions
of our certificate of incorporation and bylaws and the Delaware General
Corporation Law are discussed under the heading Delaware Law and Certificate of
Incorporation and Bylaw Provisions beginning on page 22 of this prospectus.
We have the authority to issue up to 40,000,000 shares of class A common
stock, 2,000,000 shares of class B common stock, 2,000,000 shares of class E-1
common stock, 2,000,000 shares of class E-2 common stock and 5,000,000 shares of
preferred stock, which includes 10,000 shares of series A preferred stock, 175
shares of series S preferred stock and 10,000 shares of series C preferred
stock.
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Common Stock
Class A common stock
As of June 6, 2001, there were 9,659,262 shares of class A common stock
outstanding, held of record by approximately 300 stockholders. Class A common
stock is currently traded on the Nasdaq National Market under the symbol ICCA.
Holders of class A common stock are entitled to one vote per share on all
matters to be voted on by our common stockholders. Subject to the preferences of
the preferred stock, the holders of class A common stock are entitled to a
proportional distribution of any dividends that may be declared by the board of
directors, provided that if any distributions are made to the holders of class A
common stock, identical per-share distributions must be made to the holders of
the class B common stock, even if the distributions are in class A common stock.
In the event of a liquidation, dissolution or winding up of ICC, the holders of
class A common stock are entitled to share equally with holders of the class B
common stock in all assets remaining after liabilities and amounts due to
holders of preferred stock have been paid in full or set aside. Class A common
stock has no preemptive, redemption or conversion rights. The rights of holders
of common stock are subject to, and may be adversely affected by, the rights of
the holders of shares of series A preferred stock, series S preferred stock,
series C preferred stock or any other series of preferred stock that ICC may
designate and issue in the future.
Class B common stock
As of June 6, 2001, there were 2,574 shares of class B common stock
outstanding, held of record by three stockholders.
Class B common stock is convertible into class A common stock on a
one-for-one basis both upon request of the holder of the class B common stock or
automatically upon transfer of the class B common stock to a stockholder that
does not hold any class B common stock before the transfer. Class B common stock
is entitled to six votes per share rather than one vote per share, but in all
other respects each share of class B common stock is identical to one share of
class A common stock.
Preferred Stock
Our certificate of incorporation authorizes our board of directors,
without any approval of our stockholders, to issue up to 5,000,000 shares of
preferred stock from time to time and in one or more series and to fix the
number of shares of any series and the designation, conversion, dividend and
other rights of the series. The board of directors has designated 10,000 shares
of preferred stock as series A preferred stock, 175 shares of preferred stock as
series S preferred stock and 10,000 shares of preferred stock as series C
preferred stock.
Future issuances of preferred stock may have the effect of delaying or
preventing a change in control of ICC. The issuance of preferred stock could
decrease the amount of earnings and assets available for distribution to the
holders of common stock or could adversely affect the rights and powers,
including voting rights, of the holders of our common stock. In some
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circumstances, the issuance of preferred stock could have the effect of
decreasing the market price of our common stock.
Series A preferred stock
As of June 6, 2001, ICC had 525 shares of series A preferred stock
outstanding, held by nine stockholders.
Series A preferred stock is convertible, at the option of the holder, into
class A common stock. Each share of series A preferred stock is convertible into
a number of shares of class A common stock determined by dividing $1,000 by 75%
of the average market price of the class A common stock for the ten trading days
before the conversion date. However,
o if 75% of the average market price is less than $3 per share, the
series A preferred stock provides that 75% of the average market
price will be considered to be $3 per share, which results in a
maximum of 333 shares which may be issued upon conversion of one
share of series A preferred stock; and
o if 75% of the average market price is greater than $5 per share, the
series A preferred stock provides that 75% of the average market
price will be considered to be $5 per share, which results in a
minimum of 200 shares which may be issued upon conversion of one
share of series A preferred stock.
If all of the series A preferred stock were converted on June 6, 2001, 175,000
shares of class A common stock would be issued in this conversion. The minimum
and maximum conversion rates apply even if at the time of conversion the class A
common stock is not traded on the Nasdaq National Market. No fewer than 25
shares may be converted at one time unless the holder then holds fewer than 25
shares and converts all of the holder's shares at that time.
Series A preferred stock is redeemable, in whole or in part, by ICC,
commencing on the third anniversary of the date of issuance. The redemption
price for each share of series A preferred stock is $1,000 plus unpaid
dividends. Notice of redemption must be given 30 days before the redemption
date.
Subject to the rights of stockholders holding any series of ICC preferred
stock that is senior to the series A preferred stock, upon a liquidation,
dissolution or winding up of ICC, the holders of series A preferred stock are
entitled to receive an amount equal to $1,000 per share of series A preferred
stock before any distribution is made to holders of common stock.
The holders of the outstanding shares of series A preferred stock are
entitled to a 4% annual dividend payable in cash or in shares of class A common
stock, at the option of ICC. These dividends are payable on each July 1 and
commenced on July 1, 1999. ICC elected to issue 14,641 shares of class A common
stock in payment of the dividend due on July 1, 1999 and a total of $181,772 in
cash in payment of the dividend due on July 1, 2000. The Board of Directors of
ICC has declared a dividend payable in shares of class A common stock on July 1,
2001.
Series A preferred stock has no voting rights except as expressly required
by law.
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Series S preferred stock
As of July 1, 1999, ICC had no outstanding shares of series S preferred
stock. ICC does not intend to issue any shares of series S preferred stock in
the future.
Series C preferred stock
As of June 6, 2001, ICC had 10,000 shares of series C preferred stock
outstanding, held by one stockholder.
Series C preferred stock is convertible, at the option of the holder, into
class A common stock. Each share of series C preferred stock is convertible into
a number of shares of class A common stock determined by dividing $1,000 by the
conversion price at the date of conversion. The initial conversion price for the
series C preferred stock is $22.34 per share, which is subject to adjustment in
the case of a reclassification, subdivision or combination of ICC's common stock
and upon a consolidation, merger or sale of substantially all of the assets of
ICC.
Series C preferred stock is redeemable, in whole or in part, by ICC,
commencing on the fifth anniversary of the date of issuance. The redemption
price for each share of series C preferred stock is $1,000 plus unpaid
dividends. Notice of redemption must be given not less than fifteen days nor
more than 45 days before the redemption date.
Upon a liquidation, dissolution or winding up of ICC, the holders of
series C preferred stock are entitled to receive an amount equal to $1,000 per
share of series C preferred stock plus unpaid dividends before any distribution
is made to holders of series A preferred stock or common stock.
The holders of the outstanding shares of series C preferred stock are
entitled to a 4% annual dividend payable in cash or in shares of class A common
stock, at the option of ICC. These dividends are payable on each January 1 and
commenced on January 1, 2001.
Each share of series C preferred stock is entitled to a number of votes
equal to the number of whole shares of common stock into which each share of
series C preferred is convertible as of the record date for the determination of
stockholders entitled to vote on any matter submitted to stockholders.
Warrants
As of June 6, 2001, there were 234,140 class A warrants outstanding. Each
class A warrant entitles the holder upon exercise to purchase 1.36891 shares of
class A common stock and one class B warrant, which is described below. Each
class A warrant is exercisable for $29.16 and expires in February 2002.
As of June 6, 2001, there were 263,835 class B warrants outstanding. Each
class B warrant entitles the holder upon exercise to purchase 1.36891 shares of
class A common stock. Each class B warrant is exercisable for $39.23 and expires
in February 2002.
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The class A and class B warrants are traded in the over-the-counter market
on the OTC Bulletin Board. The number of class A and class B warrants and the
exercise prices of the class A and class B warrants are subject to adjustment in
the event of any subdivision or combination of the outstanding class A common
stock, any stock dividend payable in shares of class A common stock paid to
holders of class A common stock, or any sale of any shares of class A common
stock, or of any rights, warrants, options or securities convertible into or
exercisable for class A common stock, for consideration valued at less than the
market price of the class A common stock at that time.
The class A and class B warrants are subject to redemption by ICC, at
$0.25 per class A or class B warrant, on not less than 30 days notice in the
event that the average closing bid price for the class A common stock, if the
class A common stock is then traded on the Nasdaq National Market, or the last
reported sales price, if the class A common stock is then traded on a national
securities exchange, exceeds $44.50 in the case of the redemption of the class A
warrants and $61.25 in the case of the redemption of the class B warrants, for
the thirty consecutive business days ending within 15 days of the date of the
notice of redemption. All warrants of a class must be redeemed if any of that
class are redeemed. The date set for redemption of the class B warrants may not
be earlier than 31 days after the date set for redemption of the class A
warrants. The rights of holders of class A and class B warrants to exercise the
warrants terminate at 5:00 p.m., New York time, on the business day immediately
preceding the date set for redemption.
Investors in our 1998 bridge financing purchased 10% notes with warrants
attached. For each $1 of notes, a purchaser was entitled to 0.3 warrants and we
issued a total of 778,500 warrants in this transaction. Each of these warrants
entitles the holder upon exercise to purchase one share of class A common stock
for $2.50. These warrants expire between December 2001 and July 2002. As of June
6, 2001, there were 116,000 of these warrants outstanding.
Three finders introduced us to investors in our 1998 bridge financing and
received a total of 66,600 warrants for these services. Each of these warrants
entitles the holder upon exercise to purchase one share of class A common stock
for $2.50. These warrants expire between July 2001 and January 2002. As of June
6, 2001, there were 8,910 of these warrants outstanding.
Several NASD registered broker/dealers provided services in connection
with our April 1999 private placement of series A preferred stock and received a
total of 173,250 warrants for these services. Each of these warrants entitles
the holder upon exercise to purchase one share of class A common stock for $5.00
and expires in April 2002. As of June 6, 2001, there were 43,350 of these
warrants outstanding.
The warrants issued in our 1998 bridge financing to investors and finders
are redeemable by ICC for $2.50 per warrant within 10 days of mailing an
acceleration notice at any time after one year from issuance if the bid price of
the class A common stock exceeds $7.50 subject to adjustment for stock splits,
dividends or combinations for 10 consecutive trading days.
The number and exercise price of the warrants issued to financial advisors
in connection with our 1998 bridge financing and our April 1999 private
placement are subject to adjustment in the event of any stock dividend payable
in shares of class A common stock paid to holders of
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class A common stock or any subdivision or combination of the outstanding class
A common stock.
In April 1999, Richard Blume received 18,000 warrants for consulting
services performed for ICC. Each of these warrants entitles the holder upon
exercise to purchase one share of class A common stock for $9.94. As of June 6,
2001, all of these warrants were outstanding.
In connection with our strategic global alliance with Cable & Wireless, we
issued to Cable & Wireless 400,000 warrants to purchase shares of our class A
common stock. Each of these warrants entitles the holder upon exercise to
purchase one share of class A common stock for $22.21 per share and expires in
January 2005. The number and exercise price of these warrants are subject to
adjustment in the event of any stock dividend payable in shares of class A
common stock paid to holders of class A common stock or any subdivision or
combination of the outstanding class A common stock. As of June 6, 2001, all of
these warrants were outstanding.
In connection with the RTCI Merger, warrants to purchase shares of RTCI
common stock were converted into warrants to purchase an aggregate of 45,760
shares of ICC class A common stock at $5.77 per share.
Delaware Law and Certificate of Incorporation and Bylaw Provisions
The following is a summary description of material provisions of the
Delaware General Corporation Law and our certificate of incorporation and
bylaws. For further information you should refer to our certificate of
incorporation and bylaws.
We must comply with the provisions of Section 203 of the Delaware General
Corporation Law. Section 203 prohibits a publicly-held Delaware corporation from
engaging in a business combination with an interested stockholder for three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
A business combination includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. An interested
stockholder is generally a person who, together with affiliates and associates,
owns, or within the past three years did own, 15% of the corporation's voting
stock.
There are provisions in our certificate of incorporation, our bylaws and
Delaware law that make it more difficult for a third party to obtain control of
ICC, even if doing so would be beneficial to our stockholders. This could
depress our stock price. However, these provisions enhance the likelihood of
continuity and stability in the composition of the policies formulated by the
board of directors. In addition, these provisions are intended to ensure that
the board of directors will have sufficient time to act in what it believes to
be in the best interests of ICC and its stockholders. These provisions also are
designed to reduce the vulnerability of ICC to an unsolicited proposal for a
takeover of ICC that does not contemplate the acquisition of all of its
outstanding shares or an unsolicited proposal for the restructuring or sale of
all or part of ICC. The provisions are also intended to discourage some tactics
that may be used in proxy fights.
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Classified Board of Directors
Our board of directors is divided into three classes of directors. The
classes are as nearly equal in number as possible and serve staggered three-year
terms. One class of directors is elected each year to serve a three-year term.
The classified board provision will help to assure the continuity and stability
of the board of directors and the business strategies and policies of ICC as
determined by the board of directors. The classified board provision could have
the effect of discouraging a third party from making a tender offer for our
shares or attempting to obtain control of ICC. In addition, the classified board
provision could delay stockholders who do not agree with the policies of the
board of directors from removing a majority of the board of directors for two
years.
Indemnification
We have included in our certificate of incorporation and bylaws provisions
to (1) eliminate the personal liability of our directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by the
Delaware General Corporation Law and (2) indemnify our directors and officers to
the fullest extent permitted by the Delaware General Corporation Law, including
circumstances in which indemnification is discretionary.
We believe that these provisions are necessary to attract and retain
qualified persons as directors and officers.
Transfer Agent and Registrar
The transfer agent and registrar for our class A common stock is American
Stock Transfer and Trust Company.
LEGAL MATTERS
The legality of the shares of class A common stock being offered by this
prospectus has been passed upon by Kramer Levin Naftalis & Frankel LLP, New
York, New York.
EXPERTS
The financial statements incorporated in this prospectus by reference from
Internet Commerce Corporation's Annual Report on form 10-KSB for the year ended
July 31, 2000 have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report, which is incorporated herein by reference, and has
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
Richard A. Eisner & Company, LLP, our previous independent auditors, have
audited our financial statements as of July 31, 1999, as stated in their report
included in our annual report on form 10-KSB for the year ended July 31, 2000,
which is incorporated in this prospectus by reference. Our financial statements
as of July 31, 1999 are incorporated by reference in reliance on Richard A.
Eisner & Company, LLP's report, given on their authority as experts in
accounting and auditing.
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The financial statements of Research Triangle Commerce, Inc. for the two
years ended December 31, 1999, incorporated in this Registration Statement on
form S-3 by reference to the Internet Commerce Corporation's Current Report on
form 8-K dated September 7, 2000, have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
o Government Filings. We file annual, quarterly and special reports, proxy
statements and other information with the SEC. Our SEC filings are
available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. You may obtain information on the operation of the SEC's public
reference room in Washington, D.C. by calling the SEC at 1-800-SEC-0330.
We have filed with the SEC a registration statement on form S-3 to
register the shares of class A common stock to be offered. This prospectus is
part of that registration statement and, as permitted by the SEC's rules, does
not contain all the information included in the registration statement. For
further information about us and our class A common stock, you should refer to
that registration statement and to the exhibits and schedules filed as part of
that registration statement, as well as the documents we have incorporated by
reference which are discussed below. You can review and copy the registration
statement, its exhibits and schedules, as well as the documents we have
incorporated by reference, at the public reference facilities maintained by the
SEC as described above. The registration statement, including its exhibits and
schedules, are also available on the SEC's web site, given above.
o Stock Market. Shares of our class A common stock are traded on the Nasdaq
National Market.
o Information Incorporated by Reference. The SEC allows us to incorporate by
reference the information we file with it, which means that we can
disclose important information to you by referring you to those documents.
The information incorporated by reference is an important part of this
prospectus, and information that we file later with the SEC will
automatically update and supersede this information. We incorporate by
reference the documents listed below and any further filings made with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, until
this offering has been completed:
o Our annual report on form 10-KSB for the year ended July 31, 2000;
o Our quarterly reports on form 10-Q for the quarters ended
October 31, 2000 and January 31, 2001;
o Our current reports on form 8-K dated October 13, 2000, November 8,
2000, November 14, 2000 and November 16, 2000; and
o The description of our class A common stock contained in our Rule
424 prospectus filed with the SEC on June 18, 1995, including any
amendments or
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reports filed for the purpose of updating the description. See
also Description of Securities on pages 17 to 23 of this prospectus.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Internet Commerce Corporation
805 Third Avenue
New York, New York 10022
(212) 271-7640
Attn: Victor Bjorge
We are not making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of those documents. We have not authorized anyone to
provide you with, and you should not rely on, information other than that which
is in this prospectus, any prospectus supplement or which is incorporated in
this prospectus by reference.
-25-
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with
the distribution of the securities covered by this Registration Statement. All
of the expenses will be borne by ICC except as otherwise indicated.
SEC Registration Fee (actual)....................................$ 2,150.75
Nasdaq National Market listing fee (actual)......................$ 17,500
Printing and engraving fees and expenses.........................$ 5,000
Legal fees and expenses..........................................$ 20,000
Accounting fees and expenses.....................................$ 20,000
Miscellaneous....................................................$ 349.25
Total............................................................$ 65,000
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware,
referred to as the DGCL, provides that a corporation may indemnify directors and
officers as well as other employees and individuals against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement in connection
with specified actions, suits, proceedings whether civil, criminal,
administrative, or investigative, other than action by or in the right of the
corporation, known as a derivative action, if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses, including attorneys' fees, incurred in connection with the
defense or settlement of the action, and the statute requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. The statue provides that it is not
exclusive of other indemnification that may be granted by a corporation's
charter, bylaws, disinterested director vote, stockholder vote, agreement, or
otherwise. Section 145 thus makes provision for indemnification in terms
sufficiently broad to cover officers and directors, under certain circumstances,
for liabilities arising under the Securities Act of 1933, as it may be amended
from time to time.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for (i) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) payment of unlawful dividends or unlawful
stock purchases or redemptions, or (iv) any transaction from which the director
derived an improper personal benefit.
Article VII of our bylaws and Article Seventh of our Amended and Restated
Certificate of Incorporation, as further amended, both provide that we shall
indemnify, to the fullest extent
permitted by Section 145 of the DGCL, each person that Section 145 grants us
power to indemnify. Article VIII of our bylaws and Article Seventh of our
Amended and Restated Certificate of Incorporation, as further amended, both
provide that no director shall be liable to us or any of our stockholders for
monetary damages for breach of fiduciary duty as a director, except with respect
to (1) a breach of the director's duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) liability under
Section 174 of the DGCL or (4) a transaction from which the director derived an
improper personal benefit, and that it is the intention of the foregoing
provisions to eliminate the liability of our directors to ICC or our
stockholders to the fullest extent permitted by Section 102(b)(7) of the DGCL.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the securities and exchange commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by ICC of expenses incurred or paid by a
director, officer or controlling person of ICC in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by ICC is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Item 16. Exhibits.
The following documents are filed as exhibits to this Registration
Statement, including those exhibits incorporated in this registration statement
by reference to a prior filing of ICC under the Securities Act or the Exchange
Act as indicated in parenthesis:
Exhibit
Number Description
- ------ ------------------------------------------------
2.1 Agreement and Plan of Merger among ICC, ICC Acquisition Corporation, Inc., a wholly-owned
subsidiary of ICC, Research Triangle Commerce, Inc., or RTCI, and the selling
shareholders of RTCI (13)
2.2 Agreement and Plan of Merger among ICC, IDC, and the selling shareholders of IDC (14)
3(i).1 Amended and Restated Certificate of Incorporation (1)
3(i).2 Certificate of Merger merging Infosafe Systems, Inc. and Internet Commerce
Corporation (1)
3(i).3 Certificate of Amendment to the Amended and Restated Articles of Incorporation (2)
3(i).4 Certificate of Designations-- Series A Convertible Redeemable Preferred Stock (1)
3(i).5 Certificate of Designations-- Series S Preferred Stock (1)
3(i).6 Certificate of Designations-- Series C Preferred Stock (10)
-2-
3(ii).1 Bylaws (19)
4.1 Specimen Certificate for Class A Common Stock (3)
4.2 Form of Revised Subscription Agreement, dated March 31, 1999,
relating to the shares of Series A Convertible Redeemable
Preferred Stock sold in the 1999 private placement (1)
4.3 Form of Underwriter's Option (3)
4.4 Form of Warrant Agreement (3)
4.5 Escrow agreement, as amended (3)
4.6 Form of warrant expiring February 18, 2002 (3)
4.7 Warrant Agreement, dated February 10, 1997, by and among ICC, American Stock Transfer and
Trust Company as warrant agent and D.H. Blair Investment Banking Corp. (4)
4.8 Amendment Agreement, dated February 10, 1997, to Warrant
Agreement dated January 25, 1995 by and among ICC, American
Stock Transfer and Trust Company as warrant agent and D.H.
Blair Investment Banking Corp. (4)
4.9 Form of Unit Purchase Option for D.H. Blair Investment Banking Corp. dated February 18,
1997 (4)
4.10 Agreement, dated February 18, 1997, between ICC and D. H. Blair Investment Banking Corp.
to extend an agreement dated January 25, 1995 regarding mergers, acquisitions and similar
transactions (4)
4.11 Form of Class A Bridge Warrant issued in the 1998 bridge financing (1) 4.12
Warrant Agreement dated January 12, 2000, by and among ICC and Cable and
Wireless USA, Inc. (10)
4.13 Master Agreement dated November 23, 1999 by and among ICC and Cable and Wireless PLC
Corporation (10)
4.14 RTCI Employee Stock Option Plan (15)
4.15 Amendment to RTCI Employee Stock Option Plan (15)
4.16 Form of Three-Year Incentive Stock Option Agreement (15)
4.17 Form of Four-Year Incentive Stock Option Agreement (15)
4.18 Form of Non-Qualified Stock Option Agreement (15)
4.19 Form of Buy-Sell Agreement for Optionholders (15)
4.20 Research Triangle Commerce, Inc. Restricted Stock Plan (16)
4.21* Warrant Agreement between ICC and Ben Brooks
4.22* Warrant Agreement between ICC and Marion Bass Securities Corporation
4.23* Warrant Agreement between ICC and Rene Matthews Usher
4.24* Warrant Agreement between ICC and Mark Yount
5.1* Opinion of Kramer Levin Naftalis & Frankel LLP regarding
legality of the shares of class A common stock being
registered pursuant to this Registration Statement
9.1 Voting Trust Agreement between the trustees of the voting trust and various stockholders
of ICC (3)
9.2 Amendments to the Voting Trust Agreement (1)
10.1 1992 Stock Option Plan (3)
10.2 1994 Stock Option Plan (3)
-3-
10.3 Formation and Stock Purchase Agreement, dated as of April 16, 1997 among ICC, Michele
Golden and Michael Cassidy (5)
10.4 Lease Agreement between 805 Third Ave. Co. as landlord and ICC as tenant relating to the
rental of ICC's current principal executive office (6)
10.5 Consulting Agreement, dated as of June 12, 1998, between Summerwind Restructuring, Inc.
and ICC (1)
10.6 Lease Agreement, dated as of May 21, 1999, between JB Squared
LLC and ICC relating to the rental of approximately 4,000
square feet at the Lakeview Executive Center, 45 Research Way,
East Setauket, New York, 11733 (7)
10.7 Employment Agreement for Richard J. Berman dated as of September 15, 1998 (1)
10.8 Employment Agreement for G. Michael Cassidy dated as of April 16, 2000 (18)
10.9 Employment Agreement for Michele Golden dated as of April 16, 1997 (1)
10.10 Employment Agreement for Donald R. Gordon dated as of December 18, 1998 (1)
10.11 Employment Agreement for David Hubbard dated as of April 16, 2000 (18)
10.12 Employment Agreement for Walter M. Psztur dated as of April 16, 2000 (18)
10.13 Settlement Agreement between ICC, Arthur R. Medici and Dr. Robert H. Nagel (8)
10.14 Revised Settlement Agreement between ICC, Arthur R. Medici and Dr. Robert H. Nagel (8)
10.15 Amendment to the Revised Settlement Agreement between ICC, Arthur R. Medici and Dr.
Robert H. Nagel (8)
10.16 Second Amendment to the Revised Settlement Agreement between ICC, Arthur R. Medici and
Dr. Robert H. Nagel (8)
10.17 Master Agreement between Cable & Wireless PLC and ICC executed on November
24, 1999 (9) 10.18 Consulting Agreement, dated as of March 15, 2000, between
Michele Golden and ICC (11) 10.19 Amended and restated stock option plan (12)
10.20 First Amendment to Lease Agreement, dated as of January, 2000, by and
between JB Squared
LLC and ICC relating to the rental of an additional
approximately 4,800 square feet at the Lakeview Executive
Center, 45 Research Way, East Setauket, New York, 11733 (18)
10.21 First Amendment of Lease Agreement between Madison Third Building Companies LLC and ICC
relating to the rental of additional office space at 805 Third Avenue, New York, New York
(18)
10.22 Lease Agreement, dated as of August 2, 2000, by and between IDC Realty, LLC as landlord
and ICC as tenant relating to the rental of an approximately 8,000 square feet facility
used by ICC's IDC division (18)
23(ii).1* Consent of Deloitte & Touche LLP
-4-
23(ii).2* Consent of Richard A. Eisner & Company, LLP
23(ii).3* Consent of PricewaterhouseCoopers LLP
23(ii).4* Consent of Kramer Levin Naftalis & Frankel LLP (contained in Exhibit 5.1 hereto)
(b) Financial Statement Schedules:
Not Applicable.
* Filed herewith
(1) Incorporated by reference to the Company's Registration Statement on Form S-3 (File no. 333-80043)
(2) Incorporated by reference to the Company's Annual Report on Form 10-KSB for the year ended July 31, 1998
(3) Incorporated by reference to the Company's Registration Statement on Form SB-2 (File no. 33-83940)
(4) Incorporated by reference to the Company's Report on Form 10-QSB dated January 31, 1997
(5) Incorporated by reference to the Company's Report on Form 10-QSB dated April 30, 1997
(6) Incorporated by reference to the Company's Report on Form 10-QSB dated October 31, 1997
(7) Incorporated by reference to Amendment No. 3 to the Company's Registration Statement on Form S-3
(File no. 333-80043)
(8) Incorporated by reference to the Company's Registration Statement on Form S-3 (File no. 333-91885)
(9) Incorporated by reference to the Company's Current Report on Form 8-K dated December 1, 1999
(10) Incorporated by reference to Amendment No. 1 to the Company's Registration Statement on Form S-3
(File no. 333-93301)
(11) Incorporated by reference to the Company's Current Report on Form 8-K dated March 28, 2000
(12) Incorporated by reference to the Company's Proxy Statement for the annual meeting of stockholders for
the year ended July 31, 1999
(13) Incorporated by reference to the Company's Current Report on Form 8-K dated June 15, 2000
(14) Incorporated by reference to the Company's Current Report on Form 8-K dated August 11, 2000
(15) Incorporated by reference to the Company's Registration Statement on Form S-8 (File no. 333-49372)
(16) Incorporated by reference to the Company's Registration Statement on Form S-8 (File no. 333-493640)
(17) Incorporated by reference to the Company's Current Report on Form 8-K dated December 1, 1999
(18) Incorporated by reference to the Company's Annual Report on Form 10-KSB for the year ended July 31, 2000
-5-
(19) Incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 1, 1999
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
provided, however, that clauses (i) and (ii) do not apply if the Registration
Statement is on Form S-3, Form S-8 or Form F-3, and the information required to
be included in a post-effective amendment by such clauses is contained in
periodic reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
-6-
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
4th day of June, 2001.
Internet Commerce Corporation
by: /s/ G. Michael Cassidy
------------------------------------
G. Michael Cassidy
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, this registration
statement or amendment thereto has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ G. Michael Cassidy President and Chief June 4, 2001
- -------------------------- Executive Officer
G. Michael Cassidy (Principal Executive
Officer) Director
/s/ Walter M. Psztur Chief Financial Officer June 4, 2001
- -------------------------- (Principal Financial
Walter M. Psztur and Accounting Officer)
Director June __, 2001
- --------------------------
Richard J. Berman
Director June __, 2001
- --------------------------
Sarah Byrne-Quinn
/s/ Kim D. Cooke Director June 4, 2001
- --------------------------
Kim D. Cooke
/s/ Charles C. Johnston Director June 4, 2001
- --------------------------
Charles C. Johnston
/s/ Jeffrey W. LeRose Director June 4, 2001
- --------------------------
Jeffrey W. LeRose
/s/ Arthur R. Medici Director June 4, 2001
- --------------------------
Arthur R. Medici
Exhibit 4.21
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. IT MAY
NOT BE SOLD OR OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER
SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THE COMPANY
OR HOLDER'S COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED TO EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT
TO RULE 144.
RESEARCH TRIANGLE CONSULTANTS, INC.
WARRANT MBW-3
THIS CERTIFIES that, subject to the terms and conditions of this Warrant,
Ben Brooks (the "Warrantholder"), for value received, is entitled to subscribe
for and purchase up to Fourteen Thousand Five Hundred Forty-five (14,545)
fully-paid and non-assessable shares (the "Shares") of the Common Stock (the
"Stock"), of Research Triangle Consultants, Inc., a North Carolina corporation
(the "Company"), at the exercise price of One Dollar and Twenty-one Cents
($1.21) per share (the "Initial Exercise Price"), which number of Shares and
Initial Exercise Price will be adjusted pursuant to the provisions of Section 7
hereof (the "Exercise Price").
1. Term. Except as otherwise provided for herein, the term of this Warrant
and the right to purchase shares as granted herein will be exercisable, at any
time and from time to time, during the period commencing on January 22, 1999
(the "Warrant Grant Date") and terminating at 5:00 p.m. on the fifth anniversary
of the Warrant Grant Date (the "Termination Date"), unless earlier terminated
pursuant to Section 2(c) of this Warrant.
2. Exercise of Purchase Rights.
(a) Exercise. The purchase rights represented by this Warrant are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time during
the period set forth in Section 1 above, by tendering the Company at its
principal office a notice of exercise in the form attached hereto as Exhibit A
(the "Notice of Exercise"), duly completed and executed. Upon receipt of the
Notice of Exercise and the payment of the Exercise Price in accordance with the
terms set forth below, the Company will issue to the Warrantholder a certificate
for the number of shares of Stock of the Company purchased and will execute the
Notice of Exercise indicating the number of shares of Stock which remain subject
to future purchases, if any. The person or persons in whose name(s) any
certificate(s) representing shares of Stock will be issued upon exercise of this
Warrant will be deemed to have become the holder(s) of, the Shares represented
thereby (and such shares will be deemed to have been issued) immediately prior
to the close of business on the date or dates upon which this Warrant is
exercised. In the event of any exercise of the rights represented by this
Warrant, certificates for the Shares so purchased will be delivered to the
Warrantholder or its designee as soon as practical and in any event within
thirty (30) days after receipt of such notice and, unless this Warrant has been
fully exercised or
expired, a new Warrant representing the remaining portion of the Shares, if any,
with respect to which this Warrant will not then have been exercised will also
be issued to the Warrantholder as soon as possible and in any event within such
thirty (30) day period.
(b) Method of Exercise. The purchase rights hereby represented may be exercised,
at the election of the Warrantholder, by the tender of the Notice of Election
and the surrender of this Warrant at the principal office of the Company and by
the payment to the Company, by check, cancellation of indebtedness or other form
of payment acceptable to the Company, of an amount equal to the then applicable
Exercise Price per share multiplied by the number of Shares then being
purchased.
(c) Termination in the Event of Initial Public Offering. Notwithstanding any
other term or provision of this Warrant, this Warrant will terminate immediately
upon the effectiveness of a registration statement under the Securities Act of
1933, as amended, and sale of the Company's Stock in a firm commitment
underwritten public offering. The Company will give written notice thereof to
the Warrantholder stating the date on which such event is to take place (which
will be at least ten (10) days after the giving of such notice). The
Warrantholder may condition exercise of this Warrant upon the Securities and
Exchange Commission declaring the registration statement effective.
3. Reservation of Shares.
(a) Authorization and Reservation of Shares. The Company will at all times have
authorized and reserved a sufficient number of Shares to provide for the
exercise of the rights to purchase Stock as provided herein.
(b) Registration or Listing. If any shares of Stock required to be reserved for
purposes of exercise of this Warrant require registration with or approval of
any governmental authority under any Federal or State law (other than any
registration under the Securities Act of 1933, as then in effect, or any similar
Federal statute then enforced, or any state securities law, required by reason
of any transfer), or listing on any domestic securities exchange, or if at the
time of exercise the class of Stock into which this Warrant is then exercisable
is listed on any domestic securities exchange, the Company will, at its expense
and as expeditiously as possible, use its best efforts to cause such shares to
be duly registered, listed or approved for listing on such domestic securities
exchange, as the case may be.
4. No Fractional Shares. No fractional shares or scrip representing
fractional shares will be issued upon the exercise of the Warrantholder's rights
to purchase Stock, but in lieu of such fractional shares the Company will make a
cash payment therefor upon the basis of the fair market value of a share of that
stock at the time of Exercise.
5. No Rights as Shareholder. This Warrant does not entitle the Warrantholder
to any voting rights or other rights as a shareholder of the Company prior to
the exercise of the Warrantholder's rights to purchase Stock as provided for
herein.
2
6. Warrantholder Registry. The Company will maintain a registry showing the
name and address of the registered holder of this Warrant.
7. Adjustment Rights. The Exercise Price and the number of Shares of Stock
purchasable hereunder are subject to adjustment from time to time, as follows:
(a) Reclassification or Merger. In case of any reclassification, change or
conversion of securities of the class issuable upon exercise of this Warrant
into the same or a different number of securities of any other class or classes,
or in case of any merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, will
duly execute and deliver to the holder of this Warrant, so that the holder of
this Warrant will have the right to receive, at a total purchase price not to
exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the Shares of Stock theretofore issuable upon exercise
of this Warrant, the kind and amount of shares of stock, other securities, money
and property receivable upon such reclassification, change or merger by a holder
of the number of Shares of Stock then purchasable under this Warrant. Such new
Warrant will provide for adjustment that will be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 7. The provisions of
this subparagraph (a) will similarly apply to successive reclassifications,
changes, mergers and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time will
subdivide its Stock, the Exercise Price will be proportionately decreased and
the number of Shares issuable pursuant to this Warrant will be proportionately
increased. If the Company at any time will combine its Stock, the Exercise Price
will be proportionately increased and the number of Shares issuable pursuant to
this Warrant will be proportionately decreased.
(c) Stock Dividends. If the Company at any time will pay a dividend payable
in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of Stock, then the
Exercise Price will be adjusted, from and after the date of determination of
stockholders entitled to receive such dividend or distribution of stockholders
to that price determined by multiplying the Exercise Price in effect immediately
prior to such date of determination by a fraction (i) the numerator of which
will be the total number of shares of Stock outstanding immediately prior to
such dividend or distribution, and (ii) the denominator of which will be the
total number of shares of Stock outstanding immediately after such dividend or
distribution. The Warrantholder will thereafter be entitled to purchase, at the
Exercise Price resulting form such adjustment, the number of Shares of Stock
(calculated to the nearest whole share) obtained by multiplying (i) the Exercise
Price in effect immediately prior to such adjustment by (ii) the number of
Shares of Stock issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
3
(d) Reserved Shares Adjustment. The number of shares reserved for issuance
pursuant to this Warrant will automatically be adjusted without further action
by the Company in the event of any adjustment of the number of Shares issuable
pursuant to this Warrant.
(e) Registration and Listing. The Company will take all such actions as may be
necessary to assure that all Shares of Stock issuable pursuant to this Warrant
may be so issued without violation of any applicable law or regulation or any
requirements of any domestic stock exchange (except for official notice of
issuance, which will be immediately transmitted by the Company upon issuance)
upon which shares of Stock or other shares of the same class may be listed.
8. Compliance with Securities Act; Disposition of Warrant or Shares of Stock.
(a) Compliance with Securities Act. The Warrantholder, by acceptance hereof,
agrees that this Warrant, and the Shares of Stock to be issued upon exercise
hereof, are being acquired for investment and that such Warrantholder will not
offer, sell or otherwise dispose of this Warrant, or any Shares of Stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended (the "Securities Act"), or
any applicable state securities laws. At the time of exercise, the Warrantholder
will execute an Investment Letter in the form attached hereto as Exhibit B
stating (among other things) that the shares issued pursuant to the Warrant have
not been registered under federal or state securities laws, and that such shares
may not be transferred unless the shares are so registered or unless the Company
has received an opinion of the Company's counsel or such holder's counsel
reasonably acceptable to the Company that such transfers are exempt from
registration.
(b) This Warrant and all shares of Stock issued upon exercise of this Warrant
(unless registered under the Securities Act and any applicable state securities
laws) will be stamped or imprinted with a legend in substantially the following
form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED TO
EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT TO RULE 144."
(c) Representations and Warranties of Warrantholder. In addition, in connection
with the issuance of this Warrant, the Warrantholder specifically represents to
the Company by acceptance of this Warrant as follows:
(i) The Warrantholder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant. The Warrantholder
is acquiring this Warrant for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof in violation of the Securities Act.
4
(ii) The Warrantholder understands that this Warrant has not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
Warrantholder's investment intent as expressed herein.
(iii) The Warrantholder further understands that this Warrant and any shares of
Stock to be issued upon exercise hereof must be held indefinitely unless
subsequently registered under the Securities Act and qualified under any
applicable state securities laws, or unless exemptions from registration and
qualification are otherwise available.
(d) Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any Shares of Stock acquired pursuant to the
exercise of this Warrant prior to registration of such Warrant or Shares, the
holder agrees to give written notice to the Company prior thereto, describing
briefly the manner thereof, together with an opinion of the Company's counsel or
such holder's counsel reasonably satisfactory to the Company, or other evidence,
if reasonably requested by the Company, to the effect that such offer, sale or
other disposition may be effected without registration or qualification (under
the Securities Act as then in effect or any federal or state securities law then
in effect) of this Warrant or such shares of Stock and indicating whether or not
under the Securities Act certificates for this Warrant or such shares of Stock
to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. Promptly upon receiving such written notice and reasonably
satisfactory opinion or other evidence, if so requested, the Company, as
promptly as practicable but no later than five (5) days after receipt of the
written notice, will notify such holder that such holder may sell or otherwise
dispose of this Warrant or such shares of Stock, all in accordance with the
terms of the notice delivered to the Company. Notwithstanding the foregoing,
this Warrant or such shares of Stock may, as to such federal laws, be offered,
sold or otherwise disposed of in accordance with Rule 144 or 144A under the
Securities act, provided that the Company will have been furnished with such
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 or 144A have been satisfied. Each
certificate representing this Warrant or the shares of Stock thus transferred
(except a transfer pursuant to Rule 144 or 144A) will bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
such laws, unless in the aforesaid opinion of counsel for the Company or the
Warrantholder or pursuant to Rule 144 or 144A, such legend is not required in
order to ensure compliance with such laws. The Company may issue stop transfer
instruction to its transfer agent in connection with such restrictions.
Notwithstanding the foregoing, (i) until a public market develops for the
securities of the Company, neither the Warrantholder nor any subsequent
transferee may transfer the Warrant or any Warrant Shares to any competitor of
the Company; and (ii) any transferee of the Warrantholder and any subsequent
transferee will expressly agree in writing with the Company to be bound by and
to comply with all applicable provisions of this Warrant.
(e) If in connection with the initial public offering of shares of Common Stock
of the Company registered pursuant to the Securities Act, the managing
underwriter for such registration will so request, the Warrantholder will not
sell, make any short sale of, grant any option for the purchase of, or otherwise
dispose of any Warrant Shares (other than those shares
5
of Common Stock included in such registration) without the prior written consent
of the Company for a period designated by the Company in writing to the
Warrantholder, which period will begin not more than ten (10) days prior to the
effectiveness of the registration statement pursuant to which such public
offering will be made and will not last more than one hundred eighty (180) days
(or such other period as the officers and directors of the Company and holders
of greater than ten percent (10%) of all securities registered pursuant to the
registration statement mutually agree) after the effective date of such
registration statement. The holders hereby agree to execute such form of
agreement evidencing this obligation as any underwriter requests.
9. Registration. The Company acknowledges and agrees that, with respect to
the Shares, the Warrantholder will have the registration rights provided
pursuant to the Registration Rights Agreement, the form of which is attached
hereto (the "Registration Rights Agreement").
10. Miscellaneous.
(a) Attorney's Fees. In any litigation, arbitration or court proceeding between
the Company and the Warrantholder relating hereto, the prevailing party will be
entitled to attorneys' fees and expenses and all costs of proceedings incurred
in enforcing this Warrant.
(b) Governing Law. This Warrant Agreement will be governed by and construed for
all purposes under and in accordance with the laws of the State of North
Carolina without respect to the principles of the choice of law or the conflict
of laws.
(c) Descriptive Headings. The descriptive headings of the paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant.
(d) Notices. Any notice required or permitted hereunder will be given in writing
and will be deemed effectively given upon personal delivery or upon deposit in
the United States mail, by registered or certified mail, addressed (i) to the
Warrantholder, at the address in the Warrant Register maintained by the Company,
and (ii) to the Company, at 1135 Kildaire Farm Road, Suite 329, Cary, North
Carolina 27511, Attention: Philip R. Alfano, or at such other address as any
such party may subsequently designate by written notice to the other party.
(e) Lost Warrants. The Company covenants to the Warrantholder, that upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate and, in the
case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender and cancellation of such Warrant or stock certificate, the
Company will make and deliver a new Warrant or stock certificate of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.
(f) Severability. In the event any one or more of the provisions of this Warrant
will for any reason be held invalid, illegal or unenforceable, the remaining
provisions of this Warrant will be unimpaired, and the invalid, illegal or
unenforceable provision will be replaced by a mutually acceptable valid, legal
and enforceable provision, which comes closest to the intention of the parties
underlying the invalid, illegal or unenforceable provision.
6
(g) Modification and Waiver. This Warrant and any provision hereof may be
amended, waived, discharged or terminated only by an instrument in writing
signed by the party against whom enforcement of the same is sought.
(h) Entire Agreement. This Warrant constitutes the entire agreement between the
parties pertaining to the subject matter contained in it and supersedes all
prior and contemporaneous agreements, representations and undertakings of the
parties, whether oral or written, with respect to such subject matter.
IN WITNESS WHEREOF, this warrant has been duly executed and delivered by
the undersigned.
RESEARCH TRIANGLE CONSULTANTS, INC.
By:
------------------------------
Jeffrey W. LeRose, President
7
Exhibit A
NOTICE OF EXERCISE FOR CASH
To: Research Triangle Consultants, Inc.
1135 Kildaire Farm Road
Suite 329
Cary, North Carolina 27511
Attention: Philip R. Alfano
1. The undersigned, hereby elects to purchase shares of the
Common Stock of Research Triangle Consultants, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below:
Name Address
(SIGNATURE)
Date:
8
Exhibit B
FORM OF INVESTMENT LETTER
___________, 19___
Research Triangle Consultants, Inc.
1135 Kildaire Farm Road
Suite 329
Cary, North Carolina 27511
Attention: Philip R. Alfano
Gentlemen:
The undersigned, ________________________ ("Purchaser") intends to acquire
up to _________ shares (the "Shares") of the Common Stock of Research Triangle
Consultants, Inc. (the "Company") from the Company pursuant to the exercise of
certain Warrant held by Purchaser. The Shares will be issued to Purchaser in a
transaction not involving a public offering and pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with such purchase and in order to comply with the exemption from
registration relied upon by the Company, Purchaser represents, warrants and
agrees as follows:
1. Purchaser is acquiring the Shares for Purchaser's own account, to hold
for investment, and Purchaser will not make any sale, transfer or other
disposition of the Shares in violation of the 1933 Act or the rules and
regulations promulgated thereunder by the Securities and Exchange Commission or
in violation of any applicable state securities law.
2. Purchaser has been advised that the issuance of the Shares is not being
registered under the 1933 Act on the ground that this transaction is exempt from
registration under Section 3(b) or 4(2) of the 1933 Act, as not involving any
public offering, and that reliance by the Company on such exemptions is
predicated in part on Purchaser's representations set forth in this letter.
Purchaser also has been advised that neither the Shares nor the issuance thereof
are being registered under the securities laws of any state.
3. Purchaser has been informed that the Shares must be held indefinitely
unless subsequently registered under the 1933 Act and applicable state
securities laws, or unless exemptions from such registration are available with
respect to any proposed transfer or disposition by Purchaser of the Shares.
Purchaser understands and agrees that the Company, as a condition to the
transfer of any of the Shares, may require that the request for transfer be
accompanied by an opinion of counsel satisfactory to the Company, in form and
substance satisfactory to the Company, to the effect that the proposed transfer
is exempt from registration under 1933 Act and applicable state securities laws,
unless such transfer is covered by an effective registration statement under the
1933 Act and all applicable state securities laws.
9
4. Purchaser understands and agrees that there will be placed on the
certificates for the Shares, or any substitutions therefor, a legend stating in
substance:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED TO
EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT TO RULE 144."
5. Purchaser has been furnished with or has had access to the information
it has requested from the Company in connection with the investment represented
by the Shares and has had an opportunity to discuss with the officers and
management of the Company the Company's business and financial affairs.
Purchaser has such knowledge and experience in business and financial matters
and with respect to investments in securities or in privately held companies so
as to enable it to understand and evaluate the risks of such investment and form
an investment decision with respect thereto.
Very truly yours,
-----------------------------------
Name:
Accepted as of the _____ day of ____________, 19____.
RESEARCH TRIANGLE CONSULTANTS, INC.
By:
--------------------------------
Name:
Title:
10
Exhibit 4.22
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. IT MAY
NOT BE SOLD OR OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER
SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THE COMPANY
OR HOLDER'S COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED TO EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT
TO RULE 144.
RESEARCH TRIANGLE CONSULTANTS, INC.
WARRANT MBW-1
THIS CERTIFIES that, subject to the terms and conditions of this Warrant,
Marion Bass Securities, Inc. (the "Warrantholder"), for value received, is
entitled to subscribe for and purchase up to One Hundred Twenty-nine Thousand
Forty (129,040) fully-paid and non-assessable shares (the "Shares") of the
Common Stock (the "Stock"), of Research Triangle Consultants, Inc., a North
Carolina corporation (the "Company"), at the exercise price of One Dollar and
Twenty-one Cents ($1.21) per share (the "Initial Exercise Price"), which number
of Shares and Initial Exercise Price will be adjusted pursuant to the provisions
of Section 7 hereof (the "Exercise Price").
1. Term. Except as otherwise provided for herein, the term of this Warrant
and the right to purchase shares as granted herein will be exercisable, at any
time and from time to time, during the period commencing on January 22, 1999
(the "Warrant Grant Date") and terminating at 5:00 p.m. on the fifth anniversary
of the Warrant Grant Date (the "Termination Date"), unless earlier terminated
pursuant to Section 2(c) of this Warrant.
2. Exercise of Purchase Rights.
(a) Exercise. The purchase rights represented by this Warrant are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time during
the period set forth in Section 1 above, by tendering the Company at its
principal office a notice of exercise in the form attached hereto as Exhibit A
(the "Notice of Exercise"), duly completed and executed. Upon receipt of the
Notice of Exercise and the payment of the Exercise Price in accordance with the
terms set forth below, the Company will issue to the Warrantholder a certificate
for the number of shares of Stock of the Company purchased and will execute the
Notice of Exercise indicating the number of shares of Stock which remain subject
to future purchases, if any. The person or persons in whose name(s) any
certificate(s) representing shares of Stock will be issued upon exercise of this
Warrant will be deemed to have become the holder(s) of, the Shares represented
thereby (and such shares will be deemed to have been issued) immediately prior
to the close of business on the date or dates upon which this Warrant is
exercised. In the event of any exercise of the rights represented by this
Warrant, certificates for the Shares so purchased will be delivered to the
Warrantholder or its designee as soon as practical and in any event within
thirty (30) days after receipt of such notice and, unless this Warrant has been
fully exercised or
expired, a new Warrant representing the remaining portion of the Shares, if any,
with respect to which this Warrant will not then have been exercised will also
be issued to the Warrantholder as soon as possible and in any event within such
thirty (30) day period.
(b) Method of Exercise. The purchase rights hereby represented may be exercised,
at the election of the Warrantholder, by the tender of the Notice of Election
and the surrender of this Warrant at the principal office of the Company and by
the payment to the Company, by check, cancellation of indebtedness or other form
of payment acceptable to the Company, of an amount equal to the then applicable
Exercise Price per share multiplied by the number of Shares then being
purchased.
(c) Termination in the Event of Initial Public Offering. Notwithstanding any
other term or provision of this Warrant, this Warrant will terminate immediately
upon the effectiveness of a registration statement under the Securities Act of
1933, as amended, and sale of the Company's Stock in a firm commitment
underwritten public offering. The Company will give written notice thereof to
the Warrantholder stating the date on which such event is to take place (which
will be at least ten (10) days after the giving of such notice). The
Warrantholder may condition exercise of this Warrant upon the Securities and
Exchange Commission declaring the registration statement effective.
3. Reservation of Shares.
(a) Authorization and Reservation of Shares. The Company will at all times have
authorized and reserved a sufficient number of Shares to provide for the
exercise of the rights to purchase Stock as provided herein.
(b) Registration or Listing. If any shares of Stock required to be reserved for
purposes of exercise of this Warrant require registration with or approval of
any governmental authority under any Federal or State law (other than any
registration under the Securities Act of 1933, as then in effect, or any similar
Federal statute then enforced, or any state securities law, required by reason
of any transfer), or listing on any domestic securities exchange, or if at the
time of exercise the class of Stock into which this Warrant is then exercisable
is listed on any domestic securities exchange, the Company will, at its expense
and as expeditiously as possible, use its best efforts to cause such shares to
be duly registered, listed or approved for listing on such domestic securities
exchange, as the case may be.
4. No Fractional Shares. No fractional shares or scrip representing
fractional shares will be issued upon the exercise of the Warrantholder's rights
to purchase Stock, but in lieu of such fractional shares the Company will make a
cash payment therefor upon the basis of the fair market value of a share of that
stock at the time of Exercise.
5. No Rights as Shareholder. This Warrant does not entitle the Warrantholder
to any voting rights or other rights as a shareholder of the Company prior to
the exercise of the Warrantholder's rights to purchase Stock as provided for
herein.
2
6. Warrantholder Registry. The Company will maintain a registry showing the
name and address of the registered holder of this Warrant.
7. Adjustment Rights. The Exercise Price and the number of Shares of Stock
purchasable hereunder are subject to adjustment from time to time, as follows:
(a) Reclassification or Merger. In case of any reclassification, change or
conversion of securities of the class issuable upon exercise of this Warrant
into the same or a different number of securities of any other class or classes,
or in case of any merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, will
duly execute and deliver to the holder of this Warrant, so that the holder of
this Warrant will have the right to receive, at a total purchase price not to
exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the Shares of Stock theretofore issuable upon exercise
of this Warrant, the kind and amount of shares of stock, other securities, money
and property receivable upon such reclassification, change or merger by a holder
of the number of Shares of Stock then purchasable under this Warrant. Such new
Warrant will provide for adjustment that will be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 7. The provisions of
this subparagraph (a) will similarly apply to successive reclassifications,
changes, mergers and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time will
subdivide its Stock, the Exercise Price will be proportionately decreased and
the number of Shares issuable pursuant to this Warrant will be proportionately
increased. If the Company at any time will combine its Stock, the Exercise Price
will be proportionately increased and the number of Shares issuable pursuant to
this Warrant will be proportionately decreased.
(c) Stock Dividends. If the Company at any time will pay a dividend payable in,
or make any other distribution (except any distribution specifically provided
for in the foregoing subsections (a) or (b)) of Stock, then the Exercise Price
will be adjusted, from and after the date of determination of stockholders
entitled to receive such dividend or distribution of stockholders to that price
determined by multiplying the Exercise Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which will be the total
number of shares of Stock outstanding immediately prior to such dividend or
distribution, and (ii) the denominator of which will be the total number of
shares of Stock outstanding immediately after such dividend or distribution. The
Warrantholder will thereafter be entitled to purchase, at the Exercise Price
resulting form such adjustment, the number of Shares of Stock (calculated to the
nearest whole share) obtained by multiplying (i) the Exercise Price in effect
immediately prior to such adjustment by (ii) the number of Shares of Stock
issuable upon the exercise hereof immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
3
(d) Reserved Shares Adjustment. The number of shares reserved for issuance
pursuant to this Warrant will automatically be adjusted without further action
by the Company in the event of any adjustment of the number of Shares issuable
pursuant to this Warrant.
(e) Registration and Listing. The Company will take all such actions as may be
necessary to assure that all Shares of Stock issuable pursuant to this Warrant
may be so issued without violation of any applicable law or regulation or any
requirements of any domestic stock exchange (except for official notice of
issuance, which will be immediately transmitted by the Company upon issuance)
upon which shares of Stock or other shares of the same class may be listed.
8. Compliance with Securities Act; Disposition of Warrant or Shares of Stock.
(a) Compliance with Securities Act. The Warrantholder, by acceptance hereof,
agrees that this Warrant, and the Shares of Stock to be issued upon exercise
hereof, are being acquired for investment and that such Warrantholder will not
offer, sell or otherwise dispose of this Warrant, or any Shares of Stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended (the "Securities Act"), or
any applicable state securities laws. At the time of exercise, the Warrantholder
will execute an Investment Letter in the form attached hereto as Exhibit B
stating (among other things) that the shares issued pursuant to the Warrant have
not been registered under federal or state securities laws, and that such shares
may not be transferred unless the shares are so registered or unless the Company
has received an opinion of the Company's counsel or such holder's counsel
reasonably acceptable to the Company that such transfers are exempt from
registration.
(b) This Warrant and all shares of Stock issued upon exercise of this Warrant
(unless registered under the Securities Act and any applicable state securities
laws) will be stamped or imprinted with a legend in substantially the following
form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED TO
EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT TO RULE 144."
(c) Representations and Warranties of Warrantholder. In addition, in connection
with the issuance of this Warrant, the Warrantholder specifically represents to
the Company by acceptance of this Warrant as follows:
(i) The Warrantholder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant. The Warrantholder
is acquiring this Warrant for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof in violation of the Securities Act.
4
(ii) The Warrantholder understands that this Warrant has not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
Warrantholder's investment intent as expressed herein.
(iii) The Warrantholder further understands that this Warrant and any shares of
Stock to be issued upon exercise hereof must be held indefinitely unless
subsequently registered under the Securities Act and qualified under any
applicable state securities laws, or unless exemptions from registration and
qualification are otherwise available.
(d) Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any Shares of Stock acquired pursuant to the
exercise of this Warrant prior to registration of such Warrant or Shares, the
holder agrees to give written notice to the Company prior thereto, describing
briefly the manner thereof, together with an opinion of the Company's counsel or
such holder's counsel reasonably satisfactory to the Company, or other evidence,
if reasonably requested by the Company, to the effect that such offer, sale or
other disposition may be effected without registration or qualification (under
the Securities Act as then in effect or any federal or state securities law then
in effect) of this Warrant or such shares of Stock and indicating whether or not
under the Securities Act certificates for this Warrant or such shares of Stock
to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. Promptly upon receiving such written notice and reasonably
satisfactory opinion or other evidence, if so requested, the Company, as
promptly as practicable but no later than five (5) days after receipt of the
written notice, will notify such holder that such holder may sell or otherwise
dispose of this Warrant or such shares of Stock, all in accordance with the
terms of the notice delivered to the Company. Notwithstanding the foregoing,
this Warrant or such shares of Stock may, as to such federal laws, be offered,
sold or otherwise disposed of in accordance with Rule 144 or 144A under the
Securities act, provided that the Company will have been furnished with such
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 or 144A have been satisfied. Each
certificate representing this Warrant or the shares of Stock thus transferred
(except a transfer pursuant to Rule 144 or 144A) will bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
such laws, unless in the aforesaid opinion of counsel for the Company or the
Warrantholder or pursuant to Rule 144 or 144A, such legend is not required in
order to ensure compliance with such laws. The Company may issue stop transfer
instruction to its transfer agent in connection with such restrictions.
Notwithstanding the foregoing, (i) until a public market develops for the
securities of the Company, neither the Warrantholder nor any subsequent
transferee may transfer the Warrant or any Warrant Shares to any competitor of
the Company; and (ii) any transferee of the Warrantholder and any subsequent
transferee will expressly agree in writing with the Company to be bound by and
to comply with all applicable provisions of this Warrant.
(e) If in connection with the initial public offering of shares of Common Stock
of the Company registered pursuant to the Securities Act, the managing
underwriter for such registration will so request, the Warrantholder will not
sell, make any short sale of, grant any option for the purchase of, or otherwise
dispose of any Warrant Shares (other than those shares
5
of Common Stock included in such registration) without the prior written consent
of the Company for a period designated by the Company in writing to the
Warrantholder, which period will begin not more than ten (10) days prior to the
effectiveness of the registration statement pursuant to which such public
offering will be made and will not last more than one hundred eighty (180) days
(or such other period as the officers and directors of the Company and holders
of greater than ten percent (10%) of all securities registered pursuant to the
registration statement mutually agree) after the effective date of such
registration statement. The holders hereby agree to execute such form of
agreement evidencing this obligation as any underwriter requests.
9. Registration. The Company acknowledges and agrees that, with respect to the
Shares, the Warrantholder will have the registration rights provided pursuant to
the Registration Rights Agreement, the form of which is attached hereto (the
"Registration Rights Agreement").
10. Miscellaneous.
(a) Attorney's Fees. In any litigation, arbitration or court proceeding between
the Company and the Warrantholder relating hereto, the prevailing party will be
entitled to attorneys' fees and expenses and all costs of proceedings incurred
in enforcing this Warrant.
(b) Governing Law. This Warrant Agreement will be governed by and construed for
all purposes under and in accordance with the laws of the State of North
Carolina without respect to the principles of the choice of law or the conflict
of laws.
(c) Descriptive Headings. The descriptive headings of the paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant.
(d) Notices. Any notice required or permitted hereunder will be given in writing
and will be deemed effectively given upon personal delivery or upon deposit in
the United States mail, by registered or certified mail, addressed (i) to the
Warrantholder, at the address in the Warrant Register maintained by the Company,
and (ii) to the Company, at 1135 Kildaire Farm Road, Suite 329, Cary, North
Carolina 27511, Attention: Philip R. Alfano, or at such other address as any
such party may subsequently designate by written notice to the other party.
(e) Lost Warrants. The Company covenants to the Warrantholder, that upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate and, in the
case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender and cancellation of such Warrant or stock certificate, the
Company will make and deliver a new Warrant or stock certificate of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.
(f) Severability. In the event any one or more of the provisions of this Warrant
will for any reason be held invalid, illegal or unenforceable, the remaining
provisions of this Warrant will be unimpaired, and the invalid, illegal or
unenforceable provision will be replaced by a mutually acceptable valid, legal
and enforceable provision, which comes closest to the intention of the parties
underlying the invalid, illegal or unenforceable provision.
6
(g) Modification and Waiver. This Warrant and any provision hereof may be
amended, waived, discharged or terminated only by an instrument in writing
signed by the party against whom enforcement of the same is sought.
(h) Entire Agreement. This Warrant constitutes the entire agreement between the
parties pertaining to the subject matter contained in it and supersedes all
prior and contemporaneous agreements, representations and undertakings of the
parties, whether oral or written, with respect to such subject matter.
IN WITNESS WHEREOF, this warrant has been duly executed and delivered by
the undersigned.
RESEARCH TRIANGLE CONSULTANTS, INC.
By:
------------------------------
Jeffrey W. LeRose, President
7
Exhibit A
NOTICE OF EXERCISE FOR CASH
To: Research Triangle Consultants, Inc.
1135 Kildaire Farm Road
Suite 329
Cary, North Carolina 27511
Attention: Philip R. Alfano
1. The undersigned, hereby elects to purchase shares of
the Common Stock of Research Triangle Consultants, Inc. pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below:
Name Address
(SIGNATURE)
Date:
8
Exhibit B
FORM OF INVESTMENT LETTER
___________, 19___
Research Triangle Consultants, Inc.
1135 Kildaire Farm Road
Suite 329
Cary, North Carolina 27511
Attention: Philip R. Alfano
Gentlemen:
The undersigned, ________________________ ("Purchaser") intends to acquire
up to _________ shares (the "Shares") of the Common Stock of Research Triangle
Consultants, Inc. (the "Company") from the Company pursuant to the exercise of
certain Warrant held by Purchaser. The Shares will be issued to Purchaser in a
transaction not involving a public offering and pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with such purchase and in order to comply with the exemption from
registration relied upon by the Company, Purchaser represents, warrants and
agrees as follows:
1. Purchaser is acquiring the Shares for Purchaser's own account, to hold
for investment, and Purchaser will not make any sale, transfer or other
disposition of the Shares in violation of the 1933 Act or the rules and
regulations promulgated thereunder by the Securities and Exchange Commission or
in violation of any applicable state securities law.
2. Purchaser has been advised that the issuance of the Shares is not being
registered under the 1933 Act on the ground that this transaction is exempt from
registration under Section 3(b) or 4(2) of the 1933 Act, as not involving any
public offering, and that reliance by the Company on such exemptions is
predicated in part on Purchaser's representations set forth in this letter.
Purchaser also has been advised that neither the Shares nor the issuance thereof
are being registered under the securities laws of any state.
3. Purchaser has been informed that the Shares must be held indefinitely
unless subsequently registered under the 1933 Act and applicable state
securities laws, or unless exemptions from such registration are available with
respect to any proposed transfer or disposition by Purchaser of the Shares.
Purchaser understands and agrees that the Company, as a condition to the
transfer of any of the Shares, may require that the request for transfer be
accompanied by an opinion of counsel satisfactory to the Company, in form and
substance satisfactory to the Company, to the effect that the proposed transfer
is exempt from registration under 1933 Act and applicable state securities laws,
unless such transfer is covered by an effective registration statement under the
1933 Act and all applicable state securities laws.
9
4. Purchaser understands and agrees that there will be placed on the
certificates for the Shares, or any substitutions therefor, a legend stating in
substance:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED TO
EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT TO RULE 144."
5. Purchaser has been furnished with or has had access to the information
it has requested from the Company in connection with the investment represented
by the Shares and has had an opportunity to discuss with the officers and
management of the Company the Company's business and financial affairs.
Purchaser has such knowledge and experience in business and financial matters
and with respect to investments in securities or in privately held companies so
as to enable it to understand and evaluate the risks of such investment and form
an investment decision with respect thereto.
Very truly yours,
___________________________________
Name:
Accepted as of the _____ day of ____________, 19____.
RESEARCH TRIANGLE CONSULTANTS, INC.
By: ______________________________
Name:
Title:
10
Exhibit 4.23
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. IT MAY
NOT BE SOLD OR OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER
SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THE COMPANY
OR HOLDER'S COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED TO EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT
TO RULE 144.
RESEARCH TRIANGLE CONSULTANTS, INC.
WARRANT MBW-2
THIS CERTIFIES that, subject to the terms and conditions of this Warrant,
Rene Matthews Usher (the "Warrantholder"), for value received, is entitled to
subscribe for and purchase up to Seventy Thousand Eight Hundred (70,800)
fully-paid and non-assessable shares (the "Shares") of the Common Stock (the
"Stock"), of Research Triangle Consultants, Inc., a North Carolina corporation
(the "Company"), at the exercise price of One Dollar and Twenty-one Cents
($1.21) per share (the "Initial Exercise Price"), which number of Shares and
Initial Exercise Price will be adjusted pursuant to the provisions of Section 7
hereof (the "Exercise Price").
1. Term. Except as otherwise provided for herein, the term of this Warrant
and the right to purchase shares as granted herein will be exercisable, at any
time and from time to time, during the period commencing on January 22, 1999
(the "Warrant Grant Date") and terminating at 5:00 p.m. on the fifth anniversary
of the Warrant Grant Date (the "Termination Date"), unless earlier terminated
pursuant to Section 2(c) of this Warrant.
2. Exercise of Purchase Rights.
(a) Exercise. The purchase rights represented by this Warrant are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time during
the period set forth in Section 1 above, by tendering the Company at its
principal office a notice of exercise in the form attached hereto as Exhibit A
(the "Notice of Exercise"), duly completed and executed. Upon receipt of the
Notice of Exercise and the payment of the Exercise Price in accordance with the
terms set forth below, the Company will issue to the Warrantholder a certificate
for the number of shares of Stock of the Company purchased and will execute the
Notice of Exercise indicating the number of shares of Stock which remain subject
to future purchases, if any. The person or persons in whose name(s) any
certificate(s) representing shares of Stock will be issued upon exercise of this
Warrant will be deemed to have become the holder(s) of, the Shares represented
thereby (and such shares will be deemed to have been issued) immediately prior
to the close of business on the date or dates upon which this Warrant is
exercised. In the event of any exercise of the rights represented by this
Warrant, certificates for the Shares so purchased will be delivered to the
Warrantholder or its designee as soon as practical and in any event within
thirty (30) days after receipt of such notice and, unless this Warrant has been
fully exercised or
expired, a new Warrant representing the remaining portion of the Shares, if any,
with respect to which this Warrant will not then have been exercised will also
be issued to the Warrantholder as soon as possible and in any event within such
thirty (30) day period.
(b) Method of Exercise. The purchase rights hereby represented may be exercised,
at the election of the Warrantholder, by the tender of the Notice of Election
and the surrender of this Warrant at the principal office of the Company and by
the payment to the Company, by check, cancellation of indebtedness or other form
of payment acceptable to the Company, of an amount equal to the then applicable
Exercise Price per share multiplied by the number of Shares then being
purchased.
(c) Termination in the Event of Initial Public Offering. Notwithstanding any
other term or provision of this Warrant, this Warrant will terminate immediately
upon the effectiveness of a registration statement under the Securities Act of
1933, as amended, and sale of the Company's Stock in a firm commitment
underwritten public offering. The Company will give written notice thereof to
the Warrantholder stating the date on which such event is to take place (which
will be at least ten (10) days after the giving of such notice). The
Warrantholder may condition exercise of this Warrant upon the Securities and
Exchange Commission declaring the registration statement effective.
3. Reservation of Shares.
(a) Authorization and Reservation of Shares. The Company will at all times have
authorized and reserved a sufficient number of Shares to provide for the
exercise of the rights to purchase Stock as provided herein.
(b) Registration or Listing. If any shares of Stock required to be reserved for
purposes of exercise of this Warrant require registration with or approval of
any governmental authority under any Federal or State law (other than any
registration under the Securities Act of 1933, as then in effect, or any similar
Federal statute then enforced, or any state securities law, required by reason
of any transfer), or listing on any domestic securities exchange, or if at the
time of exercise the class of Stock into which this Warrant is then exercisable
is listed on any domestic securities exchange, the Company will, at its expense
and as expeditiously as possible, use its best efforts to cause such shares to
be duly registered, listed or approved for listing on such domestic securities
exchange, as the case may be.
4. No Fractional Shares. No fractional shares or scrip representing fractional
shares will be issued upon the exercise of the Warrantholder's rights to
purchase Stock, but in lieu of such fractional shares the Company will make a
cash payment therefor upon the basis of the fair market value of a share of that
stock at the time of Exercise.
5. No Rights as Shareholder. This Warrant does not entitle the Warrantholder to
any voting rights or other rights as a shareholder of the Company prior to the
exercise of the Warrantholder's rights to purchase Stock as provided for herein.
2
6. Warrantholder Registry. The Company will maintain a registry showing the
name and address of the registered holder of this Warrant.
7. Adjustment Rights. The Exercise Price and the number of Shares of Stock
purchasable hereunder are subject to adjustment from time to time, as follows:
(a) Reclassification or Merger. In case of any reclassification, change or
conversion of securities of the class issuable upon exercise of this Warrant
into the same or a different number of securities of any other class or classes,
or in case of any merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, will
duly execute and deliver to the holder of this Warrant, so that the holder of
this Warrant will have the right to receive, at a total purchase price not to
exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the Shares of Stock theretofore issuable upon exercise
of this Warrant, the kind and amount of shares of stock, other securities, money
and property receivable upon such reclassification, change or merger by a holder
of the number of Shares of Stock then purchasable under this Warrant. Such new
Warrant will provide for adjustment that will be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 7. The provisions of
this subparagraph (a) will similarly apply to successive reclassifications,
changes, mergers and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time will
subdivide its Stock, the Exercise Price will be proportionately decreased and
the number of Shares issuable pursuant to this Warrant will be proportionately
increased. If the Company at any time will combine its Stock, the Exercise Price
will be proportionately increased and the number of Shares issuable pursuant to
this Warrant will be proportionately decreased.
(c) Stock Dividends. If the Company at any time will pay a dividend payable in,
or make any other distribution (except any distribution specifically provided
for in the foregoing subsections (a) or (b)) of Stock, then the Exercise Price
will be adjusted, from and after the date of determination of stockholders
entitled to receive such dividend or distribution of stockholders to that price
determined by multiplying the Exercise Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which will be the total
number of shares of Stock outstanding immediately prior to such dividend or
distribution, and (ii) the denominator of which will be the total number of
shares of Stock outstanding immediately after such dividend or distribution. The
Warrantholder will thereafter be entitled to purchase, at the Exercise Price
resulting form such adjustment, the number of Shares of Stock (calculated to the
nearest whole share) obtained by multiplying (i) the Exercise Price in effect
immediately prior to such adjustment by (ii) the number of Shares of Stock
issuable upon the exercise hereof immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
3
(d) Reserved Shares Adjustment. The number of shares reserved for issuance
pursuant to this Warrant will automatically be adjusted without further action
by the Company in the event of any adjustment of the number of Shares issuable
pursuant to this Warrant.
(e) Registration and Listing. The Company will take all such actions as may be
necessary to assure that all Shares of Stock issuable pursuant to this Warrant
may be so issued without violation of any applicable law or regulation or any
requirements of any domestic stock exchange (except for official notice of
issuance, which will be immediately transmitted by the Company upon issuance)
upon which shares of Stock or other shares of the same class may be listed.
8. Compliance with Securities Act; Disposition of Warrant or Shares of Stock.
(a) Compliance with Securities Act. The Warrantholder, by acceptance hereof,
agrees that this Warrant, and the Shares of Stock to be issued upon exercise
hereof, are being acquired for investment and that such Warrantholder will not
offer, sell or otherwise dispose of this Warrant, or any Shares of Stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended (the "Securities Act"), or
any applicable state securities laws. At the time of exercise, the Warrantholder
will execute an Investment Letter in the form attached hereto as Exhibit B
stating (among other things) that the shares issued pursuant to the Warrant have
not been registered under federal or state securities laws, and that such shares
may not be transferred unless the shares are so registered or unless the Company
has received an opinion of the Company's counsel or such holder's counsel
reasonably acceptable to the Company that such transfers are exempt from
registration.
(b) This Warrant and all shares of Stock issued upon exercise of this Warrant
(unless registered under the Securities Act and any applicable state securities
laws) will be stamped or imprinted with a legend in substantially the following
form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED TO
EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT TO RULE 144."
(c) Representations and Warranties of Warrantholder. In addition, in connection
with the issuance of this Warrant, the Warrantholder specifically represents to
the Company by acceptance of this Warrant as follows:
(i) The Warrantholder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant. The Warrantholder
is acquiring this Warrant for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof in violation of the Securities Act.
4
(ii) The Warrantholder understands that this Warrant has not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
Warrantholder's investment intent as expressed herein.
(iii) The Warrantholder further understands that this Warrant and any shares of
Stock to be issued upon exercise hereof must be held indefinitely unless
subsequently registered under the Securities Act and qualified under any
applicable state securities laws, or unless exemptions from registration and
qualification are otherwise available.
(d) Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any Shares of Stock acquired pursuant to the
exercise of this Warrant prior to registration of such Warrant or Shares, the
holder agrees to give written notice to the Company prior thereto, describing
briefly the manner thereof, together with an opinion of the Company's counsel or
such holder's counsel reasonably satisfactory to the Company, or other evidence,
if reasonably requested by the Company, to the effect that such offer, sale or
other disposition may be effected without registration or qualification (under
the Securities Act as then in effect or any federal or state securities law then
in effect) of this Warrant or such shares of Stock and indicating whether or not
under the Securities Act certificates for this Warrant or such shares of Stock
to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. Promptly upon receiving such written notice and reasonably
satisfactory opinion or other evidence, if so requested, the Company, as
promptly as practicable but no later than five (5) days after receipt of the
written notice, will notify such holder that such holder may sell or otherwise
dispose of this Warrant or such shares of Stock, all in accordance with the
terms of the notice delivered to the Company. Notwithstanding the foregoing,
this Warrant or such shares of Stock may, as to such federal laws, be offered,
sold or otherwise disposed of in accordance with Rule 144 or 144A under the
Securities act, provided that the Company will have been furnished with such
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 or 144A have been satisfied. Each
certificate representing this Warrant or the shares of Stock thus transferred
(except a transfer pursuant to Rule 144 or 144A) will bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
such laws, unless in the aforesaid opinion of counsel for the Company or the
Warrantholder or pursuant to Rule 144 or 144A, such legend is not required in
order to ensure compliance with such laws. The Company may issue stop transfer
instruction to its transfer agent in connection with such restrictions.
Notwithstanding the foregoing, (i) until a public market develops for the
securities of the Company, neither the Warrantholder nor any subsequent
transferee may transfer the Warrant or any Warrant Shares to any competitor of
the Company; and (ii) any transferee of the Warrantholder and any subsequent
transferee will expressly agree in writing with the Company to be bound by and
to comply with all applicable provisions of this Warrant.
(e) If in connection with the initial public offering of shares of Common Stock
of the Company registered pursuant to the Securities Act, the managing
underwriter for such registration will so request, the Warrantholder will not
sell, make any short sale of, grant any option for the purchase of, or otherwise
dispose of any Warrant Shares (other than those shares
5
of Common Stock included in such registration) without the prior written consent
of the Company for a period designated by the Company in writing to the
Warrantholder, which period will begin not more than ten (10) days prior to the
effectiveness of the registration statement pursuant to which such public
offering will be made and will not last more than one hundred eighty (180) days
(or such other period as the officers and directors of the Company and holders
of greater than ten percent (10%) of all securities registered pursuant to the
registration statement mutually agree) after the effective date of such
registration statement. The holders hereby agree to execute such form of
agreement evidencing this obligation as any underwriter requests.
9. Registration. The Company acknowledges and agrees that, with respect to the
Shares, the Warrantholder will have the registration rights provided pursuant to
the Registration Rights Agreement, the form of which is attached hereto (the
"Registration Rights Agreement").
10. Miscellaneous.
(a) Attorney's Fees. In any litigation, arbitration or court proceeding between
the Company and the Warrantholder relating hereto, the prevailing party will be
entitled to attorneys' fees and expenses and all costs of proceedings incurred
in enforcing this Warrant.
(b) Governing Law. This Warrant Agreement will be governed by and construed for
all purposes under and in accordance with the laws of the State of North
Carolina without respect to the principles of the choice of law or the conflict
of laws.
(c) Descriptive Headings. The descriptive headings of the paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant.
(d) Notices. Any notice required or permitted hereunder will be given in writing
and will be deemed effectively given upon personal delivery or upon deposit in
the United States mail, by registered or certified mail, addressed (i) to the
Warrantholder, at the address in the Warrant Register maintained by the Company,
and (ii) to the Company, at 1135 Kildaire Farm Road, Suite 329, Cary, North
Carolina 27511, Attention: Philip R. Alfano, or at such other address as any
such party may subsequently designate by written notice to the other party.
(e) Lost Warrants. The Company covenants to the Warrantholder, that upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate and, in the
case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender and cancellation of such Warrant or stock certificate, the
Company will make and deliver a new Warrant or stock certificate of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.
(f) Severability. In the event any one or more of the provisions of this Warrant
will for any reason be held invalid, illegal or unenforceable, the remaining
provisions of this Warrant will be unimpaired, and the invalid, illegal or
unenforceable provision will be replaced by a mutually acceptable valid, legal
and enforceable provision, which comes closest to the intention of the parties
underlying the invalid, illegal or unenforceable provision.
6
(g) Modification and Waiver. This Warrant and any provision hereof may be
amended, waived, discharged or terminated only by an instrument in writing
signed by the party against whom enforcement of the same is sought.
(h) Entire Agreement. This Warrant constitutes the entire agreement between the
parties pertaining to the subject matter contained in it and supersedes all
prior and contemporaneous agreements, representations and undertakings of the
parties, whether oral or written, with respect to such subject matter.
IN WITNESS WHEREOF, this warrant has been duly executed and delivered by
the undersigned.
RESEARCH TRIANGLE CONSULTANTS, INC.
By:
------------------------------
Jeffrey W. LeRose, President
7
Exhibit A
NOTICE OF EXERCISE FOR CASH
To: Research Triangle Consultants, Inc.
1135 Kildaire Farm Road
Suite 329
Cary, North Carolina 27511
Attention: Philip R. Alfano
1. The undersigned, hereby elects to purchase shares of
the Common Stock of Research Triangle Consultants, Inc. pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below:
Name Address
(SIGNATURE)
Date:
8
Exhibit B
FORM OF INVESTMENT LETTER
___________, 19___
Research Triangle Consultants, Inc.
1135 Kildaire Farm Road
Suite 329
Cary, North Carolina 27511
Attention: Philip R. Alfano
Gentlemen:
The undersigned, ________________________ ("Purchaser") intends to acquire
up to _________ shares (the "Shares") of the Common Stock of Research Triangle
Consultants, Inc. (the "Company") from the Company pursuant to the exercise of
certain Warrant held by Purchaser. The Shares will be issued to Purchaser in a
transaction not involving a public offering and pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with such purchase and in order to comply with the exemption from
registration relied upon by the Company, Purchaser represents, warrants and
agrees as follows:
1. Purchaser is acquiring the Shares for Purchaser's own account, to hold
for investment, and Purchaser will not make any sale, transfer or other
disposition of the Shares in violation of the 1933 Act or the rules and
regulations promulgated thereunder by the Securities and Exchange Commission or
in violation of any applicable state securities law.
2. Purchaser has been advised that the issuance of the Shares is not being
registered under the 1933 Act on the ground that this transaction is exempt from
registration under Section 3(b) or 4(2) of the 1933 Act, as not involving any
public offering, and that reliance by the Company on such exemptions is
predicated in part on Purchaser's representations set forth in this letter.
Purchaser also has been advised that neither the Shares nor the issuance thereof
are being registered under the securities laws of any state.
3. Purchaser has been informed that the Shares must be held indefinitely
unless subsequently registered under the 1933 Act and applicable state
securities laws, or unless exemptions from such registration are available with
respect to any proposed transfer or disposition by Purchaser of the Shares.
Purchaser understands and agrees that the Company, as a condition to the
transfer of any of the Shares, may require that the request for transfer be
accompanied by an opinion of counsel satisfactory to the Company, in form and
substance satisfactory to the Company, to the effect that the proposed transfer
is exempt from registration under 1933 Act and applicable state securities laws,
unless such transfer is covered by an effective registration statement under the
1933 Act and all applicable state securities laws.
9
4. Purchaser understands and agrees that there will be placed on the
certificates for the Shares, or any substitutions therefor, a legend stating in
substance:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED TO
EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT TO RULE 144."
5. Purchaser has been furnished with or has had access to the information
it has requested from the Company in connection with the investment represented
by the Shares and has had an opportunity to discuss with the officers and
management of the Company the Company's business and financial affairs.
Purchaser has such knowledge and experience in business and financial matters
and with respect to investments in securities or in privately held companies so
as to enable it to understand and evaluate the risks of such investment and form
an investment decision with respect thereto.
Very truly yours,
___________________________________
Name:
Accepted as of the _____ day of ____________, 19____.
RESEARCH TRIANGLE CONSULTANTS, INC.
By: ______________________________
Name:
Title:
10
Exhibit 4.24
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. IT MAY
NOT BE SOLD OR OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER
SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THE COMPANY
OR HOLDER'S COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED TO EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT
TO RULE 144.
RESEARCH TRIANGLE CONSULTANTS, INC.
WARRANT MBW-4
THIS CERTIFIES that, subject to the terms and conditions of this Warrant,
Mark Yount (the "Warrantholder"), for value received, is entitled to subscribe
for and purchase up to Four Thousand Fifteen (4,015) fully-paid and
non-assessable shares (the "Shares") of the Common Stock (the "Stock"), of
Research Triangle Consultants, Inc., a North Carolina corporation (the
"Company"), at the exercise price of One Dollar and Twenty-one Cents ($1.21) per
share (the "Initial Exercise Price"), which number of Shares and Initial
Exercise Price will be adjusted pursuant to the provisions of Section 7 hereof
(the "Exercise Price").
1. Term. Except as otherwise provided for herein, the term of this Warrant and
the right to purchase shares as granted herein will be exercisable, at any time
and from time to time, during the period commencing on January 22, 1999 (the
"Warrant Grant Date") and terminating at 5:00 p.m. on the fifth anniversary of
the Warrant Grant Date (the "Termination Date"), unless earlier terminated
pursuant to Section 2(c) of this Warrant.
2. Exercise of Purchase Rights.
(a) Exercise. The purchase rights represented by this Warrant are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time during
the period set forth in Section 1 above, by tendering the Company at its
principal office a notice of exercise in the form attached hereto as Exhibit A
(the "Notice of Exercise"), duly completed and executed. Upon receipt of the
Notice of Exercise and the payment of the Exercise Price in accordance with the
terms set forth below, the Company will issue to the Warrantholder a certificate
for the number of shares of Stock of the Company purchased and will execute the
Notice of Exercise indicating the number of shares of Stock which remain subject
to future purchases, if any. The person or persons in whose name(s) any
certificate(s) representing shares of Stock will be issued upon exercise of this
Warrant will be deemed to have become the holder(s) of, the Shares represented
thereby (and such shares will be deemed to have been issued) immediately prior
to the close of business on the date or dates upon which this Warrant is
exercised. In the event of any exercise of the rights represented by this
Warrant, certificates for the Shares so purchased will be delivered to the
Warrantholder or its designee as soon as practical and in any event within
thirty (30) days after receipt of such notice and, unless this Warrant has been
fully exercised or expired, a new Warrant representing the remaining portion of
the Shares, if any, with respect to
which this Warrant will not then have been exercised will also be issued to the
Warrantholder as soon as possible and in any event within such thirty (30) day
period.
(b) Method of Exercise. The purchase rights hereby represented may be exercised,
at the election of the Warrantholder, by the tender of the Notice of Election
and the surrender of this Warrant at the principal office of the Company and by
the payment to the Company, by check, cancellation of indebtedness or other form
of payment acceptable to the Company, of an amount equal to the then applicable
Exercise Price per share multiplied by the number of Shares then being
purchased.
(c) Termination in the Event of Initial Public Offering. Notwithstanding any
other term or provision of this Warrant, this Warrant will terminate immediately
upon the effectiveness of a registration statement under the Securities Act of
1933, as amended, and sale of the Company's Stock in a firm commitment
underwritten public offering. The Company will give written notice thereof to
the Warrantholder stating the date on which such event is to take place (which
will be at least ten (10) days after the giving of such notice). The
Warrantholder may condition exercise of this Warrant upon the Securities and
Exchange Commission declaring the registration statement effective.
3. Reservation of Shares.
(a) Authorization and Reservation of Shares. The Company will at all times have
authorized and reserved a sufficient number of Shares to provide for the
exercise of the rights to purchase Stock as provided herein.
(b) Registration or Listing. If any shares of Stock required to be reserved for
purposes of exercise of this Warrant require registration with or approval of
any governmental authority under any Federal or State law (other than any
registration under the Securities Act of 1933, as then in effect, or any similar
Federal statute then enforced, or any state securities law, required by reason
of any transfer), or listing on any domestic securities exchange, or if at the
time of exercise the class of Stock into which this Warrant is then exercisable
is listed on any domestic securities exchange, the Company will, at its expense
and as expeditiously as possible, use its best efforts to cause such shares to
be duly registered, listed or approved for listing on such domestic securities
exchange, as the case may be.
4. No Fractional Shares. No fractional shares or scrip representing fractional
shares will be issued upon the exercise of the Warrantholder's rights to
purchase Stock, but in lieu of such fractional shares the Company will make a
cash payment therefor upon the basis of the fair market value of a share of that
stock at the time of Exercise.
5. No Rights as Shareholder. This Warrant does not entitle the Warrantholder
to any voting rights or other rights as a shareholder of the Company prior to
the exercise of the Warrantholder's rights to purchase Stock as provided for
herein.
6. Warrantholder Registry. The Company will maintain a registry showing the
name and address of the registered holder of this Warrant.
2
7. Adjustment Rights. The Exercise Price and the number of Shares of Stock
purchasable hereunder are subject to adjustment from time to time, as follows:
(a) Reclassification or Merger. In case of any reclassification, change or
conversion of securities of the class issuable upon exercise of this Warrant
into the same or a different number of securities of any other class or classes,
or in case of any merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, will
duly execute and deliver to the holder of this Warrant, so that the holder of
this Warrant will have the right to receive, at a total purchase price not to
exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the Shares of Stock theretofore issuable upon exercise
of this Warrant, the kind and amount of shares of stock, other securities, money
and property receivable upon such reclassification, change or merger by a holder
of the number of Shares of Stock then purchasable under this Warrant. Such new
Warrant will provide for adjustment that will be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 7. The provisions of
this subparagraph (a) will similarly apply to successive reclassifications,
changes, mergers and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time will
subdivide its Stock, the Exercise Price will be proportionately decreased and
the number of Shares issuable pursuant to this Warrant will be proportionately
increased. If the Company at any time will combine its Stock, the Exercise Price
will be proportionately increased and the number of Shares issuable pursuant to
this Warrant will be proportionately decreased.
(c) Stock Dividends. If the Company at any time will pay a dividend payable in,
or make any other distribution (except any distribution specifically provided
for in the foregoing subsections (a) or (b)) of Stock, then the Exercise Price
will be adjusted, from and after the date of determination of stockholders
entitled to receive such dividend or distribution of stockholders to that price
determined by multiplying the Exercise Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which will be the total
number of shares of Stock outstanding immediately prior to such dividend or
distribution, and (ii) the denominator of which will be the total number of
shares of Stock outstanding immediately after such dividend or distribution. The
Warrantholder will thereafter be entitled to purchase, at the Exercise Price
resulting form such adjustment, the number of Shares of Stock (calculated to the
nearest whole share) obtained by multiplying (i) the Exercise Price in effect
immediately prior to such adjustment by (ii) the number of Shares of Stock
issuable upon the exercise hereof immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
(d) Reserved Shares Adjustment. The number of shares reserved for issuance
pursuant to this Warrant will automatically be adjusted without further action
by the Company in the event of any adjustment of the number of Shares issuable
pursuant to this Warrant.
3
(e) Registration and Listing. The Company will take all such actions as may be
necessary to assure that all Shares of Stock issuable pursuant to this Warrant
may be so issued without violation of any applicable law or regulation or any
requirements of any domestic stock exchange (except for official notice of
issuance, which will be immediately transmitted by the Company upon issuance)
upon which shares of Stock or other shares of the same class may be listed.
8. Compliance with Securities Act; Disposition of Warrant or Shares of Stock.
(a) Compliance with Securities Act. The Warrantholder, by acceptance hereof,
agrees that this Warrant, and the Shares of Stock to be issued upon exercise
hereof, are being acquired for investment and that such Warrantholder will not
offer, sell or otherwise dispose of this Warrant, or any Shares of Stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended (the "Securities Act"), or
any applicable state securities laws. At the time of exercise, the Warrantholder
will execute an Investment Letter in the form attached hereto as Exhibit B
stating (among other things) that the shares issued pursuant to the Warrant have
not been registered under federal or state securities laws, and that such shares
may not be transferred unless the shares are so registered or unless the Company
has received an opinion of the Company's counsel or such holder's counsel
reasonably acceptable to the Company that such transfers are exempt from
registration.
(b) This Warrant and all shares of Stock issued upon exercise of this Warrant
(unless registered under the Securities Act and any applicable state securities
laws) will be stamped or imprinted with a legend in substantially the following
form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED TO
EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT TO RULE 144."
(c) Representations and Warranties of Warrantholder. In addition, in connection
with the issuance of this Warrant, the Warrantholder specifically represents to
the Company by acceptance of this Warrant as follows:
(i) The Warrantholder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant. The Warrantholder
is acquiring this Warrant for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof in violation of the Securities Act.
(ii) The Warrantholder understands that this Warrant has not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon,
4
among other things, the bona fide nature of the Warrantholder's investment
intent as expressed herein.
(iii) The Warrantholder further understands that this Warrant and any shares of
Stock to be issued upon exercise hereof must be held indefinitely unless
subsequently registered under the Securities Act and qualified under any
applicable state securities laws, or unless exemptions from registration and
qualification are otherwise available.
(d) Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any Shares of Stock acquired pursuant to the
exercise of this Warrant prior to registration of such Warrant or Shares, the
holder agrees to give written notice to the Company prior thereto, describing
briefly the manner thereof, together with an opinion of the Company's counsel or
such holder's counsel reasonably satisfactory to the Company, or other evidence,
if reasonably requested by the Company, to the effect that such offer, sale or
other disposition may be effected without registration or qualification (under
the Securities Act as then in effect or any federal or state securities law then
in effect) of this Warrant or such shares of Stock and indicating whether or not
under the Securities Act certificates for this Warrant or such shares of Stock
to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. Promptly upon receiving such written notice and reasonably
satisfactory opinion or other evidence, if so requested, the Company, as
promptly as practicable but no later than five (5) days after receipt of the
written notice, will notify such holder that such holder may sell or otherwise
dispose of this Warrant or such shares of Stock, all in accordance with the
terms of the notice delivered to the Company. Notwithstanding the foregoing,
this Warrant or such shares of Stock may, as to such federal laws, be offered,
sold or otherwise disposed of in accordance with Rule 144 or 144A under the
Securities act, provided that the Company will have been furnished with such
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 or 144A have been satisfied. Each
certificate representing this Warrant or the shares of Stock thus transferred
(except a transfer pursuant to Rule 144 or 144A) will bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
such laws, unless in the aforesaid opinion of counsel for the Company or the
Warrantholder or pursuant to Rule 144 or 144A, such legend is not required in
order to ensure compliance with such laws. The Company may issue stop transfer
instruction to its transfer agent in connection with such restrictions.
Notwithstanding the foregoing, (i) until a public market develops for the
securities of the Company, neither the Warrantholder nor any subsequent
transferee may transfer the Warrant or any Warrant Shares to any competitor of
the Company; and (ii) any transferee of the Warrantholder and any subsequent
transferee will expressly agree in writing with the Company to be bound by and
to comply with all applicable provisions of this Warrant.
(e) If in connection with the initial public offering of shares of Common Stock
of the Company registered pursuant to the Securities Act, the managing
underwriter for such registration will so request, the Warrantholder will not
sell, make any short sale of, grant any option for the purchase of, or otherwise
dispose of any Warrant Shares (other than those shares of Common Stock included
in such registration) without the prior written consent of the Company for a
period designated by the Company in writing to the Warrantholder, which period
will begin not more than ten (10) days prior to the effectiveness of the
registration statement
5
pursuant to which such public offering will be made and will not last more than
one hundred eighty (180) days (or such other period as the officers and
directors of the Company and holders of greater than ten percent (10%) of all
securities registered pursuant to the registration statement mutually agree)
after the effective date of such registration statement. The holders hereby
agree to execute such form of agreement evidencing this obligation as any
underwriter requests.
9. Registration. The Company acknowledges and agrees that, with respect to the
Shares, the Warrantholder will have the registration rights provided pursuant to
the Registration Rights Agreement, the form of which is attached hereto (the
"Registration Rights Agreement").
10. Miscellaneous.
(a) Attorney's Fees. In any litigation, arbitration or court proceeding between
the Company and the Warrantholder relating hereto, the prevailing party will be
entitled to attorneys' fees and expenses and all costs of proceedings incurred
in enforcing this Warrant.
(b) Governing Law. This Warrant Agreement will be governed by and construed for
all purposes under and in accordance with the laws of the State of North
Carolina without respect to the principles of the choice of law or the conflict
of laws.
(c) Descriptive Headings. The descriptive headings of the paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant.
(d) Notices. Any notice required or permitted hereunder will be given in writing
and will be deemed effectively given upon personal delivery or upon deposit in
the United States mail, by registered or certified mail, addressed (i) to the
Warrantholder, at the address in the Warrant Register maintained by the Company,
and (ii) to the Company, at 1135 Kildaire Farm Road, Suite 329, Cary, North
Carolina 27511, Attention: Philip R. Alfano, or at such other address as any
such party may subsequently designate by written notice to the other party.
(e) Lost Warrants. The Company covenants to the Warrantholder, that upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate and, in the
case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender and cancellation of such Warrant or stock certificate, the
Company will make and deliver a new Warrant or stock certificate of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.
(f) Severability. In the event any one or more of the provisions of this Warrant
will for any reason be held invalid, illegal or unenforceable, the remaining
provisions of this Warrant will be unimpaired, and the invalid, illegal or
unenforceable provision will be replaced by a mutually acceptable valid, legal
and enforceable provision, which comes closest to the intention of the parties
underlying the invalid, illegal or unenforceable provision.
6
(g) Modification and Waiver. This Warrant and any provision hereof may be
amended, waived, discharged or terminated only by an instrument in writing
signed by the party against whom enforcement of the same is sought.
(h) Entire Agreement. This Warrant constitutes the entire agreement between the
parties pertaining to the subject matter contained in it and supersedes all
prior and contemporaneous agreements, representations and undertakings of the
parties, whether oral or written, with respect to such subject matter.
IN WITNESS WHEREOF, this warrant has been duly executed and delivered by
the undersigned.
RESEARCH TRIANGLE CONSULTANTS, INC.
By: _________________________________
Jeffrey W. LeRose, President
7
Exhibit A
NOTICE OF EXERCISE FOR CASH
To: Research Triangle Consultants, Inc.
1135 Kildaire Farm Road
Suite 329
Cary, North Carolina 27511
Attention: Philip R. Alfano
1. The undersigned, hereby elects to purchase shares of
the Common Stock of Research Triangle Consultants, Inc. pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below:
Name Address
(SIGNATURE)
Date:
8
Exhibit B
FORM OF INVESTMENT LETTER
___________, 19___
Research Triangle Consultants, Inc.
1135 Kildaire Farm Road
Suite 329
Cary, North Carolina 27511
Attention: Philip R. Alfano
Gentlemen:
The undersigned, ________________________ ("Purchaser") intends to acquire
up to _________ shares (the "Shares") of the Common Stock of Research Triangle
Consultants, Inc. (the "Company") from the Company pursuant to the exercise of
certain Warrant held by Purchaser. The Shares will be issued to Purchaser in a
transaction not involving a public offering and pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with such purchase and in order to comply with the exemption from
registration relied upon by the Company, Purchaser represents, warrants and
agrees as follows:
1. Purchaser is acquiring the Shares for Purchaser's own account, to hold
for investment, and Purchaser will not make any sale, transfer or other
disposition of the Shares in violation of the 1933 Act or the rules and
regulations promulgated thereunder by the Securities and Exchange Commission or
in violation of any applicable state securities law.
2. Purchaser has been advised that the issuance of the Shares is not being
registered under the 1933 Act on the ground that this transaction is exempt from
registration under Section 3(b) or 4(2) of the 1933 Act, as not involving any
public offering, and that reliance by the Company on such exemptions is
predicated in part on Purchaser's representations set forth in this letter.
Purchaser also has been advised that neither the Shares nor the issuance thereof
are being registered under the securities laws of any state.
3. Purchaser has been informed that the Shares must be held indefinitely
unless subsequently registered under the 1933 Act and applicable state
securities laws, or unless exemptions from such registration are available with
respect to any proposed transfer or disposition by Purchaser of the Shares.
Purchaser understands and agrees that the Company, as a condition to the
transfer of any of the Shares, may require that the request for transfer be
accompanied by an opinion of counsel satisfactory to the Company, in form and
substance satisfactory to the Company, to the effect that the proposed transfer
is exempt from registration under 1933 Act and applicable state securities laws,
unless such transfer is covered by an effective registration statement under the
1933 Act and all applicable state securities laws.
9
4. Purchaser understands and agrees that there will be placed on the
certificates for the Shares, or any substitutions therefor, a legend stating in
substance:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED TO
EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT TO RULE 144."
5. Purchaser has been furnished with or has had access to the information
it has requested from the Company in connection with the investment represented
by the Shares and has had an opportunity to discuss with the officers and
management of the Company the Company's business and financial affairs.
Purchaser has such knowledge and experience in business and financial matters
and with respect to investments in securities or in privately held companies so
as to enable it to understand and evaluate the risks of such investment and form
an investment decision with respect thereto.
Very truly yours,
____________________________________
Name:
Accepted as of the _____ day of ____________, 19____.
RESEARCH TRIANGLE CONSULTANTS, INC.
By: ______________________________
Name:
Title:
10
Exhibit 5.1
Kramer Levin Naftalis & Frankel LLP
919 THIRD AVENUE
NEW YORK, N.Y. 10022 - 3852
FACSIMILE 47, Avenue
(212) 715-8000 Hoche
75008 Paris
-----
DIRECT NUMBER France
(212) 715-9100
June 6, 2001
Internet Commerce Corporation
805 Third Avenue
New York, New York 10022
Re: Registration Statement on Form S-3 (File No. 333-52450)
--------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Internet Commerce Corporation, a
Delaware corporation (the "Registrant"), in connection with the preparation and
filing of the above referenced Registration Statement on Form S-3 (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") with respect to the registration under the Securities Act of 1933,
as amended (the "Act"), of an aggregate of 2,590,386 shares (the "Shares") of
Class A Common Stock, par value $.01 per share, including shares which may be
issued upon exercise of warrants.
In connection with the registration of the Shares, we have reviewed
copies of the Registration Statement, the Amended and Restated Certificate of
Incorporation of the Registrant, as amended (the "Certificate of
Incorporation"), the By-laws of the Registrant, the Agreement and Plan of Merger
among the Registrant, ICC Acquisition Corporation, Inc., Research Triangle
Commerce, Inc., Jeffrey LeRose and Blue Water Venture Fund II, L.L.C. dated as
of June 14, 2000, resolutions of the Board of Directors and stockholders of the
Registrant and such other documents and records as we have deemed necessary to
enable us to express an opinion on the matters covered hereby. In rendering this
opinion, we have (a) assumed (i) the genuineness of all signatures on all
documents reviewed by us, (ii) the authenticity of all documents submitted to us
as originals and (iii) the conformity to original documents of all documents
submitted to us as photostatic or conformed copies and the authenticity of the
originals of such copies; and (b) relied on (i) representations, statements and
certificates of public officials and others and (ii) as to matters of fact,
statements, representations and certificates of officers and representatives of
the Registrant.
Based upon the foregoing, we are of the opinion that the Shares
covered by the Registration Statement have been, or, in the case of Shares
issuable upon exercise of warrants,
Kramer Levin Naftalis & Frankel LLP
Internet Commerce Corporation
June 6, 2001
Page 2
when issued in accordance with the terms of such warrants, will be, validly
issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement. In giving the foregoing consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act or the rules and regulations of the Commission thereunder.
We do not express any opinion with respect to any law other than the
General Corporation Law of the State of Delaware and the federal laws of the
United States of America. Our opinion is rendered only with respect to the laws
which are currently in effect in such jurisdictions.
Very truly yours,
/s/ Kramer Levin Naftalis & Frankel LLP
Exhibit 5.1
Kramer Levin Naftalis & Frankel LLP
919 THIRD AVENUE
NEW YORK, N.Y. 10022 - 3852
FACSIMILE 47, Avenue Hoche
(212) 715-8000 75008 Paris
----- France
DIRECT NUMBER
(212) 715-9100
Exhibit 23(ii).1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-52450 of Internet Commerce Corporation on Form
S-3 of our report dated September 29, 2000, appearing in the Annual Report on
Form 10-KSB of Internet Commerce Corporation for the year ended July 31, 2000,
and to the reference to us under the heading "Experts" in the Prospectus, which
is part of such Registration Statement.
/s/ Deloitte & Touche LLP
New York, New York
June 6, 2001
Exhibit 5.1
Kramer Levin Naftalis & Frankel LLP
919 THIRD AVENUE
NEW YORK, N.Y. 10022 - 3852
FACSIMILE 47, Avenue Hoche
(212) 715-8000 75008 Paris
----- France
DIRECT NUMBER
(212) 715-9100
Exhibit 23(ii).2
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in the Registration
Statement of Internet Commerce Corporation on Amendment No. 1 to Form S-3 of our
report dated September 30, 1999, on our audit of the statements of operations,
changes in stockholders' equity and other comprehensive income, and cash flows
of Internet Commerce Corporation for the year ended July 31, 1999, which is
included in its Annual Report on Form 10-KSB. We also consent to the reference
to our firm under the caption "Experts" in the Prospectus forming a part of such
Registration Statement.
/s/ Richard A. Eisner & Company, LLP
New York, New York
June 5, 2001
Exhibit 23(ii).3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 333-52450) of Internet Commerce Corporation of our
report dated March 30, 2000 relating to the financial statements of Research
Triangle Commerce, Inc., which appears in the Current Report on Form 8-K of
Internet Commerce Corporation dated September 7, 2000. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Raleigh, North Carolina
June 4, 2001