UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                  SCHEDULE 14A
                                 (RULE 14a-101)

                            SCHEDULE 14A INFORMATION

           PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[X]  Preliminary proxy statement.

[ ]  CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
     14A-6(E)(2)).

[ ]  Definitive Proxy Statement.

[ ]  Definitive Additional Materials.

[ ]  Soliciting Material Pursuant to Section 240.14a-12.

                          EASYLINK SERVICES CORPORATION
                (Name of Registrant as Specified in its Charter)

                                 Not Applicable
    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ ]  No fee required.


[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.


     (1)  Title of each class of securities to which transaction applies:




     (2)  Aggregate number of securities to which transaction applies:




     (3)  Per unit price or other underlying value of transaction computed
          pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
          filing fee is calculated and state how it was determined):




     (4)  Proposed maximum aggregate value of transaction:




     (5)  Total fee paid:





[X]  Fee paid previously with preliminary materials: $2,056.90


[ ]  Check box if any part of the fee is offset as provided by Exchange Act Rule
     0-11(a)(2) and identify the filing for which the offsetting fee was paid
     previously. Identify the previous filing by registration statement number,
     or the form or schedule and the date of its filing.

     (1)  Amount Previously Paid: ___________________________________

     (2)  Form, Schedule or Registration Statement No.: _____________

     (3)  Filing Party: _____________________________________________

     (4)  Date Filed: _______________________________________________



                           (EASYLINK SERVICES(R) LOGO)

                              33 KNIGHTSBRIDGE ROAD
                          PISCATAWAY, NEW JERSEY 08854

Dear Stockholder:

You are cordially invited to attend a special meeting of stockholders of
EasyLink Services Corporation ("EasyLink") in lieu of the 2007 annual meeting of
stockholders (the "Special Meeting") to be held on _____, 2007 at _____________,
local time, at ___.

At the Special Meeting, you will be asked to consider and vote upon a proposal
to adopt the Agreement and Plan of Merger (the "Merger Agreement"), dated as of
May 3, 2007, among Internet Commerce Corporation, a Delaware corporation
("ICC"), Jets Acquisition Sub, Inc., a Delaware corporation and a wholly owned
subsidiary of ICC ("Sub"), and EasyLink, among other matters. The Merger
Agreement provides that Sub will merge with and into EasyLink, upon the terms
and subject to the conditions set forth in the Merger Agreement.

If the Merger Agreement is adopted by EasyLink's stockholders and the merger is
completed, you, as a stockholder, will be entitled to receive $5.80, in cash,
without interest and less any applicable withholding tax, for each share of
Class A Common Stock, par value $0.01 per share, of EasyLink (the "Common
Stock") owned by you as of the time the merger becomes effective. In addition,
if the merger is completed, EasyLink will continue as the surviving corporation
and will succeed to and assume all the rights and obligations of Sub in
accordance with the General Corporation Law of the State of Delaware. Each share
of Common Stock that is owned by EasyLink, any subsidiary of EasyLink, ICC, Sub
or any other subsidiary of ICC automatically will be canceled and retired and
will cease to exist, and no consideration will be delivered in exchange
therefor.


A special committee of EasyLink's board of directors unanimously approved the
Merger Agreement and determined the merger advisable, fair to and in the best
interests of EasyLink and EasyLink's unaffiliated stockholders. The special
committee consists entirely of directors who are not officers or employees of
EasyLink and who will not have an economic interest in EasyLink following the
merger. EasyLink's board of directors, acting upon the recommendation of the
special committee, has approved and declared advisable the merger, the Merger
Agreement and the transactions contemplated by the Merger Agreement and has
unanimously determined that the merger, the Merger Agreement and the
transactions contemplated by the Merger Agreement are fair to, and in the best
interests of, EasyLink and EasyLink's unaffiliated stockholders. THE BOARD OF
DIRECTORS RECOMMENDS THAT EASYLINK'S STOCKHOLDERS VOTE "FOR" THE ADOPTION OF THE
MERGER AGREEMENT. Only stockholders of record at the close of business on July
10, 2007 are entitled to notice of, and to vote at, the Special Meeting or any
adjournment thereof.


The proxy statement attached to this letter provides you with information about
the Special Meeting and the proposed merger. A copy of the Merger Agreement is
attached as Annex A to the proxy statement. You are encouraged to read the
entire proxy statement carefully and in its entirety. You may also obtain more
information about EasyLink from documents that EasyLink has filed with the
Securities and Exchange Commission.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OF COMMON STOCK
THAT YOU OWN. EASYLINK CANNOT COMPLETE THE MERGER UNLESS THE MERGER AGREEMENT IS
ADOPTED BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING
SHARES OF COMMON STOCK ENTITLED TO VOTE ON IT. IF YOU FAIL TO VOTE ON THE MERGER
AGREEMENT, THE EFFECT WILL BE THE SAME AS A VOTE AGAINST THE ADOPTION OF THE
MERGER AGREEMENT.






Regardless of whether you plan to attend the Special Meeting in person, please
complete, date, sign and return, as promptly as possible, the enclosed proxy
card or submit a proxy through the Internet as described in the enclosed proxy
card. A self-addressed envelope is enclosed for your convenience. No postage is
required if mailed in the United States. Submitting a proxy will not prevent you
from voting your shares in person if you subsequently choose to attend the
Special Meeting.


Thank you for your cooperation and continued support.

                                        Sincerely,


                                        /s/ Thomas F. Murawski
                                        ----------------------------------------
                                        Thomas F. Murawski
                                        Chairman, President and Chief Executive
                                        Officer

Piscataway, New Jersey
________, 2007

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS
OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE ENCLOSED
PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.


                  THE PROXY STATEMENT IS DATED ________, 2007
       AND IS FIRST BEING SENT TO STOCKHOLDERS ON OR ABOUT _______, 2007.



                                       ii


                          (EASYLINK SERVICES(R) LOGO)

                              33 KNIGHTSBRIDGE ROAD
                          PISCATAWAY, NEW JERSEY 08854
                                 (888) 825-6385

                    NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
                          TO BE HELD ON _________, 2007

To the Stockholders of EasyLink Services Corporation:

A special meeting of stockholders of EasyLink Services Corporation, a Delaware
corporation ("EasyLink"), in lieu of the 2007 annual meeting of stockholders
(the "Special Meeting"), will be held on ______, 2007, at ___________________,
local time, at ________, for the following purposes:

1.   To consider and vote on a proposal to adopt the Agreement and Plan of
     Merger, dated as of May 3, 2007 (as it may be amended from time to time,
     the "Merger Agreement"), among Internet Commerce Corporation, a Delaware
     corporation ("ICC"), Jets Acquisition Sub, Inc., a Delaware corporation and
     a wholly owned subsidiary of ICC ("Sub"), and EasyLink. A copy of the
     Merger Agreement is attached as Annex A to the accompanying proxy
     statement. Pursuant to the terms of the Merger Agreement, Sub will merge
     with and into EasyLink, and, upon the merger becoming effective, each
     outstanding share of EasyLink's Class A common stock, par value $0.01 per
     share (the "Common Stock") (other than those shares owned directly by
     EasyLink or ICC or their respective subsidiaries and dissenting shares),
     will be converted into the right to receive $5.80 per share, in cash,
     without interest and less any applicable withholding tax, as described in
     the accompanying proxy statement;

2.   To elect eight directors;

3.   To ratify the selection by the audit committee of Grant Thornton LLP as
     EasyLink's independent registered public accounting firm for the fiscal
     year ending December 31, 2007;

4.   To approve the adjournment of the Special Meeting, if necessary or
     appropriate, to solicit additional proxies if there are insufficient votes
     at the time of the meeting to adopt the Merger Agreement; and

5.   To transact such other business as may properly come before the Special
     Meeting or any adjournment thereof.


Only EasyLink stockholders of record on July 10, 2007, the record date of the
Special Meeting, are entitled to notice of and to vote at the Special Meeting
and at any adjournment of the Special Meeting.


YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OF COMMON STOCK
THAT YOU OWN. THE MERGER CANNOT BE COMPLETED UNLESS THE MERGER AGREEMENT IS
ADOPTED BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING
SHARES OF COMMON STOCK ENTITLED TO VOTE ON IT. IF YOU FAIL TO VOTE ON THE MERGER
AGREEMENT, THE EFFECT WILL BE THE SAME AS A VOTE AGAINST THE ADOPTION OF THE
MERGER AGREEMENT. The election of directors will be determined by a plurality of
the votes cast. The ratification of the selection of the independent registered
public accounting firm and the proposal to adjourn the meeting, if necessary or
appropriate, to solicit additional proxies each requires the affirmative vote of
the holders of a majority of the votes cast on the proposal.






REGARDLESS OF WHETHER YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE SIGN AND
RETURN YOUR PROXY PROMPTLY. Even if you plan to attend the Special Meeting in
person, please complete, sign, date and return the enclosed proxy or submit a
proxy through the Internet as described in the enclosed proxy card prior to the
Special Meeting and thus ensure that your shares will be represented at the
Special Meeting if you are unable to attend.



If you sign, date and return your proxy card without indicating how you wish to
vote, your proxy will be voted in favor of the adoption of the Merger Agreement,
in favor of each of the nominees for director, in favor of the ratification of
the selection of the independent registered public accounting firm and in favor
of the proposal to adjourn the Special Meeting, if necessary or appropriate, to
solicit additional proxies. If you fail to return your proxy card or fail to
submit a proxy through the Internet as described in the enclosed proxy card, the
effect will be that your shares will not be counted for purposes of determining
whether a quorum is present at the Special Meeting and will have the same effect
as a vote against the adoption of the Merger Agreement, but will not affect the
outcome of the vote regarding the election of directors, the ratification of the
selection of the independent registered public accounting firm or the
adjournment of the meeting, if necessary or appropriate, to solicit additional
proxies. If you are a stockholder of record and do attend the Special Meeting
and wish to vote in person, you may withdraw your proxy and vote in person.


EasyLink stockholders who do not vote in favor of the adoption of the Merger
Agreement will have the right to seek appraisal of the fair value of their
shares if the merger is completed, but only if they deliver a written demand for
appraisal to EasyLink before the vote is taken on the Merger Agreement and they
comply with the other requirements of Delaware law, which are summarized in the
accompanying proxy statement.

                                        By Order of the Board of Directors,


                                        /s/ Thomas F. Murawski
                                        ----------------------------------------
                                        Thomas F. Murawski
                                        Chairman, President and Chief Executive
                                        Officer

_______, 2007


                                       ii



                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
SUMMARY TERM SHEET ......................................................     1
   The Parties Involved .................................................     1
   The Merger and Related Matters .......................................     2
   Treatment of Outstanding Options and Certain Restricted Stock ........     3
   Fairness of the Merger ...............................................     3
   Other Matters Relating to the Merger .................................     5
   The Special Meeting and Related Matters ..............................     8
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER ..........    10
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS ..............    14
PARTIES INVOLVED IN THE MERGER ..........................................    15
THE SPECIAL MEETING .....................................................    16
   Time, Place and Purpose of the Special Meeting .......................    16
   Record Date, Quorum and Voting Power .................................    16
   Required Vote ........................................................    16
   Voting by Directors and Executive Officers ...........................    16
   How You Can Vote .....................................................    17
   How You May Revoke Your Proxy or Change Your Vote ....................    17
   Expenses of Proxy Solicitation .......................................    18
   Adjournments .........................................................    18
   Appraisal Rights .....................................................    18
SPECIAL FACTORS .........................................................    19
   Background of the Merger .............................................    19
   Recommendations of the Special Committee and EasyLink's Board of
      Directors .........................................................    23
   Reasons for the Special Committee's Recommendation ...................    24
   Fairness Opinions ....................................................    26
   Reasons for the Board's Recommendation ...............................    37
   Purposes and Reasons for the Merger and Plans for EasyLink after the
      Merger ............................................................    38
   Certain Effects of the Merger ........................................    38
   Effects on EasyLink if the Merger is Not Completed ...................    43
   Financing ............................................................    44
   Remedies .............................................................    45
   Material U.S. Federal Income Tax Consequences of the Merger ..........    45
   Regulatory Approvals .................................................    47







                                                                         
   Delisting and Deregistration of Common Stock .........................    47
   Fees and Expenses ....................................................    47
APPRAISAL RIGHTS ........................................................    48
PROPOSAL 1:  THE MERGER AGREEMENT .......................................    51
   Effective Time of the Merger .........................................    51
   Structure ............................................................    51
   Treatment of Common Stock, Stock Options and Certain Restricted
      Stock .............................................................    51
   Exchange and Payment Procedures ......................................    52
   Certificate of Incorporation and Bylaws ..............................    53
   Directors and Officers ...............................................    53
   Representations and Warranties .......................................    53
   Conduct of Business Pending the Merger ...............................    55
   Agreement to Take Further Action and to Use Reasonable Efforts .......    57
   Notice of Certain Events .............................................    58
   No Solicitation of Transactions ......................................    58
   Indemnification of Directors and Officers; Insurance .................    59
   Employee Benefits ....................................................    59
   Conditions to the Merger .............................................    59
   Termination ..........................................................    61
   Termination Fees .....................................................    61
   Amendment and Waiver .................................................    62
THE VOTING AGREEMENTS ...................................................    63
PROPOSAL 2:  ELECTION OF DIRECTORS ......................................    64
   Nominees .............................................................    64
   Executive Officers ...................................................    66
   Certain Relationships and Related Transactions .......................    68
   Section 16(a) Beneficial Ownership Reporting Compliance ..............    69
   Corporate Governance .................................................    69
   Code of Business Conduct and Ethics ..................................    69
   Director Nomination Process ..........................................    70
   Communications with EasyLink's Board of Directors ....................    70
   Director Independence ................................................    71
   Meetings and Committees of EasyLink's Board of Directors .............    71
   Audit Committee ......................................................    71
   Compensation Committee ...............................................    71
   Compensation Discussion and Analysis .................................    72



                                       ii




                                                                         
   Compensation Committee Report ........................................    82
   Compensation of Directors in Fiscal Year 2006 ........................    90
   Special Meeting ......................................................    92
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS .........    93
   Fees Paid to the Independent Auditor .................................    93
   Change in Principal Accountant During 2005 ...........................    94
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN
   BENEFICIAL OWNERS ....................................................    95
MARKET PRICES AND DIVIDEND INFORMATION ..................................    96
STOCKHOLDER PROPOSALS ...................................................    96
HOUSEHOLDING ............................................................    97
OTHER MATTERS ...........................................................    97
WHERE YOU CAN FIND MORE INFORMATION .....................................    97


ANNEX A: AGREEMENT AND PLAN OF MERGER
ANNEX B: OPINION OF AMERICA'S GROWTH CAPITAL, LLC
ANNEX C: OPINION OF PHARUS ADVISORS, LLC
ANNEX D: SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF
         DELAWARE
ANNEX E: FORM OF VOTING AGREEMENT


ANNEX F: INFORMATION ABOUT ICC


                                       iii


                               SUMMARY TERM SHEET

This summary term sheet highlights selected information from this proxy
statement and may not contain all of the information that may be important to
you. Accordingly, EasyLink encourages you to read carefully this entire proxy
statement, its annexes and the documents referred to or incorporated by
reference in this proxy statement. You may obtain copies of the information
incorporated by reference in this proxy statement without charge by following
the instructions under "Where You Can Find More Information".

In this proxy statement, the term EasyLink refers to EasyLink Services
Corporation and, where appropriate, its subsidiaries. In this proxy statement,
Internet Commerce Corporation, a Delaware corporation, is referred to as ICC,
and Jets Acquisition Sub, Inc., a Delaware corporation, is referred to as Sub.


EasyLink intends to first send this proxy statement and the enclosed proxy card
to its stockholders on or about July 11, 2007.


THE PARTIES INVOLVED

     EASYLINK SERVICES CORPORATION
     33 Knightsbridge Road
     Piscataway, New Jersey 08854
     (888) 825-6385

     EasyLink Services Corporation (NasdaqCM: EASY), headquartered in
     Piscataway, New Jersey at the principal executive offices set forth above,
     is a leading global provider of outsourced business process automation
     services that enable medium and large enterprises, including 60 of the
     Fortune 100, to improve productivity and competitiveness by transforming
     manual and paper-based business processes into efficient electronic
     business processes. EasyLink is integral to the movement of information,
     money, materials, products and people in the global economy, dramatically
     improving the flow of data and documents for mission-critical business
     processes such as client communications via invoices, statements and
     confirmations, insurance claims, purchasing, shipping and payments. Driven
     by the discipline of Six Sigma Quality, EasyLink helps companies become
     more competitive by providing the most secure, efficient, reliable and
     flexible means of conducting business electronically. For more information,
     visit www.easylink.com.

     INTERNET COMMERCE CORPORATION
     6025 The Corners Parkway
     Suite 100
     Norcross, GA 30092
     (678) 533-8000


     Internet Commerce Corporation (NasdaqCM: ICCA), headquartered in Norcross,
     Georgia, is a leader in providing business-to-business e-commerce
     solutions. Thousands of customers rely on ICC's comprehensive line of
     solutions, in-depth expertise and unmatched customer service to help
     balance cost, fit and function required to meet unique requirements for
     trading partner compliance, coordination and collaboration. With its
     software solutions, network services, hosted web applications, managed
     services and consulting services, ICC is the trusted provider of e-commerce
     solutions for businesses, regardless of size and level of technical
     sophistication, to connect them with their trading communities. Certain
     financial and other information about ICC, including financial statements
     and related data in respect of ICC's two most recent fiscal years and
     certain fiscal periods since ICC's most recent fiscal year, are attached to
     this proxy statement as Annex F and are incorporated by reference into this
     proxy statement. For more information about ICC, visit www.icc.net.






     JETS ACQUISITION SUB, INC.
     6025 The Corners Parkway
     Suite 100
     Norcross, GA 30092
     (678) 533-8000

     Jets Acquisition Sub, Inc., a Delaware corporation and a wholly owned
     subsidiary of ICC, was formed solely for the purpose of facilitating ICC's
     acquisition of EasyLink. Sub has not carried on any activities to date,
     except for activities incidental to its formation and activities undertaken
     in connection with the transactions contemplated by the Merger Agreement.
     Upon completion of the proposed merger, Sub will merge with and into
     EasyLink and will cease to exist, with EasyLink continuing as the surviving
     corporation.

     See "Parties Involved in the Merger".

THE MERGER AND RELATED MATTERS

     THE MERGER

     You are being asked to vote to adopt the Merger Agreement providing for the
     acquisition of EasyLink by ICC. The Merger Agreement provides that Sub will
     merge with and into EasyLink, with EasyLink as the entity surviving the
     merger, sometimes referred to in this proxy statement as the surviving
     corporation, and a wholly owned subsidiary of ICC. See "Proposal 1: The
     Merger Agreement". A copy of the Merger Agreement is attached as Annex A to
     this proxy statement.

     PURPOSES AND REASONS FOR THE MERGER

     The purpose of the merger for EasyLink is to enable its stockholders (other
     than ICC or EasyLink or their respective subsidiaries or dissenting
     stockholders) to realize immediately the value of their investment in
     EasyLink through their receipt of the per share merger price of $5.80, in
     cash, without interest. With the acquisition of EasyLink, ICC will gain:

          -    a team of dedicated and talented employees;

          -    over 1,000,000 transactions per day from more than 15,000
               customers;

          -    an integrated suite of document capture and management services,
               including a market-leading fax-to-EDI capability; and

          -    a high-performance file transfer service complemented with
               desktop and enterprise-class software to enable end-to-end
               management of high-volume file-transfers.

     EFFECT OF THE MERGER ON EASYLINK

     The merger will have the effects set forth in Section 259 of the General
     Corporation Law of the State of Delaware, which is referred to in this
     proxy statement as the DGCL. See "Special Factors--Certain Effects of the
     Merger".

     MERGER CONSIDERATION

     If the merger is completed, each EasyLink stockholder (other than ICC or
     EasyLink or their respective subsidiaries or dissenting stockholders) will
     be entitled to receive $5.80, in cash, without interest, for each share of
     Class A Common Stock, par value $0.01 per share, owned as of the time the
     merger becomes effective. EasyLink's Class A Common Stock, par value $0.01
     per share, is referred to in this proxy statement as the Common Stock, and
     the time the merger becomes effective is referred to in this proxy
     statement as the Effective Time.


                                       2



TREATMENT OF OUTSTANDING OPTIONS AND CERTAIN RESTRICTED STOCK

     TREATMENT OF OUTSTANDING OPTIONS

     At the Effective Time, each EasyLink director holding an option to acquire
     shares of Common Stock with an exercise price per share that is less than
     $5.80 (whether of not vested) will be entitled to receive an amount in cash
     equal to the amount by which $5.80 exceeds the exercise price per share of
     Common Stock subject to the option for each share subject to the option,
     less any applicable withholding tax. All other outstanding options not held
     by EasyLink directors will be replaced by ICC with a substitute option to
     purchase shares of Class A common stock of ICC. Each substitute option will
     be subject to, and exercisable and vested on, comparable terms and
     conditions as applied to the option being replaced immediately prior to the
     Effective Time (provided, however, that vesting will be accelerated if the
     option holder's employment is terminated for any reason other than for
     cause), except that each substitute option will be exercisable for that
     number of shares of Class A common stock of ICC equal to the number of
     shares of Common Stock subject to that option multiplied by an Exchange
     Ratio (as defined in the Merger Agreement). See "Proposal 1: The Merger
     Agreement--Treatment of Common Stock, Stock Options and Certain Restricted
     Stock".

     TREATMENT OF CERTAIN RESTRICTED STOCK

     Certain grants of restricted shares of Common Stock to EasyLink executives
     will be converted into restricted shares of Class A common stock of ICC,
     equal to (i) the product of $5.80 per share and the number of shares of
     restricted stock held by that executive divided by (ii) a Volume Weighted
     Average Price (as defined in the Merger Agreement). Each such share of
     restricted stock of ICC replacing EasyLink restricted stock will be subject
     to the same vesting restrictions as applied to those restricted shares of
     Common Stock immediately prior to the Effective Time (provided, however,
     that vesting restrictions will lapse if the restricted stock holder's
     employment is terminated for any reason other than for cause). See
     "Proposal 1: The Merger Agreement--Treatment of Common Stock, Stock Options
     and Certain Restricted Stock".

FAIRNESS OF THE MERGER

     SPECIAL COMMITTEE

     EasyLink's board of directors formed a special committee, referred to in
     this proxy statement as the special committee, to evaluate the merger and
     related transactions and to solicit and evaluate other proposed
     transactions to acquire all or a substantial portion of EasyLink's stock or
     assets. In addition, the special committee was charged with recommending
     action to EasyLink's full board of directors with respect to the merger and
     other proposals. The special committee consists entirely of directors who
     are not officers or employees of EasyLink and who will not have an economic
     interest in EasyLink following the merger. The special committee acted with
     the advice and assistance of outside legal and financial advisors. The
     special committee unanimously approved the Merger Agreement and determined
     the merger advisable, fair to and in the best interests of EasyLink and its
     unaffiliated stockholders. The special committee unanimously recommended
     that EasyLink's board of directors approve the Merger Agreement and the
     merger and that EasyLink's board of directors submit the Merger Agreement
     to EasyLink's stockholders and recommend that EasyLink's stockholders adopt
     the Merger Agreement. See "Special Factors--Background of the Merger",
     "Special Factors--Recommendations of the Special Committee and EasyLink's
     Board of Directors" and "Special Factors--Reasons for the Special
     Committee's Recommendation".

     BOARD RECOMMENDATION

     After careful consideration, EasyLink's board of directors, acting upon the
     recommendation of the special committee, unanimously determined that the
     merger, the Merger Agreement and the transactions


                                       3



     contemplated by the Merger Agreement are advisable, fair to and in the best
     interests of EasyLink and its unaffiliated stockholders, approved the
     Merger Agreement and determined to recommend that EasyLink's stockholders
     vote "FOR" the adoption of the Merger Agreement. See "Special
     Factors--Recommendations of the Special Committee and EasyLink's Board of
     Directors" and "Special Factors--Reasons for the Board's Recommendation".

     FAIRNESS OPINIONS

     In connection with the merger, America's Growth Capital, LLC, referred to
     in this proxy statement as AGC, delivered a written opinion to EasyLink's
     board of directors as to the fairness, from a financial point of view, to
     the holders of Common Stock (other than ICC or EasyLink or their respective
     subsidiaries or dissenting stockholders) of the merger consideration to be
     received by those holders. The full text of AGC's written opinion, dated
     May 1, 2007, is attached to this proxy statement as Annex B. You are
     encouraged to read this opinion carefully in its entirety for a description
     of the procedures followed, assumptions made, matters considered and
     limitations on the review undertaken. AGC's opinion was provided to
     EasyLink's board of directors in connection with its evaluation of the
     merger consideration from a financial point of view, does not address any
     other aspect of the proposed merger and does not constitute a
     recommendation to any stockholder as to how that stockholder should vote or
     act with respect to any matters relating to the merger. See "Special
     Factors--Fairness Opinions--Fairness Opinion of AGC" and Annex B.

     In connection with the merger, Pharus Advisors, LLC, referred to in this
     proxy statement as Pharus, also delivered a written opinion to EasyLink's
     board of directors as to the fairness, from a financial point of view, to
     the holders of Common Stock (other than ICC or EasyLink or their respective
     subsidiaries or dissenting stockholders) of the merger consideration to be
     received by those holders. The full text of Pharus' written opinion, dated
     May 1, 2007, is attached to this proxy statement as Annex C. You are
     encouraged to read this opinion carefully in its entirety for a description
     of the procedures followed, assumptions made, matters considered and
     limitations on the review undertaken. Pharus' opinion was provided to
     EasyLink's board of directors in connection with its evaluation of the
     merger consideration from a financial point of view, does not address any
     other aspect of the proposed merger and does not constitute a
     recommendation to any stockholder as to how that stockholder should vote or
     act with respect to any matters relating to the merger. See "Special
     Factors--Fairness Opinions--Fairness Opinion of Pharus" and Annex C.

     INTERESTS OF EASYLINK'S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER

     In considering the recommendation of EasyLink's board of directors with
     respect to the merger, you should be aware that EasyLink's directors and
     executive officers have interests in the merger that are different from, or
     in addition to, the interests of EasyLink's stockholders generally. These
     interests may present these individuals with actual or potential conflicts
     of interest, and these interests, to the extent material, are described in
     "Special Factors--Certain Effects of the Merger--Interests of EasyLink's
     Directors and Executive Officers in the Merger". EasyLink's board of
     directors was aware of these interests and considered them, among other
     matters, in approving the merger and the Merger Agreement and recommending
     that EasyLink's stockholders vote in favor of adopting the Merger
     Agreement.

     Pursuant to the terms of the Employment Agreement between EasyLink and its
     Chairman, President and Chief Executive Officer, Thomas Murawski, dated
     February 1, 2002, as amended by Amendment No. 1 dated as of August 8, 2003
     and as further amended by Amendment No. 2 dated February 16, 2007,
     collectively referred to in this proxy statement as the Murawski Employment
     Agreement, in connection with the transactions contemplated by the Merger
     Agreement, Mr. Murawski will be entitled to receive at the Effective Time a
     cash payment equal to 2.5% of the consideration received by the holders of
     Common Stock pursuant to the sale of EasyLink. If any of the payments to
     Mr. Murawski would be subject to the excise tax imposed by Section 4999 of
     the Internal Revenue Code, which is referred to in this proxy statement as
     the Code, Mr. Murawski is entitled to receive a gross-up payment that would
     entitle him to


                                       4



     retain, after payment of all additional taxes on the gross-up payment, an
     amount equal to the amount of the excise tax.

OTHER MATTERS RELATING TO THE MERGER

     INTERESTS OF CERTAIN PERSONS IN THE MERGER

     Members of the special committee have interests in the merger that are
     different from, or in addition to, the interests of EasyLink's
     stockholders. No EasyLink director received compensation for his service as
     a member of the special committee. As described above, EasyLink's
     directors, including the members of the special committee, will be entitled
     to receive the amount, if any, by which $5.80 exceeds the applicable per
     share exercise price for each stock option to acquire shares of Common
     Stock held by them, regardless of whether those options are vested or
     exercisable, less any applicable withholding tax. See "Special
     Factors--Certain Effects of the Merger--Interests of EasyLink's Directors
     and Executive Officers in the Merger".

     FINANCING

     The total amount of funds required to complete the merger and the related
     transactions, including payment of fees and expenses in connection with the
     merger, is anticipated to be approximately $67,000,000. This amount is
     expected to be provided through debt financing totaling approximately
     $60,000,000, referred to in this proxy statement as the bank financing. See
     "Special Factors--Financing".

     MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     In general, your receipt of the merger consideration will be a taxable
     transaction for U.S. federal income tax purposes. For U.S. federal income
     tax purposes, you will generally recognize capital gain or loss equal to
     the difference, if any, between the amount of cash received pursuant to the
     merger and your adjusted basis in the shares surrendered. However, the tax
     consequences of the merger to you will depend upon your own particular
     circumstances. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR IN ORDER TO
     UNDERSTAND FULLY HOW THE MERGER WILL AFFECT YOU. See "Special
     Factors--Material U.S. Federal Income Tax Consequences of the Merger".

     REGULATORY APPROVALS

     The merger is not subject to the filing requirements of the
     Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which is
     referred to in this proxy statement as the HSR Act.

     NO SOLICITATION OF TRANSACTIONS

     The Merger Agreement restricts EasyLink's ability to, among other things,
     solicit, initiate or encourage any discussions or negotiations with a third
     party regarding specified transactions involving EasyLink or its
     subsidiaries and its board of directors' ability to change or withdraw its
     recommendation in favor of the Merger Agreement. However, under certain
     circumstances specified in the Merger Agreement, in order to comply with
     its fiduciary duties under applicable law, EasyLink's board of directors
     may respond to certain unsolicited competing proposals or terminate the
     Merger Agreement and enter into an agreement with respect to a superior
     competing proposal or withdraw its recommendation in favor of the adoption
     of the Merger Agreement. See "Proposal 1: The Merger Agreement--No
     Solicitation of Transactions".

     CONDITIONS TO THE MERGER

     Before the merger can be completed, a number of conditions must be
     satisfied or waived (to the extent permitted by law). These include:


                                       5



     Conditions to Each Party's Obligations

          -    Adoption of the Merger Agreement by EasyLink's stockholders;

          -    The absence of any law, injunction, order or other legal
               restraint or prohibition issued by any court of competent
               jurisdiction or other governmental entity that restricts,
               prevents or prohibits completion of the merger, so long as each
               of the parties has used reasonable efforts to prevent the entry
               of any injunction described above or other order and to appeal as
               promptly as possible any injunction described above or other
               order that may be entered;

          -    ICC's stockholders having approved and adopted the issuance of
               shares of ICC's common stock issuable upon conversion of the
               convertible notes contemplated by the bank financing for the
               merger and the amendment to ICC's certificate of incorporation to
               increase the number of authorized shares of ICC's common stock;
               and

          -    The expiration or earlier termination of any applicable waiting
               period under the HSR Act.

     Conditions to Obligations of ICC and Sub

          -    EasyLink's representations and warranties set forth in the Merger
               Agreement must be true and correct as of the Effective Time;

          -    EasyLink must have performed, in all material respects, its
               covenants and obligations in the Merger Agreement;

          -    EasyLink must have provided ICC with evidence that all of
               EasyLink's stock option plans and options have been terminated
               and canceled;

          -    Since the date of the Merger Agreement, there shall have occurred
               no Material Adverse Effect (as defined in the Merger Agreement)
               on EasyLink; and

          -    Dissenting Shares (as defined in the Merger Agreement) represent
               not more than 15% of the outstanding Common Stock.

     Conditions to EasyLink's Obligations

          -    The representations and warranties of ICC and Sub set forth in
               the Merger Agreement must be true and correct as of the Effective
               Time;

          -    ICC and Sub must have performed, in all material respects, their
               respective covenants and obligations in the Merger Agreement;

          -    ICC must have provided EasyLink with evidence of the availability
               of the substitute options and substitute restricted stock
               required by the Merger Agreement; and

          -    ICC must have obtained all of the consents, approvals and waivers
               of third parties or any regulatory body or authority required
               under the Merger Agreement.

     No party to the Merger Agreement may rely on the failure of any of these
     conditions to be satisfied if that failure was caused by that party's
     failure to use reasonable efforts to complete the merger. See "Proposal 1:
     The Merger Agreement--Conditions to the Merger".

     TERMINATION OF THE MERGER AGREEMENT

     EasyLink and ICC may terminate the Merger Agreement by mutual consent at
     any time prior to the Effective Time (including after EasyLink's
     stockholders have adopted the Merger Agreement). In addition, either
     EasyLink or ICC may terminate the Merger Agreement at any time before the
     Effective Time:

          -    if the merger has not been completed by August 31, 2007, so long
               as the terminating party's failure to satisfy a material
               obligation under the Merger Agreement did not cause, or result
               in, the failure of the merger to occur on or before such date;


                                       6



          -    if any court of competent jurisdiction or other governmental
               entity has issued a final non-appealable order or taken any other
               final non-appealable action that has the effect of restricting,
               preventing or prohibiting completion of the merger, so long as
               the terminating party has used its reasonable efforts to remove
               or lift that order or other action;

          -    if the Merger Agreement has been submitted to EasyLink's
               stockholders for adoption and the required vote has not been
               obtained; or

          -    if ICC's stockholders fail to approve and adopt the issuance of
               shares of ICC's common stock issuable upon conversion of the
               convertible notes contemplated by the bank financing for the
               merger and the amendment to ICC's certificate of incorporation to
               increase the number of authorized shares of ICC's common stock.

     EasyLink may also terminate the Merger Agreement if:

          -    prior to the Effective Time, EasyLink's board of directors has
               received a superior proposal, notified ICC of the determination
               that the proposal is a superior proposal, provided ICC a four
               business day period to revise the terms of the Merger Agreement,
               determined after that four business day period that the proposal
               continues to be a superior proposal and paid the Termination Fee
               as further described under "Proposal 1: The Merger Agreement--No
               Solicitation of Transactions", "Proposal 1: The Merger
               Agreement--Termination" and "Proposal 1: The Merger
               Agreement--Termination Fees"; or

          -    ICC or Sub has materially breached or failed to perform any of
               its representations, warranties, covenants or other agreements
               and that breach or failure is not cured by ICC or Sub within 10
               days after written notice from EasyLink describing that breach or
               failure.

     ICC may also terminate the Merger Agreement if:

          -    EasyLink's board of directors or any committee of EasyLink's
               board of directors has withdrawn or materially modified its
               approval or recommendation of the Merger Agreement or the merger,
               approved or recommended a superior proposal or resolved to effect
               any of these matters; or

          -    EasyLink has materially breached or failed to perform any of its
               representations, warranties, covenants or other agreements set
               forth in the Merger Agreement where that breach or failure would
               result in the failure of a closing condition and cannot be cured
               by EasyLink within 30 days after written notice from ICC
               describing that breach or failure.

     See "Proposal 1: The Merger Agreement--Termination".

     TERMINATION FEES

     If EasyLink terminates the Merger Agreement due to the receipt of a third
     party acquisition proposal or the commencement of a tender or exchange
     offer for shares of Common Stock that EasyLink's board of directors
     concludes that, if consummated, would be a superior proposal (within the
     meaning of the Merger Agreement), EasyLink will be required to pay to ICC a
     termination fee of $2,500,000, which is referred to in this proxy statement
     as the Termination Fee. EasyLink will also be required to pay the
     Termination Fee to ICC if the Merger Agreement is terminated because the
     required vote of EasyLink stockholders has not been obtained and, before
     that meeting for the purpose of obtaining stockholder adoption of the
     Merger Agreement has occurred, EasyLink receives a third party acquisition
     proposal, or a third party commences a tender or exchange offer for shares
     of Common Stock, and that proposal or tender or exchange offer has not been
     rejected, withdrawn or terminated prior to the meeting of EasyLink's
     stockholders called to adopt the Merger Agreement. See "Proposal 1: The
     Merger Agreement--Termination".

     ICC will be required to pay the Termination Fee to EasyLink if the Merger
     Agreement is terminated due to ICC's failure to obtain the approval of
     ICC's stockholders of the issuance of shares of ICC's common stock issuable
     upon conversion of the convertible notes contemplated by the bank financing
     for the merger and


                                       7



     the amendment to ICC's certificate of incorporation to increase the number
     of authorized shares of ICC's common stock.

     MARKET PRICE OF COMMON STOCK

     The Common Stock is currently listed on The Nasdaq Capital Market under the
     trading symbol "EASY". On May 3, 2007, which was the last trading day
     before the announcement of the execution of the Merger Agreement, the
     Common Stock closed at $5.24 per share. On ______, 2007, the Common Stock
     closed at $____ per share. See "Market Prices and Dividend Information".

     ANTICIPATED CLOSING OF MERGER

     The merger will be completed after all of the conditions to completion of
     the merger are satisfied or waived, including the adoption of the Merger
     Agreement by EasyLink's stockholders, the approval by ICC's stockholders of
     the issuance of shares of ICC's common stock and the amendment to ICC's
     certificate of incorporation contemplated by the bank financing for the
     merger, and the absence of legal prohibitions to the merger. EasyLink
     currently expects the merger to be completed in the third quarter of 2007,
     although EasyLink cannot assure completion by any particular date, if at
     all. EasyLink will issue a press release and send you a letter of
     transmittal for your stock certificates once the merger has been completed.

THE SPECIAL MEETING AND RELATED MATTERS

     DATE, TIME AND PLACE

     The special meeting of stockholders of EasyLink in lieu of the 2007 annual
     meeting of stockholders, which is referred to in this proxy statement as
     the Special Meeting, will be held at _________ on ______, 2007 at _____,
     local time.

     PURPOSE OF THE SPECIAL MEETING

     At the Special Meeting, you will be asked to consider and vote upon
     proposals to adopt the Merger Agreement, to elect eight directors to serve
     on EasyLink's board of directors, to ratify the selection of EasyLink's
     independent registered public accounting firm, to adjourn the meeting, if
     necessary or appropriate, to permit the further solicitation of proxies,
     and to act on other matters and transact other business as may properly
     come before the meeting.

     RECORD DATE AND VOTING


     You are entitled to vote at the Special Meeting if you owned shares of
     Common Stock at the close of business on July 10, 2007, the record date for
     the Special Meeting. Each outstanding share of Common Stock on the record
     date entitles the holder to one vote on each matter submitted to
     stockholders for approval at the Special Meeting. As of the record date,
     there were ______ shares of Common Stock entitled to vote. See "The Special
     Meeting--Record Date, Quorum and Voting Power".


     STOCKHOLDER VOTE REQUIRED TO ADOPT THE MERGER AGREEMENT

     The adoption of the Merger Agreement requires the affirmative vote of a
     majority of the shares present in person or represented by proxy at the
     Special Meeting and entitled to vote on the subject matter. See "The
     Special Meeting--Required Vote". EASYLINK'S BOARD OF DIRECTORS RECOMMENDS
     THAT YOU VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.


                                       8



     SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS


     As of the record date, (i) EasyLink's directors held and were entitled to
     vote in the aggregate ______ shares of Common Stock, or approximately ____%
     of the outstanding shares of Common Stock, and (ii) EasyLink's executive
     officers held and were entitled to vote in the aggregate ______ shares of
     Common Stock, or approximately ____% of the outstanding shares of Common
     Stock. Mr. Murawski's shares of Common Stock are included in both clause
     (i) and clause (ii) of the preceding sentence, as he is both a director
     and executive officer of EasyLink.



     Concurrently with the execution of the Merger Agreement, all of EasyLink's
     directors and executive officers and Federal Partners, L.P. entered into
     separate voting agreements with ICC. These parties beneficially hold (i)
     outstanding shares of Common Stock that, as of the record date, represented
     approximately ___% of Common Stock outstanding, and (ii) options
     exercisable for Common Stock that, as of the record date, represented
     approximately ___% of Common Stock outstanding. Pursuant to each of these
     voting agreements, these parties have agreed, among other things, to vote
     his or its shares of Common Stock "FOR" the adoption of the Merger
     Agreement. See "The Voting Agreements". In addition, all of EasyLink's
     directors and executive officers have informed EasyLink that they intend to
     vote all of their shares of Common Stock "FOR" the adjournment of the
     Special Meeting, if necessary or appropriate, to solicit additional
     proxies. See "The Special Meeting--Voting by Directors and Executive
     Officers".


     APPRAISAL RIGHTS

     Under Delaware law, if you do not vote for adoption of the Merger Agreement
     and prior to the adoption of the Merger Agreement at the Special Meeting
     you make a written demand and you strictly comply with the other statutory
     requirements of the DGCL, you may elect to receive, in cash, in lieu of the
     $5.80 per share merger consideration, the fair value of your shares of
     Common Stock as determined by the Delaware Court of Chancery. This value
     could be more or less than or the same as the merger consideration.

     In order to exercise appraisal rights, a holder must demand and perfect the
     rights in accordance with Section 262 of the DGCL, the full text of which
     is set forth in Annex D to this proxy statement. Your failure to follow the
     procedures set forth in Section 262 of the DGCL will result in the loss of
     your appraisal rights. See "Appraisal Rights".


                                       9




         QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers briefly address some commonly asked
questions about the Special Meeting and the merger. They may not include all of
the information that may be important to you. You are urged to read carefully
this entire proxy statement, including the annexed documents and the other
documents referred to and incorporated by reference in this proxy statement. You
may obtain the information incorporated by reference in this proxy statement
without charge by following the instructions under "Where You Can Find More
Information".

Q:   WHY AM I RECEIVING THESE MATERIALS?

A:   You are receiving this proxy statement and the enclosed proxy card because
     you own shares of Common Stock. EasyLink's board of directors is providing
     these proxy materials to give you information for use in determining how to
     vote in connection with the Special Meeting.

Q:   WHAT MATTERS WILL I BE ASKED TO VOTE ON AT THE SPECIAL MEETING?

A:   You will be asked to vote on the following proposals:

     -    to adopt the Merger Agreement;

     -    to elect eight directors;

     -    to ratify the appointment of EasyLink's independent registered public
          accounting firm for 2007;

     -    to approve the adjournment of the Special Meeting, if necessary or
          appropriate, to solicit additional proxies if there are insufficient
          votes at the time of the meeting to adopt the Merger Agreement; and

     -    to transact such other business as may properly come before the
          Special Meeting.

Q:   WHO IS ENTITLED TO VOTE AT THE SPECIAL MEETING?


A:   EasyLink's board of directors has set July 10, 2007 as the record date for
     the Special Meeting. If you were a stockholder of record, as shown on
     EasyLink's stock transfer books, at the close of business on the record
     date, you are entitled to notice of and to vote at the Special Meeting or
     any adjournment of the Special Meeting. On the record date, there were
     ______ shares of Common Stock issued and outstanding and, therefore,
     eligible to vote at the Special Meeting.


Q:   HOW MANY SHARES MUST BE PRESENT TO HOLD THE SPECIAL MEETING?

A:   The holders of a majority of the outstanding shares of Common Stock as of
     the record date must be present, in person or represented by proxy, at the
     Special Meeting in order to hold the Special Meeting and conduct business.
     This is called a quorum. If you submit a properly executed proxy card, then
     your shares will be counted as part of the quorum. All shares of Common
     Stock present in person or represented by proxy and entitled to vote at the
     Special Meeting, no matter how they are voted or whether they abstain from
     voting, will be counted in determining the presence of a quorum.

Q:   WHAT VOTE OF STOCKHOLDERS IS REQUIRED TO ADOPT THE MERGER AGREEMENT?

A:   The adoption of the Merger Agreement requires the affirmative vote of a
     majority of the shares present in person or represented by proxy at the
     meeting and entitled to vote on the subject matter.

Q:   WHAT VOTE OF STOCKHOLDERS IS REQUIRED TO APPROVE THE OTHER PROPOSALS AT THE
     SPECIAL MEETING?

A:   The election of directors will be determined by a plurality of the votes
     cast at the Special Meeting. The ratification of the selection of
     EasyLink's independent registered public accounting firm and the proposal
     to adjourn the Special Meeting, if necessary or appropriate, to permit
     further solicitation of proxies each requires the affirmative vote of a
     majority of the shares present and entitled to vote.


                                       10



Q:   HOW DOES EASYLINK'S BOARD OF DIRECTORS RECOMMEND THAT I VOTE ON THE
     ADOPTION OF THE MERGER AGREEMENT AND THE OTHER PROPOSALS?

A:   EasyLink's board of directors recommends that you vote:

     -    "FOR" the adoption of the Merger Agreement;

     -    "FOR" the election of each of the nominees for director;

     -    "FOR" ratification of the selection of Grant Thornton LLP as
          EasyLink's independent registered public accounting firm for 2007; and

     -    "FOR" adjournment, if necessary or appropriate, to permit the further
          solicitation of proxies.

Q:   WHAT VOTE OF STOCKHOLDERS IS REQUIRED TO APPROVE THE SPECIAL MEETING
     ADJOURNMENT PROPOSAL?

A:   Approval of the Special Meeting adjournment proposal will require the
     affirmative vote of a majority of the votes cast on the proposal.

Q:   HOW DOES EASYLINK'S BOARD OF DIRECTORS RECOMMEND THAT I VOTE ON THE SPECIAL
     MEETING ADJOURNMENT PROPOSAL?

A:   EasyLink's board of directors recommends that you vote "FOR" the approval
     of the Special Meeting adjournment proposal.

Q:   HOW MANY VOTES DO I HAVE?

A:   You have one vote for each share of Common Stock that you owned as of the
     record date.

Q:   HOW DO I VOTE MY SHARES?


A:   In order to vote your shares, you may attend the Special Meeting and vote
     in person, or you may vote by proxy. If your shares are held in "street
     name" (that is, if your stock is registered in the name of your broker,
     bank, trustee or other nominee) and you wish to vote at the Special
     Meeting, you will need to contact your broker, bank, trustee or other
     nominee regarding how to vote at the Special Meeting. If you are a
     registered stockholder (that is, if your stock is registered in your name),
     you may vote by proxy by completing and signing the enclosed proxy card and
     returning that card in the postage-paid envelope that has been provided to
     you or submitting a proxy through the Internet as described in the enclosed
     proxy card. If you hold your shares through a broker, bank, trustee or
     other nominee, that institution or nominee will send you separate
     instructions describing the procedure for voting your shares.


Q:   WHAT IF I DO NOT SPECIFY HOW I WANT MY SHARES VOTED?

A:   If you submit a signed proxy card but do not indicate how you want your
     shares voted, the persons named in the enclosed proxy will vote your shares
     of Common Stock:

     -    "FOR" the adoption of the Merger Agreement; and

     -    "FOR" the adjournment of the Special Meeting, if necessary or
          appropriate, to solicit additional proxies. (However, no proxy voted
          against the proposal to adopt the Merger Agreement will be voted in
          favor of any adjournment of the Special Meeting to solicit additional
          proxies).

Q:   WHAT IF I FAIL TO INSTRUCT MY BROKER?

A:   Without instructions, your broker will not vote any of your shares held in
     "street name".


                                       11



Q:   HOW ARE MY VOTES COUNTED?

A:   For the proposal to adopt the Merger Agreement, you may vote FOR, AGAINST
     or ABSTAIN. Abstentions will not count as votes cast on the proposal to
     adopt the Merger Agreement, but will count for the purpose of determining
     whether a quorum is present. If you abstain, it has the same effect as if
     you vote against the adoption of the Merger Agreement.

     For the election of directors, you may vote FOR all of the nominees or you
     may WITHHOLD your vote for one or more of the nominees. Withheld votes will
     not count as votes cast for the nominee, but will count for the purpose of
     determining whether a quorum is present. As a result, if you withhold your
     vote, it has no effect on the outcome of the vote to elect directors.

     For the proposal to ratify the selection by the audit committee of
     EasyLink's independent registered public accounting firm, you may vote FOR,
     AGAINST or ABSTAIN. Abstentions will not count as votes cast on the
     proposal to ratify the selection of EasyLink's independent registered
     public accounting firm, but will count for the purpose of determining
     whether a quorum is present. As a result, if you abstain, it has the same
     effect as if you vote against ratification of the selection of EasyLink's
     independent registered public accounting firm.

     For the proposal to adjourn the Special Meeting, if necessary or
     appropriate, to permit further solicitation of proxies, you may vote FOR,
     AGAINST or ABSTAIN. Abstentions will not count as votes cast on the
     proposal to adjourn the Special Meeting, but will count for the purpose of
     determining whether a quorum is present. As a result, if you abstain, it
     has the same effect as if you vote against adjournment of the Special
     Meeting, if necessary or appropriate, to solicit additional proxies.

     If you sign your proxy card without indicating your vote, your shares will
     be voted "FOR" the adoption of the Merger Agreement, "FOR" each of the
     nominees for director, "FOR" ratification of the selection of Grant
     Thornton LLP as EasyLink's independent registered public accounting firm,
     "FOR" adjournment of the Special Meeting, if necessary or appropriate, to
     permit further solicitation of proxies, and in accordance with the
     recommendations of EasyLink's board of directors on any other matters
     properly brought before the Special Meeting for a vote.

Q:   WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?


A:   If you receive more than one proxy card, it means that you hold shares that
     are registered in more than one account. To ensure that all of your shares
     are voted, you will need to sign and return each proxy card you receive
     or submit each proxy through the Internet as described in the enclosed
     proxy card.


Q:   WHAT DO I NEED TO DO NOW?


A:   You are urged to read carefully this entire proxy statement, including the
     annexed documents and the other documents referred to and incorporated by
     reference in this proxy statement. You may obtain the information
     incorporated by reference in this proxy statement without charge by
     following the instructions under "Where You Can Find More Information". In
     addition, you should indicate your vote on your proxy card and sign and
     mail your proxy card in the enclosed return envelope or submit a proxy
     through the Internet as described in the enclosed proxy card as soon as
     possible so that your shares may be represented at the Special Meeting.


Q:   CAN I CHANGE MY VOTE AFTER SUBMITTING MY PROXY?

A:   Yes. You can change your vote at any time before your proxy is voted at the
     Special Meeting. If you are a stockholder of record, you may revoke your
     proxy by one of three ways:

     -    you can send a written notice stating that you would like to change or
          revoke your proxy to EasyLink's Corporate Secretary at the address
          given below;


                                       12




     -    you can request a new proxy card, complete it and send it to
          EasyLink's Corporate Secretary at the address given below or submit a
          new proxy via the Internet after the date of the proxy you wish to
          revoke; or


     -    you can attend the Special Meeting and vote in person. Your attendance
          alone will not revoke your proxy. You must also vote in person at the
          Special Meeting.

     You should send any written notice or request for a new proxy card to the
     attention of EasyLink's Corporate Secretary, at EasyLink Services
     Corporation, 33 Knightsbridge Road, Piscataway, New Jersey 08854, Attn:
     Corporate Secretary. The last vote received will supersede any prior vote.

     If you hold your shares in "street name", you must contact your broker,
     bank, trustee or other nominee regarding how to change your vote.

Q:   SHOULD I SEND IN MY STOCK CERTIFICATES NOW?

A:   No. If the merger is completed, you will receive, shortly after the
     Effective Time, a letter of transmittal to complete and return to _______,
     the paying agent. In order to receive the $5.80 per share merger
     consideration as soon as reasonably practicable following the completion of
     the merger, you must send to the paying agent your properly completed
     letter of transmittal together with your EasyLink stock certificates as
     instructed in the separate mailing. Once you have submitted your properly
     completed letter of transmittal, EasyLink stock certificates and other
     required documents to the paying agent, the paying agent will send you the
     $5.80 per share merger consideration. If your shares are held in "street
     name" by your broker, you will receive instructions from your broker as to
     how to effect the surrender of your "street name" shares and receive cash
     for those shares. YOU SHOULD NOT SEND IN YOUR STOCK CERTIFICATES NOW.

Q:   I DO NOT KNOW WHERE MY STOCK CERTIFICATE IS--HOW WILL I GET MY CASH?

A:   The materials that the paying agent will send to you after completion of
     the merger will include the procedures that you must follow if you cannot
     locate your stock certificate. This will include an affidavit that you will
     need to sign attesting to the loss of your stock certificate. The surviving
     corporation may also require that you provide a bond at your expense to the
     surviving corporation in order to cover any potential loss.

Q:   WHO PAYS FOR THE COST OF THE SOLICITATION OF PROXIES?


A:   EasyLink will bear the cost of this solicitation. In addition to
     solicitation by mail, EasyLink's officers, directors or employees may also
     solicit proxies by telephone, facsimile or in person, without additional
     compensation. Upon request, EasyLink will pay the reasonable expenses
     incurred by record holders of Common Stock who are brokers, dealers, banks
     or voting trustees, or their nominees, for mailing proxy material to the
     beneficial owners of the shares that they hold of record. In addition,
     ____ will provide solicitation services for EasyLink for a fee of
     approximately $____ plus out-of-pocket expenses.


Q:   WHO CAN ANSWER FURTHER QUESTIONS?

A:   If you would like additional copies of this proxy statement or a new proxy
     card or if you have questions about the merger, you should contact
     EasyLink's Investor Relations at (732) 652-3819.


                                       13



           CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This proxy statement, the annexes attached to this proxy statement and the
documents incorporated by reference in this proxy statement may contain
statements of a forward-looking nature relating to future events or financial
results of EasyLink. Investors are cautioned that such statements are only
predictions, and actual events or results may differ materially. In evaluating
such statements, investors should specifically consider the various factors that
could cause actual events or results to differ materially from those indicated
in such forward-looking statements.

Because these forward-looking statements involve risks and uncertainties, there
are important factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements. These include:
EasyLink's ability to manage business growth effectively; changes in customer
relationships; the ability to attract additional customers or to expand services
sold to existing customers; the ability to implement EasyLink's business
strategy successfully; and significant competition. These factors are discussed
in greater detail in EasyLink's Form 10-K for the year ended December 31, 2006,
as amended by Form 10-K/A, and Form 10-Q for the quarter ended March 31, 2007,
each of which is incorporated by reference in this proxy statement. See "Where
You Can Find More Information".

Statements about the expected timing, completion and effects of the proposed
merger also constitute forward-looking statements. EasyLink may not be able to
complete the proposed merger on the terms described in this proxy statement or
other acceptable terms or at all because of a number of factors, including the
failure to obtain stockholder approval, ICC's failure to obtain the necessary
financing for the merger or the failure to satisfy other closing conditions. In
addition, the following factors could cause actual results to differ materially
from those discussed in the forward-looking statements:

     -    the actual terms and availability of the financing that must be
          obtained for completion of the merger;

     -    substantial indebtedness incurred in connection with the completion of
          the merger;

     -    the occurrence of any event, change or other circumstances that could
          give rise to the termination of the Merger Agreement and the payment
          of the Termination Fee by EasyLink or ICC;

     -    the outcome of any legal proceedings that may be instituted against
          EasyLink and others following announcement of the Merger Agreement;

     -    the failure of the merger to close for any other reason;

     -    the amount of the costs, fees, expenses and charges relating to the
          merger;

     -    the risk of unforeseen material adverse changes to EasyLink's business
          or operations; and

     -    the disruption of current plans and operations caused by the pending
          merger.

These forward-looking statements are not guarantees of future performance, and
actual results may differ materially from those contemplated by these
forward-looking statements. You should not place undue reliance on these
forward-looking statements. All forward-looking statements contained or
incorporated by reference in this proxy statement speak only as of the date of
this proxy statement or as of such earlier date that those statements were made
and are based on current expectations or expectations as of such earlier date
and involve a number of assumptions, risks and uncertainties that could cause
the actual results to differ materially from such forward-looking statements.

Except to the extent required under U.S. federal securities laws, EasyLink does
not intend to update or revise the forward-looking statements. In the event of
any material change in any of the information previously disclosed, EasyLink
will, where relevant and if and to the extent required under applicable law,
update such information through a supplement to this proxy statement.

All information contained in this proxy statement concerning ICC, Sub and their
respective affiliates and designees has been supplied by ICC and has not been
independently verified by EasyLink.


                                       14



                         PARTIES INVOLVED IN THE MERGER

EASYLINK SERVICES CORPORATION
33 Knightsbridge Road
Piscataway, New Jersey 08854
(888) 825-6385

EasyLink Services Corporation (NasdaqCM: EASY), headquartered in Piscataway, New
Jersey, is a leading global provider of outsourced business process automation
services that enable medium and large enterprises, including 60 of the Fortune
100, to improve productivity and competitiveness by transforming manual and
paper-based business processes into efficient electronic business processes.
EasyLink is integral to the movement of information, money, materials, products
and people in the global economy, dramatically improving the flow of data and
documents for mission-critical business processes such as client communications
via invoices, statements and confirmations, insurance claims, purchasing,
shipping and payments. Driven by the discipline of Six Sigma Quality, EasyLink
helps companies become more competitive by providing the most secure, efficient,
reliable and flexible means of conducting business electronically. For more
information, visit www.easylink.com.

INTERNET COMMERCE CORPORATION
6025 The Corners Parkway
Suite 100
Norcross, GA 30092
(678) 533-8000


Internet Commerce Corporation (NasdaqCM: ICCA), headquartered in Norcross,
Georgia, is a leader in providing business-to-business e-commerce solutions.
Thousands of customers rely on ICC's comprehensive line of solutions, in-depth
expertise and unmatched customer service to help balance cost, fit and function
required to meet unique requirements for trading partner compliance,
coordination and collaboration. With its software solutions, network services,
hosted web applications, managed services and consulting services, ICC is the
trusted provider of e-commerce solutions for businesses, regardless of size and
level of technical sophistication, to connect them with their trading
communities. Certain financial and other information about ICC, including
financial statements and related data in respect of ICC's two most recent fiscal
years and certain fiscal periods since ICC's most recent fiscal year, are
attached to this proxy statement as Annex F and are incorporated by reference
into this proxy statement. For more information about ICC, visit www.icc.net.


JETS ACQUISITION SUB, INC.
6025 The Corners Parkway
Suite 100
Norcross, GA 30092
(678) 533-8000

Jets Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary
of ICC, was formed solely for the purpose of facilitating ICC's acquisition of
EasyLink. Sub has not carried on any activities to date, except for activities
incidental to its formation and activities undertaken in connection with the
transactions contemplated by the Merger Agreement. Upon completion of the
proposed merger, Sub will merge with and into EasyLink and will cease to exist,
with EasyLink continuing as the surviving corporation.


                                       15



                               THE SPECIAL MEETING

TIME, PLACE AND PURPOSE OF THE SPECIAL MEETING

This proxy statement is being furnished to EasyLink's stockholders as part of
the solicitation of proxies by EasyLink's board of directors for use at the
Special Meeting to be held at ___________ on ______, 2007 at ____, local time,
or at any adjournment thereof. The purpose of the Special Meeting is for
EasyLink's stockholders to consider and vote upon proposals to adopt the Merger
Agreement, to elect eight directors to serve on EasyLink's board of directors,
to ratify the selection of EasyLink's independent registered public accounting
firm, to adjourn the Special Meeting, if necessary or appropriate, to permit the
further solicitation of proxies, and to act on other matters and transact other
business as may properly come before the Special Meeting.

A copy of the Merger Agreement is attached to this proxy statement as Annex A.
In the event that there are not sufficient votes at the time of the Special
Meeting to approve the proposal to adopt the Merger Agreement, stockholders may
also be asked to vote upon a proposal to adjourn the Special Meeting to solicit
additional proxies.

RECORD DATE, QUORUM AND VOTING POWER


EasyLink has fixed the close of business on July 10, 2007 as the record date for
the Special Meeting, and only holders of record of Common Stock on the record
date are entitled to receive notice of, and to vote at, the Special Meeting. On
the record date, there were ______ shares of Common Stock outstanding, with each
share entitled to one vote.


The holders of a majority of the outstanding shares of Common Stock on the
record date, represented in person or by proxy, will constitute a quorum for
purposes of the Special Meeting. A quorum is necessary to hold the Special
Meeting. In the absence of a quorum, the holders of Common Stock present or
represented may, by majority vote, adjourn the meeting from time to time until a
quorum shall be so present or represented. Shares of its own capital stock
belonging on the record date to EasyLink or to another corporation of which a
majority of the shares entitled to vote in the election of directors of such
other corporation is held, directly or indirectly, by EasyLink, will neither be
entitled to vote nor be counted for quorum purposes; provided, however, that the
foregoing shall not limit EasyLink's right to vote stock, including its own
stock, held by it in a fiduciary capacity.

REQUIRED VOTE


The adoption of the Merger Agreement requires the affirmative vote of a majority
of the shares present in person or represented by proxy at the Special Meeting
and entitled to vote on the subject matter. The election of directors will be
determined by a plurality of the votes cast at the Special Meeting. The
ratification of the selection of EasyLink's independent registered public
accounting firm and the proposal to adjourn the Special Meeting, if necessary or
appropriate, to permit further solicitation of proxies each requires the
affirmative vote of a majority of the shares present and entitled to vote. In
order for your shares of Common Stock to be included in the vote, if you are a
stockholder of record, you must complete, sign and return the enclosed proxy
card by mail, submit a proxy through the Internet or vote in person at the
Special Meeting.


VOTING BY DIRECTORS AND EXECUTIVE OFFICERS

As of the record date:

     -    EasyLink's directors held and were entitled to vote in the aggregate
          ______ shares of Common Stock, or approximately _____% of the
          outstanding shares of Common Stock; and

     -    EasyLink's executive officers held and were entitled to vote in the
          aggregate ______ shares of Common Stock, or approximately _____% of
          the outstanding shares of Common Stock.


Mr. Murawski's shares of Common Stock are included in both of the preceding
bullet points, as he is both a director and executive officer of EasyLink.


All of EasyLink's directors and executive officers have informed EasyLink that
they intend to vote all of their shares of Common Stock "FOR" the adoption of
the Merger Agreement and "FOR" the adjournment of the Special Meeting, if
necessary or appropriate, to solicit additional proxies.


                                       16



HOW YOU CAN VOTE

You may vote your shares as follows:

     -    Voting by Mail. If you choose to vote by mail, simply mark your proxy,
          date and sign it, and return it in the postage-paid envelope provided.

     -    Voting in Person. You can also vote by appearing and voting in person
          at the Special Meeting.


     -    Voting by Internet. If you choose to vote by Internet, have your
          proxy card in hand when you access the website (www.proxyvote.com) and
          follow the instructions to obtain your records and to create an
          electronic voting instruction form.



If you vote your shares of Common Stock by submitting a proxy, your shares will
be voted at the Special Meeting as you indicated on your proxy card. If no
instructions are indicated on your signed proxy card, all of your shares of
Common Stock will be voted "FOR" the adoption of the Merger Agreement, the
election of directors, the ratification of the selection of EasyLink's
independent registered public accounting firm and any proposal to adjourn the
Special Meeting, if necessary, to solicit additional proxies in the event that
there are not sufficient votes at the time of the Special Meeting to approve the
proposal to adopt the Merger Agreement. However, no proxy voted against the
proposal to adopt the Merger Agreement will be voted in favor of any adjournment
of the Special Meeting to solicit additional proxies. You should return a
properly completed proxy by mail or submit a proxy through the Internet as
described in the enclosed proxy card even if you plan to attend the Special
Meeting in person and thus ensure that your shares will be represented at the
Special Meeting if you are unable to attend.


HOW YOU MAY REVOKE YOUR PROXY OR CHANGE YOUR VOTE


If you are a stockholder of record and submit a proxy by the Internet or by
returning a signed proxy card by mail, your shares will be voted at the Special
Meeting as you indicate on your proxy card or by such other method. If you sign
your proxy card but no voting instructions are indicated, your shares of Common
Stock will be voted "FOR" the adoption of the Merger Agreement, the election of
directors, the ratification of the selection of EasyLink's independent
registered public accounting firm and any proposal to adjourn the Special
Meeting, if necessary, to solicit additional proxies in the event that there are
not sufficient votes at the time of the Special Meeting to approve the proposal
to adopt the Merger Agreement.


If your shares are held in "street name" by your broker, bank, trustee or other
nominee, you should instruct your nominee how to vote your shares using the
instructions provided by them. If you have not received such voting instructions
or require further information regarding such voting instructions, contact your
broker, bank, trustee or other nominee for directions on how to vote your
shares. Under applicable rules, brokers who hold shares in "street name" for
customers may not exercise their voting discretion with respect to the approval
of non-routine matters such as the proposal for adoption of the Merger
Agreement, and thus, without specific instructions from the beneficial owner of
such shares, brokers are not empowered to vote such shares with respect to the
adoption of the Merger Agreement (that is, "broker non-votes"). Shares of Common
Stock held by persons attending the Special Meeting but not voting, or shares
for which EasyLink has received proxies with respect to which holders have
abstained from voting, will be considered abstentions. Abstentions and properly
executed broker non-votes, if any, will be treated as shares that are present
and entitled to vote at the Special Meeting for purposes of determining whether
a quorum exists and will not affect the outcome of the vote regarding the
election of directors, the ratification of the selection of EasyLink's
independent registered public accounting firm or the adjournment, if necessary
or appropriate, to permit further solicitation of proxies, but will have the
same effect as a vote "AGAINST" adoption of the Merger Agreement.

Failure to vote your proxy or to vote in person will have the same effect as a
vote "AGAINST" adoption of the Merger Agreement, but will not affect the outcome
of the vote regarding the election of directors, the ratification of the
selection of EasyLink's independent registered public accounting firm or the
adjournment, if necessary or appropriate, to permit further solicitation of
proxies.


You may revoke your proxy or change your vote at any time before the vote is
taken at the Special Meeting. To revoke your proxy, you must advise EasyLink's
Corporate Secretary, in writing, at EasyLink Services Corporation, 33
Knightsbridge Road, Piscataway, New Jersey 08854, Attn: Corporate Secretary, or
submit a proxy by the Internet or by mail dated



                                       17



after the date of the proxy you wish to revoke, or attend the Special Meeting
and vote your shares in person. Attendance at the Special Meeting will not by
itself constitute revocation of a proxy.

Please note that if you have instructed your broker, bank, trustee or other
nominee to vote your shares, the options for revoking your proxy or changing
your vote described in the paragraph above do not apply and instead you must
follow the directions provided by your broker, bank, trustee or other nominee to
change those instructions.

EXPENSES OF PROXY SOLICITATION


EasyLink will pay the costs of soliciting proxies for the Special Meeting.
EasyLink's officers, directors and employees may solicit proxies by telephone,
mail, facsimile or in person. However, they will not be paid for soliciting
proxies. Upon request, EasyLink will pay the reasonable expenses incurred by
record holders of Common Stock who are brokers, dealers, banks or voting
trustees, or their nominees, for mailing proxy materials to the beneficial
owners of the shares they hold of record. ____ has been retained by EasyLink to
assist in the solicitation of proxies, using the means referred to above, and
will receive a fee of $___ plus reimbursement of out-of-pocket expenses.


ADJOURNMENTS

Although it is not currently expected, the Special Meeting may be adjourned for
the purpose of soliciting additional proxies. Any adjournment may be made
without notice (if the adjournment is for not more than 30 days) other than by
an announcement made at the Special Meeting of the time, date and place of the
adjourned meeting. In the event that there is present, in person or by proxy,
sufficient favorable voting power to secure the vote of EasyLink's stockholders
necessary to adopt the Merger Agreement, EasyLink does not anticipate that it
will adjourn the Special Meeting unless it is advised by counsel that failure to
do so could reasonably be expected to result in a violation of U.S. federal
securities laws. Any signed proxies received by EasyLink in which no voting
instructions are provided on such matter will be voted in favor of an
adjournment in these circumstances. Any adjournment of the Special Meeting for
the purpose of soliciting additional proxies will allow EasyLink's stockholders
who have already sent in their proxies to revoke them at any time prior to their
use at the Special Meeting as adjourned.

APPRAISAL RIGHTS

Under Delaware law, if you do not vote for adoption of the Merger Agreement and
prior to the adoption of the Merger Agreement at the Special Meeting you make a
written demand and you strictly comply with the other statutory requirements of
the DGCL, you may elect to receive, in cash, in lieu of the $5.80 per share
merger consideration, the fair value of your shares of Common Stock as
determined by the Delaware Court of Chancery. This value could be more or less
than or the same as the merger consideration.

In order to exercise appraisal rights, a holder must demand and perfect the
rights in accordance with Section 262 of the DGCL, the full text of which is set
forth in Annex D to this proxy statement. Your failure to follow the procedures
set forth in Section 262 of the DGCL will result in the loss of your appraisal
rights. See "Appraisal Rights".


                                       18



                                 SPECIAL FACTORS

This discussion of the merger is qualified in its entirety by reference to the
Merger Agreement, which is attached to this proxy statement as Annex A. You
should read the entire Merger Agreement carefully, as it is the legal document
that governs the merger.

BACKGROUND OF THE MERGER

EasyLink's board of directors and management regularly review EasyLink's
business and operations, as well as strategic alternatives available to maximize
stockholder value, including, among others, continuing to operate as an
independent public company, making acquisitions or being acquired by a strategic
or financial acquirer. Over the course of the last several years, EasyLink's
management has engaged in discussions with various companies in its market
seeking strategic arrangements, none of which resulted in discussions that
progressed beyond the preliminary stage or purchase proposals.

In this context, Mr. Murawski had high level discussions with Thomas Stallings,
the chief executive officer of ICC, and his representative regarding the
historical performance of their respective businesses, their vision for the
industry and potential synergies of combining Electronic Data Interchange
("EDI") service offerings.

On October 13, 2006, ICC delivered to EasyLink's board of directors a written
proposal to acquire all of EasyLink's outstanding Common Stock for $4.75 per
share in an all-stock transaction. The proposal contemplated a 30-day
exclusivity period for ICC to complete due diligence. On October 20, 2006,
EasyLink's board of directors met to discuss this proposal and decided that Mr.
Murawski, along with independent directors Mr. Holzer and Mr. Duff, should meet
with ICC.

On November 17, 2006, representatives of ICC, including representatives of ICC's
financial advisor, Oppenheimer & Co., met with Messrs. Murawski, Duff and Holzer
to discuss ICC's proposal.

At a meeting on December 4, 2006, EasyLink's board of directors met and
unanimously resolved to form a special committee composed of independent
directors to make recommendations to the full board of directors as to whether
(1) EasyLink should continue to pursue its current business strategy or should
pursue a strategic transaction, and (2) any proposed strategic transaction
(including the ICC proposal) was in the best interests of EasyLink and its
stockholders. EasyLink's board of directors appointed Messrs. Petrillo (who
would serve as Chairman), Holzer and Raney to serve on the special committee.

In early December 2006, the special committee engaged Pillsbury Winthrop Shaw
Pittman LLP ("PWSP"), EasyLink's regular outside corporate counsel, to serve as
legal adviser to the special committee. Over the first two weeks of December,
the special committee met several times (with representatives of PWSP in
attendance) to discuss various organizational matters, including the proposed
process for making recommendations and the desirability of hiring a financial
adviser. On December 22, 2007, EasyLink's board of directors engaged AGC to act
as EasyLink's financial advisor in connection with evaluating strategic
alternatives for EasyLink, including any business combination of EasyLink.

Over the next several weeks, AGC conducted meetings with EasyLink's management
and gathered financial and operating information about EasyLink and market
information with a view to providing feedback on ICC's proposal and generally
advising as to the matters within the special committee's mandate. Shortly
thereafter, AGC contacted ICC and several other parties that had previously
approached EasyLink and expressed an interest in acquiring all or part of the
business and notified them that it had been retained by EasyLink to assist it in
evaluating its strategic alternatives, including a potential sale.

On January 11, 2007, the special committee met with representatives of AGC and
PWSP to discuss the status of AGC's work. AGC made a general presentation
regarding various strategic and financial alternatives for EasyLink. The
presentation considered the relative price performance of the Common Stock over
historical periods, certain


                                       19



valuation metrics, a comparable company overview, comparable operating and
valuation statistics and comparable valuation analyses. Based on this analysis,
AGC recommended that EasyLink initiate a process whereby potential strategic and
financial purchasers would be contacted to determine their interest in pursuing
a potential business combination with EasyLink. The special committee resolved
to recommend this course of action to EasyLink's full board of directors.

On January 12, 2007, EasyLink's board of directors (other than Mr. Murawski) met
with AGC and PWSP and approved the special committee's recommendation that a
sale process be initiated.

The following week, AGC initiated discussions with third parties, including ICC,
regarding a potential business combination with EasyLink. Upon the execution of
a confidentiality and standstill agreement (the "NDA") parties were sent a
confidential information memorandum describing EasyLink, its historical
performance and its business prospects, and given the opportunity to meet with
EasyLink's management. The standstill provisions of the NDA provided, among
other things, that the party would not acquire, directly or indirectly, any
securities or property of EasyLink (subject to certain exceptions) unless
EasyLink's board of directors approved such acquisition.

On January 19, 2007, EasyLink received an unsolicited letter from ICC dated
January 18, 2007, publicly proposing to acquire all of the outstanding Common
Stock for $5.00 per share in ICC stock or cash (with the cash portion of the
offer capped at $13.75 million). The offer was to be kept open until 5:00 p.m.
on January 23, 2007 and contemplated entering into a 30-day exclusivity period.

The special committee and then the full board of directors met to consider the
ICC offer. The special committee and the full board of directors unanimously
concluded that given the early stage in the sale process that they had recently
initiated and the lack of liquidity of ICC common stock, it would be premature
to enter into exclusive discussions with ICC relating to ICC's most recent
offer, and that they would continue to pursue all interested parties in order to
maximize value for EasyLink's stockholders. AGC contacted ICC to notify them of
the decision and to suggest that ICC sign the NDA to receive confidential,
non-public information that could potentially impact their offer. ICC declined
to sign the NDA or meet with EasyLink management.

On January 23, 2007, the proposal set forth in ICC's January 18, 2007 letter
expired.

On January 31, 2007, EasyLink received an unsolicited letter from J2 Global
Communications, Inc. ("J2") publicly proposing to acquire all of the outstanding
Common Stock for $4.50 per share in cash. That letter also stated that J2
objected to the standstill language in the NDA and therefore would not sign it.

Over the next two weeks, representatives of AGC and EasyLink were in regular
contact with a number of parties to advance the due diligence process and to
negotiate other aspects of a proposed transaction.


On February 7, 2007, PWSP provided to AGC a draft acquisition agreement to be
reviewed and commented upon by the third parties in the sale process. On
February 5, 2007, AGC contacted parties who had expressed an interest in
acquiring EasyLink and requested that they submit preliminary indications of
interest by February 15, 2007. The draft agreement was circulated with the bid
request letter.


On February 12, 2007, ICC signed the NDA, received the confidential information
memorandum and began its due diligence review.

At a meeting of EasyLink's board of directors on February 16, 2007, AGC
presented an overview of the initial indications of interest received from third
parties. AGC reported that it had contacted or had been contacted by 77
potential strategic and financial parties and that numerous third parties had
expressed interest in potentially evaluating an acquisition of EasyLink. Twenty-
eight parties had signed NDAs and received EasyLink's confidential information
memorandum. Eleven parties had meetings or conferences with EasyLink's
management. As a result of this preliminary process, EasyLink received seven
bids to acquire all or parts of EasyLink. Four of the parties, including ICC,
were invited to the second round. The parties were chosen based, among other
things, on their stated interest in EasyLink, past history of completing
transactions, their comments on a merger agreement and the terms


                                       20



of their initial indications of interest, including price, form of
consideration, financing contingencies and ability to finance the transaction,
required approvals and conditions and timeline to closing. PWSP advised
EasyLink's board of directors as to its fiduciary duties under Delaware law.
EasyLink's board of directors discussed the benefits of hiring, and authorized
the special committee to engage, a second investment banking firm to deliver a
fairness opinion in connection with any proposed transaction that resulted from
the sale process.

Over the following week, representatives of AGC contacted each of the four
parties that were invited to participate in the second round to negotiate
additional matters in their indications of interest. Over the course of their
involvement in the bidding process, each of the parties conducted further
financial, legal and operational due diligence during the following weeks
through various meetings and conference calls with EasyLink's management and
AGC, as well as the review of documents in the data room or as requested by the
parties.


AGC provided updates on February 21 and February 23, 2007, to the special
committee and on February 27, 2007 to EasyLink's board of directors on the
ongoing diligence process by the four bidders, including proposed timing for
completing a transaction.


On March 3, 2007, the special committee discussed the terms of ICC's preliminary
offer, particularly the financing structure and commitment. PWSP advised the
special committee that the proposed financing structure would almost certainly
require a vote of ICC's stockholders under current Nasdaq rules, potentially
extending the timeline for completing a transaction beyond the other proposals
and creating additional risk that ICC stockholders would not approve the
financing structure.

At a meeting of EasyLink's board of directors held on March 9, 2007, AGC
provided an update on the ongoing process. Two of the bidders had withdrawn from
the process. AGC compared the preliminary offers that EasyLink had received from
the two remaining bidders, including ICC and a second bidder ("Bidder 1"). AGC
compared the amount and form of consideration, payment of transaction expenses,
financing structure, employee benefits provisions, conditions to closing and
timing to execution of a definitive merger agreement with each bidder. AGC also
reported that both bidders refused to continue the process beyond this point
without the execution of an exclusivity agreement. EasyLink's board of
directors, upon recommendation by the special committee, concluded that the
offer from Bidder 1 was superior to ICC's offer and unanimously approved the
signing of an exclusivity agreement until March 20, 2007 with Bidder 1.

From March 9 to March 19, 2007, EasyLink's management, PWSP, AGC, Bidder 1's
management and Bidder 1's legal counsel negotiated the legal and business terms
of a merger agreement.

At a meeting of EasyLink's board of directors held on March 19, 2007, EasyLink's
management discussed that Bidder 1 had agreed to the terms of a merger agreement
and that it was substantially complete. However, Bidder 1 had requested that the
exclusivity agreement be extended for an additional week because Bidder 1 needed
additional time to create the documentation for the financing of the
transaction. EasyLink's board of directors, upon recommendation by the special
committee, unanimously approved extending the exclusivity agreement for up to
one additional week. PWSP gave a presentation on the terms of the proposed
merger agreement and the board of directors' fiduciary duties under Delaware
law. AGC and Pharus made financial presentations to the board of directors
reviewing the work they had completed to assess the fairness of the proposed
transaction and the assumptions made in the course of their respective analyses.
AGC and Pharus delivered their respective oral opinions subsequently confirmed
by delivery of written opinions to the effect that, as of that date, based upon
and subject to the considerations set forth in such opinions, the consideration
to be received by EasyLink's stockholders pursuant to the Merger Agreement was
fair from a financial point of view to EasyLink's stockholders. The special
committee unanimously concluded that it recommend to EasyLink's board of
directors the proposed merger agreement with Bidder 1. EasyLink's board of
directors then agreed to reconvene within one week as it considered the special
committee's recommendation and as Bidder 1 finalized its financing
documentation.

On March 26, 2007, at a meeting of EasyLink's board of directors, EasyLink's
management discussed that Bidder 1 had contacted management to inform them that
as a result of the proposed transaction Bidder 1 would need to completely
recapitalize its debt structure. Accordingly, Bidder 1 had advised that its
financing documentation was


                                       21



taking longer than anticipated and it would require an additional ten-day period
of exclusivity. EasyLink's board of directors discussed and deliberated their
options, including the alternative of approaching ICC. AGC discussed that
approaching ICC at this point likely would not speed up the process or improve
the offer for EasyLink because (i) ICC would require that EasyLink sign an
exclusivity agreement with ICC, which in effect would require EasyLink to stop
the process with Bidder 1, (ii) ICC's proposed offer and terms were not as
favorable as Bidder 1's, and (iii) ICC's lenders, York Capital Management, LLC
("York"), would also have to perform diligence in order to complete the
financing. EasyLink's board of directors further deliberated and decided that
management should have a discussion with Bidder 1's management directly to
address the board of directors' concerns and request that Bidder 1 reaffirm its
commitment to the transaction by including new terms to the proposed merger
agreement that would compensate EasyLink in the event Bidder 1 could not obtain
financing for the transaction.

The special committee met twice on March 30, 2007 to deliberate over discussions
with Bidder 1's management, including the proposal to add new terms to the
proposed merger agreement that would compensate EasyLink if Bidder 1's financing
did not materialize. EasyLink's management updated the special committee that
Bidder 1 had communicated to them that day that they were still working on
finalizing the terms of their financing and would require at a minimum an
additional two weeks before they could sign a definitive merger agreement. In
addition, Bidder 1 would not agree to sign the proposed merger agreement with
new terms or enter into a modified form of exclusivity agreement before they
could sign a definitive merger agreement. The special committee considered the
new information and unanimously approved that it recommend to EasyLink's board
of directors that EasyLink re-approach ICC about a possible transaction.

At a meeting of EasyLink's board of directors held on March 30, 2007, the
special committee provided the board of directors with the information that had
been discussed at the special committee meetings of the same date. AGC
communicated that ICC had sent them an unsolicited email stating that ICC had
not seen any transaction involving EasyLink announced in the press and ICC was
still interested in a possible transaction. Upon discussion and deliberation of
the new information, EasyLink's board of directors unanimously approved the
special committee's recommendation to re-approach ICC. AGC then approached ICC
and requested it to re-submit an offer.


On April 4, 2007, EasyLink received a revised written proposal from ICC. AGC
updated the special committee on the terms of ICC's written proposal and
indicated that there was no new information concerning Bidder 1's ability to
secure financing necessary to consummate a transaction. The special committee
decided to continue the negotiation process with ICC, and directed AGC and PWSP
to negotiate better terms with ICC including a higher price.


Over the course of the next week, EasyLink's management, AGC, PWSP and ICC
negotiated the terms of the proposed transaction. Among other things, ICC
indicated that the execution of a voting agreement by each officer and director
of EasyLink and by Federal Partners, L.P. (EasyLink's largest stockholder)
agreeing to vote in favor of the proposed ICC transaction would be a requirement
of any ICC offer. The special committee met on April 6, 2007 (with
representatives of AGC, PWSP and Mr. Murawski) to discuss the ICC offer. The
special committee indicated that the minimum working capital provisions that ICC
had proposed were unacceptable.

On April 10, 2007, the special committee (with representatives of AGC, PWSP and
Mr. Murawski present) discussed the status of Bidder 1's financing. Based on
Bidder 1's likely timing for receiving a financing commitment, the special
committee recommended that EasyLink enter into a limited exclusivity period with
ICC. EasyLink's board of directors met the same day and approved the special
committee's recommendation to move forward with ICC and to seek to improve the
terms of their offer, and authorized the special committee to do so.


On April 11, 2007, EasyLink received an updated offer from ICC. The special
committee met with representatives of PWSP, AGC and Mr. Murawski to discuss the
current status of the ICC offer. Based on the updated terms, the special
committee approved EasyLink's entering into an exclusivity agreement granting
ICC exclusivity until April 26, 2007 pursuant to the terms of ICC's updated
offer. The exclusivity agreement was executed later that day.


On April 13, 2007, PWSP furnished to ICC and ICC's counsel a draft of the Merger
Agreement and the voting agreement.


                                       22


On April 17 and 18, 2007, ICC and representatives of Oppenheimer & Co. and AGC
attended due diligence presentations at EasyLink's headquarters in New Jersey.
At these sessions, representatives of ICC discussed EasyLink's business with
various members of EasyLink's management, including Mr. Murawski and Michael
Doyle, EasyLink's Vice President and Chief Financial Officer. Over the following
two weeks, EasyLink's management, PWSP, AGC, ICC's management and ICC's legal
counsel negotiated the legal and business terms of the Merger Agreement. During
the same time period, York also conducted due diligence in connection with the
financing of the transaction.

On April 26, 2007, AGC provided an update to EasyLink's board of directors on
ICC's proposal, including that ICC expected to finalize the financing commitment
from York but that neither EasyLink nor its advisors had seen any documentation
pertaining to the financing commitment. Since the exclusivity agreement with ICC
had lapsed, AGC was able to verify that Bidder 1 was still in the process of its
recapitalization and, though Bidder 1 was still interested in a possible
business combination with EasyLink, until the recapitalization was completed,
Bidder 1 could not consider a business combination. EasyLink's board of
directors discussed the financing status for both Bidder 1 and ICC and concluded
that ICC was further along in the process. The board of directors decided that
management and AGC would request the financing documentation from York and
authorized the special committee to extend the exclusivity period with ICC if
the special committee determined that such action was appropriate.

On April 26, 2007, the special committee approved extending the exclusivity
agreement with ICC until April 30, 2007, and such extension was executed by
EasyLink and ICC.

At a regularly scheduled meeting of the board of directors held on May 1, 2007,
PWSP gave a presentation on the terms of the Merger Agreement and the board of
directors' fiduciary duties under Delaware law. AGC and Pharus made financial
presentations to the board of directors reviewing the work they had completed to
assess the fairness of the proposed transaction and the assumptions made in the
course of their respective analyses. AGC and Pharus delivered their respective
oral opinions, which were subsequently confirmed by delivery of written opinions
dated May 1, 2007, to the effect that, as of that date, based upon and subject
to the considerations set forth in such opinions, the consideration to be
received by EasyLink's stockholders pursuant to the Merger Agreement was fair
from a financial point of view to EasyLink's stockholders. Upon discussion and
deliberation, the board of directors, on the recommendation of the special
committee, unanimously adopted resolutions that, among other things, approved
and declared the Merger Agreement and the transactions contemplated thereby to
be advisable and in the best interests of EasyLink and its stockholders,
authorized and approved the Merger Agreement and the transactions contemplated
thereby, recommended that EasyLink's stockholders adopt the Merger Agreement and
authorized EasyLink's management to execute the Merger Agreement, subject to the
finalization of the Merger Agreement and review of the financing documentation
from York.

From May 1 to May 3, 2007, EasyLink's management, PWSP, ICC's management and
ICC's legal counsel finalized the remaining non-material items in the Merger
Agreement. ICC's counsel provided draft and final copies of the financing
documentation from York. On May 3, 2007, EasyLink and ICC executed the Merger
Agreement. Concurrently with the execution of the Merger Agreement, EasyLink's
directors and executive officers and Federal Partners, L.P. entered into
separate voting agreements with ICC.

On May 3, 2007, EasyLink and ICC issued a joint press release publicly
announcing the execution of the Merger Agreement and, on May 4, 2007, EasyLink
filed a Form 8-K with the Securities and Exchange Commission (the "SEC"),
including the press release, the Merger Agreement and a form of voting agreement
as exhibits.

RECOMMENDATIONS OF THE SPECIAL COMMITTEE AND EASYLINK'S BOARD OF DIRECTORS

EasyLink's board of directors formed the special committee to evaluate the
merger and related transactions and to solicit and evaluate other proposed
transactions to acquire all or a substantial portion of EasyLink's stock or
assets. In addition, the special committee was charged with recommending action
to EasyLink's full board of directors with respect to the merger and other
proposals. The special committee consists entirely of directors who are not
officers


                                       23



or employees of EasyLink and who will not have an economic interest in EasyLink
following the merger. The special committee acted with the advice and assistance
of outside legal and financial advisors.

The special committee unanimously approved the Merger Agreement and determined
the merger advisable, fair to and in the best interests of EasyLink and its
unaffiliated stockholders. The special committee unanimously recommended that
EasyLink's board of directors approve the Merger Agreement and the merger and
that EasyLink's board of directors submit the Merger Agreement to its
stockholders and recommend that its stockholders adopt the Merger Agreement. The
special committee considered a number of factors, as more fully described above
under "--Background of the Merger" and below under "--Reasons for the Special
Committee's Recommendation", in determining to recommend that EasyLink's board
of directors approve the merger and the Merger Agreement.

After careful consideration, EasyLink's board of directors, acting upon the
recommendation of the special committee, unanimously:

     -    determined that the merger, the Merger Agreement and the transactions
          contemplated by the Merger Agreement are advisable, fair to and in the
          best interests of EasyLink and its unaffiliated stockholders;

     -    approved the merger and the Merger Agreement; and

     -    resolved to recommend that EasyLink's stockholders vote "FOR" the
          adoption of the Merger Agreement.

REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION

In reaching its conclusions described above, the special committee considered
the factors set forth below, each of which the special committee believes
supported its conclusions, but none of which is listed in any relative order of
importance:

     -    the current and historical market prices of Common Stock, including
          the market price of Common Stock relative to those of peer industry
          participants and general equity markets indices, and the fact that the
          merger consideration represented a premium of 44% over the 180-day
          trading average on May 1, 2007;

     -    its belief that the merger was the best alternative to EasyLink's
          unaffiliated stockholders and EasyLink, taking into account the
          uncertain returns to such stockholders in light of EasyLink's business
          operations, financial condition, strategy and prospects, as well as
          the risks of achieving those returns, the nature of EasyLink's
          industry and general economic and market conditions;

     -    the potential value to EasyLink's stockholders that might result from
          other strategic alternatives available to EasyLink, including, among
          other things, remaining a company with publicly traded common stock,
          entering or acquiring strategically complementary businesses or
          acquiring other businesses in its existing business lines and the
          execution risks associated with those alternatives, compared to the
          risks and benefits of the merger;

     -    the financial presentations of AGC and Pharus, including their
          respective opinions, each dated May 1, 2007, to EasyLink's board of
          directors as to the fairness, from a financial point of view and as of
          the date of each such opinion, to the unaffiliated holders of Common
          Stock of the merger consideration to be received by such holders, as
          more fully described below under "Fairness Opinions", in the full text
          of AGC's written opinion attached as Annex B to this proxy statement
          and in the full text of Pharus' written opinion attached as Annex C to
          this proxy statement;

     -    the fact that the merger consideration to be received by EasyLink's
          unaffiliated stockholders is all cash, so that the merger allows
          EasyLink's unaffiliated stockholders to realize immediately a fair
          value, in cash, for their investment and provides certainty of value
          to EasyLink's unaffiliated stockholders for their shares;

     -    the special committee's belief that the terms of the Merger Agreement
          were favorable to EasyLink's unaffiliated stockholders, noting in
          particular:

               -    the fact that, subject to compliance with the terms and
                    conditions of the Merger Agreement, EasyLink is permitted to
                    terminate the Merger Agreement, prior to stockholder
                    adoption of the Merger Agreement, in order to enter into a
                    permitted alternative acquisition agreement that EasyLink's
                    board of directors believes in good faith constitutes a
                    superior proposal, upon the payment to ICC of the
                    Termination Fee of $2,500,000 (representing approximately
                    3.9% of the total enterprise value of the transaction),
                    which amount was viewed by the special committee as


                                       24



                    reasonable in light of the benefits of the merger to
                    EasyLink's stockholders and the sale process conducted on
                    EasyLink's behalf;

               -    the obligation of ICC, subject to the terms and conditions
                    of the Merger Agreement, to pay to EasyLink the Termination
                    Fee of $2,500,000 (representing approximately 3.9% of the
                    total enterprise value of the transaction) if ICC fails to
                    complete the merger as and when required by the Merger
                    Agreement; and

               -    the limited number and nature of the conditions to ICC's
                    obligation to complete the merger and the limited risk of
                    non-satisfaction of such conditions; and

     -    ICC's delivery to EasyLink of a debt commitment letter from York that
          represented sufficient cash to pay the merger consideration.

The special committee also believed the process by which EasyLink entered into
the Merger Agreement was fair. In reaching that conclusion, the special
committee considered, in addition to the factors described above, the following:

     -    the fact that the negotiation of the transaction was conducted
          entirely under the oversight of the special committee, which:

               -    consists entirely of directors who are not officers or
                    employees of EasyLink and who will not have an economic
                    interest in EasyLink following the merger;

               -    was given authority to, among other things, consider,
                    negotiate and evaluate the terms of any proposed
                    transaction, including the Merger Agreement, and any
                    alternative; and

               -    had ultimate authority to decide whether to proceed with a
                    transaction, subject to approval of the Merger Agreement by
                    EasyLink's board of directors.

     -    the fact that the special committee was advised by legal and financial
          advisors who assisted the special committee in evaluating and
          negotiating the merger;

     -    the fact that the terms and conditions of the Merger Agreement were
          the product of negotiations between the special committee and its
          advisors, on the one hand, and ICC and its advisors, on the other
          hand;

     -    the fact that the Merger Agreement requires the adoption by a majority
          of the votes cast by all of EasyLink's stockholders; and

     -    the absence of any bid competitive with ICC's proposal despite
          EasyLink's public announcement that it had received such a proposal
          and a sale process during which 77 potential strategic and financial
          buyers were contacted and 28 of such potential buyers were provided
          with a confidential information memorandum inviting the submission of
          a competing bid.

For the reasons discussed above, the special committee believes that the merger
is procedurally fair to EasyLink's unaffiliated stockholders despite the fact
that the special committee did not retain an unaffiliated representative to act
solely on behalf of EasyLink's unaffiliated stockholders. In light of the
factors described above, and the fact that the use of a special committee of
independent and disinterested directors is a mechanism well-recognized to ensure
fairness in transactions of this type, the special committee did not consider it
necessary to (and therefore did not) retain an unaffiliated representative to
act solely on behalf of EasyLink's unaffiliated stockholders.

The special committee also took into account a number of potentially adverse
factors concerning the merger, including, without limitation, the following:

     -    the risk that the merger might not close in a timely manner or at all,
          including the risk that the merger will not occur if ICC fails to
          obtain the approval of its stockholders for the issuance of shares of
          ICC's common stock and the amendment to ICC's certificate of
          incorporation as contemplated by the bank financing for the merger, as
          well as the costs of a failure to complete the merger, including
          employee attrition and potential negative effects on customer
          relationships;

     -    the fact that EasyLink is entering into the Merger Agreement with a
          newly-formed corporation with essentially no assets;

     -    the merger consideration consists of cash and will therefore be
          taxable to EasyLink's stockholders for U.S. federal income tax
          purposes;


                                       25



     -    the opportunities for growth and the potential for increased
          stockholder value if EasyLink were to remain an independent company
          with publicly traded equity securities and the fact that EasyLink's
          unaffiliated stockholders will not participate in any future
          appreciation of EasyLink's value;

     -    the fact that, in order for EasyLink to terminate the Merger Agreement
          to accept a superior proposal, EasyLink must, in addition to complying
          with certain other terms and conditions of the Merger Agreement, pay
          the Termination Fee to ICC;

     -    the restrictions placed on EasyLink's activities prior to closing of
          the merger as a result of the restrictive covenants included in the
          Merger Agreement, which may prevent EasyLink from capitalizing on
          business opportunities that may arise before completion of the merger;

     -    the fact that EasyLink's directors and executive officers have
          interests in the merger that are different from those of EasyLink's
          other stockholders generally; and

     -    the disruption to EasyLink's business operations and diversion of
          management focus and resources from other strategic opportunities
          because of the pending merger.

The special committee did not consider EasyLink's net book value, which is an
accounting concept, to be a factor in determining the substantive fairness of
the transaction to EasyLink's unaffiliated stockholders because the special
committee believed that net book value is not a material indicator of the value
of EasyLink's equity but rather an indicator of historical costs. The special
committee also did not consider the liquidation value of EasyLink's assets as
indicative of its value primarily because of its belief that the liquidation
value would be significantly lower than EasyLink's value as an ongoing business
and that, due to the fact that EasyLink is being sold as an ongoing business,
the liquidation value is irrelevant to a determination as to whether the merger
is fair to EasyLink's unaffiliated stockholders.

The foregoing discussion of the information and factors considered by the
special committee, while not exhaustive, includes the material considerations
discussed by the special committee. In view of the wide variety of factors
considered by the special committee and the complexity of these matters, the
special committee did not find it practicable to, and did not, quantify or
otherwise assign relative or specific weight or values to any of these factors,
and individual members of the special committee may have given different weights
to different factors. The special committee approved and recommended that
EasyLink's board of directors approve the merger based upon its belief that the
positive factors relating to the merger outweigh the negative factors, in light
of the totality of information presented to and considered by it.

FAIRNESS OPINIONS

     FAIRNESS OPINION OF AGC

     On December 22, 2006, EasyLink engaged AGC to act as its financial advisor
     in evaluating potential strategic alternatives including a potential sale
     of EasyLink. On May 1, 2007, AGC rendered its oral opinion (subsequently
     confirmed by delivery of a written opinion dated May 1, 2007) to EasyLink's
     board of directors that, as of that date, and based on and subject to the
     matters stated in the opinion, the consideration to be offered to
     EasyLink's stockholders in the merger was fair, from a financial point of
     view, to such stockholders.

     THE FULL TEXT OF THE WRITTEN OPINION, DATED MAY 1, 2007, WHICH SETS FORTH
     THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE OPINION
     UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED AS ANNEX B TO THIS
     PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. THIS OPINION DOES
     NOT CONSTITUTE A RECOMMENDATION AS TO HOW ANY STOCKHOLDER SHOULD VOTE IN
     CONNECTION WITH THE MERGER AGREEMENT OR ANY OTHER MATTER RELATED THERETO.
     THE FOLLOWING IS A SUMMARY OF AGC'S OPINION AND THE METHODOLOGY IT USED TO
     RENDER ITS OPINION. YOU SHOULD READ THIS OPINION IN ITS ENTIRETY.

     AGC's opinion and analyses were only one of many factors considered by
     EasyLink's board of directors in its evaluation of the offer and should not
     be viewed as determinative of the views of EasyLink's board of directors
     with respect to the offer.


                                       26



     AGC's advisory services and opinion were provided for the information and
     assistance of EasyLink's board of directors, and its special committee, in
     connection with their respective considerations of the merger. AGC was not
     asked to, and did not, express any opinion as to whether EasyLink should
     engage in the transactions contemplated by the Merger Agreement on the
     terms set forth therein. AGC's opinion does not address the underlying
     business decision to enter into the Merger Agreement or the relative merits
     of the Merger Agreement as compared to other business strategies available
     to EasyLink.

     In arriving at its opinion, AGC reviewed and considered the following
     financial and other information and other matters it deemed relevant, among
     other things:

          -    The Merger Agreement, including the financial terms of the
               merger;

          -    EasyLink's Annual Reports on Form 10-K for the three fiscal years
               ended December 31, 2006, 2005 and 2004;

          -    Certain interim reports to stockholders and EasyLink's Quarterly
               Reports on Form 10-Q;

          -    Certain business, financial and other information regarding
               EasyLink that was publicly available or furnished to AGC by
               EasyLink's management; and

          -    Certain internal financial forecasts regarding EasyLink furnished
               to AGC by EasyLink's management (the "EasyLink Forecasts").

     In addition, AGC took the following actions:

          -    Held discussions with EasyLink's management concerning EasyLink's
               business, past and current operations, financial condition and
               future prospects, including discussions with EasyLink's
               management concerning the EasyLink Forecasts and the risks and
               uncertainties of EasyLink continuing to pursue an independent
               strategy;

          -    Compared EasyLink's historical performance to management's
               historical forecasts;

          -    Participated in discussions and negotiations among
               representatives of EasyLink, ICC and their respective financial
               and legal advisors;

          -    Prepared an analysis of EasyLink's discounted cash flows;

          -    Compared EasyLink's historical and present financial condition
               with those of other companies that AGC deemed relevant;

          -    Compared the proposed financial terms of the Merger Agreement
               with the financial terms of certain other business combinations
               and transactions that AGC deemed relevant;

          -    Considered bids received from third parties to acquire all or
               part of EasyLink and the results of AGC's extensive efforts to
               solicit indications of interest and definitive proposals with
               respect to a sale of EasyLink;

          -    Reviewed the stock price and trading history of the Common Stock;

          -    Considered the qualified opinion of EasyLink's auditors in 2000,
               2001, 2002, 2003, 2004 and 2005 that stated that EasyLink has a
               working capital deficiency and an accumulated deficit that raised
               doubt about its ability to continue as a going concern;

          -    Considered other information and analyses to the extent deemed
               relevant by AGC; and

          -    Conducted discussions with certain members of EasyLink's board of
               directors.

     In conducting its review and arriving at its opinion, AGC assumed and
     relied, without independent investigation, upon the accuracy and
     completeness of all financial and other information provided to it by
     EasyLink or that was publicly available. AGC did not undertake any
     responsibility for the accuracy, completeness or reasonableness of, or
     attempt to independently verify, such information. In addition, AGC did not
     conduct nor did it assume any obligation to conduct any physical inspection
     of EasyLink's properties or facilities. AGC further relied upon the
     assurance of EasyLink's management that management was unaware of any facts
     that would make such information incomplete or misleading in any respect.
     For the purposes of the analyses described below, certain of the estimated
     data for EasyLink were based on the internal estimates of EasyLink's
     management. AGC, with EasyLink's consent, assumed that the financial
     forecasts that it examined were reasonably prepared by EasyLink's
     management on bases reflecting the best currently available estimates and
     good faith judgments of such management as to EasyLink's future
     performance.


                                       27



     In preparing its opinion, AGC performed a variety of financial and
     comparative analyses as described below. In arriving at its opinion, AGC
     did not ascribe a specific range of values to EasyLink, but rather made its
     determination as to the fairness, from a financial point of view, to
     EasyLink's stockholders of the consideration to be offered to such
     stockholders in the merger on the basis of financial and comparative
     analyses.

     The preparation of a fairness opinion is a complex analytical process that
     involves various determinations as to the most appropriate and relevant
     methods of financial analysis and the application of these methods to the
     particular circumstances, and, therefore, a fairness opinion is not easily
     summarized. Furthermore, in arriving at its opinion, AGC did not attribute
     any particular weight to any analysis or factor considered by it, but
     rather made qualitative judgments as to the significance and relevance of
     each analysis and factor. Accordingly, AGC believes that its analyses must
     be considered as a whole and that considering any portion without
     considering all analyses and factors as a whole could create a misleading
     or incomplete view of the process underlying its opinion.

     The following is a summary of the material financial analyses performed by
     AGC in connection with the delivery of its opinion to EasyLink. In order to
     fully understand AGC's financial analyses, the tables must be read together
     with the text of each summary. The tables alone do not constitute a
     complete description of the financial analyses. Considering the data below
     without considering the full narrative description of the financial
     analyses, including the methodologies and assumptions underlying the
     analyses, could create a misleading or incomplete view of AGC's financial
     analyses.

          Other Bids Received in EasyLink's Public Auction Process

          AGC considered bids received from third parties to acquire all or part
          of EasyLink and the results of AGC's extensive efforts to solicit
          indications of interest and definitive proposals with respect to a
          sale of EasyLink. AGC directly contacted or was contacted by 77
          potential buyers of EasyLink and received a number of alternative bids
          for EasyLink. In addition, the public announcement of offers to buy
          EasyLink by ICC on January 19, 2007 and by J2 on February 1, 2007,
          along with a press release issued by EasyLink on January 19, 2007
          stating that EasyLink's board of directors had formed a committee of
          independent directors to review strategic alternatives, including
          possible mergers, ensured that all potential buyers of EasyLink were
          aware of the process undertaken by EasyLink's board of directors and
          were provided an opportunity to bid on EasyLink. The public auction
          process yielded alternative bids to acquire all of the Common Stock
          for prices ranging from $4.50 to $6.00 per share in cash. Prior to
          entering into the Merger Agreement, EasyLink had been in advanced
          negotiations with a bidder offering $6.00 per share in cash. EasyLink
          elected to abandon these negotiations when it became clear that the
          bidder had not secured adequate financing to enable it to consummate
          its bid. After abandoning these negotiations and prior to entering
          into the Merger Agreement, EasyLink again approached the bidder, at
          which time the bidder re-confirmed that it still had not successfully
          arranged adequate financing.

          Premiums Paid Analysis

          AGC reviewed the premiums paid by acquirers in 113 public technology
          M&A transactions involving U.S.-based targets announced between
          January 1, 2006 and April 30, 2007.

          AGC compared the premiums with regard to the share prices at one day,
          30 days, 60 days and 90 days before the announcement of the selected
          transactions with the premiums implied by the merger consideration of
          $5.80, to EasyLink share prices at similar time periods prior to
          January 19, 2007, the date on which ICC publicly announced it had
          submitted to EasyLink's board of directors an unsolicited proposal to
          acquire EasyLink.


                                       28



          The table below indicates that the selected precedent premiums for one
          day, 30 days, 60 days and 90 days before the announcement of the
          selected transactions since 2006 range between 22% and 31%. AGC
          selected premiums observed in transactions since 2006 in order to
          reflect the current level of premiums in its considerations. These
          precedent premiums compare to the premiums observed for the merger
          consideration relative to EasyLink's share price at similar periods in
          time as indicated in the table below.



PREMIUM AS OF                   MEDIAN OF SELECTED TRANSACTIONS   EASYLINK
-------------                   -------------------------------   --------
                                                            
1 day prior to announcement                   22%                    60%
30 days prior to announcement                 27%                   103%
60 days prior to announcement                 30%                   102%
90 days prior to announcement                 31%                    80%


          AGC noted that the per share merger consideration of $5.80 was above
          the range implied by the foregoing analysis.

          Precedent Transaction Analysis

          Using publicly available information and estimates, AGC reviewed and
          compared the purchase prices and multiples paid in nine acquisitions
          that AGC, based on its experience, deemed relevant to arriving at its
          opinion. The selected transactions were:



TARGET                                              ACQUIRER
------                                              ------------------------
                                                 
BISYS Group, Inc. (Information Services Group)      Open Solutions Inc.
Carreker Corporation                                CheckFree Corporation
Click Commerce Inc.                                 Illinois Tool Works Inc.
Docucorp International, Inc.                        Skywire Software
G International Inc. (IBM's EDI & BES Businesses)   GXS, Inc.
Print, Inc.                                         Pitney Bowes, Inc.
ProQuest Company (Business Solutions Segment)       Snap-on Incorporated
QRS Corporation                                     Inovis, Inc.
SOURCECORP, Inc.                                    Apollo Management L.P.


          AGC calculated the transaction value (defined as target equity market
          capitalization at announcement of transaction plus debt minus cash) to
          the last 12 months ("LTM") earnings before interest, taxes,
          depreciation and amortization ("EBITDA") multiples of the selected
          transactions.

          The table below presents the results of the analysis:



MULTIPLE                          MEDIAN OF SELECTED TRANSACTIONS   EASYLINK
--------                          -------------------------------   --------
                                                              
Transaction Value to LTM EBITDA                 8.1x                  9.3x


          Based on the median multiple of 8.1x transaction value to LTM EBITDA,
          AGC calculated an implied per share equity value of $4.94 for
          EasyLink. AGC noted that the per share merger consideration of $5.80
          was above the value implied in the foregoing analysis.

          Comparable Company Analysis

          Using publicly available information, AGC reviewed and compared
          specific financial and operating data relating to EasyLink with
          selected companies that AGC deemed comparable to EasyLink. AGC
          selected publicly traded business services companies based on their
          general


                                       29



          similarity to EasyLink in the mix and characteristics of their
          businesses. AGC included in the review of comparable companies the
          following companies:

               -    Crawford & Company

               -    Genesys S.A.

               -    Internet Commerce Corporation

               -    Premiere Global Services, Inc.

               -    StarTek, Inc.

               -    TRX, Inc.

          AGC calculated and compared each comparable company's enterprise value
          (defined as equity value plus net debt plus minority interest and
          preferred stock) as a multiple of its LTM EBITDA and as a multiple of
          its adjusted operating income (defined as operating income excluding
          extraordinary and non-recurring items). AGC calculated these multiples
          based on closing market prices on April 30, 2007. Using publicly
          available information and projections provided by EasyLink's
          management, AGC also calculated and analyzed these multiples for
          EasyLink using the merger consideration of $5.80 per share.

          The table below presents the results of this analysis:



                                           MEDIAN OF COMPARABLE
MULTIPLE                                         COMPANIES        EASYLINK
--------                                   --------------------   --------
                                                            
Enterprise Value to LTM EBITDA                      7.2x             9.3x
Enterprise Value to LTM Operating Income           18.4x            29.7x


          Based on a median LTM EBITDA multiple of the selected companies as set
          out above of 7.2x, AGC calculated a per share equity value of $4.34,
          and, based on a median LTM adjusted operating income multiple of
          18.4x, AGC calculated a per share equity value of $3.51. AGC noted
          that the per share merger consideration of $5.80 was above the range
          implied by the foregoing.

          Discounted Cash Flows Analysis

          Using financial projections provided by EasyLink's management, AGC
          calculated the net present value of the unlevered, after-tax free cash
          flows that EasyLink's business is forecasted to generate for the
          financial years 2007 through 2011 plus the present value of the
          terminal value of EasyLink's business at the end of the financial year
          2011. To estimate the terminal values of EasyLink at the end of the
          forecasted period, AGC applied a range of EBITDA multiples of 4.0x to
          6.0x to projected 2011 EBITDA and a range of terminal growth rates of
          3.0% to 5.0%. AGC discounted the after-tax cash flows through
          financial year 2011 and the terminal value back to December 31, 2007,
          using discount rates between 30.0% and 33.0%. This range was based on
          an analysis of EasyLink's weighted average cost of capital and took
          into account macro-economic assumptions, the risks associated with
          EasyLink's relative size, historical performance relative to
          management forecasts and other appropriate factors.

          Based on the implied present value of the free cash flows and the
          implied present value of terminal value indications, adjusted for the
          net debt as of March 31, 2007, AGC estimated a range of per share
          value of $3.78 to $5.70 for EasyLink. AGC noted that the per share
          merger consideration of $5.80 was above the range implied by the
          foregoing analysis.

          Limitations of Financial and Comparative Analyses

          AGC employed several analytical methodologies, and no one method of
          analysis should be regarded as critical to the overall conclusion
          reached by AGC. Each analytical technique has


                                       30



          inherent strengths and weaknesses, and the nature of the available
          information may further affect the value of particular techniques. The
          conclusion reached by AGC was based on all analyses and factors taken
          as a whole and also on application of AGC's experience and judgment,
          which may involve significant elements of subjective judgment and
          qualitative analyses. Due to the inherent differences between
          businesses, operations and prospects, and the reasons for and the
          circumstances surrounding each transaction, no company, transaction or
          business used in the foregoing analyses as a comparison is identical
          to EasyLink or the proposed transaction, and an evaluation of those
          analyses cannot rely solely on the quantitative results. Rather, AGC's
          analyses involved complex considerations and judgments concerning
          financial and operating characteristics and other factors that could
          affect the acquisition, public trading or other values of the
          companies, business segments or transactions analyzed. In its
          analyses, AGC made numerous assumptions with respect to industry
          performance, general business and economic conditions and other
          matters, many of which are beyond EasyLink's control. None of
          EasyLink, AGC or any other person assumes responsibility if future
          results are materially different from those discussed. Any estimates
          contained in these analyses were not necessarily indicative of actual
          values or predictive of future results or values, which may be
          significantly more or less favorable than as set forth herein.


          For its services provided to EasyLink, AGC will be paid a total fee of
          $2,015,126 or 3.1% of the aggregate merger consideration, of which
          $300,000 has been received to date with the balance of the total fee
          to be paid to AGC at the time of the closing of the merger. In
          addition, EasyLink agreed to reimburse AGC for all reasonable
          out-of-pocket expenses incurred by AGC on EasyLink's behalf, provided
          expenses of AGC's legal counsel do not exceed $25,000 without
          EasyLink's prior consent. EasyLink also agreed to indemnify AGC
          against certain liabilities, including any that may arise under the
          federal securities laws.


     FAIRNESS OPINION OF PHARUS

     EasyLink's board of directors also retained Pharus to evaluate the
     fairness, from a financial point of view, to the public holders of Common
     Stock of the consideration to be received by such holders in the merger. On
     May 1, 2007, EasyLink's board of directors met to review the proposed
     merger and the terms of the Merger Agreement. During this meeting, Pharus
     reviewed with EasyLink's board of directors certain financial analyses as
     described below and rendered its oral opinion to EasyLink's board of
     directors, which opinion was confirmed by delivery of a written opinion,
     dated May 1, 2007, to the effect that, as of that date and based on and
     subject to the matters described in its opinion, the merger consideration
     was fair, from a financial point of view, to the public holders of Common
     Stock.

     THE FULL TEXT OF PHARUS' WRITTEN OPINION, DATED MAY 1, 2007, TO EASYLINK'S
     BOARD OF DIRECTORS, WHICH SETS FORTH, AMONG OTHER THINGS, THE PROCEDURES
     FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE SCOPE
     OF REVIEW UNDERTAKEN BY PHARUS IN RENDERING ITS OPINION, IS ATTACHED AS
     ANNEX C AND IS INCORPORATED INTO THIS PROXY STATEMENT BY REFERENCE IN ITS
     ENTIRETY. HOLDERS OF COMMON STOCK ARE ENCOURAGED TO READ THIS OPINION
     CAREFULLY IN ITS ENTIRETY. PHARUS' OPINION WAS PROVIDED TO EASYLINK'S BOARD
     OF DIRECTORS AND ITS SPECIAL COMMITTEE FOR THEIR INFORMATION IN CONNECTION
     WITH THEIR RESPECTIVE EVALUATIONS OF THE MERGER CONSIDERATION AND RELATES
     ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE MERGER
     CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF COMMON STOCK, DOES NOT
     ADDRESS ANY OTHER ASPECT OF THE MERGER AND DOES NOT CONSTITUTE A
     RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE OR
     ACT WITH RESPECT TO ANY MATTERS RELATING TO THE MERGER. THE SUMMARY OF
     PHARUS' OPINION IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY
     REFERENCE TO THE FULL TEXT OF THE OPINION.

     In arriving at its opinion, Pharus, among other things:

          -    reviewed a draft of the Merger Agreement dated April 25, 2007;


                                       31



          -    reviewed EasyLink's Annual Reports on Form 10-K for the fiscal
               years ended December 31, 2004, December 31, 2005 and December 31,
               2006, the Amendment to its Annual Report on Form 10-K/A for the
               fiscal year ended December 31, 2006, its Quarterly Reports on
               Form 10-Q for the periods ended March 31, 2006, June 30, 2006 and
               September 30, 2006, its internal financial statements for the
               fiscal quarter ended March 31, 2007 and its Current Reports on
               Form 8-K filed since February 7, 2006;

          -    reviewed certain operating and financial information relating to
               EasyLink's business and prospects, including internal budgets for
               the four years ending December 31, 2007, interim management
               reports, and projections for the five years ending December 31,
               2011, all as prepared and provided to it by EasyLink's
               management;

          -    spoke with certain members of EasyLink's management regarding
               EasyLink's operations, financial condition, future prospects and
               projected operations and performance and regarding the merger,
               and spoke with representatives of AGC and EasyLink's counsel
               regarding EasyLink, the merger and related matters;

          -    participated in discussions with the special committee and its
               counsel regarding EasyLink's projected financials results, among
               other matters;

          -    reviewed certain business, financial and other information
               regarding EasyLink that was furnished to it by EasyLink through
               its management or was publicly available;

          -    reviewed the historical market prices and trading volume for
               EasyLink's publicly traded securities;

          -    reviewed certain other publicly available financial data for
               certain companies that Pharus deemed relevant for purposes of its
               analysis and publicly available transaction prices and premiums
               paid in other transactions that it deemed relevant for purposes
               of its analysis;

          -    performed a discounted cash flow analysis based on the projected
               financial information provided by EasyLink's management; and

          -    conducted such other financial studies, analyses and inquiries as
               it deemed appropriate.

     In connection with its review, Pharus relied upon and assumed, without
     independent verification, the accuracy and completeness of all data,
     material and other information furnished or otherwise made available to it,
     discussed with or reviewed by it, or publicly available, and did not assume
     any responsibility with respect to such data, material and other
     information. In addition, EasyLink's management advised Pharus, and Pharus
     assumed, that EasyLink's projected financial information provided to Pharus
     was reasonably prepared on bases reflecting the best currently available
     estimates and judgments of EasyLink's future financial results and
     condition. Pharus expressed no opinion with respect to such forecasts and
     projections or the assumptions on which they are based. Pharus also relied
     upon and assumed, without independent verification, that there has been no
     material change in EasyLink's assets, liabilities, financial condition,
     results of operations, business or prospects since the date of the most
     recent financial statements provided to Pharus, and that there is no
     information or facts that would make the information reviewed by Pharus
     incomplete or misleading. Pharus also assumed that neither EasyLink nor ICC
     is party to any material pending transaction, including, without
     limitation, any external financing (other than in connection with the
     merger), recapitalization, acquisition or merger, divestiture or spin-off
     (other than the merger or other publicly disclosed transactions).

     Pharus relied upon and assumed, without independent verification, that (a)
     the representations and warranties of all parties to the agreements
     identified in the Merger Agreement and all other related documents and
     instruments that are referred to therein are true and correct, (b) each
     party to each such agreement, document or instrument will perform all of
     the covenants and agreements required to be performed by such party, (c)
     all conditions to the completion of the merger will be satisfied without
     waiver thereof and (d) the merger will be completed in a timely manner in
     accordance with the terms described in the agreements provided to Pharus,
     without any amendments or modifications thereto or any adjustment to the
     aggregate consideration (through offset, reduction, indemnity claims,
     post-closing purchase price adjustments or otherwise). Pharus also relied
     upon and assumed, without independent verification, that all governmental,
     regulatory and other consents and approvals necessary for the completion of
     the merger will be obtained and that no delay, limitations, restrictions or
     conditions will be imposed.


                                       32



     Pharus was not requested to make, and did not make, any physical inspection
     or independent appraisal or evaluation of any of the assets, properties or
     liabilities (contingent or otherwise) of EasyLink, ICC or any other party.
     Furthermore, Pharus did not undertake independent analysis of any potential
     or actual litigation, governmental investigation, regulatory action,
     possible unasserted claims or other contingent liabilities to which
     EasyLink or ICC is a party or may be subject.

     Pharus' opinion addressed only the fairness, from a financial point of
     view, of the merger consideration to be received by the public holders of
     Common Stock and did not address any other aspect or implication of the
     merger or any other agreement, arrangement or understanding entered into in
     connection with the merger or otherwise. Pharus' opinion was necessarily
     based upon information made available to it as of the date of the opinion
     and financial, economic, market and other conditions as they existed and
     could be evaluated on the date of the opinion. Pharus' opinion did not
     address the relative merits of the merger as compared to alternative
     transactions or strategies that might be available to EasyLink, nor did it
     address EasyLink's underlying business decision to proceed with the merger.
     Except as described above, EasyLink's board of directors imposed no other
     limitations on Pharus with respect to the investigations made or procedures
     followed in rendering the opinion.

     In preparing its opinion to EasyLink's board of directors, Pharus performed
     a variety of financial and comparative analyses, including those described
     below that were the material financial analyses reviewed with EasyLink's
     board of directors in connection with Pharus' opinion. The summary of
     Pharus' analyses described below is not a complete description of such
     analyses underlying Pharus' opinion. The preparation of a fairness opinion
     is a complex process involving various determinations as to the most
     appropriate and relevant methods of financial analysis and the application
     of those methods to the particular circumstances and, therefore, a fairness
     opinion is not readily susceptible to partial analysis or summary
     description. Pharus arrived at its ultimate opinion based on the results of
     all analyses undertaken by it and assessed as a whole and did not draw, in
     isolation, conclusions from or with regard to any one factor or method of
     analysis. Accordingly, Pharus believes that its analyses must be considered
     as a whole and that selecting portions of its analyses and factors or
     focusing on information presented in tabular format, without considering
     all analyses and factors or the narrative description of the analyses,
     could create a misleading or incomplete view of the processes underlying
     its analyses and opinion.

     In its analyses, Pharus considered industry performance, general business,
     economic, market and financial conditions and other matters, many of which
     are beyond EasyLink's control. No company, transaction or business used in
     Pharus' analyses as a comparison is identical to EasyLink or the proposed
     merger, and an evaluation of the results of those analyses is not entirely
     mathematical. Rather, the analyses involve complex considerations and
     judgments concerning financial and operating characteristics and other
     factors that could affect the acquisition, public trading or other values
     of the companies, business segments or transactions analyzed. The estimates
     contained in Pharus' analyses and the ranges of valuations resulting from
     any particular analysis are not necessarily indicative of actual values or
     predictive of future results or values, which may be significantly more or
     less favorable than those suggested by the analyses. In addition, analyses
     relating to the value of businesses or securities do not purport to be
     appraisals or to reflect the prices at which businesses or securities
     actually may be sold. Accordingly, the estimates used in, and the results
     derived from, Pharus' analyses are inherently subject to substantial
     uncertainty.

     Pharus was not requested to, and it did not, recommend the specific
     consideration payable in the merger, which consideration was determined
     between EasyLink and ICC, and the decision to enter into the merger was
     solely that of the special committee and EasyLink's board of directors.
     Pharus' opinion and financial analyses were only one of many factors
     considered by the special committee in its evaluation of the merger and
     should not be viewed as determinative of the views of the special
     committee, EasyLink's board of directors or EasyLink's management with
     respect to the merger or the merger consideration.

     The following is a summary of the material financial analyses reviewed with
     EasyLink's board of directors in connection with Pharus' opinion. The
     financial analyses summarized below include information presented in
     tabular format. In order to fully understand Pharus' financial analyses,
     the tables must be read


                                       33



     together with the text of each summary. The tables alone do not constitute
     a complete description of the financial analyses. Considering the data in
     the tables below without considering the full narrative description of the
     financial analyses, including the methodologies and assumptions underlying
     the analyses, could create a misleading or incomplete view of Pharus'
     financial analyses.

          Review of Sales Process

          Pharus reviewed the sale process undertaken by Easylink. Pharus was
          advised that AGC contacted a total of 77 potential strategic and
          financial buyers. Of these potential buyers, 28 executed
          confidentiality agreements and received confidential evaluation
          materials, 11 participated in one or more meetings with EasyLink's
          management and four submitted final written bids.

          Comparison of Merger Consideration to Historical Stock Prices

          Pharus reviewed the merger consideration of $5.80 in cash per share to
          be received by the holders of Common Stock to EasyLink's historical
          stock prices. The following table summarizes this analysis:

          PREMIUM OF THE MERGER CONSIDERATION RELATIVE TO STOCK PRICE AS OF
          APRIL 30, 2007:


                                                        
Stock Price as of April 30, 2007 of $5.14                   12.8%
52-Week High as of April 30, 2007 of $5.45                   6.4%
52-Week Low as of April 30, 2007 of $2.45                  136.7%
30-Day Average Stock Price as of April 30, 2007 of $5.11    13.5%
90-Day Average Stock Price as of April 30, 2007 of $5.01    15.7%


          Pharus also compared the merger consideration to EasyLink's closing
          stock price on January 12, 2007, one week prior to the announcement
          made by EasyLink regarding the board of directors' decision to explore
          strategic alternatives. The following table summarizes this analysis:

          PREMIUM OF THE MERGER CONSIDERATION RELATIVE TO STOCK PRICE AS OF
          JANUARY 12, 2007:


                                                          
Stock Price as of January 12, 2007 of $3.07                   88.9%
52-Week High as of January 12, 2007 of $4.45                  30.3%
52-Week Low as of January 12, 2007 of $2.52                  130.2%
30-Day Average Stock Price as of January 12, 2007 of $2.80   107.1%
90-Day Average Stock Price as of January 12, 2007 of $3.02    92.1%


          Premium Paid Analysis

          Pharus compared the premium being offered to EasyLink's stockholders
          in the merger to the premiums (discounts) paid in 17 merger and
          acquisition transactions involving publicly-traded companies in the
          business services sector completed between January 1, 2005 and April
          30, 2007 with implied transaction equity consideration between
          $20,000,000 to $250,000,000. Pharus derived the high and low and the
          mean and median premiums (discounts) paid over the targets' stock
          prices one, seven, ten, 30 and 90 trading day(s) before the
          transaction announcement from the available data. The premiums
          (discounts) for these merger and acquisition transactions were
          compared to the merger consideration and to EasyLink's closing stock
          price on April 30, 2007 and January 12, 2007. The following table
          summarizes the results of this analysis and also compares these
          results with the premium implied by the merger consideration.


                                       34





                                MERGER CONSIDERATION
                                       PREMIUM                 PRECEDENT TRANSACTION
                            ----------------------------         PREMIUM / DISCOUNT
                             Current      Price Before     -----------------------------
                            Price (1)   Announcement (2)    Low     High   Mean   Median
                            ---------   ----------------   ----    -----   ----   ------
                                                                
PREMIUM AS OF THE DATE        12.8%           88.9%
PREMIUM BASED ON PRIOR TO
   THE DATE
1-Day                         13.7%           92.1%         2.1%   106.2%  36.6%   30.1%
7-Days                        12.2%           90.8%         0.6%   114.3%  37.8%   28.0%
10-Days                       12.6%          100.7%         1.4%   106.5%  37.6%   26.2%
30-Days                       14.4%          116.4%        (2.0)%  103.4%  41.1%   37.5%
90-Days                       30.0%           47.2%         5.0%   150.0%  54.4%   50.4%


(1)  As of April 30, 2007

(2)  As of January 12, 2007

          Discounted Cash Flow Analysis

          Pharus utilized the projected financial information prepared by
          EasyLink's management to derive debt-free cash flows for conducting a
          discounted cash flow analysis. The discounted cash flow analysis
          involved determining EasyLink's value at the end of the projection
          period. To calculate EasyLink's value at the end of the projection
          period, Pharus applied the Gordon Growth Perpetuity Model utilizing a
          range of risk-adjusted discount rates of 22% to 24% and a range of
          long-term growth rates of 2.0% to 3.0%. The risk-adjusted discount
          rates applied to discount the debt-free cash flows were based on a
          weighted average cost of capital analysis.

          The discounted cash flow analysis resulted in a share price range for
          the Common Stock of $5.10 to $5.81, which includes the value of
          EasyLink's net operating losses.

          Comparable Companies Analysis

          Pharus reviewed and analyzed selected historical and projected
          information about EasyLink provided by management and compared this
          information to certain financial information of six publicly traded
          companies that Pharus deemed to be reasonably comparable to EasyLink
          (the "Comparable Companies") for purposes of its analysis:

               -    Advant-E Corp.;

               -    Descartes Systems Group Inc.;

               -    Dicom Group plc;

               -    Genesys SA;

               -    Internet Commerce Corp.; and

               -    Premiere Global Services, Inc.

          Pharus reviewed, among other things, the Comparable Companies'
          enterprise value as a multiple of (i) actual LTM EBITDA and (ii)
          estimated EBITDA for each Comparable Company's fiscal year ending in
          2007. The LTM was performed using the 12 months ended December 31,
          2006 for Advant-E Corp., Descartes Systems Group Inc., Dicom Group
          plc, Genesys SA and Premiere Global Services, Inc., and the 12 months
          ended January 31, 2007 for Descartes Systems Group Inc. and Internet
          Commerce Corp. The following table summarizes the results of the
          analysis.


                                       35





           ENTERPRISE VALUE / EBITDA
         -----------------------------
                      PROJECTED FISCAL
         ACTUAL LTM       YEAR 2007
         ----------   ----------------
                
Mean         9.7x            9.1x
Median      11.1x           10.3x
High        17.9x           13.3x
Low          4.6x            8.5x


          For the purpose of the analysis, Pharus derived EasyLink's enterprise
          value using this methodology by multiplying selected multiples to
          EasyLink's LTM EBITDA ended March 31, 2007 and projected fiscal year
          2007 EBITDA and taking the average of the two results. A comparative
          risk analysis between EasyLink and the Comparable Companies formed the
          basis for the selection of appropriate risk-adjusted multiples. The
          risk analysis incorporated both quantitative and qualitative risk
          factors, relating to, among other things, the nature of the industry
          in which EasyLink and the Comparable Companies are engaged, and
          EasyLink's relative performance against the Comparable Companies.
          Based on its analysis, Pharus calculated an EBITDA multiple range of
          10.2x to 11.3x for EasyLink's March 31, 2007 EBITDA and a multiple
          range of 7.8x to 8.6x for projected Fiscal Year 2007 EBITDA.

          The Comparable Companies analysis resulted in a share price range for
          Common Stock of $5.80 to $6.54, which includes the value of EasyLink's
          net operating losses.

          Comparable Transactions Analysis

          Pharus reviewed and analyzed selected historical information about
          EasyLink provided by management and compared this information to the
          multiples exhibited in eight announced control acquisitions that
          Pharus deemed to be reasonably comparable for purposes of its
          analysis. The selected transactions differ significantly from the
          merger based on, among other things, the size of the transactions, the
          structure of the transactions and the dates that the transactions were
          announced and consummated. The transactions reviewed as part of the
          analysis included:



ACQUIRER                                      TARGET
--------                                      ------
                                           
Apollo Management                             Sourcecorp
Inovis                                        QRS
Open Solutions                                Bisys Information Services
Quadrangle Group and Thomas H. Lee Partners   West Corporation
Skywire Software                              Docucorp International
Snap-on                                       ProQuest Business Solutions
TransWorks Information Services               Minacs Worldwide
Vertical Communications                       Vodavi Technology


          Pharus calculated, among other information, the enterprise value
          implied by the purchase price in each selected transaction as a
          multiple of the target's actual LTM EBITDA based on publicly available
          information. The following table summarizes the results of this
          analysis.

                    TRANSACTION ENTERPRISE VALUE / LTM EBITDA



MEAN   MEDIAN   HIGH   LOW
----   ------   ----   ---
              
9.1x    9.3x    11.8x  5.8x


          The comparable transactions methodology involves multiplication of
          EBITDA by appropriate transaction multiples. Pharus derived EasyLink's
          enterprise value using this methodology by


                                       36



          multiplying the selected multiples by EasyLink's actual LTM EBITDA.
          Based on its analysis, Pharus calculated a range of EasyLink's
          enterprise values to LTM EBITDA of 8.5x to 10.5x.

          This analysis resulted in a share price range for the Common Stock of
          $4.16 to $5.09.

          Valuation of Net Operating Losses

          Pharus performed a valuation of EasyLink's net operating losses, based
          on a utilization schedule and the projected financial results provided
          by EasyLink's management. Pharus calculated the estimated present
          value of the after-tax cash flows that would be realized as a result
          of reduced future cash tax payments. The analysis resulted in the net
          present value of net operating loss tax benefits at $3,600,000 to
          $3,800,000. The present value of the after-tax cash flows was computed
          based on a range of discount rates of 22% to 24%, which corresponded
          to EasyLink's estimated weighted average cost of capital.

          EasyLink's Hiring of Pharus

          EasyLink's board of directors selected Pharus based on Pharus'
          qualifications, experience and reputation and its familiarity with
          EasyLink and EasyLink's business. Pharus is an investment banking firm
          regularly engaged in the valuation of businesses and securities in
          connection with mergers and acquisitions, leveraged buyouts,
          competitive biddings, private placements and valuations for corporate
          and other purposes.

          Prior to this engagement, Pharus had not provided financial advisory
          or investment banking services to Easylink. For its services provided
          to EasyLink, Pharus was paid a total fee of $375,000. In addition,
          EasyLink agreed to reimburse Pharus for all reasonable out-of-pocket
          expenses incurred by Pharus on EasyLink's behalf, provided such
          expenses do not exceed $25,000 without EasyLink's prior consent.
          EasyLink also agreed to indemnify Pharus against certain liabilities,
          including any which may arise under the federal securities laws.

REASONS FOR THE BOARD'S RECOMMENDATION

In reaching its conclusion regarding the fairness of the merger and its decision
to approve the Merger Agreement and recommend the adoption of the Merger
Agreement by EasyLink's stockholders, EasyLink's board of directors relied on
the special committee's recommendations and the factors examined by the special
committee as described above. In view of the wide variety of factors considered
in connection with its evaluation of the merger, EasyLink's board of directors
did not find it practicable to, and did not, quantify or otherwise assign
relative weights to the foregoing factors in reaching its conclusion. In
addition, individual members of EasyLink's board of directors may have given
different weights to different factors and may have viewed some factors more
positively or negatively than others. Rather, EasyLink's board of directors
viewed its position as being based on the totality of the information considered
by it. As part of its determination with respect to the merger, EasyLink's board
of directors adopted the conclusion of the special committee and the analyses
underlying the conclusion, based upon its view as to the reasonableness of such
conclusion and analyses.

In light of the factors described above, and the fact that the use of a special
committee of independent and disinterested directors is a mechanism
well-recognized to ensure fairness in transactions of this type, EasyLink's
board of directors did not consider it necessary to (and therefore did not)
retain an unaffiliated representative to act solely on behalf of EasyLink's
unaffiliated stockholders for purposes of negotiating the terms of the Merger
Agreement or preparing a report concerning the fairness of the Merger Agreement
and the transactions contemplated by the Merger Agreement, including the merger.


                                       37


Based on the factors outlined above, EasyLink's board of directors determined
that the merger, the Merger Agreement and the transactions contemplated by the
Merger Agreement are advisable, fair to and in the best interests of EasyLink
and its unaffiliated stockholders.

PURPOSES AND REASONS FOR THE MERGER AND PLANS FOR EASYLINK AFTER THE MERGER

The purpose of the merger for EasyLink is to enable EasyLink's stockholders
(other than ICC or EasyLink or their respective subsidiaries or dissenting
stockholders) to realize immediately the value of their investment in EasyLink
through their receipt of the per share merger price of $5.80, in cash, without
interest, representing a premium of approximately 11% to the closing market
price of Common Stock on May 3, 2007, the last trading day before the
announcement of the execution of the Merger Agreement. In this respect, the
special committee and EasyLink's board of directors believed that the merger was
more favorable to such stockholders than any other alternative reasonably
available to EasyLink and its stockholders because of the uncertain returns to
such stockholders in light of EasyLink's business, operations, financial
condition, strategy and prospects, as well as the risks involved in achieving
those prospects, and general industry, economic and market conditions, both on a
historical and on a prospective basis. For these reasons, and the reasons
discussed under "--Reasons for the Board's Recommendation" above, EasyLink's
board of directors determined that the merger, the Merger Agreement and the
transactions contemplated by the Merger Agreement are advisable, fair to and in
the best interests of EasyLink and its unaffiliated stockholders.

EasyLink's board of directors decided to proceed with the Merger Agreement at
this time because they believe that the merger is more favorable to EasyLink's
unaffiliated stockholders than any other alternative reasonably available to
EasyLink and its stockholders, including remaining as a stand-alone public
company.

After completion of the merger, it is anticipated that EasyLink will continue
its current operations, except that it will be a wholly owned subsidiary of ICC.
ICC has advised EasyLink that ICC does not have any current plans or proposals
that relate to or would result in an extraordinary corporate transaction
following completion of the merger involving EasyLink's corporate structure,
business or management, such as a merger, reorganization, liquidation,
relocation of any operations or sale or transfer of a material amount of assets.
ICC and EasyLink's management expect continuously to evaluate and review its
business and operations following the merger and may develop new plans and
proposals that they consider appropriate to maximize the value of EasyLink. ICC
expressly reserves the right to make any changes it deems appropriate in light
of such evaluation and review or in light of future developments.

CERTAIN EFFECTS OF THE MERGER

     EFFECT ON OUTSTANDING EASYLINK EQUITY

     As of the Effective Time, by virtue of the Merger Agreement and without any
     action on the part of any holder of shares of Common Stock, each issued and
     outstanding share of capital stock of Sub will be converted into and become
     one fully paid and non-assessable share of common stock, par value $0.01
     per share, of the surviving corporation.

     Each share of Common Stock that is owned by EasyLink, ICC or any of their
     respective subsidiaries will automatically be canceled and retired and will
     cease to exist, and no consideration will be delivered in exchange
     therefor.

     Except as set forth below with respect to restricted stock owned by
     EasyLink's executive officers, upon completion of the merger, each share of
     Common Stock issued and outstanding immediately prior to the Effective Time
     (other than those shares owned directly by ICC or EasyLink or their
     respective subsidiaries or dissenting stockholders) will be converted into
     the right to receive from the surviving corporation $5.80, in cash, without
     interest (the "Merger Consideration"). See "Proposal 1: The Merger
     Agreement--Treatment of Common Stock, Stock Options and Certain Restricted
     Stock". As of the Effective Time, all shares of Common Stock will no longer
     be outstanding and will automatically be canceled and retired and


                                       38



     will cease to exist, and each holder of a certificate representing any
     Common Stock (a "Certificate") and each holder of Common Stock not
     represented by a Certificate (an "Uncertificated Share") will cease to have
     any rights with respect thereto, except the right, as provided in the
     Merger Agreement, to receive the Merger Consideration.

     ICC will be entitled to deduct and withhold from the Merger Consideration
     otherwise payable pursuant to the Merger Agreement to any holder of shares
     of Common Stock outstanding immediately prior to the Effective Time such
     amounts as may be required to be deducted and withheld with respect to the
     making of such payment under the Code or any provision of state, local or
     foreign tax law. To the extent that amounts are so withheld, such withheld
     amounts will be treated for all purposes of the Merger Agreement as having
     been paid to the holder of the shares of Common Stock outstanding
     immediately prior to the Effective Time in respect of which such deduction
     and withholding was made.

     TREATMENT OF OUTSTANDING OPTIONS AND CERTAIN RESTRICTED STOCK

     At the Effective Time, each EasyLink director holding an option to acquire
     shares of Common Stock with an exercise price per share that is less than
     $5.80 (whether of not vested) will be entitled to receive an amount in cash
     equal to the amount by which $5.80 exceeds the exercise price per share of
     Common Stock subject to the option for each share subject to the option,
     less any applicable withholding tax. All other outstanding options not held
     by EasyLink directors will be replaced by ICC with a substitute option to
     purchase shares of Class A common stock of ICC. Each substitute option will
     be subject to, and exercisable and vested on, comparable terms and
     conditions as applied to the option being replaced immediately prior to the
     Effective Time (provided, however, that vesting will be accelerated if the
     option holder's employment is terminated for any reason other than for
     cause), except that each substitute option will be exercisable for that
     number of shares of Class A common stock of ICC equal to the number of
     shares of Common Stock subject to that option multiplied by an Exchange
     Ratio (as defined in the Merger Agreement). Certain grants of restricted
     shares of Common Stock to EasyLink executives will be converted into
     restricted shares of Class A common stock of ICC equal to (i) the product
     of $5.80 per share and the number of shares of restricted stock held by
     that executive divided by (ii) a Volume Weighted Average Price (as defined
     in the Merger Agreement). Each such share of restricted stock of ICC
     replacing EasyLink restricted stock will be subject to the same vesting
     restrictions as applied to such restricted shares of Common Stock
     immediately prior to the Effective Time (provided, however, that vesting
     restrictions will lapse if the restricted stock holder's employment is
     terminated for any reason other than for cause). See "Proposal 1: The
     Merger Agreement--Treatment of Common Stock, Stock Options and Certain
     Restricted Stock".

     The Common Stock is currently registered under the Securities Exchange Act
     of 1934, as amended (the "Exchange Act"), and is quoted on The Nasdaq
     Capital Market under the symbol "EASY". As a result of the merger, EasyLink
     will no longer be a publicly traded company, and there will be no public
     market for the Common Stock. After the merger, the Common Stock will cease
     to be quoted on The Nasdaq Capital Market, and price quotations with
     respect to sales of shares of Common Stock in the public market will no
     longer be available. In addition, registration of the Common Stock under
     the Exchange Act will be terminated. This termination will make certain
     provisions of the Exchange Act, such as the requirement of furnishing a
     proxy or information statement in connection with stockholders' meetings,
     no longer applicable to EasyLink. After completion of the merger, EasyLink
     will also no longer be required to file periodic reports with the SEC on
     account of Common Stock.

     EFFECT ON EASYLINK'S ORGANIZATION AND MANAGEMENT

     The officers of EasyLink immediately prior to the Effective Time will be
     the officers of the surviving corporation, until their respective
     successors are duly elected or appointed or qualified or until their
     earlier death, resignation or removal in accordance with the certificate of
     incorporation and bylaws of the surviving corporation.


                                       39



     The directors of Sub immediately prior to the Effective Time will be the
     directors of the surviving corporation, until their respective successors
     are duly elected or appointed or qualified or until their earlier death,
     resignation or removal in accordance with the certificate of incorporation
     and bylaws of the surviving corporation.

     EasyLink's certificate of incorporation will be amended in the merger to be
     the same as the certificate of incorporation of Sub, as in effect
     immediately prior to the Effective Time, except that the corporate name of
     EasyLink will remain the corporate name of the surviving corporation, until
     thereafter changed or amended as provided therein or by applicable law.

     The bylaws of Sub as in effect immediately prior to the Effective Time will
     become the bylaws of the surviving corporation, until thereafter changed or
     amended as provided therein or by applicable law.

     INTERESTS OF EASYLINK'S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER

     EasyLink is a party to employment agreements with each of Thomas Murawski
     (EasyLink's Chairman, President and Chief Executive Officer), Michael Doyle
     (EasyLink's Vice President and Chief Financial Officer), Richard Gooding
     (EasyLink's Executive Vice President and General Manager), Gary MacPhee
     (EasyLink's Executive Vice President and General Manager) and Frank
     Graziano (EasyLink's Senior Vice President of Corporate Development). All
     of these persons are referred to in this proxy statement as EasyLink's
     "executive officers". In addition, EasyLink is a party to a severance and
     change of control agreement with each of its executive officers other than
     Mr. Murawski (whose change of control arrangements are set forth in his
     employment agreement).

     Mr. Murawski's employment agreement provides that, in the event of his
     termination of employment by EasyLink for any reason other than death,
     disability or "cause" (as defined in the employment agreement) or by Mr.
     Murawski for "good reason" (as defined in the employment agreement), Mr.
     Murawski will be entitled to receive either (i) continuation of his base
     salary plus his target bonus for the year in which the termination has
     occurred (assuming performance at the 100% level for all applicable
     measures) and participation in EasyLink's standard health insurance and
     401(k) plans for 12 months after the date of termination, or (ii) a lump
     sum equal to 12 months' base salary plus his target bonus for the year in
     which the termination has occurred (assuming performance at the 100% level
     for all applicable measures). In addition, if EasyLink terminates Mr.
     Murawski's employment without cause within three months before or six
     months after the Effective Time, or if Mr. Murawski terminates his
     employment for good reason within six months after the Effective Time, then
     all of Mr. Murawski's outstanding stock options and other equity-based
     awards granted under EasyLink's equity incentive plans or pursuant to
     individual agreements with EasyLink will become fully vested and
     exercisable. Further, if the Effective Time occurs before the termination
     of Mr. Murawski's employment or within three months after a termination of
     his employment without cause or within three months after Mr. Murawski
     terminates his employment for good reason, he will be entitled to receive
     upon the Effective Time a cash payment equal to 2.5% of the consideration
     received by the holders of Common Stock pursuant to the merger. If any of
     the payments to Mr. Murawski under his employment agreement would be
     subject to the excise tax imposed by Section 4999 of the Code, Mr. Murawski
     will be entitled to receive a gross-up payment that would entitle him to
     retain, after payment of all additional taxes on the gross-up payment, an
     amount equal to the amount of the excise tax.

     The severance and change of control agreements with EasyLink's executive
     officers other than Mr. Murawski provide for severance pay in the amount of
     six months' salary upon termination of such executive officer's employment
     without "cause" (as defined in the relevant agreement) at any time, or if
     such executive officer terminates his employment for "good reason" (as
     defined in the relevant agreement) within six months after a "change of
     control" (as defined in the relevant agreement) provided that such
     executive officer signs a waiver and release of claims. If EasyLink
     terminates such executive officer's employment without cause within three
     months before or six months after a change of control, or if such executive
     officer terminates his employment for good reason within six months after a
     change of control,


                                       40



     then all of such executive officer's outstanding equity-based awards will
     fully vest. The completion of the merger will constitute a change of
     control for purposes of the severance and change of control agreements.

     EFFECT ON OWNERSHIP INTEREST IN EASYLINK AFTER THE MERGER; BENEFICIAL AND
     DETRIMENTAL EFFECTS

     In considering the recommendation of EasyLink's board of directors with
     respect to the Merger Agreement, holders of shares of Common Stock should
     be aware that EasyLink's directors and executive officers have interests in
     the merger that may be different from, or in addition to, those of
     EasyLink's stockholders generally. These interests may create potential
     conflicts of interest. EasyLink's board of directors was aware of these
     potential conflicts of interest and considered them, among other matters,
     in reaching its decision to approve the Merger Agreement and to recommend
     that EasyLink's stockholders vote in favor of adopting the Merger
     Agreement.

          Stock Holdings and Stock Options

          At the Effective Time, each EasyLink director holding an option to
          acquire shares of Common Stock with an exercise price per share that
          is less than $5.80 (whether of not vested) will be entitled to receive
          an amount in cash equal to the amount by which $5.80 exceeds the
          exercise price per share of Common Stock subject to the option for
          each share subject to the option, less any applicable withholding tax.
          All other outstanding options not held by EasyLink directors will be
          replaced by ICC with a substitute option to purchase shares of Class A
          common stock of ICC. Each substitute option will be subject to, and
          exercisable and vested on, comparable terms and conditions as applied
          to the option being replaced immediately prior to the Effective Time
          (provided, however, that vesting will be accelerated if the option
          holder's employment is terminated for any reason other than for
          cause), except that each substitute option will be exercisable for
          that number of shares of Class A common stock of ICC equal to the
          number of shares of Common Stock subject to that option multiplied by
          an Exchange Ratio (as defined in the Merger Agreement).


          The table below sets forth, as of July 10, 2007, for each of
          EasyLink's directors:


               -    the number of shares of Common Stock currently held;

               -    the amount of cash that will be paid in respect of such
                    shares upon completion of the merger;

               -    the number of options entitled to payment, whether or not
                    vested;

               -    the amount of cash that will be paid in respect of
                    cancellation of such option upon completion of the merger;
                    and

               -    the total amount of cash that will be received by such
                    person in respect of such shares and options upon completion
                    of the merger.

          All dollar amounts are gross amounts and do not reflect deductions for
          income taxes and other withholding. In each case with respect to
          options owned by directors, the payment is calculated by multiplying
          the number of shares subject to each option by the amount, if any, by
          which $5.80 exceeds the exercise price of the option. The Merger
          Agreement requires EasyLink's board of directors to take all actions
          necessary to cause all outstanding stock options to be canceled as of
          the Effective Time.


                                       41






                     COMMON STOCK OWNED       OPTIONS SUBJECT TO
                    AS OF JULY 10, 2007       BEING CASHED OUT
                   ----------------------   ----------------------       TOTAL
NAME               SHARES   CONSIDERATION   SHARES   CONSIDERATION   CONSIDERATION
----               ------   -------------   ------   -------------   -------------
                                                      
Thomas Murawski    40,657      $206,131     80,600      $118,890        $325,021
Peter J. Holzer    32,258      $163,548      6,000      $  8,500        $172,048
Eric J. Zahler     20,000      $101,400      6,000      $  8,500        $109,900
John C. Petrillo   16,129      $ 81,774      6,000      $  8,500        $ 90,274
George Knapp        8,064      $ 40,884     10,000      $ 21,100        $ 61,984
Robert Casale       6,451      $ 32,707     10,000      $ 21,100        $ 53,807
Dennis Raney        8,700      $ 44,109     10,000      $ 21,100        $ 65,209
Steve Duff          3,065      $ 15,540      8,000      $ 20,300        $ 35,840




          The table below sets forth, as of July 10, 2007, for each of
          EasyLink's executive officers:


               -    the number of shares of Common Stock currently held;

               -    the amount of cash that will be paid in respect of such
                    shares upon completion of the merger; and

               -    the number of options that will be replaced by ICC with a
                    substitute option to purchase shares of Class A common stock
                    of ICC.

          All dollar amounts are gross amounts and do not reflect deductions for
          income taxes and other withholding. The Merger Agreement requires
          EasyLink's board of directors to take all actions necessary to cause
          all outstanding stock options to be canceled as of the Effective Time.




                                              OPTIONS THAT
                                                 WILL BE
                    COMMON STOCK OWNED          REPLACED
                   AS OF JULY 10, 2007         BY ICC WITH
                  ----------------------   SUBSTITUTE OPTIONS
NAME (1)          SHARES   CONSIDERATION          SHARES
--------          ------   -------------   ------------------
                                  
Gary MacPhee      10,289   $ 59,676               61,000
Richard Gooding    8,751   $ 50,756               45,100
Michael Doyle     18,320   $106,256               36,000
Frank Graziano    23,111   $134,044               40,716



(1)  Thomas Murawski is both a director and executive officer of EasyLink.
     Pursuant to the terms of the Merger Agreement, his options will be treated
     the same as EasyLink's other directors, as detailed in the previous table.

          No current EasyLink stockholder will, directly or indirectly, have any
          ownership interest in, or be a stockholder of, EasyLink immediately
          following the Effective Time. As a result, immediately following the
          merger, EasyLink's current unaffiliated stockholders will not benefit
          from any increase in EasyLink's value, nor will they bear the risk of
          any decrease in EasyLink's value. Following the merger, ICC will
          directly benefit from any increase in EasyLink's value and also will
          bear the risk of any decrease in EasyLink's value.

          In addition, the detriments of the merger to EasyLink's unaffiliated
          stockholders include that the receipt of the payment for their shares
          of Common Stock will be a taxable transaction for federal income tax
          purposes. See "--Material U.S. Federal Income Tax Consequences of the
          Merger" below.


                                       42



          Shares of Restricted Stock


          Certain grants of restricted shares of Common Stock to EasyLink
          executives will be converted into restricted shares of Class A common
          stock of ICC, equal to (i) the product of $5.80 per share and the
          number of shares of restricted stock held by that executive divided by
          (ii) a Volume Weighted Average Price (as defined in the Merger
          Agreement). Each such share of restricted stock of ICC replacing
          EasyLink restricted stock will be subject to the same vesting
          restrictions as applied to such restricted shares of Common Stock
          immediately prior to the Effective Time (provided, however, that
          vesting restrictions will lapse if the restricted stock holder's
          employment is terminated for any reason other than for cause).



          The table below sets forth, as of July 10, 2007, for each of
          EasyLink's executive officers, the number of restricted shares of
          Common Stock that will be converted into restricted shares of Class A
          common stock of ICC as a result of the merger.




                  SHARES THAT WILL CONVERT INTO RESTRICTED
NAME                  SHARES AS A RESULT OF THE MERGER       MARKET VALUE
----              ----------------------------------------   ------------
                                                       
Thomas Murawski                     29,560                     $149,869
Michael Doyle                       14,976                     $ 75,928
Gary MacPhee                        13,509                     $ 68,490
Richard Gooding                     12,958                     $ 65,697
Frank Graziano                      12,824                     $ 65,017


     BENEFITS ACCRUING PRIOR TO OR UPON THE MERGER

     The Merger Agreement provides that EasyLink's directors and officers will
     be indemnified in respect of their past service and that ICC will maintain
     EasyLink's current directors' and officers' liability insurance, subject to
     certain conditions. See "Proposal 1: The Merger Agreement--Indemnification
     of Directors and Officers; Insurance".

     BENEFITS ACCRUING AFTER THE MERGER

     EasyLink's current executive officers will be the officers of the surviving
     corporation immediately after the Effective Time. It is anticipated that
     the service of EasyLink's directors will end at the Effective Time.
     Immediately after the Effective Time, the directors of Sub immediately
     prior to the Effective Time will become the directors of the surviving
     corporation, until the earlier of their resignation or removal or until
     their respective successors are duly elected or appointed and qualified, as
     the case may be.

EFFECTS ON EASYLINK IF THE MERGER IS NOT COMPLETED

In the event that the Merger Agreement is not adopted by EasyLink's stockholders
or if the merger is not completed for any other reason, EasyLink's stockholders
will not receive any payment for their shares of Common Stock in connection with
the merger. Instead, EasyLink will remain an independent public company and the
Common Stock will continue to be listed on The Nasdaq Capital Market. In
addition, if the merger is not completed, EasyLink expects that management will
operate the business in a manner similar to that in which it is being operated
today and that EasyLink's stockholders will continue to be subject to the same
risks and opportunities as they currently are with respect to their ownership of
Common Stock. If the merger is not completed, there can be no assurance as to
the effect of these risks and opportunities on the future value of the Common
Stock, including the risk that the market price of the Common Stock may decline
to the extent that the current market price of the Common Stock reflects a
market assumption that the merger will be completed. Accordingly, if the merger
is not completed, there can be no assurance as to the effect of these risks and
opportunities on the future value of the Common Stock. If the merger is not
completed for any reason, EasyLink's board of directors will evaluate and review
from time to time EasyLink's business operations, properties, dividend policy
and capitalization to, among other things, make such


                                       43



changes as are deemed appropriate and continue to seek to identify strategic
alternatives to maximize stockholder value. If the Merger Agreement is not
adopted by EasyLink's stockholders or if the merger is not completed for any
other reason, there can be no assurance that any other transaction acceptable to
EasyLink will be offered or that EasyLink's business, prospects or results of
operations will not be adversely impacted.

Under certain circumstances, if the merger is not completed, EasyLink will be
obligated to pay the Termination Fee to ICC. In addition, under certain
circumstances, if the merger is not completed, ICC will be obligated to pay the
Termination Fee to EasyLink. See "Proposal 1: The Merger Agreement--Termination
Fees".

FINANCING


ICC's obligations to complete the merger are subject to the approval of ICC's
stockholders in connection with the bank financing for the merger. See "Proposal
1: The Merger Agreement--Conditions to the Merger". The total amount of funds
required to complete the merger and the related transactions, including repaying
EasyLink's existing debt and payment of fees and expenses in connection with the
merger, is anticipated to be approximately $67,000,000. This amount is expected
to be provided through a combination of:


     -    Between $20,000,000 and $30,000,000 (as determined by ICC) of Series A
          Senior Secured Convertible Notes (the "Series A Notes");

     -    $30,000,000 Series B Senior Secured Convertible Notes (the "Series B
          Notes");

     -    a possible $10,000,000 of additional Series A Notes if the purchaser
          of such notes elects to exercise additional investment rights to
          acquire additional notes on the same terms as the Series A Notes (the
          "Additional Investment Rights"); and

     -    cash on hand at the Effective Time.

Concurrently with execution of the Merger Agreement, ICC entered into a
securities purchase agreement with certain accredited institutional investors
affiliated with York, pursuant to which ICC will issue to such investors, in a
private placement, the Series A Notes, the Series B Notes, warrants to purchase
shares of ICC's class A common stock (the "ICC Warrants") and the Additional
Investment Rights, all as more fully described in such securities purchase
agreement, for an aggregate purchase price between $50,000,000 and $60,000,000,
depending on the amount of Series A Notes that ICC elects to issue.

The Series A Notes will bear interest at the prime rate plus 75 basis points
less an interest factor based on the performance of ICC's Class A common stock,
as more fully described in the Series A Notes, and interest will be payable
quarterly. The Series B Notes will bear interest at the prime rate plus 300
basis points less an interest factor based on the performance of ICC's Class A
common stock, as more fully described in the Series B Notes, and interest will
be payable quarterly. Both the Series A Notes and the Series B Notes will have a
term of four years, will be repayable in 30 equal monthly installments of
principal beginning 18 months after issuance and may be prepaid subject to a 25%
prepayment penalty and certain other conditions, provided that ICC may prepay up
to $15,000,000 of the Series B Notes from the proceeds of sales of assets
subject to a 12.5% prepayment penalty.

The ICC Warrants will entitle the investors thereof to acquire an aggregate
number of shares of ICC's Class A common stock equal to 30% of the principal
amount of the Series B Notes divided by the least of (i) the arithmetic average
of the volume weighted average price (as defined in such securities purchase
agreement) for the 10 trading days prior to the closing of the merger, (ii) the
closing price on the trading day immediately preceding the Effective Time and
(iii) $2.53. The ICC Warrants will be exercisable from the Effective Time until
the fifth anniversary of the date a registration statement covering the resale
of the shares issuable upon exercise of the ICC Warrants is declared effective
by the SEC. The Additional Investment Rights will entitle the investors thereof
to purchase additional notes having terms similar to the Series A Notes in an
aggregate principal amount up to $10,000,000.

Under such securities purchase agreement, ICC is subject to certain limitations,
including limitations on its ability to incur additional debt or sell assets,
make certain investments and acquisitions, grant liens and pay dividends and
distributions. ICC is also subject to financial covenants on a quarterly basis,
which include minimum requirements for recurring revenue, EBITDA and the ratio
of EBITDA to interest expense. Such securities purchase agreement


                                       44



contains certain events of default (many of which are subject to applicable
cure periods), including, among others, the failure to make payments when due,
defaults under other contractual obligations, change of control and
non-compliance with covenants.

The issuance and sale of the securities pursuant to such securities purchase
agreement will occur at the Effective Time, at which time ICC's subsidiaries
will enter into guaranty agreements whereby each such subsidiary will guarantee
the repayment of the Series A Notes and the Series B Notes and will provide a
senior security interest in all or substantially all of their assets as
collateral to secure such guarantees. At the Effective Time, ICC will also
provide a senior security interest in all or substantially all of its assets,
including the pledge of its shares of capital stock in its subsidiaries. All of
the proceeds from such securities purchase agreement will be used to finance the
merger.

Please refer to ICC's Form 8-K filed on May 9, 2007 for further information on
such securities purchase agreement.

REMEDIES

EasyLink cannot seek specific performance to require ICC to complete the merger,
and, if ICC fails to complete the merger in the circumstances described under
"The Merger Agreement--Termination Fees and Expenses", ICC will be obligated to
pay the Termination Fee to EasyLink. EasyLink's right to receive payment of the
Termination Fee from ICC pursuant to the Merger Agreement does not limit
EasyLink's remedies against ICC or Sub for any damages in excess of the
Termination Fee suffered by EasyLink as a result of the failure of ICC or Sub to
obtain the financing necessary to complete the merger.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following is a discussion of the material U.S. federal income tax
consequences of the merger relevant to beneficial holders of Common Stock whose
shares are converted into cash in the merger. This discussion is based on the
provisions of the Code, existing, temporary and proposed U.S. Treasury
Regulations, judicial authority and administrative rulings and practice in
effect as of the date of this proxy statement, all of which are subject to
changes that could materially affect the tax consequences discussed in the
Merger Agreement, possibly on a retroactive basis.

This discussion applies only to beneficial holders of Common Stock that hold
those shares as a capital asset within the meaning of Section 1221 of the Code
(generally, property held for investment). This discussion does not address all
aspects of U.S. federal income tax that may be relevant to you in light of your
particular circumstances or that may apply to you if you are subject to special
treatment under the U.S. federal income tax laws (including, for example,
insurance companies, dealers in securities or foreign currencies, tax-exempt
organizations, financial institutions, mutual funds, partnerships or other
pass-through entities for U.S. federal income tax purposes, stockholders who
hold shares of Common Stock as part of a hedge, straddle, constructive sale or
conversion transaction, stockholders who acquired their shares of Common Stock
through the exercise of employee stock options or other compensation
arrangements (including holders of outstanding stock options or restricted
stock) or stockholders who will hold (actually or constructively) an equity
interest in ICC after the merger). In addition, the discussion does not address
tax considerations to holders under state, local or non-U.S. tax law. No party
to the merger will seek an opinion of counsel or a ruling from the Internal
Revenue Service with respect to the U.S. federal income tax consequences
discussed herein. Accordingly, there can be no assurance that the Internal
Revenue Service will agree with the positions described in this proxy statement.

The U.S. federal income taxes of a partner in a partnership (or other entity
treated as a partnership for U.S. federal income tax purposes) holding Common
Stock will depend on the status of the partner and the activities of the
partnership (or other entity treated as a partnership for U.S. federal income
tax purposes). Partners in a partnership (or other entity treated as a
partnership for U.S. federal income tax purposes) holding shares of Common Stock
should consult their own tax advisors.

For purposes of this discussion, the term "U.S. holder" means a beneficial owner
of Common Stock that is for U.S. federal income tax purposes:


                                       45



     -    a citizen or individual resident of the U.S.;

     -    a corporation, or other entity taxable as a corporation, created or
          organized in or under the laws of the U.S. or any state or the
          District of Columbia;

     -    a trust if it (i) is subject to the primary supervision of a court
          within the U.S. and one or more U.S. persons have the authority to
          control all substantial decisions of the trust or (ii) has a valid
          election in effect under applicable U.S. Treasury Regulations to be
          treated as a U.S. person; or

     -    an estate the income of which is subject to U.S. federal income tax
          regardless of its source.

The term "non-U.S. holder" means a beneficial owner of Common Stock that is, for
U.S. federal income tax purposes, neither a U.S. holder nor a partnership (or
other entity treated as a partnership for U.S. federal income tax purposes).

          TAX TREATMENT TO U.S. HOLDERS

          The receipt of cash by U.S. holders in exchange for Common Stock in
          the merger will be a taxable transaction for U.S. federal income tax
          purposes. In general, a U.S. holder of Common Stock who receives cash
          in exchange for Common Stock in the merger will recognize gain or loss
          equal to the difference between:

               -    the amount of cash received in exchange for such Common
                    Stock, and

               -    the U.S. holder's adjusted tax basis in such Common Stock.

          Such gain or loss will be capital gain or loss and will be long-term
          capital gain or loss if such U.S. holder of Common Stock surrendered
          in the merger has held such stock for greater than one year as of the
          date of the merger. The deductibility of a capital loss recognized on
          the exchange is subject to limitations under the Code.

          Certain U.S. holders, including individuals, are eligible for
          preferential rates of U.S. federal income tax in respect of long-term
          capital gains. If you acquired different blocks of Common Stock at
          different times and different prices, you must calculate your gain or
          loss and determine your adjusted tax basis and holding period
          separately with respect to each block of Common Stock.

          TAX TREATMENT TO NON-U.S. HOLDERS

          A non-U.S. holder generally will not be subject to U.S. federal income
          tax with respect to gain recognized pursuant to the merger unless one
          of the following applies:

               -    the gain is effectively connected with a non-U.S. holder's
                    conduct of a trade or business within the U.S. and, if a tax
                    treaty applies, the gain is attributable to a non-U.S.
                    holder's U.S. permanent establishment; in such case, the
                    non-U.S. holder will, unless an applicable tax treaty
                    provides otherwise, generally be taxed on its net gain
                    derived from the merger at regular graduated U.S. federal
                    income tax rates and, in the case of a foreign corporation,
                    may also be subject to the branch profits tax; or

               -    a non-U.S. holder who is an individual holds Common Stock as
                    a capital asset, is present in the U.S. for 183 or more days
                    in the taxable year of the merger and certain other
                    conditions are met; in such a case, the non-U.S. holder will
                    be subject to a flat 30% tax on the gain derived from the
                    merger, which may be offset by certain U.S. capital losses.

          BACKUP WITHHOLDING

          Certain non-corporate beneficial owners may be subject to backup
          withholding at a 28% rate on cash payments received in connection with
          the merger. Backup withholding will not apply, however, to a
          beneficial owner who (i) furnishes a correct taxpayer identification
          number and certifies that he, she or it is not subject to backup
          withholding on the substitute Form W-9 or successor form, (ii)
          provides a

                                       46



          certification of foreign status on Form W-8 or successor form or (iii)
          is otherwise exempt from backup withholding.

          TREATMENT OF MERGER TO EASYLINK

          Under general U.S. federal income tax principles, the merger should
          not be a taxable event to EasyLink, and no gain or loss should be
          recognized by EasyLink for U.S. federal income tax purposes.

THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH
BENEFICIAL OWNER OF SHARES SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM, HER OR IT,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.

REGULATORY APPROVALS

The merger is not subject to the filing requirements of the HSR Act.

DELISTING AND DEREGISTRATION OF COMMON STOCK

If the merger is completed, the Common Stock will be delisted from The Nasdaq
Capital Market and deregistered under the Exchange Act, and EasyLink will no
longer file periodic reports with the SEC on account of the Common Stock.

FEES AND EXPENSES

In general, all fees and expenses incurred in connection with the merger will be
paid by the party incurring those fees and expenses. If the Merger Agreement is
terminated, EasyLink or ICC will, in specified circumstances, be required to pay
the Termination Fee. See "Proposal 1: The Merger Agreement--Termination Fees".
Fees and expenses incurred or to be incurred by EasyLink in connection with the
merger and the related financings and other transactions contemplated by the
Merger Agreement are estimated at this time to be as follows:




DESCRIPTION                                                  AMOUNT
-----------                                               -------------
                                                       
Financial advisory, legal and accounting fees             $3,215,126.00
SEC filing fees                                           $    2,056.90
Printing, proxy solicitation and mailing costs            $   56,500.00
                                                          -------------
   Total                                                  $3,273,682.90
                                                          =============



These expenses will not reduce the Merger Consideration to be received by
EasyLink's unaffiliated stockholders.


                                       47



                                APPRAISAL RIGHTS

Under the DGCL, you have the right to demand appraisal of your Common Stock and
to receive, in lieu of the Merger Consideration, payment in cash for the fair
value of your Common Stock as determined by the Delaware Court of Chancery,
exclusive of any element of value arising from the accomplishment of the merger,
together with a fair rate of interest. Stockholders electing to exercise
appraisal rights must strictly comply with the provisions of Section 262 of the
DGCL in order to perfect their rights.

The following is intended as a brief summary of the material provisions of the
Delaware statutory procedures required to be followed by a stockholder in order
to demand and perfect appraisal rights and is qualified in its entirety by
reference to Section 262 of the DGCL, the full text of which appears in Annex D
to this proxy statement.

Section 262 of the DGCL requires that stockholders be notified that appraisal
rights will be available not less than 20 days before the Special Meeting to
vote on the adoption of the Merger Agreement. A copy of Section 262 of the DGCL
must be included with such notice. This proxy statement constitutes EasyLink's
notice to its stockholders of the availability of appraisal rights in connection
with the merger in compliance with the requirements of Section 262 of the DGCL.
If you wish to consider exercising your appraisal rights, you should carefully
review the text of Section 262 of the DGCL contained in Annex D, since failure
to timely and properly comply with the requirements of Section 262 of the DGCL
will result in the loss of your appraisal rights under Delaware law.

If you elect to demand appraisal of your shares, you must satisfy each of the
following conditions:

     -    you must be a holder of record of shares of Common Stock on the date
          that the written demand for appraisal is made, and you must continue
          to hold the shares of record through the Effective Time;

     -    you must deliver to EasyLink a written demand for appraisal of your
          shares before the vote with respect to the Merger Agreement is taken
          at the Special Meeting, which written demand for appraisal must be in
          addition to and separate from any proxy or vote abstaining from or
          voting against the adoption of the Merger Agreement (voting against or
          failing to vote for the adoption of the Merger Agreement by itself
          does not constitute a demand for appraisal within the meaning of
          Section 262 of the DGCL); and

     -    you must not vote in favor of the adoption of the Merger Agreement (a
          vote in favor of the adoption of the Merger Agreement, by proxy or in
          person, will constitute a waiver of your appraisal rights in respect
          of the shares so voted and will nullify any previously filed written
          demands for appraisal).

If you fail to comply with any of these conditions and the merger is completed,
you will be entitled to receive the cash payment for your shares of Common Stock
as provided for in the Merger Agreement, but you will have no appraisal rights
with respect to your shares of Common Stock. A proxy card that is signed and
does not contain voting instructions will, unless revoked, be voted "FOR" the
adoption of the Merger Agreement and will constitute a waiver of your right of
appraisal and will nullify any previous written demand for appraisal. If the
written demand for appraisal is made in accordance with the requirements of
Delaware law, failure to vote against the proposal to adopt the Merger Agreement
(that is, abstaining) will not operate as a waiver of your appraisal rights.

All demands for appraisal should be in writing and addressed to Corporate
Secretary, EasyLink Services Corporation, 33 Knightsbridge Road, Piscataway, New
Jersey 08854, Attention: Corporate Secretary, and must be delivered before the
vote on the Merger Agreement is taken at the Special Meeting. All demands for
appraisal should be executed by, or on behalf of, the record holder of the
shares in respect of which appraisal is being demanded. The demand must
reasonably inform EasyLink of the identity of the stockholder and the intention
of the stockholder to demand appraisal of such holder's shares.

To be effective, a demand for appraisal by a holder of Common Stock must be made
by, or in the name of, such registered stockholder, fully and correctly, as the
stockholder's name appears on his or her stock certificate(s). The demand should
specify the holder's name and mailing address and the number of shares
registered in the holder's name and must state that the holder intends thereby
to demand appraisal of the holder's shares in connection with the merger.
BENEFICIAL OWNERS WHO DO NOT ALSO HOLD THE SHARES OF RECORD MAY NOT DIRECTLY
MAKE APPRAISAL DEMANDS TO EASYLINK. THE BENEFICIAL HOLDER MUST, IN SUCH CASES,
HAVE THE RECORD OWNER SUBMIT THE REQUIRED


                                       48



DEMAND IN RESPECT OF THOSE SHARES. If shares are owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution of a demand for
appraisal should be made in that capacity, and if shares are owned of record by
more than one person, as in a joint tenancy or tenancy in common, the demand
should be executed by or for all joint owners. An authorized agent, including an
authorized agent for two or more joint owners, may execute the demand for
appraisal for a stockholder of record; however, the agent must identify the
record owner or owners and expressly disclose the fact that, in executing the
demand, he or she is acting as agent for the record owner. A record owner, such
as a broker, who holds shares as a nominee for others may exercise his or her
right of appraisal with respect to the shares held for one or more beneficial
owners, while not exercising this right for other beneficial owners. In that
case, the written demand should state the number of shares as to which appraisal
is sought. Where no number of shares is expressly mentioned, the demand will be
presumed to cover all shares held in the name of the record owner.

IF YOU HOLD YOUR SHARES OF COMMON STOCK IN A BROKERAGE ACCOUNT OR IN OTHER
NOMINEE FORM AND YOU WISH TO EXERCISE APPRAISAL RIGHTS, YOU SHOULD CONSULT WITH
YOUR BROKER OR THE OTHER NOMINEE TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE
MAKING OF A DEMAND FOR APPRAISAL BY THE NOMINEE.


Within 10 days after the Effective Time, the surviving corporation must give
written notice that the merger has become effective to each stockholder who has
properly filed a written demand for appraisal and who did not vote in favor of
the Merger Agreement. At any time within 60 days after the Effective Time, any
stockholder who has demanded an appraisal has the right to withdraw the demand
and to accept the cash payment specified by the Merger Agreement for such
stockholder's shares of Common Stock. Within 120 days after the Effective Time,
either the surviving corporation or any stockholder who has complied with the
requirements of Section 262 of the DGCL may file a petition in the Delaware
Court of Chancery demanding a determination of the fair value of the shares held
by all stockholders entitled to appraisal. The surviving corporation has no
obligation and has no present intention to file such a petition in the event
there are dissenting stockholders. Accordingly, the failure of a stockholder to
file such a petition within the period specified could nullify the stockholder's
previously written demand for appraisal. Within 120 days after the Effective
Time, any holder of Common Stock who has complied with the requirements for
exercise of appraisal rights under Section 262 of the DGCL will be entitled,
upon written request, to receive from the surviving corporation a statement
setting forth the aggregate number of shares not voted in favor of adoption of
the Merger Agreement and with respect to which demands for appraisal have been
received and the aggregate number of holders of such shares. The statement must
be sent to such holder within 10 days after a written request for the
statement has been received by the surviving corporation.


If a petition for appraisal is duly filed by a stockholder and a copy of the
petition is delivered to the surviving corporation, the surviving corporation
will then be obligated, within 20 days after receiving service of a copy of the
petition, to provide the Delaware Court of Chancery with a duly verified list
containing the names and addresses of all stockholders who have demanded an
appraisal of their shares and with whom agreements as to the value of their
shares have not been reached. After notice to dissenting stockholders, the
Delaware Court of Chancery is empowered to conduct a hearing upon the petition
and to determine those stockholders who have complied with Section 262 of the
DGCL and who have become entitled to the appraisal rights provided thereby. The
Delaware Court of Chancery may require the stockholders who have demanded
payment for their shares to submit their stock certificates to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings, and,
if any stockholder fails to comply with that direction, the Delaware Court of
Chancery may dismiss the proceedings as to that stockholder.

After determination of the stockholders entitled to appraisal of their shares of
Common Stock, the Delaware Court of Chancery will appraise the shares,
determining their fair value exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
When the value is determined, the Delaware Court of Chancery will direct the
payment of such value, with interest thereon accrued during the pendency of the
proceeding, if the Delaware Court of Chancery so determines, to the stockholders
entitled to receive the same, upon surrender by such holders of the certificates
representing those shares.


                                       49



In determining fair value and, if applicable, a fair rate of interest, the
Delaware Court of Chancery is required to take into account all relevant
factors. In Weinberger v. UOP, Inc. ("Weinberger"), the Delaware Supreme Court
discussed the factors that could be considered in determining fair value in an
appraisal proceeding, stating that "proof of value by any techniques or methods
that are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered and that "fair price
obviously requires consideration of all relevant factors involving the value of
a company". The Delaware Supreme Court stated that, in making this determination
of fair value, the court must consider market value, asset value, dividends,
earnings prospects, the nature of the enterprise and any other facts that could
be ascertained as of the date of the merger that throw any light on future
prospects of the merged corporation. Section 262 of the DGCL provides that fair
value is to be "exclusive of any element of value arising from the
accomplishment or expectation of the merger". In Cede & Co. v. Technicolor,
Inc., the Delaware Supreme Court stated that such exclusion is a "narrow
exclusion [that] does not encompass known elements of value", but that rather
applies only to the speculative elements of value arising from such
accomplishment or expectation. In Weinberger, the Delaware Supreme Court also
stated that "elements of future value, including the nature of the enterprise,
which are known or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered". YOU SHOULD BE AWARE THAT THE FAIR
VALUE OF YOUR SHARES AS DETERMINED UNDER SECTION 262 OF THE DGCL COULD BE MORE,
THE SAME OR LESS THAN THE VALUE THAT YOU ARE ENTITLED TO RECEIVE UNDER THE TERMS
OF THE MERGER AGREEMENT.

Costs of the appraisal proceeding may be imposed upon the surviving corporation
and the stockholders participating in the appraisal proceeding by the Delaware
Court of Chancery as the Delaware Court of Chancery deems equitable in the
circumstances. Upon the application of a stockholder, the Delaware Court of
Chancery may order all or a portion of the expenses incurred by any stockholder
in connection with the appraisal proceeding, including, without limitation,
reasonable attorneys' fees and the fees and expenses of experts, to be charged
pro rata against the value of all shares entitled to appraisal. Any stockholder
who had demanded appraisal rights will not, after the Effective Time, be
entitled to vote shares subject to that demand for any purpose or to receive
payments of dividends or any other distribution with respect to those shares,
other than with respect to payment as of a record date prior to the Effective
Time; however, if no petition for appraisal is filed within 120 days after the
Effective Time, or if the stockholder delivers a written withdrawal of such
stockholder's demand for appraisal and an acceptance of the terms of the merger
within 60 days after the Effective Time, then the right of that stockholder to
appraisal will cease and that stockholder will be entitled to receive the cash
payment for such holder's shares of Common Stock pursuant to the Merger
Agreement. Any withdrawal of a demand for appraisal made more than 60 days after
the Effective Time may only be made with the written approval of the surviving
corporation. Once a petition for appraisal has been filed, the appraisal
proceeding may not be dismissed as to any stockholder without the approval of
the Delaware Court of Chancery.

Failure to comply strictly with all of the procedures set forth in Section 262
of the DGCL will result in the loss of a stockholder's statutory appraisal
rights. IN VIEW OF THE COMPLEXITY OF SECTION 262 OF THE DGCL, STOCKHOLDERS WHO
MAY WISH TO DISSENT FROM THE MERGER AND PURSUE APPRAISAL RIGHTS SHOULD CONSULT
THEIR LEGAL ADVISORS.


                                       50



                        PROPOSAL 1: THE MERGER AGREEMENT

The summary of the material terms of the Merger Agreement below and elsewhere in
this proxy statement is qualified in its entirety by reference to the Merger
Agreement, a copy of which is attached to this proxy statement as Annex A and is
incorporated by reference into this document. This summary may not contain all
of the information about the Merger Agreement that is important to you. You are
encouraged to read carefully the Merger Agreement in its entirety.

EFFECTIVE TIME OF THE MERGER

The Effective Time will occur at the time that ICC and EasyLink file a
certificate of merger with the Secretary of State of the State of Delaware or
other appropriate documents as provided in Section 251 of the DGCL (or at such
later time as is specified in the certificate of merger) on the closing date of
the merger. Unless otherwise agreed to by ICC and EasyLink, the closing date of
the merger will take place no later than the second business day after
satisfaction or waiver of the conditions set forth in the Merger Agreement.

STRUCTURE

At the Effective Time, Sub will merge with and into EasyLink. Upon completion of
the merger, Sub will cease to exist as a separate entity, and EasyLink will
continue as the surviving corporation and a wholly owned subsidiary of ICC. All
of EasyLink's and ICC's rights and obligations will become those of the
surviving corporation. Following the completion of the merger, the Common Stock
will be delisted from The Nasdaq Capital Market, deregistered under the Exchange
Act and no longer publicly traded.

TREATMENT OF COMMON STOCK, STOCK OPTIONS AND CERTAIN RESTRICTED STOCK

     COMMON STOCK

     At and after the Effective Time, each EasyLink stockholder (other than ICC
     or EasyLink or their respective subsidiaries or dissenting stockholders)
     will be entitled to receive $5.80, in cash, without interest, for each
     share of Common Stock owned as of the Effective Time.

     Each share of Common Stock that is owned by ICC, EasyLink or any of their
     respective subsidiaries (including Sub) will automatically be canceled and
     retired and will cease to exist, and no consideration will be delivered in
     exchange therefor.

     EASYLINK STOCK OPTIONS

     At the Effective Time, each EasyLink director holding an option to acquire
     shares of Common Stock with an exercise price per share that is less than
     $5.80 (whether of not vested) will be entitled to receive an amount in cash
     equal to the amount by which $5.80 exceeds the exercise price per share of
     Common Stock subject to the option for each share subject to the option,
     less any applicable withholding tax. All other outstanding options not held
     by EasyLink directors will be replaced by ICC with a substitute option to
     purchase shares of Class A common stock of ICC. Each substitute option will
     be subject to, and exercisable and vested on, comparable terms and
     conditions as applied to the option being replaced immediately prior to the
     Effective Time (provided, however, that vesting will be accelerated if the
     option holder's employment is terminated for any reason other than for
     cause), except that each substitute option will be exercisable for that
     number of shares of Class A common stock of ICC equal to the number of
     shares of Common Stock subject to that option multiplied by an Exchange
     Ratio (as defined in the Merger Agreement).

     Except as may be otherwise agreed to by ICC or Sub and EasyLink, EasyLink's
     stock option plans will terminate as of the Effective Time, and the
     provisions in any other plan, program or


                                       51



     arrangement providing for the issuance or grant of any other interest in
     respect of EasyLink's capital stock will be terminated as of the Effective
     Time.

     CERTAIN SHARES OF RESTRICTED STOCK

     Certain grants of restricted shares of Common Stock to EasyLink executives
     will be converted into restricted shares of Class A common stock of ICC,
     equal to (i) the product of $5.80 per share and the number of shares of
     restricted stock held by that executive divided by (ii) a Volume Weighted
     Average Price (as defined in the Merger Agreement). Each such share of
     restricted stock of ICC replacing EasyLink restricted stock will be subject
     to the same vesting restrictions as applied to such restricted shares of
     Common Stock immediately prior to the Effective Time (provided, however,
     that vesting restrictions will lapse if the restricted stock holder's
     employment is terminated for any reason other than for cause).

     NO FURTHER OWNERSHIP RIGHTS

     After the Effective Time, each outstanding certificate of Common Stock will
     represent only the right to receive a cash amount equal to the product of
     the per share Merger Consideration multiplied by the number of shares so
     represented. After the Effective Time, no holder of an EasyLink stock
     option or shares of restricted stock will have any right to acquire any
     capital stock or any interest in respect of any capital stock of the
     surviving corporation.

EXCHANGE AND PAYMENT PROCEDURES

At the Effective Time, the surviving corporation will deposit with a U.S.
federally insured bank or trust company (the "paying agent") reasonably
acceptable to EasyLink an amount of cash sufficient to pay the Merger
Consideration to each holder of shares of Common Stock. Promptly after the
Effective Time, the paying agent will mail a letter of transmittal to you and
EasyLink's other stockholders. The letter of transmittal will tell you how to
surrender your Common Stock certificates in exchange for the Merger
Consideration.

You should not return your stock certificates with the enclosed proxy card, and
you should not forward your stock certificates to the paying agent without a
letter of transmittal.

You will not be entitled to receive the Merger Consideration until you surrender
your Common Stock certificate or certificates to the paying agent, together with
a duly completed and executed letter of transmittal or, in the case of
uncertificated shares of Common Stock, such other documents as the paying agent
may require. The Merger Consideration may be paid to a person other than the
person in whose name the corresponding certificate is registered if the
certificate is properly endorsed or is otherwise in the proper form for
transfer. In addition, the person requesting payment must either pay any
applicable stock transfer taxes or establish to the reasonable satisfaction of
the surviving corporation that such stock transfer taxes have been paid or are
not applicable.

If you have lost a certificate, or if it has been stolen or destroyed, then you
will be required to make an affidavit of that fact before you will be entitled
to receive the Merger Consideration. In addition, if required by the surviving
corporation, you will have to post a bond at your expense in a reasonable amount
determined by the surviving corporation indemnifying the surviving corporation
against any claims made against it with respect to the lost, stolen or destroyed
certificate.

No interest will be paid or will accrue on the cash payable upon surrender of
the certificates. Each of the paying agent and the surviving corporation will be
entitled to deduct and withhold any applicable taxes from the Merger
Consideration and pay such withholding amount over to the appropriate taxing
authority.

At the Effective Time, EasyLink's share transfer books will be closed, and there
will be no further registration of transfers of outstanding shares of Common
Stock. If, after the Effective Time, certificates are presented to the surviving
corporation or the paying agent for transfer or any other reason, they will be
canceled and exchanged for the Merger Consideration.


                                       52



Any portion of the Merger Consideration deposited with the paying agent that
remains unclaimed by holders of Common Stock one year after the Effective Time
will be delivered to the surviving corporation. Holders of Common Stock who have
not surrendered their certificates within one year after the Effective Time may
only look to the surviving corporation for the payment of the Merger
Consideration. No party to the Merger Agreement will be liable to any person for
any cash delivered to a public official pursuant to any applicable abandoned
property, escheat or other applicable law.

CERTIFICATE OF INCORPORATION AND BYLAWS

EasyLink's certificate of incorporation will be amended in the merger to be the
same as the certificate of incorporation of Sub as in effect immediately prior
to the Effective Time, except that the corporate name of EasyLink will remain
the corporate name of the surviving corporation, until thereafter changed or
amended as provided therein or by applicable law.

The bylaws of Sub as in effect immediately prior to the Effective Time will
become the bylaws of the surviving corporation, until thereafter changed or
amended as provided therein or by applicable law.

DIRECTORS AND OFFICERS

The directors of Sub immediately prior to the Effective Time will be the
directors of the surviving corporation, until their respective successors are
duly elected or appointed or qualified, or until their earlier death,
resignation or removal in accordance with the certificate of incorporation and
bylaws of the surviving corporation. The officers of EasyLink immediately prior
to the Effective Time will be the officers of the surviving corporation, until
their respective successors are duly elected or appointed or qualified, or until
their earlier death, resignation or removal in accordance with the certificate
of incorporation and bylaws of the surviving corporation.

REPRESENTATIONS AND WARRANTIES

The Merger Agreement contains representations and warranties that EasyLink, ICC
and Sub made to one another as of specific dates. The assertions embodied in
those representations and warranties were made for purposes of the Merger
Agreement and may be subject to important qualifications and limitations set
forth in the Merger Agreement and the disclosure schedules thereto. Moreover,
certain representations and warranties are subject to a contractual standard of
materiality different from those generally applicable to stockholders or were
used for the purpose of allocating risk between EasyLink and ICC rather than
establishing matters as facts. Stockholders are not third-party beneficiaries
under the Merger Agreement and should not rely on the representations and
warranties or any description thereof as characterizations of the actual state
of facts or condition of EasyLink, ICC or their respective subsidiaries.

EasyLink's representations and warranties relate to, among other things:

     -    EasyLink's and its subsidiaries' proper organization, good standing
          and corporate power to operate their respective businesses;

     -    EasyLink's capitalization, including in particular the number of
          shares of Common Stock, stock options and shares of restricted stock
          owned by executive officers and warrants that are outstanding;

     -    EasyLink's corporate power and authority to enter into the Merger
          Agreement and to complete the transactions contemplated by the Merger
          Agreement;

     -    the approval and recommendation by EasyLink's board of directors of
          the Merger Agreement and the merger;

     -    the required vote of EasyLink's stockholders in connection with the
          adoption of the Merger Agreement;

     -    the enforceability of the Merger Agreement against EasyLink;

     -    the absence of any conflict with or violation of EasyLink's and its
          subsidiaries' organizational documents, certain agreements or
          applicable law as a result of entering into the Merger Agreement and
          completing the merger;


                                       53



     -    required consents and approvals of governmental entities as a result
          of entering into the Merger Agreement and completing the merger;

     -    EasyLink's SEC filings since December 31, 2004, the financial
          statements described in the Merger Agreement and EasyLink's disclosure
          controls and procedures and internal control over financial reporting;

     -    the absence of liabilities that would have a material adverse effect
          on EasyLink, other than liabilities reflected in EasyLink's financial
          statements filed with its Annual Report on Form 10-K for the year
          ended December 31, 2006, as amended, liabilities incurred in
          connection with the merger or ordinary course liabilities incurred
          since December 31, 2006;

     -    affiliate contracts and affiliated transactions;

     -    the absence of certain changes and events since December 31, 2006,
          including the absence of a material adverse effect;

     -    accuracy of written information supplied by EasyLink for inclusion in
          the proxy statement ICC sends to its stockholders to approve the
          matters contemplated by the financing for the merger;

     -    employee benefit plans;

     -    litigation or outstanding orders against EasyLink;

     -    EasyLink's possession of and compliance with licenses and permits
          necessary to conduct its business;

     -    EasyLink's compliance with applicable laws;

     -    tax matters;

     -    the inapplicability of any anti-takeover statute to the merger;

     -    the absence of undisclosed brokers' fees;

     -    EasyLink's receipt of fairness opinions;

     -    EasyLink's intellectual property;

     -    labor matters;

     -    change of control matters;

     -    environmental matters;

     -    certain contracts to which EasyLink or its subsidiaries are a party;

     -    real property leased by EasyLink and its subsidiaries;

     -    title to EasyLink's assets;

     -    EasyLink's insurance policies; and

     -    EasyLink's customers and suppliers.

For the purposes of the Merger Agreement, "material adverse effect" means any
change, development, event, occurrence or effect that, individually or in the
aggregate, has or would reasonably be expected to have a material and adverse
effect on:

     -    the business, liabilities (including contingent liabilities),
          financial condition, results of operations or assets of EasyLink and
          its subsidiaries, taken as a whole; or

     -    EasyLink's ability to perform its obligations under the Merger
          Agreement or to complete the merger or the other transactions
          contemplated by the Merger Agreement.

Notwithstanding the foregoing, none of the following will constitute a "material
adverse effect":

     -    any adverse change resulting from the merger or the announcement of or
          pendency of any costs or expenses associated with the merger,
          including a decline in the trading price of the Common Stock;

     -    any adverse changes in general market and economic conditions;

     -    any adverse changes affecting EasyLink's industry generally;

     -    any adverse regulatory or legislative changes affecting EasyLink or
          companies in general;

     -    any adverse change relating to changes in generally accepted
          accounting principles in the U.S.; and

     -    hurricanes, earthquakes or similar catastrophes, or acts of war
          (whether declared or undeclared), sabotage, terrorism, military action
          or any escalation or worsening thereof.

The Merger Agreement also contains representations and warranties made by ICC
and Sub relating to, among other things:


                                       54


     -    their proper organization, good standing and corporate power to
          operate their respective businesses;

     -    their corporate power and authority to enter into the Merger Agreement
          and to complete the transactions contemplated by the Merger Agreement;

     -    the approval by ICC's and Sub's respective boards of directors of the
          Merger Agreement;

     -    the required vote of ICC's stockholders to approve the issuance of
          shares of ICC's common stock issuable upon conversion of the
          convertible notes contemplated by the bank financing for the merger
          and the amendment to ICC's certificate of incorporation to increase
          the number of authorized shares of ICC's common stock;

     -    the enforceability of the Merger Agreement as against ICC and Sub;

     -    the absence of any conflict with or violation of their organizational
          documents, certain agreements or applicable law as a result of
          entering into the Merger Agreement and completing the merger;

     -    required consents and approvals of governmental entities as a result
          of entering into the Merger Agreement and completing the merger;

     -    accuracy of the written information supplied by ICC or Sub for
          inclusion in this proxy statement;

     -    the lack of prior operations of Sub;

     -    the financing commitment received by ICC; and

     -    the absence of undisclosed brokers' fees.

The representations and warranties of each of the parties to the Merger
Agreement will expire upon completion of the merger or the termination of the
Merger Agreement.

CONDUCT OF BUSINESS PENDING THE MERGER

Under the Merger Agreement, EasyLink agreed that, subject to certain exceptions,
between May 3, 2007 and the Effective Time, EasyLink and its subsidiaries will:

     -    conduct their respective operations according to their ordinary and
          usual course of business consistent with past practice;

     -    use their commercially reasonable efforts to preserve intact their
          current business organization, keep available the services of their
          current officers and employees and preserve their relationships with
          customers, suppliers, licensors, licensees, advertisers, distributors
          and others having business dealings with them; and

     -    preserve goodwill.

EasyLink also agreed that, during the same time period, and again subject to
certain exceptions or unless ICC gives its consent, EasyLink and its
subsidiaries will not:

     -    adopt or amend in any material respect any bonus, profit sharing,
          compensation, severance, termination, stock option, stock purchase,
          stock appreciation right, pension, retirement, employment or other
          employee benefit agreement, trust, plan or other arrangement for the
          benefit or welfare of any director, officer or employee, except in the
          ordinary course of business consistent with past practice;

     -    increase in any manner the compensation or fringe benefits of any
          director, officer or employee, except in the ordinary course of
          business consistent with past practice (the ordinary course including
          normal annual increases and executive incentive opportunities);

     -    pay any benefit not required by any existing agreement or place any
          assets in any trust for the benefit of any director, officer or
          employee, except in the ordinary course of business consistent with
          past practice;

     -    incur any indebtedness for borrowed money in excess of EasyLink's
          current line of credit;

     -    expend funds for individual capital expenditures in excess of $100,000
          individually or $1,000,000 in the aggregate for any 12-month period
          commencing after May 3, 2007;

     -    sell, lease, license, mortgage or otherwise encumber or subject to any
          lien or otherwise dispose of any of EasyLink's properties or assets,
          other than immaterial properties or assets, except in the ordinary
          course of business consistent with past practice;

     -    declare, set aside or pay dividends on, or make any other
          distributions in respect of, any capital stock;

     -    split, combine or reclassify any capital stock or issue or authorize
          the issuance of any other securities in respect of, in lieu of or in
          substitution for any capital stock; methods, principles or practices:


                                       55



     -    purchase, redeem or otherwise acquire any of EasyLink's capital stock
          or other securities, or any rights, warrants or options to acquire any
          such securities;

     -    except for shares of Common Stock issuable pursuant to EasyLink's
          stock options or shares of restricted stock outstanding on the date of
          the Merger Agreement, or in connection with matching contributions
          under EasyLink's 401(k) plan, authorize for issuance, issue, deliver,
          sell, modify or amend, or agree or commit to issue, sell, deliver,
          pledge or otherwise encumber, any shares of capital stock, any other
          voting securities or any securities convertible into, or any rights,
          warrants or options to acquire, any such shares, voting securities or
          convertible securities or any other securities or equity equivalents
          (including stock appreciation rights);

     -    amend the certificate of incorporation or bylaws or other
          organizational documents of EasyLink or any of its subsidiaries;

     -    acquire or agree to acquire any assets material to EasyLink, except
          for acquisitions of equipment or services in the ordinary course of
          business consistent with past practice or pursuant to purchase orders
          entered into in the ordinary course of business consistent with past
          practice that do not call for payments in excess of $100,000
          individually;

     -    settle or compromise any stockholder derivative suits arising out of
          the transactions contemplated by the Merger Agreement or any other
          material litigation or settle, pay or compromise any material claims
          not required to be paid;

     -    adopt a plan of complete or partial liquidation, dissolution,
          consolidation, restructuring or recapitalization of EasyLink or any of
          its subsidiaries or otherwise permit the corporate organization of
          EasyLink or any of its subsidiaries to be suspended, lapsed or
          revoked;

     -    directly or indirectly, sell, lease, sell and leaseback, mortgage or
          otherwise encumber or subject to any lien or otherwise dispose of any
          of EasyLink's material properties or assets or any interest therein,
          other than:

               -    the sale or distribution of personal property (including
                    intangibles) held for such sale or distribution to customers
                    in the ordinary course of business consistent with past
                    practice;

               -    pursuant to existing contracts or commitments;

               -    any liens for taxes not yet due and payable or being
                    contested in good faith; and

               -    such mechanics' and similar liens, if any, as do not
                    materially detract from the value of any such properties or
                    assets;

     -    repurchase, prepay or incur any indebtedness (other than pursuant to
          EasyLink's existing line of credit facility), assume, guarantee or
          endorse any indebtedness of another person or issue or sell any debt
          securities or options, warrants, calls or other rights to acquire any
          of EasyLink's debt securities;

     -    make any loan, advance or capital contribution to, or investment in,
          any person, other than loans or advances to, or investments in,
          EasyLink or its wholly owned subsidiaries in the ordinary course of
          business consistent with past practice;

     -    enter into, modify, amend or terminate, or waive, release or assign
          any material right under, any contract, except for any new contracts
          or any modifications, amendments or terminations of, or waivers,
          releases or assignments to, existing contracts in the ordinary course
          of business consistent with past practice that would not:

               -    impair in any material respect EasyLink's ability to perform
                    its obligations under the Merger Agreement; or

               -    prevent or delay the consummation of the transactions
                    contemplated by the Merger Agreement;

     -    except as otherwise contemplated by the Merger Agreement or as
          required to comply with applicable law or any existing contract or
          benefit plans, waive any of EasyLink's material rights under, or grant
          or pay any material benefit not provided for as of May 3, 2007 under,
          any contract or benefit plan, except as specifically provided in the
          Merger Agreement, enter into, modify, amend or terminate any benefit
          plan or adopt or enter into any collective bargaining agreement or
          other labor union contract;

     -    permit to be canceled or terminated, or cancel or terminate, any
          insurance policy naming EasyLink as a beneficiary or loss payee,
          unless such policy is replaced by a policy with comparable coverage,
          or otherwise fail to maintain insurance at less than current levels or
          otherwise in a manner consistent with past practice in all material
          respects;

     -    other than as required by generally accepted accounting principles,
          revalue any material assets or make any material changes in accounting
          methods, principles or practices;


                                       56



     -    except in the ordinary course of business consistent with past
          practice, disclose to any party (other than ICC's representatives)
          that is not subject to a non-disclosure agreement any material trade
          secret;

     -    except in the ordinary course of business consistent with past
          practice, transfer, modify or terminate any agreement pursuant to
          which EasyLink has licensed intellectual property rights from any
          party, except those that would be immaterial to its business;

     -    disclose any source code to any third party, except in the ordinary
          course of business consistent with past practice and only if such
          third party has executed an enforceable non-disclosure and invention
          assignment agreement;

     -    enter into any material strategic alliance, material joint development
          or joint marketing agreement or any agreement pursuant to which ICC,
          the surviving corporation, any subsidiary of ICC, EasyLink or any of
          EasyLink's subsidiaries will be subject to any exclusivity,
          non-competition, non-solicitation, most favored nation or other
          similar restriction or requirement on their respective businesses
          following the Effective Time;

     -    commence any litigation, except for actions commenced in the ordinary
          course of business against third parties or pursuant to or in
          connection with the Merger Agreement;

     -    except in the ordinary course of business consistent with past
          practice or as required by applicable law, seek a judicial order or
          decree, except pursuant to or in connection with the Merger Agreement;

     -    take any action that would make any of EasyLink's representations or
          warranties under the Merger Agreement inaccurate in any material
          respect or omit to take any action necessary to prevent any such
          representations or warranties from being inaccurate in any respect;

     -    make or change any material tax election, change any annual tax
          accounting period, adopt or change any method of tax accounting, file
          any material amended tax returns or claims for material tax refunds,
          enter into any closing agreement, settle any tax claim, audit or
          assessment or surrender any right to claim a material tax refund or
          offset or other material reduction in tax liability; or

     -    fail to file any material federal or state income tax return or an
          extension thereof.

EasyLink also agreed that it would not take any action that would, or that could
reasonably be expected to, result in:

     -    any of its representations and warranties set forth in the Merger
          Agreement that are qualified as to materiality becoming untrue;

     -    any of such representations and warranties that are not so qualified
          becoming untrue in any material respect; or

     -    the merger not being completed (subject to EasyLink's right to take
          actions specifically permitted by the Merger Agreement).

AGREEMENT TO TAKE FURTHER ACTION AND TO USE REASONABLE EFFORTS

Subject to the terms and conditions of the Merger Agreement, each of EasyLink
and ICC agreed to use reasonable efforts to take, or cause to be taken, all
actions necessary to make such filings and registrations and comply promptly
with all legal requirements imposed on it with respect to the merger and to
obtain any consent, authorization, order, approval or exemption required in
connection with the merger.

ICC agreed to use its commercially reasonable efforts to arrange and complete
the bank financing for the transactions contemplated by the Merger Agreement on
terms substantially the same as described in its commitment letter, including to
negotiate definitive agreements and to satisfy all conditions with respect
thereto.

ICC agreed to keep EasyLink informed at all times with respect to the status of
ICC's efforts to arrange and complete the bank financing for the transactions
contemplated by the Merger Agreement, including with respect to the occurrence
of any event that ICC believes may have a materially adverse effect on its
ability to obtain the bank financing.

In addition, EasyLink agreed to use its reasonable best efforts to assist ICC to
arrange and complete the bank financing, at ICC's sole cost and expense.


                                       57



NOTICE OF CERTAIN EVENTS

EasyLink and ICC agreed to give prompt written notice to each other of:

     -    any notice or other communication from any person alleging that such
          person's consent is or may be required in connection with the
          transactions contemplated by the Merger Agreement;

     -    any notice or communication from any governmental entity in connection
          with the transactions contemplated by the Merger Agreement;

     -    any actions, suits, claims, investigations or proceedings commenced
          or, to the actual knowledge of the executive officers of the notifying
          party, threatened against, relating to or involving or otherwise
          affecting such party, which would reasonably be expected to have a
          material adverse effect on EasyLink;

     -    an administrative or other order or notification relating to any
          material violation or claimed material violation of law;

     -    the occurrence or non-occurrence of any event that would cause any
          representation or warranty contained in the Merger Agreement to be
          untrue or inaccurate in any material respect; or

     -    such party's material failure to comply with or satisfy any obligation
          to be complied with or satisfied by it under the Merger Agreement.

NO SOLICITATION OF TRANSACTIONS

EasyLink agreed that neither it nor any of its subsidiaries or representatives
will:

     -    solicit, initiate or encourage or take any action in furtherance of
          any discussions or negotiations with any person, entity or group,
          other than ICC, concerning any offer or proposal that constitutes or
          is reasonably likely to lead to any acquisition proposal (as defined
          below); or

     -    furnish any non-public information to any person, entity or group
          regarding EasyLink or an acquisition proposal.

For purposes of the Merger Agreement, "acquisition proposal" means any inquiry,
proposal or offer from any person, entity or group (other than ICC) relating to
any direct or indirect acquisition or purchase of any shares of any class of
equity securities of EasyLink constituting 50% or more of the outstanding equity
securities of EasyLink, any tender offer or exchange offer that if consummated
would result in any person, entity or group beneficially owning 50% or more of
any class of equity securities of EasyLink, or any merger, consolidation,
business combination, sale of all or substantially all of the assets,
recapitalization, liquidation, dissolution or similar transaction involving
EasyLink, other than the transactions contemplated by the Merger Agreement.

Notwithstanding the foregoing, EasyLink may furnish information with respect to
EasyLink to any person, entity or group making such acquisition proposal and
participate in discussions or negotiations regarding such acquisition proposal
in response to an unsolicited acquisition proposal received subsequent to May 3,
2007 if EasyLink's board of directors determines in the good-faith exercise of
its fiduciary duties that such acquisition proposal is reasonably likely to
result in a Superior Proposal (as defined below). Any information furnished to
any person, entity or group in connection with an acquisition proposal shall be
provided pursuant to a confidentiality agreement in customary form.

For purposes of the Merger Agreement, "Superior Proposal" means any written
proposal made by a third party to consummate a tender offer, exchange offer,
merger, consolidation or similar transaction that would result in such third
party (or its stockholders) owning, directly or indirectly, a majority of the
shares of Common Stock then outstanding (or of the surviving entity in a merger)
or all or substantially all of the assets of EasyLink and its subsidiaries,
taken as a whole, and otherwise on terms that EasyLink's board of directors
determines to be more favorable to EasyLink's stockholders, from a financial
point of view, than the transactions contemplated by the Merger Agreement. In
reaching such determination, EasyLink's board of directors shall give
consideration to all the terms and conditions, including whether any such third
party proposal includes definitive financing, the likelihood of completion of
such proposed transactions and applicable fees payable to ICC under the Merger
Agreement and the


                                      58



financial, regulatory, legal and other aspects of such proposal for which
financing, to the extent required, is then fully committed or reasonably
determined by EasyLink's board of directors to be available.

The Merger Agreement does not prohibit EasyLink from complying with Rules 14d-9
and 14e-2 promulgated under the Exchange Act or from making any disclosure to
EasyLink's stockholders if, in the good faith judgment of EasyLink's board of
directors, failure so to disclose would be inconsistent with its obligations
under applicable law.

EasyLink agreed that it would promptly (but any event within 24 hours after its
receipt thereof) notify ICC orally and in writing if any proposal is made, or
any information is requested by any person, entity or group, with respect to any
acquisition proposal or that could lead to an acquisition proposal and provide
ICC the material terms of any such acquisition proposal in writing.

Upon having received an acquisition proposal that EasyLink's board of directors
concludes, if consummated, would be a Superior Proposal, EasyLink's board of
directors will promptly notify ICC in writing of such determination and, four
business days following ICC's receipt of such notification, may withdraw or
modify its approval or recommendation of the Merger Agreement or the merger,
approve or recommend the Superior Proposal or terminate the Merger Agreement;
provided, that, during such four business day period, at the option of ICC,
EasyLink negotiates with ICC in good faith to make adjustments to the terms and
conditions of the Merger Agreement as would enable EasyLink to proceed with the
merger on such adjusted terms.

INDEMNIFICATION OF DIRECTORS AND OFFICERS; INSURANCE

ICC and EasyLink agreed that all rights to indemnification for acts or omissions
occurring prior to the Effective Time existing in favor of any current or former
director or officer, including as provided in EasyLink's certificate of
incorporation or bylaws, will survive the merger and will continue in full force
and effect.

The Merger Agreement also requires that, for a period of six years after the
Effective Time, the surviving corporation will maintain EasyLink's current
directors' and officers' liability insurance (or policies of at least
substantially the same coverage and amounts containing terms that are no less
advantageous to the insured parties) covering directors and officers who are
currently covered by EasyLink's directors' and officers' liability insurance
policies.

The obligations described above concerning indemnification and directors' and
officers' liability insurance must be assumed by any successor entity to the
surviving corporation as a result of any consolidation, merger or transfer of
all or substantially all of its properties and assets.

EMPLOYEE BENEFITS

EasyLink and ICC agreed that, until December 31, 2007, ICC will maintain or
cause the surviving corporation to maintain the benefit plans currently
maintained by EasyLink and its subsidiaries. Thereafter, should any of such
benefit plans be terminated, ICC will include the affected employees in the
corresponding benefit plan of ICC or its subsidiaries on substantially the same
basis and terms as ICC's similarly situated employees. Severance agreements will
remain in full force and effect on and after December 31, 2007, pursuant to
their respective terms.


After the Effective Time, past service with EasyLink will be recognized for
purposes of eligibility and vesting generally. All vacation, holiday, sickness
and personal days accrued as of the Effective Time will be honored. With respect
to any life, health or long-term disability insurance plan, all limitations as
to pre-existing conditions, exclusions and waiting periods will be waived,
credit for any co-payments and deductibles with respect to any health insurance
plan paid prior to the Effective Time in satisfying any deductible or similar
requirements will be waived and any medical certification required under any
life or long-term disability plan will be waived.


CONDITIONS TO THE MERGER

The obligations of the parties to complete the merger are subject to the
following mutual conditions:


                                       59



     -    the Merger Agreement must be adopted by a majority of holders of the
          Common Stock;

     -    the absence of any law, injunction, order or other legal prohibition
          issued by any court of competent jurisdiction or other governmental
          entity that restricts, prevents or prohibits the completion of the
          merger; provided, however, that each of the parties has used
          reasonable efforts to prevent the entry of any such injunction or
          other order and to appeal as promptly as possible any such injunction
          or other order that may be entered;

     -    ICC's stockholders having approved and adopted the issuance of shares
          of ICC's common stock issuable upon conversion of the convertible
          notes contemplated by the bank financing for the merger and the
          amendment to ICC's certificate of incorporation to increase the number
          of authorized shares of ICC's common stock; and

     -    the expiration or earlier termination of any applicable waiting period
          under the HSR Act and the completion or termination of any stay or
          application process as may be required under any foreign anti-trust or
          competition law or regulation.

None of the foregoing conditions may be asserted by any party if such party's
failure to use reasonable efforts to complete the merger was the cause of such
condition not being satisfied.

The obligations of ICC and Sub to complete the merger are subject to the
following additional conditions:

     -    EasyLink's representations and warranties set forth in the Merger
          Agreement that are qualified as to materiality being true and correct,
          and EasyLink's representations and warranties set forth in the Merger
          Agreement that are not so qualified being true and correct in all
          material respects;

     -    EasyLink must have performed in all material respects the obligations
          required to be performed by it under the Merger Agreement on or prior
          to the Effective Time and must have delivered a certificate signed by
          a senior executive officer to such effect;

     -    EasyLink must have delivered to ICC a good standing certificate
          relating to EasyLink from the Secretary of State of the State of
          Delaware and each other jurisdiction in which EasyLink is qualified to
          conduct its business;

     -    EasyLink must have delivered to ICC a certificate signed by EasyLink's
          Corporate Secretary attesting to incumbency and execution of certain
          documents;

     -    EasyLink must have provided ICC with evidence, reasonably satisfactory
          to ICC, that all stock option plans and all options have been
          terminated and canceled as of the Effective Time;

     -    the absence of any material adverse effect;

     -    EasyLink must have delivered to ICC a certification to the effect that
          EasyLink is not nor has it been within five years a "United States
          real property holding corporation" as defined in Section 897 of the
          Code; and

     -    Dissenting Shares (as defined in the Merger Agreement) represent not
          more than 15% of the outstanding Common Stock.

None of the foregoing conditions may be asserted by ICC or Sub if such party's
failure to use reasonable efforts to complete the merger was the cause of such
condition not being satisfied.

EasyLink's obligation to complete the merger is subject to the following
additional conditions:

     -    the representations and warranties of ICC and Sub set forth in the
          Merger Agreement that are qualified as to materiality being true and
          correct, and the representations and warranties of ICC and Sub set
          forth in the Merger Agreement that are not so qualified being true and
          correct in all material respects;

     -    each of ICC and Sub must have performed in all material respects the
          obligations required to be performed by it under the Merger Agreement
          on or prior to the Effective Time and must have delivered a
          certificate signed by a senior executive officer to such effect;

     -    each of ICC and Sub must have each delivered to EasyLink a certificate
          signed by its respective secretary attesting to incumbency and
          execution of certain documents;

     -    ICC must have provided EasyLink with evidence, reasonably satisfactory
          to EasyLink, of the availability of the substitute options and the
          substitute restricted stock; and


                                       60



     -    ICC must have procured all of the consents, approvals and waivers of
          third parties or any regulatory body or authority required to be
          obtained by it under the Merger Agreement.

None of the foregoing conditions may be asserted by EasyLink if EasyLink's
failure to use reasonable efforts to complete the merger was the cause of such
condition not being satisfied.

TERMINATION

The Merger Agreement may be terminated and the merger may be abandoned at any
time prior to the Effective Time, whether before or after stockholder approval
has been obtained, as follows:

     -    by mutual written consent of EasyLink and ICC;

     -    by ICC or EasyLink, if any governmental entity determines not to take
          any action required under the Merger Agreement and all appeals of such
          determination have been taken and have been unsuccessful, or any court
          of competent jurisdiction or other governmental entity issues any
          order, decree or ruling, or takes any other action, that has the
          effect of making the completion of the merger illegal or that
          otherwise prohibits completion of the merger, and such order has
          become final and non-appealable, so long as the terminating party has
          used its reasonable efforts to remove or lift such order, decree,
          ruling or other action;

     -    by ICC or EasyLink, if the Effective Time shall not have occurred on
          or before August 31, 2007, referred to as the "termination date", so
          long as the failure to complete the merger is not the result of the
          terminating party's failure to satisfy any material obligation under
          the Merger Agreement;

     -    by ICC or EasyLink, if the Special Meeting is held and EasyLink's
          stockholders fail to adopt the Merger Agreement;

     -    by ICC or EasyLink, if the special meeting of ICC's stockholders is
          held and ICC's stockholders fail to approve and adopt the issuance of
          shares of ICC's common stock issuable upon conversion of the
          convertible notes contemplated by the bank financing for the merger
          and the amendment to ICC's certificate of incorporation to increase
          the number of authorized shares of ICC's common stock;

     -    by ICC, if, prior to the Effective Time, there has been a material
          violation or breach by EasyLink of any representation, warranty,
          covenant or agreement contained in the Merger Agreement that would
          give rise to the failure of certain conditions set forth in the Merger
          Agreement or cannot be cured by EasyLink within 30 days after written
          notice reasonably describing such breach;

     -    by EasyLink, if, prior to the Effective Time, there has been a
          material violation or breach by ICC or Sub of any representation,
          warranty, covenant or agreement contained in the Merger Agreement,
          which violation or breach is not cured by ICC or Sub within 10 days
          after written notice reasonably describing such breach;

     -    by ICC, if EasyLink's board of directors, or any committee thereof,
          withdraws or materially modifies its approval or recommendation of the
          Merger Agreement or the merger, approves or recommends a Superior
          Proposal or resolves to take any of the foregoing actions;

     -    by EasyLink, upon receipt of a proposal relating to an acquisition
          proposal or upon the commencement of a tender or exchange offer for
          shares of Common Stock, in each case where EasyLink's board of
          directors concludes that such proposal or tender or exchange offer, if
          consummated, would be a Superior Proposal; and

     -    by EasyLink or ICC, if EasyLink fails to obtain stockholder approval
          of the adoption of the Merger Agreement at the Special Meeting (or any
          reconvened meeting after any adjournment).

TERMINATION FEES

EasyLink has agreed to pay the Termination Fee of $2,500,000 to ICC if:

     -    EasyLink has terminated the Merger Agreement due to a proposal
          relating to an acquisition proposal or due to the commencement of a
          tender or exchange offer for shares of Common Stock, in each case
          where EasyLink's board of directors concludes that such proposal or
          tender or exchange offer, if consummated, would be a Superior
          Proposal; or

     -    ICC or EasyLink has terminated the Merger Agreement due to the Special
          Meeting having been held but EasyLink's stockholders fail to adopt the
          Merger Agreement.


                                       61



ICC has agreed to pay the Termination Fee to EasyLink if ICC or Sub has
terminated the Merger Agreement due to the special meeting of ICC's stockholders
having been held but ICC's stockholders fail to approve and adopt the issuance
of shares of ICC's common stock issuable upon conversion of the convertible
notes contemplated by the bank financing for the merger and the amendment to
ICC's certificate of incorporation to increase the number of authorized shares
of ICC's common stock. EasyLink's right to receive payment of the Termination
Fee from ICC pursuant to the Merger Agreement does not limit EasyLink's remedies
against ICC or Sub for any damages in excess of the Termination Fee suffered by
EasyLink as a result of the failure of ICC or Sub to obtain the financing
necessary to complete the merger.

AMENDMENT AND WAIVER

The Merger Agreement may be amended prior to the Effective Time by mutual
agreement of the parties; however, after the Merger Agreement has been adopted
by EasyLink's stockholders, no amendment may be made that under applicable law
requires further approval by EasyLink's stockholders without so obtaining such
further stockholder approval. The Merger Agreement also provides that, at any
time prior to the Effective Time, any party may extend the time for the
performance of any obligations or other acts of another party, waive any
inaccuracies in the representations and warranties of another party or waive
compliance with any agreement of another party or any condition to its own
obligations contained in the Merger Agreement.


                                       62


                              THE VOTING AGREEMENTS

Concurrently with the execution of the Merger Agreement, EasyLink's directors
and executive officers and Federal Partners, L.P. entered into separate voting
agreements with ICC, each dated as of May 3, 2007, which are referred to in this
proxy statement as the "voting agreements", pursuant to which such parties
agreed, among other things and subject to certain conditions, to vote all of
their beneficially owned Common Stock in favor of the adoption of the Merger
Agreement, against any competing takeover proposal that may be submitted by
EasyLink for a vote of its stockholders, against any proposal made in opposition
to, or in competition or inconsistent with, the Merger Agreement, against any
dissolution of EasyLink and against any change in EasyLink's capital structure
not contemplated by the Merger Agreement.


As of July 10, 2007, the record date, the parties signing the voting agreements
beneficially owned approximately __% of the Common Stock outstanding, in the
aggregate. The voting agreements will terminate upon the occurrence of certain
events, including if the Merger Agreement is terminated.


A COPY OF THE FORM OF VOTING AGREEMENT IS ATTACHED TO THIS PROXY STATEMENT AS
ANNEX E AND IS INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT. THE SUMMARY
OF THE VOTING AGREEMENTS IN THE PRECEDING PARAGRAPHS DOES NOT PURPORT TO BE
COMPLETE AND MAY NOT CONTAIN ALL OF THE INFORMATION ABOUT THE VOTING AGREEMENTS.


                                       63



                        PROPOSAL 2: ELECTION OF DIRECTORS

NOMINEES

At the Special Meeting, EasyLink's stockholders will elect eight directors to
serve until the next annual meeting of stockholders or until their respective
successors are elected and qualified. In the event that any nominee is unable or
unwilling to serve as a director at the time of the Special Meeting, the proxies
may be voted for the balance of those nominees named and for any substitute
nominee designated by the present board of directors or the proxy holders to
fill such vacancy, or for the balance of the nominees named without nomination
of a substitute, or the size of the board of directors may be reduced in
accordance with EasyLink's bylaws. EasyLink's board of directors has no reason
to believe that any of the persons named below will be unable or unwilling to
serve as a nominee or as a director if elected.

The names of the nominees, their ages as of the date of this proxy statement and
certain other information about them are set forth below:



NAME               AGE   POSITION(S)
----               ---   -----------
                   
Thomas Murawski     62   Chairman, President, Chief Executive Officer, Director
Robert J. Casale    68   Director
Stephen Duff        43   Director
Peter J. Holzer     61   Director
George Knapp        75   Director
John C. Petrillo    58   Director
Dennis Raney        64   Director
Eric Zahler         56   Director


There are no family relationships among any of EasyLink's directors or executive
officers.

     THOMAS MURAWSKI: CHAIRMAN, PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR

     Mr. Murawski has served as a member of EasyLink's board of directors since
     February 2000. Mr. Murawski has served as EasyLink's Chairman since April
     25, 2005, as its Chief Executive Officer since October 2000 and as its
     President since June 2002. Mr. Murawski served as Chief Executive Officer
     of Mail.com Business Messaging Services, Inc., a wholly owned subsidiary of
     EasyLink, from February 2000 to October 2000. Before joining EasyLink, Mr.
     Murawski served as Chairman, President, Chief Executive Officer and
     Director of NetMoves Corporation from November 1991. Prior to joining
     NetMoves Corporation, Mr. Murawski served as Executive Vice President of
     Western Union Corporation, a global telecommunications and financial
     services company, and President of its Network Services Group. Prior to
     joining Western Union Corporation, Mr. Murawski served 23 years with ITT
     Corporation, a diversified manufacturing and services company. Mr. Murawski
     has held operating responsibilities in the areas of subsidiary and product
     line management, engineering, sales and marketing for both voice and
     data-oriented businesses. Mr. Murawski's last position with ITT Corporation
     was President and General Manager of ITT World Communications Inc., an
     international telecommunications services company.

     ROBERT J. CASALE: DIRECTOR

     Mr. Casale has served as a member of EasyLink's board of directors since
     May 8, 2003. Mr. Casale has been a Senior Advisor, Financial Services, to
     Welsh, Carson, Anderson & Stowe, a large private equity firm, from 2002 to
     2006 and a consultant to ADP from 1998 to 2005. From 1988 to 1998, Mr.
     Casale was Group President, Brokerage Information Services, of ADP. From
     1986 to 1988, Mr. Casale was a Managing Director, Co-Head Technology
     Mergers & Acquisitions Practice, Kidder Peabody & Company. From 1975 to
     1986, Mr. Casale held various management positions with AT&T Corp.,
     including President, Special Markets Group from 1985 to 1986. Previously,
     Mr. Casale held management positions for Telex Corporation and sales
     positions for Xerox Corporation and Honeywell Corporation. Mr. Casale
     currently


                                       64



     serves as the chairman of the board of directors and interim President and
     Chief Executive Officer of The BISYS Group, Inc. Mr. Casale also currently
     serves on the board of directors of privately held Northeast Securities.
     Mr. Casale has previously served on the boards of ADP, Provident Mutual
     Life Insurance Company, Quantum Corporation and the not-for-profit New York
     Pops.

     STEPHEN DUFF: DIRECTOR

     Mr. Duff has been a member of EasyLink's board of directors since April 13,
     2006 and was previously a director from January 2001 through November 2004.
     Mr. Duff is the Chief Investment Officer of The Clark Estates, Inc. Prior
     to joining The Clark Estates, Inc. in 1995, Mr. Duff was an analyst and
     portfolio manager at The Portfolio Group, Inc., a subsidiary of The
     Chemical Banking Corporation, Inc., from 1990 through 1995. Mr. Duff is a
     1985 graduate of Stonehill College. Currently, Mr. Duff serves on the board
     of directors of TRC Companies, Inc., Opto-Generic Devices Incorporated and
     The Clara Welch Thanksgiving Home, Inc. (a non-profit elderly care
     facility). Mr. Duff previously served on the boards of directors of
     Viewpoint Corporation and Advanced Financial Applications. Federal
     Partners, L.P. holds a contractual right to designate one director of
     EasyLink's board of directors and has named Mr. Duff as its designee. See
     "Certain Relationships And Related Transactions".

     PETER J. HOLZER: DIRECTOR

     Mr. Holzer has served as a member of EasyLink's board of directors since
     February 8, 2005. From 1990 to 1996, Mr. Holzer served as Executive Vice
     President and Director - Strategic Planning and Development for The Chase
     Manhattan Corporation (now JPMorgan Chase), where he also held a number of
     other executive assignments around the world during his 28-year career.
     From May 1998 to January 2007, Mr. Holzer served as a director and chairman
     of the audit committee of Embrex, Inc., an international agricultural
     biotechnology firm, where he also served as chairman of the board of
     directors starting in 2000. Mr. Holzer served as the chairman of the
     compensation committee of Embrex, Inc. from 2000 to 2002. Mr. Holzer serves
     as a director, chairman of the audit committee and member of the
     compensation committee of CAS Holdings, Inc., a privately-owned operator of
     environmental testing laboratories. Mr. Holzer formerly served as an
     advisor to Taddingstone Consulting Group, Inc., a strategy consulting firm
     serving the financial services industry. Mr. Holzer also serves as a
     trustee of Big Brothers/Big Sisters of New York City and The High Desert
     Museum of Bend, Oregon. Mr. Holzer previously served on the board of
     directors of Crown Central Petroleum Corp. and Swiss-American Chamber of
     Commerce and as an Advisory Director to AMT Capital Advisors, LLC, a
     mergers, acquisitions and strategy advisory firm serving the financial
     services industry.

     GEORGE KNAPP: DIRECTOR

     Mr. Knapp has served as a member of EasyLink's board of directors since May
     8, 2003. Mr. Knapp has been a Special Limited Partner and Consultant to
     MidMark Partners, a venture capital firm based in Chatham, New Jersey, from
     1993 to the present. From 1988 to 1996, Mr. Knapp was an Associate of MBW
     Management, a venture capital firm based in Morristown, New Jersey, and a
     Principal of Communications Investment Group, an investment banking and
     telecommunications consulting firm based in Morristown, New Jersey. From
     1982 to 1987, Mr. Knapp served as Corporate Vice President of ITT and
     Director, Telecommunications/Marketing for ITT Europe, based in Brussels.
     From 1975 to 1982, Mr. Knapp served as Corporate Vice President of ITT and
     Group Executive and Chief Executive Officer for U.S. domestic and
     international telecommunications network operations of ITT, based in New
     York. From 1968 to 1974, Mr. Knapp served as President and Chief Executive
     Officer of the Puerto Rico Telephone Co. in San Juan, Puerto Rico. From
     1966 to 1968, Mr. Knapp served as Director of Operations for the Chilean
     Telephone Company in Santiago, Chile. From 1956 to 1965, Mr. Knapp served
     in various capacities at AT&T Corp., New York Telephone and Bell
     Laboratories. Mr. Knapp is currently serving as a member of the Board of
     Trustees of Manhattan College, New York as a Trustee Emeritus. Mr. Knapp
     has served on the boards of a variety of companies and other organizations,
     including Intermedia


                                       65



     Communications, Inc., Digex Inc., the Boy Scouts of America, Greater New
     York and the Greater New York United Fund.

     JOHN C. PETRILLO: DIRECTOR

     Mr. Petrillo has served as a member of EasyLink's board of directors since
     January 14, 2005. Mr. Petrillo has over 30 years of experience with AT&T,
     retiring in 2003 as AT&T's most senior executive responsible for global
     corporate strategy and business development. From February 2005 through
     June 2006, Mr. Petrillo served as the Chief Executive Officer and Chairman
     of the Board of IDT Spectrum, a private company. Mr. Petrillo's experiences
     in the global communications industry include successful large line
     operational profit and loss assignments in the global business
     communications services market, domestic and international public and
     private board positions and sophisticated technical, business strategy
     development, investment and partnership negotiation experiences in the
     wireless, cable, Internet and global business communications sectors. Mr.
     Petrillo currently serves as chairman of the board of directors of Narad
     Networks, as an advisory board member at BridgePort Networks and as
     chairman and Chief Executive Officer of Cognition Networks.

     DENNIS RANEY: DIRECTOR

     Mr. Raney has served as a member of EasyLink's board of directors since May
     8, 2003. Mr. Raney was Chief Financial Officer of eOne Global, LP from July
     2001 to May 2003. From March 1998 to July 2001, Mr. Raney was Executive
     Vice President and Chief Financial Officer of Novell, Inc. From 1996 to
     1997, Mr. Raney served as Chief Financial Officer of QAD Inc. From 1995 to
     1996, Mr. Raney was Chief Financial Officer of California Microwave. During
     1995, Mr. Raney was Chief Financial Officer of General Magic. From 1993 to
     1995, Mr. Raney was Chief Financial Officer, Pharmaceutical Group, of
     Bristol-Myers Squibb. From 1970 to 1993, Mr. Raney held various management
     positions with Hewlett Packard. Mr. Raney currently serves as a director
     and chairman of the audit committees of Viewpoint Corporation and Infiniti
     Solutions, a private Singapore company, and as a director of Ultratech,
     Inc. Mr. Raney also currently serves as a Principal of Liberty-Greenfield
     California. Mr. Raney served as a director and audit committee member of
     Equinix, Inc. from April 2003 to May 2005, ProBusiness Services during
     portions of 2002 and 2003, Redleaf Group, Inc. from 2001 to June 2003, W.R.
     Hambrecht & Company from November 1998 to June 2001 and ADAC Laboratories
     from March 1999 to March 2001.

     ERIC ZAHLER: DIRECTOR

     Mr. Zahler has served as a member of EasyLink's board of directors since
     February 8, 2005. Mr. Zahler is President and Chief Operating Officer of
     Loral Space & Communications, Inc., where he is responsible for overseeing
     the company's two businesses: Loral Skynet, a global satellite services
     provider; and Space Systems/Loral, a leading manufacturer of commercial
     satellites. Loral Space & Communications, Inc. and certain subsidiaries
     filed for protection under Chapter 11 of the United States Bankruptcy Code
     on July 15, 2003 and emerged from such proceedings on November 21, 2005.
     Prior to joining Loral Space & Communications, Inc., Mr. Zahler was engaged
     in the private practice of law as a partner at the firm of Fried, Frank,
     Harris, Shriver & Jacobson.

EXECUTIVE OFFICERS

EasyLink's executive officers and their respective ages and positions as of the
date of this proxy statement are as follows:


                                       66





NAME              AGE   POSITION
----              ---   --------
                  
Thomas Murawski    62   Chairman, President, Chief Executive Officer, Director
Michael Doyle      51   Vice President and Chief Financial Officer
Richard Gooding    57   Executive Vice President and General Manager
Gary MacPhee       45   Executive Vice President and General Manager
Frank Graziano     49   Senior Vice President of Corporate Development


     THOMAS MURAWSKI: CHAIRMAN, PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR

     For the biographical summary of Thomas Murawski, see "Nominees--Thomas
     Murawski".

     MICHAEL DOYLE: VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

     Mr. Doyle has served as EasyLink's Vice President and Chief Financial
     Officer since March 2004. Prior to joining EasyLink, Mr. Doyle was Chief
     Financial Officer of D&B North America, a division of D&B, Inc. (Dun &
     Bradstreet) from 2002 to September 2003. Mr. Doyle held various positions
     at Cendant, Inc. from 1997 to 2002, including Vice President Audit, Vice
     President Relationship Marketing and Management and Senior Vice President
     Relationship Marketing & Management. Mr. Doyle served as Chief Financial
     Officer of the Fluorine Products Division of Allied Signal Corporation from
     1995 to 1997. Mr. Doyle held various finance, accounting and management
     positions at Pepsico, Inc. from 1986 to 1995 and at Continental Can
     Company, Inc. from 1978 to 1986. Mr. Doyle received his B.B.A from
     University of Notre Dame and his M.B.A. from New York University.

     RICHARD GOODING: EXECUTIVE VICE PRESIDENT AND GENERAL MANAGER

     Mr. Gooding joined EasyLink in 2001 to oversee the business and technical
     transition from AT&T. During his tenure with EasyLink, Mr. Gooding served
     as Vice President, Operations from 2002 until assuming his current role as
     Executive Vice President and General Manager of the Transaction Delivery
     Services business unit. Prior to joining EasyLink, Mr. Gooding was involved
     in "b2b" Internet startups and consulting services from 1997 to 2001. From
     1994 to 1996, Mr. Gooding was President of Western Union Data Services
     Company. From 1991 to 1994, Mr. Gooding held general management positions
     at MAI Systems Corporation. Between 1971 and 1991, Mr. Gooding held various
     positions of increasing responsibilities at Western Union Corporation. Mr.
     Gooding received a B.S. in Mathematics and Computer Science from Clemson
     University in 1971.

     GARY MACPHEE: EXECUTIVE VICE PRESIDENT AND GENERAL MANAGER

     Mr. MacPhee was appointed EasyLink's Executive Vice President and General
     Manager Transaction Management Services in January 2005. Mr. MacPhee also
     served as EasyLink's Vice President Technology from September 2002 to
     December 2004. Prior to joining EasyLink, Mr. MacPhee was Vice President
     Business Systems at Merant, Inc. from 1999 to August 2002. Mr. MacPhee held
     various positions at GE Information Services, a division of the General
     Electric Company, from 1983 to 1999, including Vice President Global
     Product Engineering, Director of R&D Internet Services and Director of R&D
     Consumer Online Services. Mr. MacPhee received his B.S. in Computer Science
     from Ohio State University and his M.S. in Computer Science from Virginia
     Polytechnic Institute and State University.

     FRANK GRAZIANO: SENIOR VICE PRESIDENT OF CORPORATE DEVELOPMENT

     Mr. Graziano was appointed EasyLink's Senior Vice President of Corporate
     Development in January 2005. Mr. Graziano served as EasyLink's Senior Vice
     President of Marketing from 2003 to 2004 and as Vice President of
     Acquisitions and Strategic Alliances from 1999 to 2003. Prior to joining
     EasyLink, Mr. Graziano was involved in investment and merchant banking,
     turnaround and workout consulting and interim executive assignments for
     various "b2b" and "b2c" ventures from 1994 to 1998. From 1989 to 1994, Mr.
     MacPhee was a founder and Chief Executive Officer of Compact Disk Products,
     a value-added


                                       67



     reseller of personal computer systems and services. Mr. Graziano received
     his B.S. in Chemistry/Business from the University of Scranton and his
     M.B.A. in Finance from the Columbia University Graduate School of Business.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

EasyLink's Audit Committee reviews and approves in advance all related party
transactions in accordance with its written charter.

     COMMON STOCK FINANCING

     On April 13, 2006, EasyLink entered into a common stock purchase agreement
     and a registration rights agreement with certain of its existing
     stockholders (including, among others, Federal Partners, L.P., Lawrence
     Auriana and members of EasyLink's board of directors and management). Under
     the terms of the common stock purchase agreement, EasyLink raised an
     aggregate of approximately $5,400,000 in exchange for the issuance of
     approximately 1,800,000 shares of Common Stock. Of the total $5,400,000,
     approximately $4,900,000 was raised from non-management investors and
     approximately $500,000 from EasyLink's directors and key members of
     EasyLink's senior management. Purchases by non-management investors were at
     $0.60 per share, while purchases by EasyLink's directors and senior
     management were at $0.62, which was equal to the most recent closing bid
     price prior to the execution and delivery of the common stock purchase
     agreement. The common stock purchase agreement contained a condition to
     closing that EasyLink's directors and management commit to purchase at
     least $500,000 of Common Stock under the common stock purchase agreement at
     a price not less than the most recent closing bid price.

     Under the terms of the registration rights agreement, EasyLink agreed to
     prepare and file on or before December 31, 2006 a registration statement
     covering the resale of the shares of Common Stock issued in the financing.
     EasyLink has delayed the filing of this registration statement pending the
     outcome of the merger for which approval is being sought in this proxy
     statement.

     Federal Partners, L.P. purchased approximately 820,000 shares of Common
     Stock in the financing, raising its ownership to approximately 1,900,000
     shares, or 17.5% of EasyLink's total shares outstanding. Lawrence Auriana
     purchased 500,000 shares of Common Stock under the common stock purchase
     agreement, raising his ownership to approximately 9.4% of EasyLink's total
     shares outstanding.

     Members of EasyLink's board of directors, its executive officers and other
     members of management purchased shares in the financing as follows:



                   PURCHASE   NUMBER OF
NAME                 PRICE      SHARES
----               --------   ---------
                        
Robert J. Casale   $ 20,000      6,451
Peter J. Holzer    $100,000     32,258
George Knapp       $ 25,000      8,064
John C. Petrillo   $ 50,000     16,129
Eric Zahler        $ 62,000     20,000
Thomas Murawski    $100,000     32,258
Michael Doyle      $ 32,500     10,483
Richard Gooding    $  5,000      1,612
Gary MacPhee       $ 10,000      3,225
Frank Graziano     $ 50,000     16,129
Other Management   $ 70,000     22,578
                   --------    -------
   TOTAL           $524,500    169,187
                   ========    =======


     Mr. Duff is Chief Investment Officer of The Clark Estates, Inc. and is
     Treasurer of the general partner of, and a limited partner of, Federal
     Partners, L.P. Federal Partners, L.P. is the beneficial holder of shares of
     Common Stock. In connection with a senior convertible notes financing
     completed on January 8, 2001,


                                       68



     EasyLink granted to Federal Partners, L.P. the right to designate one
     director to EasyLink's board of directors so long as Federal Partners, L.P.
     and other persons associated with it own at least 60,000 shares of Common
     Stock. Federal Partners, L.P. designated Mr. Duff in connection with the
     common stock financing described above, and he was appointed to EasyLink's
     board of directors on April 13, 2006. Through his limited partnership
     interest in Federal Partners, L.P., Mr. Duff has an indirect interest in
     3,055 shares of Common Stock held by Federal Partners, L.P.

     OTHER RELATIONSHIPS

     PWSP and its predecessor firms Pillsbury Winthrop LLP and Winthrop,
     Stimson, Putnam & Roberts have served as EasyLink's counsel dating back to
     EasyLink's initial public offering in 1999. Robert E. Zahler has been a
     partner of PWSP since 2005 effective upon the merger of Pillsbury Winthrop
     LLP and Shaw Pittman LLP, a separate predecessor firm of PWSP. Robert E.
     Zahler is the brother of EasyLink director Eric Zahler. The approximate
     value of transactions between EasyLink and PWSP during the past fiscal year
     was $253,000. Robert E. Zahler has not been involved directly in PWSP's
     representation of EasyLink but does receive indirect benefits from PWSP's
     representation of EasyLink as a partner of PWSP.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires EasyLink's directors and executive
officers and persons that own more than 10% of Common Stock (collectively,
"Reporting Persons") to file with the SEC initial reports of ownership and
changes in ownership of Common Stock. Reporting Persons are required by SEC
regulations to furnish EasyLink with copies of all Section 16(a) reports that
they file. EasyLink prepares Section 16(a) forms on behalf of its directors and
executive officers based on the information provided by them.

To EasyLink's knowledge and based solely on EasyLink's review of the copies of
such reports received or written representations from certain Reporting Persons
that no other reports were required, EasyLink believes that, during the 2006
fiscal year, no Reporting Person failed to file the forms required by Section
16(a) of the Exchange Act on a timely basis.

CORPORATE GOVERNANCE

EasyLink's board of directors has adopted the following corporate governance
documents:

     -    Code of Business Conduct and Ethics that applies to its officers,
          including its Chief Executive Officer and its principal financial and
          accounting officer;

     -    written charters of the audit committee and the compensation committee
          of EasyLink's board of directors;

     -    resolutions for Director Nominations Procedures; and

     -    a Stockholders Communications with the Board of Directors Policy.

Copies of such corporate governance documents are posted on the Corporate
Governance page of EasyLink's website. The Corporate Governance page of
EasyLink's website can be accessed in the Investor Relations section of
EasyLink's website at www.easylink.com.

CODE OF BUSINESS CONDUCT AND ETHICS

EasyLink's Code of Business Conduct and Ethics applies to all employees,
officers and members of EasyLink's board of directors, including the principal
executive officer, the principal financial officer, the principal accounting
officer and the controller. The provisions of the Code of Business Conduct and
Ethics are designed to promote honest and ethical conduct, including the ethical
handling of actual or apparent conflicts of interest between personal and
professional relationships. The Code of Business Conduct and Ethics is posted on
the Corporate Governance page of EasyLink's website, which can be accessed in
the Investor Relations section of EasyLink's website at www.easylink.com.


                                       69



DIRECTOR NOMINATION PROCESS

EasyLink's board of directors does not have a standing nominating committee.
EasyLink's board of directors has, however, adopted Director Nominations
Procedures. The Director Nominations Procedures provide, among other things,
that:

     -    EasyLink's independent directors (as determined in accordance with the
          rules and regulations of The Nasdaq Capital Market) will (i) assist
          EasyLink's board of directors in identifying individuals qualified to
          become members of EasyLink's board of directors and committees
          thereof, (ii) recommend director nominees for selection by EasyLink's
          board of directors at each annual meeting of stockholders and upon any
          vacancy in EasyLink's board of directors, and (iii) take such other
          actions within the scope of the Director Nominations Procedures as
          such independent directors deem necessary or appropriate.

     -    The independent directors have authority to:

               -    evaluate the size and composition of EasyLink's board of
                    directors, develop criteria for membership on EasyLink's
                    board of directors and evaluate the independence of existing
                    and prospective directors;

               -    seek, evaluate and recommend that EasyLink's board of
                    directors select qualified individuals to become directors;

               -    approve procedures to be followed by stockholders in
                    submitting recommendations of director candidates and the
                    consideration of such director candidates in accordance with
                    any applicable notice provisions and procedures set forth in
                    EasyLink's bylaws;

               -    assist EasyLink in making the periodic disclosures related
                    to the nominating procedures required by rules issued or
                    enforced by the SEC;

               -    take such other actions as may be requested or required by
                    EasyLink's board of directors from time to time; and

               -    decide whether to retain a search firm and/or legal counsel
                    and other consultants to assist such independent directors
                    in identifying, screening and attracting director candidates
                    and in fulfilling their role under the Director Nominations
                    Procedures, with the fees of such firm, counsel or
                    consultant paid by EasyLink.

EasyLink's board of directors will consider candidates recommended by
stockholders when the nominations are properly submitted. The deadlines and
procedures for stockholder submissions of director nominees are described below
under "Stockholder Proposals". Following verification of the stockholder status
of persons proposing candidates, the independent directors, acting pursuant to
the Director Nominations Procedures described above, will make an initial
analysis of the qualifications of any candidate recommended by stockholders to
determine whether the candidate is qualified for service on EasyLink's board of
directors before deciding to undertake a complete evaluation of the candidate.
Other than the verification of compliance with procedures and stockholder status
and the initial analysis performed by the independent directors, a potential
candidate nominated by a stockholder is considered in the same manner as any
other potential candidate during the review process by EasyLink's board of
directors.

The Director Nominations Procedures are posted on the Corporate Governance page
of EasyLink's website, which can be accessed in the Investor Relations section
of EasyLink's website at www.easylink.com.

COMMUNICATIONS WITH EASYLINK'S BOARD OF DIRECTORS

EasyLink's board of directors believes that it is in the best interest of
EasyLink and its stockholders to maintain a policy of open communications
between EasyLink's stockholders and EasyLink's board of directors. Accordingly,
EasyLink's board of directors has adopted the following procedures for
stockholders who wish to communicate with EasyLink's board of directors.

Stockholders who wish to communicate with EasyLink's board of directors or with
specified directors should do so by forwarding such communication, in writing,
to The Board of Directors, c/o Investor Relations, EasyLink Services
Corporation, 33 Knightsbridge Road, Piscataway, New Jersey 08854. Any such
communication must state the


                                       70


number of shares beneficially owned by the stockholder making the
communication. EasyLink's Investor Relations department will forward such
communication to the full board of directors or to any individual director or
directors to whom the communication is directed, unless the communication is
unduly hostile, threatening, illegal or similarly inappropriate, in which case
EasyLink's Investor Relations department (after consultation with EasyLink's
legal department, if appropriate) will have the authority to discard the
communication or take appropriate legal action regarding the communication. A
good faith determination made by EasyLink's Investor Relations department to
forward a communication or not to forward a communication to the full board of
directors or to any individual director or directors shall be final and
conclusive and deemed in full compliance with these procedures.

DIRECTOR INDEPENDENCE

In accordance with the rules and regulations of The Nasdaq Capital Market,
EasyLink's board of directors affirmatively determines the independence of each
director and nominee for election as a director in accordance with guidelines
that it has adopted, which include all elements of independence under the
definition promulgated by The Nasdaq Capital Market. Based on these standards,
EasyLink's board of directors has determined that each of Messrs. Casale,
Holzer, Knapp, Petrillo, Raney and Zahler is an independent director under the
listing standards of The Nasdaq Capital Market, is a non-employee director as
defined in Rule 16(b)-3 under the Exchange Act and is an outside director as
such term is defined with respect to Section 162(m) of the Code.

MEETINGS AND COMMITTEES OF EASYLINK'S BOARD OF DIRECTORS

During 2006, EasyLink's board of directors had 9 meetings and acted 0 times by
unanimous written consent. All of EasyLink's directors attended 75% or more of
the aggregate number of regularly scheduled and special meetings of EasyLink's
board of directors and committees thereof on which they served and that were
held during their tenure in 2006. All of EasyLink's directors attended
EasyLink's annual meeting held in 2006.

AUDIT COMMITTEE

EasyLink's board of directors has established an audit committee (the "Audit
Committee"). The Audit Committee is currently comprised of four directors:
Messrs. Raney (Chairman), Knapp, Petrillo and Zahler. EasyLink's board of
directors has determined that each of the current Audit Committee members is
independent within the meaning of the marketplace rules of The Nasdaq Capital
Market and is otherwise eligible to serve on the Audit Committee in accordance
with the other marketplace rules of The Nasdaq Capital Market. EasyLink's board
of directors has determined that all members of the Audit Committee meet the
requirements for financial literacy and that Mr. Raney qualifies as an "audit
committee financial expert" pursuant to applicable SEC rules and regulations.

The Audit Committee held 9 meetings during 2006 and acted 0 times by unanimous
written consent. The Audit Committee oversees EasyLink's accounting and
financial reporting processes and the audits of its financial statements. The
Audit Committee also coordinates the oversight by EasyLink's board of directors
of EasyLink's internal control over financial reporting, its disclosure controls
and procedures and its Code of Business Conduct and Ethics. The Audit Committee
is also responsible for reviewing all transactions between EasyLink and related
parties.

EasyLink's board of directors has adopted a written charter for the Audit
Committee. The charter is posted on the Corporate Governance page of EasyLink's
website, which can be accessed in the Investor Relations section of EasyLink's
website at www.easylink.com.

COMPENSATION COMMITTEE

The compensation committee of EasyLink's board of directors (the "Compensation
Committee") is currently comprised of three non-management independent
directors: Messrs. Knapp, Casale and Holzer. Mr. Knapp is the Chairman of the
Compensation Committee. The Compensation Committee held 5 meetings during 2006
and acted 0 times by unanimous written consent. The Compensation Committee has
the authority to determine salaries and bonuses and to make awards of capital
stock or options to purchase capital stock of EasyLink to EasyLink's officers


                                       71



and employees. All decisions relating to the compensation of EasyLink executive
officers are either made or recommended to EasyLink's board of directors by the
Compensation Committee.

The Compensation Committee operates pursuant to a written charter adopted by
EasyLink's board of directors. The charter is posted on the Corporate Governance
page of EasyLink's website, which can be accessed in the Investor Relations
section of EasyLink's website at www.easylink.com.

COMPENSATION DISCUSSION AND ANALYSIS

     INTRODUCTION

     This Compensation Discussion and Analysis (this "CD&A") provides an
     overview of EasyLink's executive compensation program, together with a
     description of the material factors underlying the decisions that resulted
     in the compensation provided to EasyLink's Chairman, President and Chief
     Executive Officer ("CEO"), Chief Financial Officer ("CFO") and certain
     other executive officers (collectively, the named executive officers
     ("NEOs")) for 2006 (as presented in the tables that follow this CD&A).

     COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     None of the members of the Compensation Committee has ever served as an
     officer of EasyLink. The Compensation Committee has responsibility for
     determining and implementing EasyLink's philosophy with respect to
     executive compensation and, accordingly, has overall responsibility for
     approving and evaluating the various components of EasyLink's executive
     compensation program.

     None of EasyLink's executive officers serves as a member of the board of
     directors or the compensation committee of any other entity that has one or
     more executive officers serving as a member of EasyLink's board of
     directors or the Compensation Committee.

     EXECUTIVE COMPENSATION PHILOSOPHY AND OBJECTIVES

     The Compensation Committee's philosophy with respect to executive
     compensation is to provide compensation that attracts and retains
     outstanding executive talent, motivates and rewards the performance of
     EasyLink's NEOs in support of its strategic, financial and operating
     objectives and aligns the interests of EasyLink's executives with the
     long-term interests of EasyLink's stockholders. Accordingly, the
     Compensation Committee implements and maintains compensation plans that
     motivate EasyLink's NEOs to achieve the business objectives developed by
     management and approved by EasyLink's board of directors and rewards its
     NEOs for achieving such objectives. The Compensation Committee believes
     that EasyLink's executive compensation packages should include both cash
     and stock-based compensation that reward performance as measured against
     established objectives.

     EXECUTIVE COMPENSATION CONSULTANT

     The Compensation Committee has the authority under its charter to engage
     the services of outside advisors to assist the Compensation Committee in
     fulfilling its responsibilities. In accordance with this authority, in
     2006, the Compensation Committee engaged both Frederic W. Cook & Co., Inc.
     (the "Compensation Consultant") and Pearl Meyer & Partners (the "Executive
     Compensation Consultant") to conduct a review of, and to provide guidance
     with respect to, EasyLink's executive compensation programs.

     SETTING EXECUTIVE COMPENSATION

     In making compensation decisions, the Compensation Committee strives to
     ensure that EasyLink's executive compensation programs are competitive with
     those of publicly traded internet software and services companies with
     which the Compensation Committee believes that EasyLink competes for
     talent. EasyLink's management recommends a list of companies in the peer
     group, which is then reviewed by the


                                       72



     Compensation Committee. In 2006, the Compensation Consultant provided the
     Compensation Committee with recent historical executive compensation data
     for these peer group companies, as well as survey data from the 2005
     Radford Technology Survey for generally comparable companies (collectively,
     the "collected market data"). Based on the collected market data, the
     Compensation Committee then adjusted the peer group composition as it
     deemed appropriate and reasonable.

     The peer group companies that were considered for 2006 (collectively, the
     "Compensation Peer Group") were:

          -    Cell Genesys Inc.

          -    Centra Software

          -    CGI Holding

          -    Corillian

          -    Globix

          -    Greenfield Online

          -    Hyperspace Communications

          -    I-Many

          -    Imergent

          -    Innodata Isogen

          -    Interland

          -    Internap Network

          -    Kintera

          -    Looksmart

          -    Navisite

          -    Net2Phone

          -    Newmarket Technology

          -    Planetout

          -    Raindance Communications

          -    Saba Software

          -    Savvis

          -    Selectica

          -    Tucows

          -    Vitria Technology

     The Compensation Committee reviews the total compensation levels for each
     of EasyLink's NEOs against the collected market data for the Compensation
     Peer Group. In order to address retention concerns and ensure that
     EasyLink's hiring practices remain competitive, the Compensation Committee
     targeted total compensation for each NEO for 2006 at approximately the 75th
     percentile of compensation paid to executives holding equivalent positions
     in the Compensation Peer Group. In this regard, there is no pre-established
     policy or target for the allocation between cash and non-cash compensation
     or short-term and long-term compensation. Rather, the Compensation
     Committee reviews and determines the appropriate level and mix of
     compensation on an ongoing basis.

     All compensation decisions for EasyLink's NEOs, including determining
     salaries and bonuses and making equity awards, including grants of common
     stock or options to purchase common stock, are made or approved by the
     Compensation Committee. However, EasyLink's management plays a significant
     role in the compensation setting process. At the request of the Chairman of
     the Compensation Committee, EasyLink's CEO or other NEOs may attend and
     participate in portions of the Compensation Committee's meetings and, as
     described below, the NEOs play a role in setting the targets and objectives
     for EasyLink's annual executive incentive plans. The Compensation Committee
     considers, but is not bound by and does not always accept, management's
     proposals.

     EasyLink's compensation practices are evaluated on an ongoing basis to
     determine whether they are appropriate to attract, retain and motivate key
     personnel. Such evaluations may result in a determination


                                       73



     that it is appropriate to increase salaries, award additional stock options
     or other stock-based compensation or provide other short-term and long-term
     incentive compensation to EasyLink's NEOs.

     2006 EXECUTIVE COMPENSATION COMPONENTS

     EasyLink seeks to implement the compensation philosophy described above
     through compensation programs for its NEOs that consist of three major
     elements: base salary; short-term incentive compensation (in annual
     bonuses); and long-term incentive compensation in the form of stock options
     or other stock-based awards. Each of these elements is described in greater
     depth below.

          Base Salary

          The base salaries for EasyLink's NEOs are intended to attract and
          retain the leadership and skill necessary to build long-term
          stockholder value. Initial base salaries for EasyLink's NEOs are set
          by the Compensation Committee based on the NEO's experience and
          performance with previous employers, pay levels for similar positions
          in the Compensation Peer Group and negotiations with individual NEOs.
          Thereafter, the Compensation Committee typically considers increases
          to base salaries for EasyLink's NEOs annually as part of EasyLink's
          performance review process, as well as upon a promotion or other
          significant change in job responsibility. In recent years, except
          where there has been a significant change in job responsibility, most
          salary increases for the NEOs have been cost-of-living increases.
          Salary increases for EasyLink's NEOs normally take effect on July 1st
          of each year.

          In establishing the salaries of the NEOs for 2006, the Compensation
          Committee reviewed the collected market data regarding each NEO's
          salary and total target compensation relative to salaries for similar
          positions in the Compensation Peer Group. The Compensation Committee
          also considered the results of the review of the CEO's performance by
          EasyLink's board of directors and information provided by the CEO with
          respect to the performance reviews of the other NEOs. The Compensation
          Committee also considered recommendations from the CEO regarding
          salary adjustments for the other NEOs. The Compensation Committee
          reviews the recommendations of the CEO carefully in light of his
          proximity to the other NEOs and his knowledge of their individual
          contributions to EasyLink. The Compensation Committee does not rely on
          predetermined formulas or a limited set of criteria when it evaluates
          the performance of the CEO and the other NEOs. The Compensation
          Committee may accord different weight at different times to different
          factors for each NEO.

          The CEO's total compensation is determined by the Compensation
          Committee in executive session without the presence of the CEO. In
          addition to evaluating the CEO's salary by the same factors applied to
          the other NEOs, the accomplishments of the CEO in developing
          EasyLink's business strategy, EasyLink's performance relative to this
          strategy and his ability to attract and retain senior management are
          also considered. Further, the Compensation Committee takes into
          consideration other aspects of EasyLink's health and development.

          After considering all of the foregoing, the Compensation Committee
          determined compensation for the NEOs for 2006, as it deemed
          appropriate. The salary increases approved by the Compensation
          Committee for the NEOs ranged from zero to 6.94%, resulting in an
          overall increase to the NEO payroll of 2.7%. As a result, the NEOs'
          base salaries, in the aggregate, generally approached the 75th
          percentile of similarly situated executive officers in the
          Compensation Peer Group, although there was considerable individual
          variation.

          Short-Term Annual Incentive Compensation

          The Compensation Committee believes that a significant component of
          each NEO's compensation should be directly dependent on EasyLink's
          performance and in particular on EasyLink's


                                       74



          achievement of certain financial goals. Accordingly, the Compensation
          Committee approves an annual executive incentive plan (the "Executive
          Incentive Plan") that provides an opportunity for the NEOs to receive
          additional compensation upon the achievement of certain designated
          short-term financial objectives.

          Each year, the Compensation Committee, working with senior management
          and the entire board of directors, sets these short-term financial
          performance objectives under EasyLink's annual Executive Incentive
          Plan. These financial performance objectives, as well as any
          individual objectives that may be established by the Compensation
          Committee, become an NEO's performance criteria under the applicable
          Executive Incentive Plan. The Compensation Committee then sets a
          target annual incentive amount for each NEO (the "target bonus"),
          generally expressed as a percentage of the NEO's base salary, for
          achievement of his performance criteria under the Executive Incentive
          Plan. The target bonus approved by the Compensation Committee for the
          NEOs other than the CEO is normally recommended by the CEO and are
          then reviewed by the Compensation Committee with the CEO. The
          Compensation Committee decides the target bonus for the CEO in an
          executive session without the presence of the CEO.

          After the end of each fiscal year, the Compensation Committee reviews
          whether, and to what extent, the NEOs' performance criteria were
          attained for the prior fiscal year. The Compensation Committee also
          considers any other significant but unforeseen factors that may have
          positively or negatively affected EasyLink's performance. Based upon
          this review, the Compensation Committee then determines awards under
          the Executive Incentive Plan for the prior fiscal year. If EasyLink or
          the NEO fails to meet fully some or all of EasyLink's or individual
          objectives, the awards may be significantly reduced or even
          eliminated.

          In 2006, the Compensation Committee determined that the designated
          short-term financial performance objectives under EasyLink's Executive
          Incentive Plan established for 2005, consisting of minimum revenue and
          EBITDA objectives, had not been met. As a result of this
          determination, no annual incentive bonuses were paid to the NEOs under
          EasyLink's Executive Incentive Plan established for 2005.

          EasyLink's Executive Incentive Plan established for 2006 (the "2006
          Executive Incentive Plan") was submitted by the CEO and approved by
          the Compensation Committee at its April 25, 2006 meeting. Payouts
          under the 2006 Executive Incentive Plan were based on EasyLink's
          achievement of prescribed revenue and EBITDA objectives for fiscal
          year 2006. In addition, the Compensation Committee determined that the
          absence of a going concern modification in the report of EasyLink's
          independent registered public accounting firm on its 2006 annual
          financial statements was an additional individual objective for the
          CEO and the CFO under the 2006 Executive Incentive Plan and would be a
          consideration in the determination of their 2006 bonuses.

          EasyLink has not disclosed the specific revenue and EBITDA objectives
          approved by the Compensation Committee under the 2006 Executive
          Incentive Plan, because they constitute confidential business
          information that could damage EasyLink's ability to compete
          effectively in the marketplace. However, these financial performance
          targets were established and approved by the Compensation Committee
          and were believed to be sufficiently ambitious so as to provide
          meaningful incentives.

          The EBITDA objective adopted by the Compensation Committee was
          calculated as income from continuing operations plus net interest
          expense, income taxes, depreciation and amortization and write-offs of
          intangibles.

          Under the 2006 Executive Incentive Plan, the target bonuses
          established for the NEOs, based on a percentage of base salary, were
          75% for Mr. Murawski, 50% for Messrs. Gooding and MacPhee and 30% for
          Messrs. Doyle and Graziano. The NEOs were eligible to receive a bonus
          from zero


                                       75



          to 200% of their target bonus percentages based upon the actual level
          of under-achievement and/or over-achievement of the revenue and EBITDA
          performance objectives. In determining the amount of the individual
          target bonuses for the NEOs, the Compensation Committee did not use
          any formula-based approach. However, the target bonuses for the NEOs
          were generally at or about the 50th percentile of annual incentive
          bonus targets of similarly situated executive officers in the
          Compensation Peer Group, with some individual variation.

          The Compensation Committee retained full authority to approve the
          final amount of any awards under the 2006 Executive Incentive Plan. At
          the time of the 2006 Executive Incentive Plan's adoption and approval,
          the Compensation Committee determined that bonus payments under the
          2006 Executive Incentive Plan were to be paid first using up to
          160,000 shares of Common Stock in order to increase the level of stock
          ownership in EasyLink for all NEOs.

          At its meeting on February 26, 2007, the CEO reviewed with the
          Compensation Committee the results of the NEOs' attainment of their
          performance criteria under the 2006 Executive Incentive Plan. Given
          EasyLink's failure to achieve the revenue objective for 2006, no award
          for revenue performance was made. However, due to the fact that
          EasyLink exceeded its EBITDA objective, the Compensation Committee
          awarded bonuses to the NEOs under the 2006 Executive Incentive Plan in
          the amount of 77% of their target bonus percentages, which were paid
          in the first quarter of 2007. In addition, the Compensation Committee
          considered the individual bonuses of the CEO and CFO as they related
          to the going concern modification. Given positive indications by
          EasyLink's independent registered public accountants to the Audit
          Committee as to the likelihood of the elimination of the going concern
          modification, the Compensation Committee decided to pay bonuses to the
          CEO and CFO consistent with the bonuses for the other NEOs. Finally,
          in light of the formation by EasyLink's board of directors of a
          special committee of independent directors to evaluate strategic
          alternatives, which development had not been foreseen at the time the
          Compensation Committee approved the 2006 Executive Incentive Plan, the
          Compensation Committee determined that it would be more appropriate to
          pay the bonuses awarded under the 2006 Executive Incentive Plan in
          cash rather than in stock. Accordingly, in March 2007, bonuses were
          paid to the NEOs under the 2006 Executive Incentive Plan.

          On May 17, 2007, the Compensation Committee adopted a 2007 Executive
          Incentive Plan for EasyLink. EasyLink's 2007 executive incentive
          compensation is based on achieving specified revenue and EBITDA
          objectives. Officers and key management employees are eligible to
          participate upon the recommendation of EasyLink's CEO and the approval
          of the Compensation Committee. Under the plan, a target award based on
          percentage of base salary has been established for each participant,
          which varies from 10% to 75% of base salary for the participant. The
          participant may receive a bonus from 0% to 200% of the target award
          based upon the actual level of under-achievement and/or
          over-achievement of the revenue and EBITDA performance objectives.

          At the discretion of the Compensation Committee, payments under the
          2007 Executive Incentive Plan may be made in cash or stock or a
          combination of cash and stock. All bonus payments will be net of
          applicable withholding taxes. If bonus award payments under the plan
          are made in shares of common stock instead of cash, then the value of
          the shares issued in payment of the bonus is not treated as an expense
          item in the EBITDA calculation for this purpose. All transaction
          expenses incurred in connection with exploring or consummating
          strategic alternatives will also be excluded from the EBITDA
          calculation.

          The Compensation Committee retains full authority to approve final
          amounts, which may be higher or lower than plan results. The
          Compensation Committee may also approve the use of individual
          objectives as part of a participant's performance criteria under the
          plan. For 2007, the Compensation Committee has determined that the
          absence of a going concern qualification in the report of EasyLink's
          independent auditor on EasyLink's 2007 annual financial statements is
          an


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          individual objective for certain executives and is a consideration in
          the determination of their 2007 bonus.

          If there occurs a significant beneficial or adverse change in economic
          conditions, the indications of growth or recession in EasyLink's
          business segments, the nature of EasyLink's operations, applicable
          laws, regulations or accounting practices or other unanticipated
          matters that, in EasyLink's judgment, have a substantial positive or
          negative effect on EasyLink's performance, the Compensation Committee
          may modify or revise the performance objectives. These significant
          changes might, for example, result from acquisitions or dispositions
          of assets or mergers.

          Employees terminating prior to the payout date are not eligible for
          payment of an award unless termination is due to retirement or
          economic reduction in force or change of control (as described in the
          plan).

          Should a "change of control" occur during the year, participants will
          receive an award in accordance with the plan pro-rated through the
          date of the change of control. The award will be based upon EasyLink's
          cumulative performance to the budgeted revenue and EBITDA objectives
          that are the basis for the full year 2007 plan. Following a change of
          control, new objectives may be established by EasyLink's CEO for the
          remainder of the year consistent with transition objectives such that
          eligible employees will have an opportunity to earn their full year
          target bonus. If new objectives are not set after the change of
          control for the remaining months of the year, then current plan
          objectives will apply.

          Long-Term Incentive Compensation

          The Compensation Committee considers equity-based compensation to be a
          valuable and necessary compensation tool that aligns the long-term
          financial interests of the NEOs with the financial interests of
          EasyLink's stockholders by linking a portion of the NEOs' compensation
          with the performance of EasyLink's stock and the value delivered to
          EasyLink's stockholders. Accordingly, the Compensation Committee
          provides long-term incentives to EasyLink's NEOs through equity-based
          compensation under EasyLink's 2005 Stock and Incentive Plan.
          Historically, the Compensation Committee has elected to use stock
          options as the primary long-term equity incentive vehicle. However,
          EasyLink's 2005 Stock and Incentive Plan also provides for other
          awards, such as restricted stock, restricted stock units and deferred
          stock units, that consist of, or are denominated in, payable in,
          valued in whole or in part by reference to or otherwise related to,
          Common Stock.

          Because the Compensation Committee believes that equity-based
          compensation remains one of the most important ways to motivate and
          reward EasyLink's NEOs to increase stockholder value over the
          long-term, in 2006, the Compensation Committee requested guidance from
          the Compensation Consultant with respect to maximizing the utility of
          this component of compensation. Accordingly, based on the
          recommendation of the Compensation Consultant, at its meeting on April
          25, 2006, the Compensation Committee recommended that EasyLink's 2005
          Stock and Incentive Plan (the "2005 Stock and Incentive Plan") be
          amended to increase the maximum number of shares of Common Stock that
          could be issued thereunder, for use in both bonus awards and long-term
          incentive awards, from 200,000 shares to 600,000 shares. (All
          references here and elsewhere in this proxy statement to shares of
          Common Stock give effect to the 1-for-5 reverse stock split which
          became effective on August 28, 2006.) This amendment to the 2005 Stock
          and Incentive Plan was approved by EasyLink's stockholders at the
          annual meeting of stockholders held on June 20, 2006 (the "2006 Annual
          Meeting").

          The Compensation Consultant also recommended to the Compensation
          Committee that EasyLink's previously discontinued employee stock
          purchase plan (the "Stock Purchase Plan") be reintroduced to provide
          an additional incentive to a broad-based group of EasyLink's employees


                                       77



          to acquire a proprietary interest in EasyLink, to continue their
          positions with EasyLink and to increase their efforts on EasyLink's
          behalf. The Stock Purchase Plan was also approved by EasyLink's
          stockholders at the 2006 Annual Meeting, but has not yet been
          implemented by EasyLink. At the time the Stock Purchase Plan was
          approved by EasyLink's stockholders, EasyLink was not in compliance
          with the requirements of The Nasdaq Capital Market regarding the price
          of Common Stock. As a result, EasyLink postponed implementation of the
          Stock Purchase Plan until it had regained compliance with this
          requirement and the price of the Common Stock had stabilized. However,
          EasyLink has again postponed the implementation of the Stock Purchase
          Plan pending the outcome of the evaluation of the special committee of
          independent directors regarding strategic alternatives.

          Also on the recommendation of the Compensation Consultant, at its
          meeting on August 1, 2006, the CEO presented to the Compensation
          Committee, and the Compensation Committee approved, three forms of
          stock award agreements for possible future grants under the 2005 Stock
          and Incentive Plan: a deferred stock unit agreement; a restricted unit
          agreement; and a restricted stock agreement. By approving these forms
          of stock award agreements for the future, the Compensation Committee
          sought to permit itself greater flexibility and broader alternatives
          in designing future awards of equity-based compensation to motivate
          and reward the NEOs.

          All equity-based grants to the NEOs are approved by the Compensation
          Committee. The Compensation Committee has typically granted long-term
          incentive awards to the NEOs at the Compensation Committee's regularly
          scheduled October meeting, although such grants are entirely at the
          discretion of the Compensation Committee, including their timing, the
          recipients thereof and the number of shares underlying any particular
          grant. Prior to fiscal year 2006, these awards had been in the form of
          stock option grants, with exercise prices equal to the fair market
          value of the underlying Common Stock on the date of grant, as
          determined under the 2005 Stock and Incentive Plan, typically vesting
          over a 4-year period and expiring 10 years from the date of grant.
          With regard to these annual grants made to NEOs, it has generally been
          EasyLink's practice for the CEO to propose grants to the Compensation
          Committee. The Compensation Committee would review the recommendations
          of the CEO for stock option grants to the other NEOs and would conduct
          its own review and analysis with respect to grants to the CEO. In
          determining the grants, the Compensation Committee considered each
          NEO's current contributions to EasyLink's performance, the anticipated
          contribution to meeting EasyLink's long-term strategic performance
          goals and industry practices and norms. Long-term incentives granted
          in prior years and existing levels of stock ownership were also taken
          into consideration.

          In addition to annual equity awards, the Compensation Committee has
          also approved stock option awards for newly hired NEOs or in
          recognition of an NEO's promotion or expansion of responsibilities.
          Newly hired NEOs typically receive an initial award of stock options
          on the first date of employment, while newly promoted executives may
          receive an award of stock options on the effective date of their
          promotion. The value of an initial option grant to an NEO has
          generally been determined with reference to peer group companies, the
          responsibilities and future contributions of the NEO and recruitment
          and retention considerations.

          To further explore its alternatives with respect to long-term
          incentive compensation for the NEOs, in August 2006, the Compensation
          Committee engaged the Executive Compensation Consultant to review
          EasyLink's existing incentive plans and to recommend a long-term
          incentive plan. Throughout the remainder of 2006, the Compensation
          Committee consulted with the Compensation Consultant and the Executive
          Compensation Consultant regarding the structuring of long-term
          incentives targeted to the market median that facilitate EasyLink's
          performance and NEO retention.

          In order to accomplish these objectives, the Executive Compensation
          Consultant recommended that the Compensation Committee implement a mix
          of equity instruments, including time vesting


                                       78



          stock options, time-based restricted stock and performance vesting
          restricted stock. In October 2006, based on the recommendation of the
          Executive Compensation Consultant, the Compensation Committee
          introduced the use of time-based vesting shares of restricted stock
          and granted Messrs. Murawski, Doyle, MacPhee, Gooding and Graziano an
          aggregate of 83,827 shares of restricted Common Stock under the 2005
          Stock and Incentive Plan. Each of these grants vest as to 25% of the
          shares on October 10, 2007 and as to 1/12th of the remaining shares
          quarterly thereafter so that all amounts would be fully vested on
          October 10, 2010 if the recipient remains employed by EasyLink until
          that date. These restricted stock grants do not require any specific
          performance achievement during the vesting period in order to be
          earned. See the table under "Grants of Plan-Based Awards in Fiscal
          Year 2006" below for more detail on these grants to the NEOs. In
          determining the amount of the individual long-term equity awards for
          the NEOs for 2006, the Compensation Committee did not use any
          formula-based approach.

     PERQUISITES AND OTHER PERSONAL BENEFITS

     In accordance with EasyLink's compensation philosophy, EasyLink continues
     to maintain modest benefits and very limited perquisites for its NEOs.
     EasyLink generally does not provide pension arrangements, post-retirement
     health coverage or similar benefits for its NEOs. The few perquisites
     provided to EasyLink's NEOs during 2006 aggregated to less than $10,000 per
     NEO, and the amounts relating to these perquisites for 2006 are included in
     the table under "Summary Compensation Table for Fiscal Year 2006" below and
     described in the accompanying footnotes. EasyLink's NEOs participate on the
     same terms as other employees in EasyLink's 401(k) plan and health and
     welfare benefits plans, including medical, dental, life and disability
     insurance, and are entitled to vacation time and paid time off based on
     EasyLink's general vacation policies. The Compensation Committee believes
     that the perquisites and benefits currently offered to EasyLink's NEOs are
     consistent with, if not below, the median competitive levels for comparable
     companies. The Compensation Committee periodically reviews the levels of
     perquisites and other personal benefits provided to the NEOs to ensure
     these programs are warranted, based upon the business need and
     contributions of the NEOs.

     TIMING OF AWARDS

     The Compensation Committee is the only party authorized to grant equity
     awards to the NEOs. Although EasyLink does not have a formal policy, it is
     the Compensation Committee's practice to issue equity compensation awards
     only at regularly scheduled Compensation Committee meetings without regard
     to the timing of the release of material information. Executives do not
     have any role in selecting the grant date of equity awards. EasyLink does
     not time the award of stock options or other equity-based compensation to
     take advantage of anticipated or actual changes in the price of Common
     Stock prior to or following the release of material information about
     EasyLink.

     The grant date of equity awards is generally the date the Compensation
     Committee approves the award. However, if a Compensation Committee meeting
     is scheduled for a date during an EasyLink trading blackout period, the
     grant date of an equity award may be set for a date after the trading
     blackout period has ended. In general, equity awards to the NEOs are made
     during the Compensation Committee's June meeting, at which, in connection
     with the annual meeting, the Compensation Committee reviews EasyLink
     performance and determines base salaries and bonuses for all of the NEOs.
     However, at the time of the 2006 Annual Meeting, EasyLink was in the
     process of preparing for the 1-for-5 reverse stock split that became
     effective in August 2006. As a result, the equity awards to the NEOs for
     2006 were made in October rather than in June. The Compensation Committee
     may also make equity awards at other times during the year in connection
     with promotions, assumption of additional responsibilities and other
     factors.

     The exercise price of all stock option awards is equal to the fair market
     value of the underlying Common Stock on the date of the grant, which is
     defined by the 2005 Stock and Incentive Plan as the closing price of the
     Common Stock on the last trading day prior to the date of grant.


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     STOCK OWNERSHIP REQUIREMENTS

     The Compensation Committee is considering, but has not yet established,
     minimum ownership guidelines of the Common Stock for EasyLink's NEOs to
     further align management's incentives with those of stockholders. Although
     EasyLink does not currently have such a stock ownership policy for its
     NEOs, all of EasyLink's NEOs own shares of Common Stock.

     EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS

          Employment Agreements

          The Murawski Employment Agreement provides for Mr. Murawski's
          employment at-will and contains confidentiality, intellectual property
          and non-solicitation covenants. In addition, the Murawski Employment
          Agreement contains provisions relating to payments and benefits upon
          termination of Mr. Murawski's employment due to his death or
          disability, if Mr. Murawski's employment is terminated without "cause"
          or if he terminates his employment for "good reason". The Murawski
          Employment Agreement also has provisions addressing termination in the
          event of a "change of control" of EasyLink, which, in addition to
          providing for certain payments to Mr. Murawski, also provides for
          accelerated vesting, until February 15, 2010, of all of his
          outstanding equity-based awards. The Murawski Employment Agreement
          defines "cause", "good reason" and "change of control". In addition,
          if a sale of EasyLink occurs before the termination of Mr. Murawski's
          employment or within three months after a termination of his
          employment without cause or within three months after Mr. Murawski
          terminates his employment for good reason, he will be entitled to
          receive upon the consummation of the sale a cash payment equal to 2.5%
          of the consideration received by the holders of Common Stock pursuant
          to the sale. If any of the payments to Mr. Murawski under his
          employment agreement would be subject to the excise tax imposed by
          Section 4999 of the Code, Mr. Murawski will be entitled to receive
          gross-up payments, which would entitle him to retain, after payment of
          all additional taxes on the gross-up payments, an amount equal to the
          amount of the excise tax. See "Tax Considerations" below for further
          information regarding the gross-up payment. See the table under
          "Potential Payments upon Termination or Change in Control" below for
          Mr. Murawski for a more detailed discussion of these arrangements.

          EasyLink has entered into employment agreements with each of Messrs.
          Doyle, MacPhee and Gooding, which provide for employment at-will and
          contain confidentiality, intellectual property and non-competition
          covenants.

          EasyLink also entered into an employment agreement with Mr. Graziano
          in June 1999, which was subsequently amended in September 2001.
          Portions of this employment agreement were superseded by the Severance
          and Change of Control Agreement discussed below. This employment
          agreement provides for Mr. Graziano's employment at-will and contains
          confidentiality, intellectual property and non-competition covenants.
          In addition, this employment agreement provides for Mr. Graziano to
          receive, as incentive compensation, a bonus of 0.5% of the
          consideration involved in any completed transaction in which EasyLink
          purchases the equity or assets of another entity, with a limit per
          transaction of $5,000.

          Severance and Change of Control Arrangements

          EasyLink has change of control arrangements with each of its NEOs. The
          terms of Mr. Murawski's change of control arrangement are set forth in
          his employment agreement, and the terms of EasyLink's change of
          control arrangements with each of the other NEOs are set forth in
          severance and change of control agreements that EasyLink entered into
          with each of these NEO in June 2006 (the "Severance and Change of
          Control Agreements"). The Severance and Change of


                                       80



          Control Agreements were approved by the Compensation Committee on the
          recommendation of the Compensation Consultant and were designed to
          provide uniformity of treatment of all of these NEOs upon any change
          of control of EasyLink.

          The Severance and Change of Control Agreements provide for severance
          pay in the amount of six months' salary upon termination of an NEO's
          employment without "cause" at any time or if the NEO terminates his
          employment for "good reason" within six months after a "change of
          control" of EasyLink, provided that the NEO signs a waiver and release
          of claims. If EasyLink terminates the NEO's employment without cause
          within three months before or six months after a change of control or
          the NEO terminates his employment for good reason within six months
          after a change of control, all of the NEO's outstanding equity-based
          awards will fully vest. The Severance and Change of Control Agreements
          define "cause", "good reason" and "change of control". The Severance
          and Change of Control Agreements have initial terms of three years and
          expire on June 30, 2009 unless renewed by EasyLink upon the approval
          of the Compensation Committee on or before such date. See the tables
          under "Potential Payments upon Termination or Change in Control" below
          for further discussion of these arrangements.

          EasyLink entered into the Severance and Change of Control Agreements
          so that its NEOs can focus their attention and energies on EasyLink's
          business during periods of uncertainty that may occur due to a
          potential change of control. In addition, EasyLink wants its NEOs to
          support a corporate transaction involving a change of control that is
          in the best interests of EasyLink's stockholders, even though the
          transaction may adversely impact the NEO's continued employment with
          EasyLink. EasyLink believes that its practice of entering into such
          arrangements with the NEOs allows EasyLink to remain competitive in
          the market for qualified executives and provides a key incentive for
          EasyLink's NEOs to remain with EasyLink.

          The change of control benefits provided for under the Severance and
          Change of Control Agreements are triggered upon a termination of
          employment by EasyLink (or its successor) without cause or by the NEO
          for good reason. The Compensation Committee has concluded that this
          requirement of a "double trigger" to receive severance benefits in the
          event of a change of control are appropriate for executive officers in
          positions similar to those of the NEOs at comparable companies.

          On February 13, 2007, the Compensation Committee unanimously approved
          the amendment of Mr. Murawski's employment agreement to add a change
          of control provision that provides for the vesting of stock options
          and other equity-based awards in the same manner as the Severance and
          Change of Control Agreements.

     TAX CONSIDERATIONS

     Section 162(m) of the Code places a limit of $1,000,000 on the amount of
     compensation a publicly held company may deduct in any one year with
     respect to its chief executive officer and its four other highest paid
     executives. There is an exception to the $1,000,000 limitation for
     performance-based compensation if certain requirements are met. The
     compensation paid to each of EasyLink's NEOs for 2006 did not exceed the
     $1,000,000 limit. However, it is possible that some portion of compensation
     paid to the NEOs in future years will be non-deductible, particularly if a
     change of control in EasyLink occurs.

     To the extent feasible, the Compensation Committee structures executive
     compensation to preserve deductibility for federal income tax purposes.
     However, to maintain flexibility in compensating the NEOs in view of the
     overall objectives of EasyLink's compensation program, the Compensation
     Committee has not adopted a policy requiring that all compensation be tax
     deductible.

     Other provisions of the Code also can affect EasyLink's compensation
     decisions. Under Section 4999 of the Code, a 20% excise tax is imposed upon
     an NEO who receives "excess parachute payments" (as


                                       81



     defined under section 280G of the Code). The excise tax applies to all
     payments over one times annual compensation, determined by a 5-year
     average. Under such circumstances, EasyLink (or its successor) also loses
     the deduction on the amounts subject to the excise tax. As noted above, Mr.
     Murawski's employment agreement provides for a "gross-up" payment to him if
     this excise tax would apply. The Compensation Committee considers the
     adverse tax liabilities imposed by Section 4999 of the Code, as well as
     other competitive factors, when it structures certain post-termination
     compensation payable to its NEOs.

COMPENSATION COMMITTEE REPORT

The information contained in this report shall not be deemed to be "soliciting
material" or "filed" or "incorporated by reference" in future filings with the
SEC or subject to the liabilities of Section 18 of the Exchange Act, except to
the extent that EasyLink specifically incorporates it by reference into a
document filed under the Securities Act of 1933, as amended, or the Exchange
Act.

The Compensation Committee establishes and oversees the design and functioning
of EasyLink's executive compensation program. The Compensation Committee has
reviewed and discussed the foregoing Compensation Discussion and Analysis, which
is required by Item 402(b) of Regulation S-K promulgated by the SEC, with
EasyLink's management. Based on this review and discussion, the Compensation
Committee recommended to EasyLink's board of directors that the Compensation
Discussion and Analysis be included in this proxy statement.

                                           MEMBERS OF THE COMPENSATION COMMITTEE

                                                         George Knapp (Chairman)
                                                                Robert J. Casale
                                                                 Peter J. Holzer

     SUMMARY COMPENSATION TABLE FOR FISCAL YEAR 2006

     The following table provides information about all compensation earned in
     2006 by the individuals who served as EasyLink's NEOs, including EasyLink's
     CEO and CFO:



                                                                        NON-EQUITY
                                                     STOCK   OPTION   INCENTIVE PLAN     ALL OTHER
                                                    AWARDS   AWARDS    COMPENSATION    COMPENSATION
NAME AND PRINCIPAL POSITION       YEAR    SALARY      (1)      (2)          (3)             (4)         TOTAL
---------------------------       ----   --------   ------   ------   --------------   ------------   --------
                                                                                 
THOMAS MURAWSKI                   2006   $483,600   $6,863   $    0      $280,295         $7,314      $778,072
   Chairman, President and CEO

MICHAEL DOYLE                     2006   $240,693   $3,477   $    0      $ 56,801         $6,438      $307,409
   Vice President and CFO

RICHARD GOODING                   2006   $204,596   $3,010   $    0      $ 81,917         $6,138      $295,661
   Executive Vice President and
   General Manager

GARY MACPHEE                      2006   $216,962   $3,137   $    0      $ 85,394         $6,509      $312,002
   Executive Vice President and
   General Manager

FRANK GRAZIANO                    2006   $206,032   $2,978   $4,272      $ 48,640         $6,181      $268,103
   Senior Vice President of
   Corporate Development


----------
(1)  Represents stock-based compensation expense of restricted stock awards
     recognized by EasyLink, before forfeitures, under Statement of Financial
     Accounting Standards ("FAS") 123R for the 2006 fiscal year, rather than
     amounts paid to or realized by the NEO. Please refer to Note 15 to
     EasyLink's consolidated financial statements in EasyLink's Form 10-K for
     the year ended December 31, 2006 for the underlying assumptions for this
     expense. There can be no assurance that the restricted stock will be earned
     (in which case no value will be recognized by the NEO) or that the value of
     the restricted stock actually earned will approximate the compensation
     expense recognized by EasyLink.

(2)  Represents the compensation expense of option awards recognized by
     EasyLink, before forfeitures, under FAS 123R for the 2006 fiscal year,
     rather than amounts paid to or realized by the NEO, and includes expense
     recognized for awards granted prior to 2006. Please refer to Note 15 to
     EasyLink's consolidated financial statements in EasyLink's Form 10-K for
     the year ended December 31,


                                       82



     2006 for the underlying assumptions for this expense. There can be no
     assurance that options will be exercised (in which case no value will be
     recognized by the NEO) or that the value on exercise will approximate the
     compensation expense recognized by EasyLink.

(3)  Represents bonuses paid under the 2006 Executive Incentive Plan for 2006.
     These amounts are not reported in the "Bonus" column because the award is
     tied to corporate performance goals. Under the SEC's prior rules, these
     types of awards were previously reported under the "Bonus" column.

(4)  Reflects matching contributions to EasyLink's 401(k) plan, which all
     participating employees receive.

     GRANTS OF PLAN BASED AWARDS IN FISCAL YEAR 2006

     The following table provides information on non-equity incentive plan
     awards, stock options and certain restricted stock awards granted in 2006
     to each of the NEOs. There can be no assurance that the grant date fair
     value of stock and option awards will ever by realized. The amount of these
     awards that were expensed is shown in the table under "Summary Compensation
     Table for Fiscal Year 2006" below.



                                   ESTIMATED FUTURE PAYOUTS
                                  UNDER NON-EQUITY INCENTIVE       ALL OTHER STOCK    CLOSING PRICE ON   GRANT DATE FAIR
                                       PLAN AWARDS (1)             AWARDS: NUMBER       DATE OF GRANT     VALUE OF STOCK
                               -------------------------------   OF SHARES OF STOCK      STOCK AWARD        AND OPTION
NAME              GRANT DATE   THRESHOLD    TARGET     MAXIMUM      OR UNITS (2)         (PER SHARE)        AWARDS (3)
----              ----------   ---------   --------   --------   ------------------   ----------------   ---------------
                                                                                    
Thomas Murawski   --               --      $362,700   $725,400             --                  --                  --
                  10/10/2006       --            --         --         29,560               $4.09            $120,900
Michael Doyle     --               --      $ 73,500   $144,000             --                  --                  --
                  10/10/2006       --            --         --         14,976               $4.09            $ 61,252
Richard Gooding   --               --      $106,000   $212,000             --                  --                  --
                  10/10/2006       --            --         --         12,958               $4.09            $ 52,998
Gary MacPhee      --               --      $110,500   $221,000             --                  --                  --
                  10/10/2006       --            --         --         13,509               $4.09            $ 55,252
Frank Graziano    --               --      $ 62,940   $125,880             --                  --                  --
                  10/10/2006       --            --         --         12,824               $4.09            $ 52,450


----------
(1)  As described under "Short-Term Annual Incentive Compensation" in this CD&A,
     the NEOs were eligible to receive between zero and 200% of their target
     bonus amounts, depending on the achievement of objectives under the 2006
     Executive Incentive Plan set by the Compensation Committee on April 25,
     2006. The actual amount of the cash payments made to the NEOs pursuant to
     the Executive Incentive Plan in March 2007, based on 2006 performance, is
     set forth under the heading "Non-Equity Incentive Plan Compensation" of the
     table under "Summary Compensation Table for Fiscal Year 2006" below.

(2)  Represents grants of restricted stock. The restricted stock vests as to 25%
     of the shares on October 10, 2007 and as to 1/12th of the remaining shares
     quarterly thereafter.

(3)  Represents aggregate grant date value computed in accordance with FAS 123R,
     based on the closing price of Common Stock on the date of grant.

     OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END FOR FISCAL YEAR 2006

     The following table provides information about the equity awards held as of
     December 31, 2006 by each of EasyLink's NEOs:


                                       83




                   NUMBER OF      NUMBER OF
                   SECURITIES     SECURITIES                                           NUMBER OF      MARKET VALUE OF
                   UNDERLYING     UNDERLYING                                        SHARES OR UNITS   SHARES OR UNITS
                  UNEXERCISED    UNEXERCISED                                         OF STOCK THAT     OF STOCK THAT
                    OPTIONS        OPTIONS      OPTION EXERCISE        OPTION           HAVE NOT          HAVE NOT
NAME              EXERCISABLE   UNEXERCISABLE      PRICE (1)      EXPIRATION DATE      VESTED (2)        VESTED (3)
---------------   -----------   -------------   ---------------   ---------------   ---------------   ---------------
                                                                                    
Thomas Murawski         193                          $84.38          05/20/2007
                        771                          $84.38          12/10/2007
                        771                          $84.38          11/10/2008
                        385                          $84.38          12/06/2009
                      4,624                          $84.38          02/08/2010
                      2,501                          $84.38          05/31/2010
                     34,000                          $64.06          01/26/2011
                     46,505                          $11.00          09/10/2011
                     60,000                          $ 4.90          06/21/2012
                     20,600                          $ 2.65          05/14/2013
                    200,000                          $ 6.25          08/07/2013
                      9,000                          $ 6.60          08/03/2014
                                                                                         29,560           $85,428
Michael Doyle        25,000                          $ 7.25          03/22/2014
                      6,000                          $ 6.60          08/03/2014
                      5,000                          $ 5.75          03/22/2015
                                                                                         14,976           $43,281
Richard Gooding         300                          $35.95          03/06/2011
                      1,800                          $11.00          09/10/2011
                      7,000                          $ 4.90          06/21/2012
                      3,000                          $ 2.65          05/14/2013
                     19,000                          $ 6.25          08/07/2013
                      4,000                          $ 6.60          08/03/2014
                     10,000                          $ 5.30          04/25/2015
                                                                                         12,958           $37,449
Gary MacPhee         16,000                          $ 9.40          09/09/2012
                     13,000                          $ 6.25          08/07/2013
                      4,000                          $ 7.90          09/10/2013
                      2,000                          $ 2.65          05/14/2013
                      6,000                          $ 6.60          08/03/2014
                     20,000                          $ 5.30          04/25/2015
                                                                                         13,509           $39,041
Frank Graziano            1                          $84.38          01/31/2009
                         68                          $84.38          02/28/2009
                         33                          $84.38          03/31/2009
                         49                          $84.38          05/31/2009
                      1,100                          $84.38          06/01/2009
                          4                          $84.38          07/23/2009
                         70                          $84.38          03/01/2010
                         49                          $84.38          03/13/2010
                      1,000                          $84.38          05/31/2010
                        640                          $84.38          07/03/2010
                      3,502                          $11.00          09/10/2011
                      5,000                          $ 4.90          06/21/2012
                      3,200                          $ 2.65          05/14/2013
                     17,000                          $ 6.25          08/07/2013
                      4,000                          $ 6.60          08/03/2014
                      1,562                          $ 4.10          08/01/2015
                                  3,438 (4)          $ 4.10          08/01/2015
                                                                                         12,824           $37,061


----------
(1)  As described under "Timing of Awards" in this CD&A, the exercise price of
     all stock option awards under the 2005 Stock and Incentive Plan is equal to
     the fair market value of the underlying Common Stock on the last trading
     day preceding the date of grant.

(2)  The unvested restricted stock set forth in this column vests as to 25% of
     the shares on October 10, 2007 and as to 1/12th of the remaining shares
     quarterly thereafter, so that all amounts would be fully vested on October
     10, 2010 if the NEO were still employed by EasyLink at that time. For
     information regarding the vesting of this restricted stock upon termination
     of the NEO's employment, see the information set forth under "Potential
     Payments Upon Termination or Change in Control" below.

(3)  The market value of stock awards is based on the closing price of Common
     Stock on December 29, 2006, which was $2.89.


                                       84



(4)  The unvested options granted to Mr. Graziano set forth in this column vest
     in 11 equal quarterly installments beginning on February 1, 2007, with the
     last quarterly vesting scheduled to occur on August 1, 2009. For
     information regarding the vesting of Mr. Graziano's options, see the
     information set forth under "Potential Payments Upon Termination or Change
     in Control" below.

     OUTSTANDING EXERCISES AND STOCK VESTED DURING FISCAL YEAR 2006

     There were no options or other derivative securities exercised in 2006 by
     any of EasyLink's NEOs. None of the stock awards granted to EasyLink's NEOs
     vested in 2006.

     PENSION BENEFITS AT FISCAL YEAR 2006 YEAR-END

     EasyLink does not maintain any pension or retirement plans for its NEOs.

     NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR 2006

     EasyLink does not provide any non-qualified defined contribution or other
     deferred compensation plans to its NEOs.

     POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

     The tables below show potential payments to each of the NEOs under existing
     contracts, agreements, plans or arrangements, whether written or unwritten,
     upon different termination scenarios. The amounts shown assume that such
     termination was effective as of December 31, 2006 and are estimates of the
     amounts that would have been paid out to the NEOs upon their termination at
     such date. The actual amounts to be paid out can only be determined at the
     time of such NEO's actual separation from EasyLink.

     The amounts shown in these tables do not include payments and benefits to
     the extent they are provided on a non-discriminatory basis to salaried
     employees generally upon termination of employment, such as accrued salary
     and vacation pay and disability benefits (if applicable). The amounts shown
     in these tables also do not reflect amounts that would be payable to the
     NEOs that are already vested.

     Certain arrangements with EasyLink's NEOs discussed above provide for the
     acceleration of vesting of unvested equity awards upon a change of control.
     These tables include in the applicable columns the value of the gain
     realized if the NEO were to exercise all unvested equity awards on the date
     of termination, based on the price of Common Stock on December 29, 2006
     ($2.89).


                                       85



PRESIDENT, CEO AND CHAIRMAN-THOMAS MURAWSKI



                               TERMINATION                                                        RESIGNATION
                                   UPON                               TERMINATION   TERMINATION     FOR GOOD    RESIGNATION
                               RESIGNATION                              WITHOUT       WITHOUT        REASON       FOR GOOD
    EXECUTIVE                     (OTHER                               CAUSE AND     CAUSE AND        AND          REASON
    PAYMENTS                     THAN FOR   TERMINATION                 WITHOUT         WITH        WITHOUT       AND WITH
      UPON        TERMINATION      GOOD         UPON     TERMINATION   CHANGE OF     CHANGE OF     CHANGE OF     CHANGE OF
   TERMINATION     WITH CAUSE    REASON)     DISABILITY   UPON DEATH    CONTROL       CONTROL       CONTROL       CONTROL
----------------  -----------  -----------  -----------  -----------  -----------  -------------  -----------  -------------
                                                                                       
Severance
   Payments            $0           $0      $230,088(1)  $120,900(2)  $483,600(3)  $  483,600(3)  $483,600(3)  $  483,600(3)
Executive
   Incentive
   Plan (4)            $0           $0      $      0     $      0     $362,700     $  362,700     $362,700     $  362,700
Continuation of
   Medical
   Benefits (5)        $0           $0      $      0     $      0     $  8,346     $    8,346     $  8,346     $    8,346
Continuation of
   401(k) Plan
   Match (6)           $0           $0      $      0     $      0     $  7,314     $    7,314     $  7,314     $    7,314
Acceleration of
   Unvested
   Restricted
   Stock (7)           $0           $0      $      0     $      0     $      0     $   85,428     $      0     $   85,428
Sale of the
   Company Fee
   (4)(8)              $0           $0      $      0     $      0     $      0     $1,594,886     $      0     $1,594,886
Tax Gross-Up (9)       $0           $0      $      0     $      0     $      0       $934,515     $      0     $  934,515
                      ---          ---      --------     --------     --------     ----------     --------     ----------
Total                  $0           $0      $230,088     $      0     $861,960(10) $3,476,789(10) $861,960(10) $3,476,789(10)
                      ===          ===      ========     ========     ========     ==========     ========     ==========


----------
For purposes of the foregoing table, EasyLink has assumed that Mr. Murawski's
compensation is as follows: current base salary is equal to $483,600; and target
annual incentive bonus is equal to 75% of base salary.

(1)  Upon termination due to Mr. Murawski's disability, he would be entitled to
     the difference between disability insurance benefits and full salary for
     six months.

(2)  Upon his death, Mr. Murawski's estate would receive his base salary for
     three months thereafter.

(3)  This amount will be paid out over 12 months if Mr. Murawski elects to
     continue to receive the benefits indicated in footnotes 5 and 6. At Mr.
     Murawski's election, he can forego the benefits indicated in footnotes 5
     and 6 and receive this amount as a lump sum payment.

(4)  Payable in a lump sum.

(5)  This amount is only payable if Mr. Murawski elects to receive the amount
     indicated in footnote 3 over time, instead of in a lump sum.

(6)  This amount is only payable if Mr. Murawski elects to receive the amount
     indicated in footnote 3 over time, instead of in a lump sum.

(7)  Represents the value of Mr. Murawski's unvested restricted stock, which
     would become fully vested and exercisable if such termination is within
     three months before or six months after a change of control.

(8)  The assumptions used to calculate the sale of EasyLink fee include the
     following: (i) a sale of EasyLink occurred on March 30, 2007; (ii) Mr.
     Murawski was terminated without cause or resigned for good reason on
     December 31, 2006; (iii) the fair market value of the consideration
     received by the holders of Common Stock in the transaction was equal to the
     product of (A) the Merger Consideration of $5.80 times (B) the number of
     shares of Common Stock outstanding on March 30, 2007 (10,999,213).

(9)  The assumptions used to calculate the excise tax gross-up include the
     following: (i) a sale of EasyLink occurred on March 30, 2007; (ii) Mr.
     Murawski was terminated without cause or resigned for good reason on
     December 31, 2006; (iii) the combined state and federal tax rate for Mr.
     Murawski was 40%; and (iv) the excise tax rate was 20%.

(10) The amounts indicated in footnotes 5 and 6 are only included in this total
     if Mr. Murawski elects to receive the amount indicated in footnote 3 over
     time, instead of in a lump sum.


                                       86



VICE PRESIDENT AND CFO-MICHAEL DOYLE



                               TERMINATION                                                        RESIGNATION
                                   UPON                               TERMINATION   TERMINATION     FOR GOOD    RESIGNATION
                               RESIGNATION                              WITHOUT       WITHOUT        REASON       FOR GOOD
    EXECUTIVE                     (OTHER                               CAUSE AND     CAUSE AND        AND          REASON
    PAYMENTS                     THAN FOR   TERMINATION                 WITHOUT         WITH        WITHOUT       AND WITH
      UPON        TERMINATION      GOOD         UPON     TERMINATION   CHANGE OF     CHANGE OF     CHANGE OF     CHANGE OF
   TERMINATION     WITH CAUSE    REASON)     DISABILITY   UPON DEATH    CONTROL       CONTROL       CONTROL       CONTROL
----------------  -----------  -----------  -----------  -----------  -----------  -------------  -----------  -------------
                                                                                       
Severance
   Payments (1)        $0           $0           $0           $0      $122,500      $122,500       $     0      $122,500
Executive
   Incentive
   Plan (2)            $0           $0           $0           $0      $ 73,500(3)   $73,500(3)     $73,500(4)   $ 73,500(4)
Acceleration of
   Unvested
   Equity Awards
   (5)                 $0           $0           $0           $0      $      0      $ 43,281       $     0      $ 43,281
                      ---          ---          ---          ---      --------      --------       -------      --------
Total                  $0           $0           $0           $0      $196,000(6)   $239,281(6)    $73,500(7)   $239,281(7)
                      ===          ===          ===          ===      ========      ========       =======      ========


----------
For purposes of the foregoing table, EasyLink has assumed that Mr. Doyle's
compensation is as follows: current base salary is equal to $240,693; and target
annual incentive bonus is equal to 30% of base salary.

(1)  Paid in equal installments over six months. However, in order to comply
     with the requirements of Section 409A of the Code, EasyLink has the right
     either (i) to cause all severance payments to Mr. Doyle to be paid by March
     15 of the calendar year following the calendar year in which the
     termination date occurs (with any installments that are scheduled to be
     paid after such March 15 date being paid in a lump sum prior to such date)
     or (ii) if it is not practicable to make all of such payments prior to such
     March 15 date, to provide that none of such payments will commence prior to
     such March 15 date and the total severance amount will be paid in one lump
     sum on the date that is one day after six months after Mr. Doyle's
     termination date.

(2)  Payable in a lump sum.

(3)  Under the terms of the 2006 Executive Incentive Plan, employees terminated
     prior to the payout date are not eligible for payment of any award under
     the 2006 Executive Incentive Plan unless the termination is due to an
     economic reduction in force. Mr. Doyle would only be entitled to receive
     the amount shown if his termination without cause was due to an economic
     reduction in force, in which case this amount would be paid as a lump sum.

(4)  Under the terms of the 2006 Executive Incentive Plan, employees terminating
     prior to the payout date are not eligible for payment of any award under
     the 2006 Executive Incentive Plan unless such resignation is due to
     retirement. Mr. Doyle would only be entitled to receive the amount shown if
     his resignation for good reason also constituted his retirement, in which
     case this amount would be paid as a lump sum.

(5)  Represents the value of Mr. Doyle's unvested restricted stock, which would
     become fully vested and exercisable if such termination is within three
     months before or six months after a change of control.

(6)  Would only include the amount indicated in footnote 3 if Mr. Doyle's
     termination without cause was due to an economic reduction in force.

(7)  Would only include the amount indicated in footnote 4 if Mr. Doyle's
     resignation for good reason also constituted his retirement.

     The foregoing payments are conditioned on Mr. Doyle's execution and
     delivery of EasyLink's standard separation agreement and release in effect
     at the time of termination, and Mr. Doyle's not revoking such agreement
     within any period of revocation under applicable law. The foregoing
     payments are further conditioned on Mr. Doyle's continued compliance with
     any applicable obligations regarding confidentiality, intellectual property
     and non-competition contained in his employment agreement or in other
     agreements between Mr. Doyle and EasyLink. EasyLink has the right to recoup
     any of the foregoing payments previously made in the event that Mr. Doyle
     fails to comply with such obligations.


                                       87



EXECUTIVE VICE PRESIDENT AND GENERAL MANAGER-RICHARD GOODING



                               TERMINATION                                                        RESIGNATION
                                   UPON                               TERMINATION   TERMINATION     FOR GOOD    RESIGNATION
                               RESIGNATION                              WITHOUT       WITHOUT        REASON       FOR GOOD
    EXECUTIVE                     (OTHER                               CAUSE AND     CAUSE AND        AND          REASON
    PAYMENTS                     THAN FOR   TERMINATION                 WITHOUT         WITH        WITHOUT       AND WITH
      UPON        TERMINATION      GOOD         UPON     TERMINATION   CHANGE OF     CHANGE OF     CHANGE OF     CHANGE OF
   TERMINATION     WITH CAUSE    REASON)     DISABILITY   UPON DEATH    CONTROL       CONTROL       CONTROL       CONTROL
----------------  -----------  -----------  -----------  -----------  -----------  -------------  -----------  -------------
                                                                                       
Severance
   Payments (1)        $0           $0           $0           $0      $106,000      $106,000      $      0      $106,000
Executive
   Incentive
   Plan (2)            $0           $0           $0           $0      $106,000(3)   $106,000(3)   $106,000(4)   $106,000(4)
Acceleration of
   Unvested
   Equity
   Awards (5)          $0           $0           $0           $0      $      0       $37,449      $      0      $ 37,449
                      ---          ---          ---          ---      --------      --------      --------      --------
Total                  $0           $0           $0           $0      $212,000(6)   $249,449(6)   $106,000(7)   $249,449(7)
                      ===          ===          ===          ===      ========      ========      ========      ========


----------
For purposes of the foregoing table, EasyLink has assumed that Mr. Gooding's
compensation is as follows: current base salary is equal to $212,000; and target
annual incentive bonus is equal to 50% of base salary.

(1)  Paid in equal installments over six months. However, in order to comply
     with the requirements of Section 409A of the Code, EasyLink has the right
     either (i) to cause all severance payments to Mr. Gooding to be paid by
     March 15 of the calendar year following the calendar year in which the
     termination date occurs (with any installments that are scheduled to be
     paid after such March 15 date being paid in a lump sum prior to such date)
     or (ii) if it is not practicable to make all of such payments prior to such
     March 15 date, to provide that none of such payments will commence prior to
     such March 15 date and the total severance amount will be paid in one lump
     sum on the date that is one day after six months after Mr. Gooding's
     termination date.

(2)  Payable in a lump sum.

(3)  Under the terms of the 2006 Executive Incentive Plan, employees terminated
     prior to the payout date are not eligible for payment of any award under
     the 2006 Executive Incentive Plan unless the termination is due to an
     economic reduction in force. Mr. Gooding would only be entitled to receive
     the amount shown if his termination without cause was due to an economic
     reduction in force, in which case this amount would be paid as a lump sum.

(4)  Under the terms of the 2006 Executive Incentive Plan, employees terminating
     prior to the payout date are not eligible for payment of any award under
     the 2006 Executive Incentive Plan unless such resignation is due to
     retirement. Mr. Gooding would only be entitled to receive the amount shown
     if his resignation for good reason also constituted his retirement, in
     which case this amount would be paid as a lump sum.

(5)  Represents the value of Mr. Gooding's unvested restricted stock, which
     would become fully vested and exercisable if such termination is within
     three months before or six months after a change of control.

(6)  Would only include the amount indicated in footnote 3 if Mr. Gooding's
     termination without cause was due to an economic reduction in force.

(7)  Would only include the amount indicated in footnote 4 if Mr. Gooding's
     resignation for good reason also constituted his retirement.

     The foregoing payments are conditioned on Mr. Gooding's execution and
     delivery of EasyLink's standard separation agreement and release in effect
     at the time of termination, and Mr. Gooding's not revoking such agreement
     within any period of revocation under applicable law. The foregoing
     payments are further conditioned on Mr. Gooding's continued compliance with
     any applicable obligations regarding confidentiality, intellectual property
     and non-competition contained in his employment agreement or in other
     agreements between Mr. Gooding and EasyLink. EasyLink has the right to
     recoup any of the foregoing payments previously made in the event that Mr.
     Gooding fails to comply with such obligations.


                                       88


EXECUTIVE VICE PRESIDENT AND GENERAL MANAGER-GARY MACPHEE



                                           TERMINATION                                                      RESIGNATION
                                              UPON                                TERMINATION  TERMINATION   FOR GOOD    RESIGNATION
                                           RESIGNATION                              WITHOUT      WITHOUT      REASON       FOR GOOD
                                             (OTHER                                CAUSE AND    CAUSE AND       AND         REASON
          EXECUTIVE                         THAN FOR    TERMINATION                 WITHOUT       WITH        WITHOUT     AND WITH
        PAYMENTS UPON         TERMINATION      GOOD         UPON     TERMINATION   CHANGE OF    CHANGE OF    CHANGE OF    CHANGE OF
         TERMINATION           WITH CAUSE    REASON)    DISABILITY    UPON DEATH    CONTROL      CONTROL      CONTROL      CONTROL
        -------------         -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
                                                                                                 
Severance Payments (1)             $0           $0           $0           $0      $110,500     $110,500     $      0     $110,500
Executive Incentive Plan (2)       $0           $0           $0           $0      $110,500(3)  $110,500(3)  $110,500(4)  $110,500(4)
Acceleration of Unvested
   Equity Awards (5)               $0           $0           $0           $0      $      0     $ 39,041     $      0     $ 39,041
                                  ---          ---          ---          ---      --------     --------     --------     --------
Total                              $0           $0           $0           $0      $221,000(6)  $260,041(6)  $110,500(7)  $260,041(7)
                                  ===          ===          ===          ===      ========     ========     ========     ========


----------
For purposes of the foregoing table, EasyLink has assumed that Mr. MacPhee's
compensation is as follows: current base salary is equal to $221,000; and target
annual incentive bonus is equal to 50% of base salary.

(1)  Paid in equal installments over six months. However, in order to comply
     with the requirements of Section 409A of the Code, EasyLink has the right
     either (i) to cause all severance payments to Mr. MacPhee to be paid by
     March 15 of the calendar year following the calendar year in which the
     termination date occurs (with any installments that are scheduled to be
     paid after such March 15 date being paid in a lump sum prior to such date)
     or (ii) if it is not practicable to make all of such payments prior to such
     March 15 date, to provide that none of such payments will commence prior to
     such March 15 date and the total severance amount will be paid in one lump
     sum on the date that is one day after six months after Mr. MacPhee's
     termination date.

(2)  Payable in a lump sum.

(3)  Under the terms of the 2006 Executive Incentive Plan, employees terminated
     prior to the payout date are not eligible for payment of any award under
     the 2006 Executive Incentive Plan unless the termination is due to an
     economic reduction in force. Mr. MacPhee would only be entitled to receive
     the amount shown if his termination without cause was due to an economic
     reduction in force, in which case this amount would be paid as a lump sum.

(4)  Under the terms of the 2006 Executive Incentive Plan, employees terminating
     prior to the payout date are not eligible for payment of any award under
     the 2006 Executive Incentive Plan unless such resignation is due to
     retirement. Mr. MacPhee would only be entitled to receive the amount shown
     if his resignation for good reason also constituted his retirement, in
     which case this amount would be paid as a lump sum.

(5)  Represents the value of Mr. MacPhee's unvested restricted stock, which
     would become fully vested and exercisable if such termination is within
     three months before or six months after a change of control.

(6)  Would only include the amount indicated in footnote 3 if Mr. MacPhee's
     termination without cause was due to an economic reduction in force.

(7)  Would only include the amount indicated in footnote 4 if Mr. MacPhee's
     resignation for good reason also constituted his retirement.

     The foregoing payments are conditioned on Mr. MacPhee's execution and
     delivery of EasyLink's standard separation agreement and release in effect
     at the time of termination, and Mr. MacPhee's not revoking such agreement
     within any period of revocation under applicable law. The foregoing
     payments are further conditioned on Mr. MacPhee's continued compliance with
     any applicable obligations regarding confidentiality, intellectual property
     and non-competition contained in his employment agreement or in other
     agreements between Mr. MacPhee and EasyLink. EasyLink has the right to
     recoup any of the foregoing payments previously made in the event that Mr.
     MacPhee fails to comply with such obligations.


                                       89



SENIOR VICE PRESIDENT OF CORPORATE DEVELOPMENT-FRANK GRAZIANO



                                           TERMINATION                                                      RESIGNATION
                                              UPON                                TERMINATION  TERMINATION   FOR GOOD    RESIGNATION
                                           RESIGNATION                              WITHOUT      WITHOUT      REASON       FOR GOOD
                                             (OTHER                                CAUSE AND    CAUSE AND       AND         REASON
          EXECUTIVE                         THAN FOR    TERMINATION                 WITHOUT       WITH        WITHOUT     AND WITH
        PAYMENTS UPON         TERMINATION      GOOD         UPON     TERMINATION   CHANGE OF    CHANGE OF    CHANGE OF    CHANGE OF
         TERMINATION           WITH CAUSE    REASON)    DISABILITY    UPON DEATH    CONTROL      CONTROL      CONTROL      CONTROL
        -------------         -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
                                                                                                 
Severance Payments (1)             $0           $0           $0           $0      $104,900     $104,900     $      0     $104,900
Executive Incentive Plan (2)       $0           $0           $0           $0      $ 62,940(3)  $ 62,940(3)  $ 62,940(4)  $ 62,940(4)
Acceleration of Unvested
   Equity Awards (5)               $0           $0           $0           $0      $      0     $ 37,061     $      0     $ 37,061
                                  ---          ---          ---          ---      --------     --------     --------     --------
Total                              $0           $0           $0           $0      $167,840(6)  $204,901(6)  $167,840(7)  $204,901(7)
                                  ===          ===          ===          ===      ========     ========     ========     ========


----------
For purposes of the foregoing table, EasyLink has assumed that Mr. Graziano's
compensation is as follows: current base salary is equal to $209,800; and target
annual incentive bonus is equal to 30% of base salary.

(1)  Paid in equal installments over six months. However, in order to comply
     with the requirements of Section 409A of the Code, EasyLink has the right
     either (i) to cause all severance payments to Mr. Graziano to be paid by
     March 15 of the calendar year following the calendar year in which the
     termination date occurs (with any installments that are scheduled to be
     paid after such March 15 date being paid in a lump sum prior to such date)
     or (ii) if it is not practicable to make all of such payments prior to such
     March 15 date, to provide that none of such payments will commence prior to
     such March 15 date and the total severance amount will be paid in one lump
     sum on the date that is one day after six months after Mr. Graziano's
     termination date.

(2)  Payable in a lump sum.

(3)  Under the terms of the 2006 Executive Incentive Plan, employees terminated
     prior to the payout date are not eligible for payment of any award under
     the 2006 Executive Incentive Plan unless the termination is due to an
     economic reduction in force. Mr. Graziano would only be entitled to receive
     the amount shown if his termination without cause was due to an economic
     reduction in force, in which case this amount would be paid as a lump sum.

(4)  Under the terms of the 2006 Executive Incentive Plan, employees terminating
     prior to the payout date are not eligible for payment of any award under
     the 2006 Executive Incentive Plan unless such resignation is due to
     retirement. Mr. Graziano would only be entitled to receive the amount shown
     if his resignation for good reason also constituted his retirement, in
     which case this amount would be paid as a lump sum.

(5)  Represents the value of Mr. Graziano's unvested restricted stock, which
     would become fully vested and exercisable if such termination is within
     three months before or six months after a change of control.

(6)  Would only include the amount indicated in footnote 3 if Mr. Graziano's
     termination without cause was due to an economic reduction in force.

(7)  Would only include the amount indicated in footnote 4 if Mr. Graziano's
     resignation for good reason also constituted his retirement.

     The foregoing payments are conditioned on Mr. Graziano's execution and
     delivery of EasyLink's standard separation agreement and release in effect
     at the time of termination, and Mr. Graziano's not revoking such agreement
     within any period of revocation under applicable law. The foregoing
     payments are further conditioned on Mr. Graziano's continued compliance
     with any applicable obligations regarding confidentiality, intellectual
     property and non-competition contained in his employment agreement or in
     other agreements between Mr. Graziano and EasyLink. EasyLink has the right
     to recoup any of the foregoing payments previously made in the event that
     Mr. Graziano fails to comply with such obligations.

COMPENSATION OF DIRECTORS IN FISCAL YEAR 2006

As described more fully below, the following table sets forth a summary of the
compensation earned by EasyLink's directors for the fiscal year ended December
31, 2006, other than EasyLink's Chief Executive Officer, Mr. Murawski, who does
not receive any additional compensation for his role as director.


                                       90





NAME               FEES EARNED OR PAID IN CASH   OPTION AWARDS(1)    TOTAL
----               ---------------------------   ----------------   -------
                                                           
Robert J. Casale             $28,000                $ 8,498(2)      $36,498
Steven Duff                  $21,500                $ 3,488(3)      $24,988
Peter J. Holzer              $28,500                $ 9,919(4)      $38,419
George Knapp                 $42,500                $ 8,498(5)      $50,998
Dennis Raney                 $36,000                $ 8,498(6)      $44,498
John C. Petrillo             $31,500                $10,292(7)      $41,792
Eric Zahler                  $32,500                $ 9,919(8)      $42,419


----------
(1)  Represents the compensation expense of option awards recognized by
     EasyLink, before forfeitures, under FAS 123R for the 2006 fiscal year,
     rather than amounts paid to or realized by the named individual, and
     includes expense recognized for awards granted prior to 2006. Please refer
     to Note 15 to EasyLink's consolidated financial statements in its Form 10-K
     for the year ended December 31, 2006 for the underlying assumptions for
     this expense. There can be no assurance that options will be exercised (in
     which case no value will be realized by the individual) or that the value
     on exercise will approximate the compensation expense recognized by
     EasyLink. The grant date fair value of the options granted to each
     non-employee director during 2006 was $4,500, except for Mr. Duff, for whom
     it was $16,200 for the options granted on April 13, 2006 and $4,500 for the
     options granted on June 20, 2006.

(2)  Consists of $2,199, $1,541, $4,159 and $599, representing the compensation
     expense incurred by EasyLink in fiscal year 2006 in connection with grants
     of options to Mr. Casale to purchase 4,000, 1,000, 4,000 and 2,000 shares
     of Common Stock on May 14, 2002, June 15, 2004, June 21, 2005 and June 20,
     2006, respectively, calculated in accordance with FAS 123R. At fiscal year
     end, the aggregate number of option awards outstanding for Mr. Casale was
     11,000.

(3)  Consists of $2,889 and $599, representing the compensation expense incurred
     by EasyLink in fiscal year 2006 in connection with grants of options to Mr.
     Duff to purchase 6,000 and 2,000 shares of Common Stock on April 13, 2006
     and June 20, 2006, respectively, calculated in accordance with FAS 123R. At
     fiscal year end, the aggregate number of option awards outstanding for Mr.
     Duff was 8,000.

(4)  Consists of $5,161, $4,159 and $599, representing the compensation expense
     incurred by EasyLink in fiscal year 2006 in connection with grants of
     options to Mr. Holzer to purchase 4,000, 4,000 and 2,000 shares of Common
     Stock on February 8, 2005, June 21, 2005 and June 20, 2006, respectively,
     calculated in accordance with FAS 123R. At fiscal year end, the aggregate
     number of option awards outstanding for Mr. Holzer was 10,000.

(5)  Consists of $2,199, $1,541, $4,159 and $599, representing the compensation
     expense incurred by EasyLink in fiscal year 2006 in connection with grants
     of options to Mr. Knapp to purchase 4,000, 1,000, 4,000 and 2,000 shares of
     Common Stock on May 14, 2003, June 15, 2004, June 21, 2005 and June 20,
     2006, respectively, calculated in accordance with FAS 123R. At fiscal year
     end, the aggregate number of option awards outstanding for Mr. Knapp was
     11,000.

(6)  Consists of $2,199, $1,541, $4,159 and $599, representing the compensation
     expense incurred by EasyLink in fiscal year 2006 in connection with grants
     of options to Mr. Raney to purchase 4,000, 1,000, 4,000 and 2,000 shares of
     Common Stock on May 14, 2003, June 15, 2004, June 21, 2005 and June 20,
     2006, respectively, calculated in accordance with FAS 123R. At fiscal year
     end, the aggregate number of option awards outstanding for Mr. Raney was
     11,000.

(7)  Consists of $5,534, $4,159 and $599, representing the compensation expense
     incurred by EasyLink in fiscal year 2006 in connection with grants of
     options to Mr. Petrillo to purchase 4,000, 4,000 and 2,000 shares of Common
     Stock on January 14, 2005, June 21, 2005 and June 20, 2006, respectively,
     calculated in accordance with FAS 123R. At fiscal year end, the aggregate
     number of option awards outstanding for Mr. Petrillo was 10,000.

(8)  Consists of $5,161, $4,159 and $599, representing the compensation expense
     incurred by EasyLink in fiscal year 2006 in connection with grants of
     options to Mr. Zahler to purchase 4,000, 4,000 and 2,000 shares of Common
     Stock on February 8, 2005, June 21, 2005 and June 20, 2006, respectively,
     calculated in accordance with FAS 123R. At fiscal year end, the aggregate
     number of option awards outstanding for Mr. Zahler was 10,000.

EasyLink uses a combination of cash and stock-based incentive compensation to
attract and retain qualified candidates to serve on EasyLink's board of
directors.

     CASH COMPENSATION

     Other than reimbursing customary and reasonable expenses of attending
     meetings of EasyLink's board of directors or any of its committees, Mr.
     Murawski, EasyLink's Chairman, President and Chief Executive Officer,
     receives no additional compensation for serving as a director or as a
     member of any committee of EasyLink's board of directors. Under EasyLink's
     current arrangements, in addition to reimbursement for reasonable travel
     and other expenses in connection with attending meetings of EasyLink's
     board of directors, each non-employee director is entitled to receive cash
     compensation in accordance with the following schedule:


                                       91




                                  
BOARD OF DIRECTORS
Annual retainer                      $15,000
Meeting fee--attendance in person    $ 1,000
Meeting fee--telephonic attendance   $   500
COMMITTEES
Annual retainer                      $ 4,000
Meeting fee--attendance in person    $ 1,000
Meeting fee--telephonic attendance   $   500


EQUITY COMPENSATION

In addition to cash compensation for services as a member of EasyLink's board of
directors, each non-employee director also receives options to purchase shares
of Common Stock. These options are granted both upon joining EasyLink's board of
directors and on an annual basis in line with recommendations by the
Compensation Committee.

     Initial Grant

     Under EasyLink's previous arrangement, upon initial election or appointment
     to EasyLink's board of directors, each non-employee director received an
     option to purchase 4,000 shares of Common Stock. In 2005, the amount of
     this initial grant was increased so that, upon initial election or
     appointment to EasyLink's board of directors, each non-employee director
     was to receive an option to purchase 6,000 shares of Common Stock.
     Accordingly, each incumbent director serving at the time this increase was
     adopted by the Compensation Committee was awarded an option to purchase an
     additional 2,000 shares of Common Stock.

     Annual Grant

     On the date of each annual meeting of stockholders, each non-employee
     director re-elected to EasyLink's board of directors receives an option to
     purchase 2,000 shares of Common Stock. Each option grant has an exercise
     price equal to the closing price of Common Stock on The Nasdaq Capital
     Market on the last trading day prior to the date of grant. The option
     grants vest in an amount equal to 25% on the first anniversary of the date
     of the grant, with the remaining amount vesting in successive equal,
     quarterly installments of 8.33% over the three year period after such first
     anniversary, subject to continued service on EasyLink's board of directors
     on the vesting date. If a change of control occurs and the director does
     not continue to serve as a director of the surviving corporation or its
     parent entity, then the portion of his options that would have vested in
     that vesting year (25%) will vest immediately upon the change of control.

SPECIAL MEETING


EasyLink has no policy with regard to attendance by members of the board of
directors at special meetings of stockholders. EasyLink has invited all
directors to attend the Special Meeting.



                                       92



         PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

Grant Thornton LLP served as the independent registered public accounting firm
for EasyLink and its subsidiary corporations for the fiscal year ended December
31, 2006 and has been appointed by EasyLink's board of directors to continue as
EasyLink's independent registered public accounting firm for the year ending
December 31, 2007. Representatives of Grant Thornton LLP are expected to attend
the Special Meeting and will have an opportunity to make a statement and/or
respond to appropriate questions from EasyLink's stockholders. EasyLink is
seeking ratification of the appointment of Grant Thornton LLP as its independent
registered public accounting firm for the year ending December 31, 2007.

FEES PAID TO THE INDEPENDENT AUDITOR

The following table presents fees for professional audit services rendered by
EasyLink's principal independent registered public accounting firm, Grant
Thornton LLP, for the audit of EasyLink's annual consolidated financial
statements for the years ended December 31, 2006 and December 31, 2005, as well
as fees billed for other services rendered by Grant Thornton LLP during those
periods.



                       2006        2005
                     --------   ----------
                          
Audit Fees           $849,000   $  946,000
Audit-Related Fees   $      0   $        0
Tax Fees             $144,000   $  199,000
All Other Fees       $      0   $        0
                     --------   ----------
   TOTAL             $993,000   $1,145,000
                     ========   ==========


     AUDIT FEES

     Audit fees are those fees billed in connection with the audit and review of
     EasyLink's financial statements, including services related thereto such as
     comfort letters, statutory audits, attest services, consents and assistance
     with and review of documents filed with the SEC. The aggregate amount of
     audit fees for each of the last two fiscal years were $889,000 in 2006 and
     $1,208,000 in 2005. Audit fees of $40,000 in 2006 and $262,000 in 2005 were
     paid to KPMG LLP, who previously served as EasyLink's principal independent
     registered public accounting firm until their resignation in June 2005.

     AUDIT-RELATED FEES

     Audit-related fees are assurance and related services that are reasonably
     related to the performance of the audit of EasyLink's financial statements.
     More specifically, these services would include, among others, employee
     benefit plan audits, due diligence related to mergers and acquisitions,
     accounting consultations and audits in connection with acquisitions,
     internal control reviews, attest services that are not required by statute
     or regulation and consultation concerning financial accounting and
     reporting standards. During 2006 and 2005, neither Grant Thornton LLP nor
     KPMG LLP provided EasyLink with any assurance and related services.

     TAX FEES

     The aggregate fees billed for professional services rendered for tax
     compliance, tax advice and tax planning services for each of the last two
     fiscal years were $232,000 in 2006 and $229,000 in 2005, consisting of
     $144,000 and $199,000 in 2006 and 2005, respectively, paid to Grant
     Thornton LLP, $15,000 and $30,000 in 2006 and 2005, respectively, paid to
     KPMG LLP, and $73,000 in 2006 paid to Deloitte & Touche LLP.

     ALL OTHER FEES

     No other fees were billed for professional services rendered by Grant
     Thornton LLP or KPMG LLP during the last two fiscal years, except as
     described below.


                                       93



     Prior to the appointment of Grant Thornton LLP, Grant Thornton
     International member firms performed bookkeeping and payroll services for
     EasyLink's entities in France, Germany and Korea. These member firms are
     considered affiliates of Grant Thornton LLP. Grant Thornton LLP provided no
     audit, audit-related or non-audit services to EasyLink or any of its
     subsidiaries or other affiliates prior to its appointment. The fees paid to
     these member firms for these services were de minimis. EasyLink terminated
     the services of the Grant Thornton International member firms effective
     July 26, 2005. Prior to the appointment of Grant Thornton LLP as its
     independent registered public accounting firm, EasyLink consulted with the
     staff of the SEC's Office of the Chief Accountant concerning these services
     and the auditor selection process. After such consultation, the Audit
     Committee and EasyLink's management have concluded that Grant Thornton
     LLP's independence is not impaired by the involvement of its affiliates
     with these services.

     Consistent with the policies of the SEC regarding auditor independence, the
     Audit Committee has responsibility, pursuant to its written charter, for
     appointing, setting compensation and overseeing the work of EasyLink's
     independent registered public accounting firm. In recognition of this
     responsibility, the Audit Committee has established a policy to pre-approve
     all audit and permissible non-audit services provided by EasyLink's
     independent registered public accounting firm; provided, however, that de
     minimis non-audit services may instead be approved in accordance with
     applicable SEC rules. The Audit Committee has not adopted further
     procedures and policies relating to the pre-approval of audit and non-audit
     services. All of the fees described above for tax-related services were in
     connection with engagements approved by the Audit Committee.

CHANGE IN PRINCIPAL ACCOUNTANT DURING 2005

KPMG LLP was previously EasyLink's principal independent registered public
accounting firm. On June 8, 2005, that firm resigned. EasyLink's Audit Committee
selected Grant Thornton LLP as its new principal independent registered public
accounting firm to replace KPMG LLP.

During EasyLink's fiscal years ended December 31, 2004 and December 31, 2003 and
the subsequent interim period through June 8, 2005, (i) there were no
disagreements with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedures, which
disagreements if not resolved to KPMG LLP's satisfaction would have caused it to
make reference to the subject matter of the disagreement in connection with its
report, and (ii) there were no "reportable events" as described in Item
304(a)(1)(v) of Regulation S-K promulgated by the SEC.

The audit reports of KPMG LLP on the consolidated financial statements of
EasyLink and its subsidiaries as of and for the years ended December 31, 2004
and 2003 did not contain any adverse opinion or disclaimer of opinion, nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles, except that KPMG LLP's report on the consolidated financial
statements of EasyLink and its subsidiaries as of and for the years ended
December 31, 2004 and 2003 contained a separate paragraph stating that EasyLink
"has a working capital deficiency and an accumulated deficit that raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1(b). The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty."

The foregoing disclosures were previously reported in Item 4.01 of EasyLink's
Current Report on Form 8-K filed with the SEC on June 14, 2005. EasyLink
provided KPMG LLP with a copy of the foregoing disclosures and requested that
KPMG LLP furnish EasyLink with a letter addressed to the SEC stating that it
agreed with such statements. A copy of such letter, dated June 14, 2005, was
filed as Exhibit 99.1 to such Form 8-K.

On August 2, 2005, EasyLink engaged Grant Thornton LLP as EasyLink's independent
registered public accounting firm for the year ended December 31, 2005. The
decision to engage Grant Thornton LLP was made by EasyLink's Audit Committee.
For the two fiscal years and subsequent interim period prior to such
appointment, EasyLink had not (and no one on its behalf had) consulted with
Grant Thornton LLP on the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on


                                       94



EasyLink's financial statements, or any matter that was either the subject of a
disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K promulgated by
the SEC or reportable event as described in Item 304(a)(1)(v) of Regulation S-K
promulgated by the SEC.

               SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
                          AND CERTAIN BENEFICIAL OWNERS


The following table sets forth as of ___________, 2007 certain information
regarding the beneficial ownership of Common Stock by: (i) each stockholder
known by EasyLink to own beneficially more than 5% of Common Stock; (ii) each of
EasyLink's directors and executive officers, and (iii) EasyLink's directors and
executive officers as a group. Except as otherwise indicated, to the knowledge
of EasyLink, the beneficial owners of Common Stock listed below have sole
investment and voting power with respect to such shares.





                                            SHARES BENEFICIALLY
                                                 OWNED(1)
                                          ----------------------
NAME AND ADDRESS(2) OF BENEFICIAL OWNER     NUMBER    PERCENT(3)
---------------------------------------   ---------   ----------
                                                
The Clark Estates, Inc.
One Rockefeller Center, 31st Floor
New York, New York 10020(4)

Lawrence Auriana
140 East 45th Street, 43rd Floor
New York, New York 10017

Thomas Murawski(5)
Gary MacPhee(6)
Frank Graziano(7)
Michael Doyle(8)
Richard Gooding(9)
Peter J. Holzer
Eric J. Zahler
John C. Petrillo
Dennis Raney
George Knapp
Robert J. Casale
Stephen Duff(10)

All current directors and executive
   officers as a group (12 persons)(11)




----------
(1)  Based on information supplied by EasyLink's officers, directors and
     principal stockholders and on any Schedules 13D or 13G filed with the SEC.
     Beneficial ownership is determined in accordance with rules of the SEC and
     includes generally voting power and/or investment power with respect to
     securities. Shares of Common Stock subject to options or warrants currently
     exercisable or exercisable within 60 days of ______, 2007 are deemed to
     be outstanding for computing the percentage ownership of the person holding
     such securities, but not for computing the percentage ownership of any
     other person. Except as indicated by footnote, and subject to community
     property laws where applicable, EasyLink believes that the persons named in
     this table, based on information provided by such persons, have sole voting
     and investment power with respect to the shares of stock shown as
     beneficially owned by them.


(2)  Unless otherwise indicated, the address for each director and current
     executive officer is c/o EasyLink Services Corporation, 33 Knightsbridge
     Road, Piscataway, New Jersey 08854.


(3)  Based on ________ shares outstanding on ______, 2007. An asterisk (*)
     indicates less than 1%.


(4)  Consists of shares held by Federal Partners, L.P. The Clark Estates, Inc.
     provides management and administrative services to Federal Partners, L.P.
     and has sole power to vote or to direct the vote and to dispose of or
     direct the disposition of all of the shares owned by Federal Partners, L.P.

(5)  Includes 8,143 shares held by EasyLink's 401(k) plan for Mr. Murawski's
     account pursuant to the employer matching contribution feature of the plan.


(6)  Includes _____ shares held by EasyLink's 401(k) plan for Mr. MacPhee's
     account pursuant to the employer matching contribution feature of the plan.
     Mr. MacPhee currently has the power to divest only 1/3 of these shares
     while they are held by EasyLink's 401(k) plan.



                                       95





(7)  Includes _____ shares held by EasyLink's 401(k) plan for Mr. Graziano's
     account pursuant to the employer matching contribution feature of the plan.
     Mr. Graziano currently has the power to divest only 1/3 of these shares
     while they are held by EasyLink's 401(k) plan.



(8)  Includes _____ shares held by EasyLink's 401(k) plan for Mr. Doyle's
     account pursuant to the employer matching contribution feature of the plan.
     Mr. Doyle currently has the power to divest only 1/3 of these shares while
     they are held by EasyLink's 401(k) plan.



(9)  Includes _____ shares held by EasyLink's 401(k) plan for Mr. Gooding's
     account pursuant to the employer matching contribution feature of the plan.
     Also includes 140 shares held by Mr. Gooding's wife. Mr. Gooding disclaims
     beneficial ownership of the shares held by his wife.


(10) Does not include shares owned by The Clark Estates, Inc. (see footnote 3),
     of which Mr. Duff is Chief Investment Officer, or shares owned by Federal
     Partners, L.P., of which Mr. Duff is both a limited partner and the
     Treasurer of the general partner. Mr. Duff disclaims beneficial ownership
     of any shares held by The Clark Estates, Inc. or by Federal Partners, L.P.,
     other than 3,055 shares over which Mr. Duff has beneficial ownership
     through his limited partnership interest in Federal Partners, L.P.


(11) Includes information contained in the footnotes above, as applicable. None
     of these individuals has pledged shares of EasyLink's Class A common stock
     as security.



As of July 10, 2007, ICC does not beneficially own any shares of Common Stock.
To the knowledge of ICC, as of July 10, 2007, none of its executive officers or
directors, or their respective associates, beneficially owns any shares of
Common Stock.


                     MARKET PRICES AND DIVIDEND INFORMATION


The Common Stock is currently listed on The Nasdaq Capital Market under the
symbol "EASY". Prior to February 21, 2006, the Common Stock was listed on The
Nasdaq National Market (now The Nasdaq Global Market). The table below sets
forth by quarter, since the beginning of EasyLink's fiscal year ended December
31, 2005, the high and low sale prices of the Common Stock on The Nasdaq Capital
Market and The Nasdaq National Market (now The Nasdaq Global Market), as
applicable.





                                             MARKET PRICES
                                             -------------
                                              HIGH    LOW
                                             -----   -----
                                               
2005
First Quarter                                $7.10   $5.00
Second Quarter                               $5.80   $4.60
Third Quarter                                $5.00   $3.40
Fourth Quarter                               $4.80   $3.30

2006
First Quarter                                $4.75   $3.30
Second Quarter                               $4.05   $3.00
Third Quarter                                $5.35   $4.41
Fourth Quarter                               $4.21   $2.52

2007
First Quarter                                $5.35   $3.02
Second Quarter (through June 28, 2007)       $5.75   $5.08




The closing sale price of the Common Stock on May 3, 2007, the last trading day
prior to the announcement of the execution of the Merger Agreement, was $5.24
per share. On _____, 2007, the most recent practicable date before this proxy
statement was printed, the closing price for the Common Stock was $_____ per
share. You are encouraged to obtain current market quotations for the Common
Stock in connection with voting your shares.


EasyLink has never declared or paid cash dividends on the Common Stock and does
not anticipate paying cash dividends on the Common Stock in the foreseeable
future. In addition, EasyLink's credit agreement prohibits it from paying cash
dividends without the lender's prior consent, and the Merger Agreement provides
that EasyLink may not pay any dividends on the Common Stock without thpe consent
of ICC.

                              STOCKHOLDER PROPOSALS


                                       96



A 2008 annual meeting of stockholders will be held only if the merger is not
completed. Rule 14a-8 under the Exchange Act requires that EasyLink include
certain stockholder proposals in its proxy statement for an annual stockholders'
meeting if the proposal is submitted prior to the deadline calculated under the
rule. Under EasyLink's bylaws, stockholder proposals with respect to the 2008
annual meeting of stockholders, including nominations for directors, that have
not been previously approved by EasyLink's board of directors must be submitted
to EasyLink's Corporate Secretary not later than March 24, 2008 and not earlier
than February 28, 2008. Any such proposals must be in writing and sent either by
personal delivery, nationally-recognized express mail or United States mail,
postage prepaid, to EasyLink Services Corporation, 33 Knightsbridge Road,
Piscataway, New Jersey 08854, (888) 825-6385, Attention: Corporate Secretary.
Each nomination or proposal must include the information required by the bylaws.
All late or non-conforming nominations and proposals will be rejected.



Stockholder proposals for the 2008 annual meeting of stockholders, if held, must
be submitted to EasyLink by March 24, 2008 to receive consideration for
inclusion in EasyLink's proxy statement relating to the 2008 annual meeting of
stockholders. Any such proposal must also comply with SEC proxy rules, including
Rule 14a-8 under the Exchange Act.



In addition, stockholders are notified that the deadline for providing EasyLink
timely notice of any stockholder proposal submitted outside of the Rule 14a-8
process for consideration at EasyLink's 2008 annual meeting of stockholders is
March 24, 2008. As to all such matters that EasyLink does not have notice on or
prior to March 24, 2008, discretionary authority shall be granted to the persons
designated in EasyLink's proxy related to the 2008 annual meeting of
stockholders to vote on such proposal.


                                  HOUSEHOLDING


In order to reduce printing costs and postage fees, EasyLink has adopted the
process called "householding" for sending its proxy statement to "street name
holders", which refers to stockholders whose shares are held in a stock
brokerage account or by a bank or other nominee. This means that street name
holders who share the same last name and address will receive only one copy of
EasyLink's proxy statements unless EasyLink receives contrary instructions from
a street name holder at that address. EasyLink will continue to send a proxy
card to each stockholder of record.


If you prefer to receive multiple copies of EasyLink's proxy statements at the
same address, you may obtain additional copies by writing to EasyLink Services
Corporation, Investor Relations, 33 Knightsbridge Road, Piscataway, New Jersey
08854 or by calling (800) 828-7115, in which case EasyLink will deliver promptly
upon such request separate copies thereof. You may also obtain separate copies
in the future by directing a notification to EasyLink by contacting EasyLink in
the same manner. Eligible stockholders of record receiving multiple copies of
EasyLink's proxy statements can request householding by contacting EasyLink in
the same manner.

                                  OTHER MATTERS

EasyLink is not aware of any business or matter other than as indicated above
that may be properly presented at the Special Meeting. If, however, any other
matter properly comes before the Special Meeting, the persons named as proxies
in the accompanying proxy will, in their discretion, vote thereon in accordance
with their best judgment.

                       WHERE YOU CAN FIND MORE INFORMATION

EasyLink files annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document that EasyLink files
with the SEC at the SEC's Public Reference Room located at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549. You may obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. EasyLink's
SEC filings are also available to the public at the SEC's Internet website,
which is located at www.sec.gov.


                                       97



The information contained in this proxy statement speaks only as of the date
indicated on the cover of this proxy statement unless the information
specifically indicates that another date applies.

The SEC allows EasyLink to "incorporate by reference" information into this
proxy statement. This means that EasyLink can disclose important information to
you by referring to another document filed separately with the SEC. The
information incorporated by reference is considered to be part of this proxy
statement, and later information that EasyLink files with the SEC may update and
supersede the information contained in and incorporated by reference into this
proxy statement. All documents filed by EasyLink pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act (other than Current Reports on Form 8-K
furnished pursuant to Items 2.02 and 7.01 thereto) with the SEC from the date of
this proxy statement through the date of the Special Meeting (or, if earlier,
the date on which the Merger Agreement is terminated) are also deemed to be
incorporated by reference into this proxy statement and deemed a part of this
proxy statement from the date that document is filed. EasyLink also incorporates
by reference into this proxy statement the following documents (which are also
being delivered to each EasyLink stockholder along with this proxy statement)
filed by it with the SEC under the Exchange Act:

     -    EasyLink's Annual Report on Form 10-K for the year ended December 31,
          2006 filed on March 27, 2007, as amended by Form 10-K/A filed on April
          30, 2007;

     -    EasyLink's Quarterly Report on Form 10-Q for the quarter ended March
          31, 2007 filed on May 14, 2007; and


     -    EasyLink's Current Reports on Form 8-K filed on January 22, 2007,
          February 16, 2007, May 4, 2007, May 22, 2007 and June 19, 2007.


Statements contained in this proxy statement, or in any document incorporated by
reference in this proxy statement regarding the contents of any contract or
other document, are not necessarily complete, and each such statement is
qualified in its entirety by reference to that contract or other document filed
as an exhibit with the SEC.

EasyLink's website is www.easylink.com. The information on EasyLink's website is
not, and should not be, considered part of this proxy statement and is not
incorporated by reference in this document. This website is, and is only
intended to be, an inactive textual reference. EasyLink makes available, free of
charge, on its website, its annual and quarterly reports on Forms 10-K and 10-Q,
respectively, including all amendments thereto, if any. In addition, EasyLink
will provide to any person, including any beneficial owner, to whom this proxy
statement is delivered, upon written or oral request, additional paper or
electronic copies of such reports as filed with the SEC (including the reports
described in the bullet points above), without charge except for exhibits to the
report, by first class mail or other equally prompt means within one business
day of receipt of such request. Requests should be directed to:

                          EASYLINK SERVICES CORPORATION
                              33 Knightsbridge Road
                          Piscataway, New Jersey 08854
                          Attention: Investor Relations
                                 (800) 828-7115

Document requests from EasyLink should be made by _____, 2007 in order to
receive them before the Special Meeting.

The delivery of this proxy statement should not create an implication that there
has been no change in the affairs of EasyLink since the date of this proxy
statement or that the information in the Merger Agreement is correct as of any
later date.


Stockholders should not rely on information other than that contained or
incorporated by reference in this proxy statement. EasyLink has not authorized
anyone to provide information that is different from that contained in this
proxy statement. This proxy statement is dated _____, 2007. No assumption should
be made that the information contained in this proxy statement is accurate as of
any date other than that date, and the sending of this proxy statement will not
create any implication to the contrary.



                                       98



If you have questions about the Special Meeting or the merger after reading this
proxy, or if you would like additional copies of this proxy statement or the
proxy card, you should contact:

                          EASYLINK SERVICES CORPORATION
                              33 Knightsbridge Road
                          Piscataway, New Jersey 08854
                          Attention: Investor Relations
                                 (800) 828-7115

                                        By Order of the Board of Directors


                                        ----------------------------------------
                                        Thomas F. Murawski
                                        Chairman, President and Chief Executive
                                        Officer

_________, 2007
Piscataway, New Jersey


                                       99



                                     ANNEX A

                          AGREEMENT AND PLAN OF MERGER

================================================================================

                          AGREEMENT AND PLAN OF MERGER

                                      among

                         INTERNET COMMERCE CORPORATION,

                           JETS ACQUISITION SUB, INC.

                                       and

                          EASYLINK SERVICES CORPORATION

                             Dated as of May 3, 2007

================================================================================






                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
Article I. THE MERGER....................................................     1
   Section 1.01 The Merger...............................................     1
   Section 1.02 Closing..................................................     1
   Section 1.03 Effective Time...........................................     1
   Section 1.04 Effects of the Merger....................................     2
   Section 1.05 Certificate of Incorporation and By-Laws.................     2
   Section 1.06 Directors................................................     2
   Section 1.07 Officers.................................................     2

Article II. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
   CORPORATIONS; EXCHANGE OF CERTIFICATES................................     2
   Section 2.01 Effect on Capital Stock..................................     2
   Section 2.02 Exchange of Certificates.................................     3
   Section 2.03 Taking of Necessary Action; Further Action...............     4

Article III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............     5
   Section 3.01 Organization.............................................     5
   Section 3.02 Stock and Options........................................     5
   Section 3.03 Authority................................................     6
   Section 3.04 Consents and Approvals; No Violations....................     7
   Section 3.05 SEC Reports and Financial Statements.....................     7
   Section 3.06 Absence of Certain Changes or Events.....................     9
   Section 3.07 Information Supplied.....................................    10
   Section 3.08 Benefit Plans............................................    11
   Section 3.09 Litigation...............................................    13
   Section 3.10 Compliance with Applicable Law...........................    13
   Section 3.11 Tax Matters..............................................    14
   Section 3.12 State Takeover Statutes..................................    15
   Section 3.13 Brokers; Fees and Expenses...............................    15
   Section 3.14 Opinion of Financial Advisor.............................    15
   Section 3.15 Intellectual Property....................................    15
   Section 3.16 Labor Relations and Employment...........................    17
   Section 3.17 Change of Control........................................    18
   Section 3.18 Environmental Matters....................................    18
   Section 3.19 Material Contracts.......................................    19








                                                                         
   Section 3.20 Property.................................................    21
   Section 3.21 Title to Properties......................................    21
   Section 3.22 Insurance................................................    21
   Section 3.23 Customers and Suppliers..................................    22
   Section 3.24 No Other Representations and Warranties..................    22

Article IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.............    22
   Section 4.01 Organization.............................................    22
   Section 4.02 Authority................................................    22
   Section 4.03 Consents and Approvals; No Violations....................    23
   Section 4.04 Information Supplied.....................................    23
   Section 4.05 Interim Operations of Sub................................    23
   Section 4.06 Funds and Commitment.....................................    23
   Section 4.07 Brokers..................................................    23

Article V. COVENANTS.....................................................    24
   Section 5.01 Conduct of Business of the Company.......................    24
   Section 5.02 No Solicitation..........................................    26
   Section 5.03 Other Actions............................................    27
   Section 5.04 Notice of Certain Events.................................    27

Article VI. ADDITIONAL AGREEMENTS........................................    28
   Section 6.01 Stockholder Approvals; Preparation of Proxy Statements...    28
   Section 6.02 Access to Information....................................    29
   Section 6.03 Reasonable Efforts.......................................    29
   Section 6.04 Options and Restricted Shares............................    30
   Section 6.05 SEC Filings..............................................    32
   Section 6.06 Indemnification; Insurance...............................    32
   Section 6.07 Employees................................................    32
   Section 6.08 Transfer Taxes...........................................    33

Article VII. CONDITIONS..................................................    33
   Section 7.01 Conditions to Each Party's Obligation to Effect the
      Merger.............................................................    33
   Section 7.02 Conditions to Obligation of Parent and Sub...............    34
   Section 7.03 Conditions to Obligation of the Company..................    35
   Section 7.04 Frustration of Closing Conditions........................    35

Article VIII. TERMINATION, AMENDMENT AND WAIVER..........................    35
   Section 8.01 Termination..............................................    35
   Section 8.02 Effect of Termination....................................    36
   Section 8.03 Amendment................................................    37



                                       ii




                                                                         
   Section 8.04 Extension; Waiver........................................    37

Article IX. MISCELLANEOUS................................................    38
   Section 9.01 Nonsurvival of Representations and Warranties............    38
   Section 9.02 Assumption of Obligations................................    38
   Section 9.03 Notices..................................................    38
   Section 9.04 Interpretation...........................................    39
   Section 9.05 Counterparts.............................................    39
   Section 9.06 Entire Agreement; Third Party Beneficiaries..............    39
   Section 9.07 Governing Law............................................    39
   Section 9.08 Publicity................................................    40
   Section 9.09 Assignment...............................................    40
   Section 9.10 Enforcement..............................................    40
   Section 9.11 Fees and Expenses........................................    40



                                      iii


     THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of May 3,
2007, is among Internet Commerce Corporation, a Delaware corporation ("Parent"),
Jets Acquisition Sub, Inc., a Delaware corporation and a wholly-owned subsidiary
of Parent ("Sub"), and EasyLink Services Corporation, a Delaware corporation
(the "Company"). "Parties" means Parent, Sub and the Company, and each shall be
considered a "Party."

     WHEREAS, the respective boards of directors of Parent, Sub and the Company
deem it advisable and in the best interests of each corporation and its
respective stockholders to consummate the acquisition of the Company by Parent
on the terms and subject to the conditions set forth in this Agreement;

     WHEREAS, the respective boards of directors of Parent, Sub and the Company
have each approved the merger of Sub into the Company, upon the terms and
subject to the conditions set forth in this Agreement (the "Merger"), whereby
each issued and outstanding share of Class A common stock, par value $0.01 per
share, of the Company (the "Company Common Stock"), other than shares of Company
Common Stock owned directly or indirectly by Parent or the Company and
Dissenting Shares (as defined in Section 2.01(d)), will be converted into the
right to receive the Merger Consideration (as defined in Section 2.01(c));

     WHEREAS, the board of directors of the Company (the "Company Board"), has
recommended that each holder of Company Common Stock (the "Company
Stockholders") approve the Merger and this Agreement; and

     WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various terms and conditions to the Merger;

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Sub and the Company hereby agree as follows:

                                   Article I.

                                   THE MERGER

          Section 1.01 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Delaware General
Corporation Law, as amended (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.03). Following the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Sub in accordance with the DGCL.

          Section 1.02 Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. (New York City time) on a date to be specified by the
Parties, which shall be no later than the second Business Day after satisfaction
or waiver of the conditions set forth in Article VII (the "Closing Date"), at
the offices of Pillsbury Winthrop Shaw Pittman LLP, 1540 Broadway, New York, New
York, unless another Closing Date, time or place is agreed to in writing by the
Parties. For purposes of this Agreement "Business Day" means any day other than
Saturday, Sunday, and any day which is a legal holiday or a day on which banking
institutions in New York or New Jersey are authorized or required by Law (as
defined in Section 2.02(d)) or other action of a Governmental Entity (as defined
in Section 3.04) to close.

          Section 1.03 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the Parties
shall file with the Secretary of State of the State of Delaware a certificate of
merger or other appropriate documents as provided in Section 251 of the DGCL (in
any such case, the "Certificate of Merger") executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL to effectuate the Merger. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such other time as Sub and
the Company shall agree should be specified in the Certificate of Merger (the
time the Merger becomes effective being hereinafter referred to as the
"Effective Time").






          Section 1.04 Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL.

          Section 1.05 Certificate of Incorporation and By-Laws. (a) The
certificate of incorporation of the Company shall be amended in the Merger to be
the same as the certificate of incorporation of Sub, as in effect immediately
prior to the Effective Time, except that the corporate name of the Company shall
remain the corporate name of the Surviving Corporation, until thereafter changed
or amended as provided therein or by applicable Legal Requirements (as defined
in Section 3.02(c)).

               (b) The by-laws of Sub as in effect immediately prior to the
Effective Time shall become the by-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable Legal
Requirements.

          Section 1.06 Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed or qualified, or until their earlier death,
resignation or removal in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation.

          Section 1.07 Officers. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected or appointed or qualified, or until their earlier death,
resignation or removal in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation.

                                   Article II.

                EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
               CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

          Section 2.01 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Sub, the
Company or the holder of any shares of Company Common Stock or any shares of
capital stock of Sub:

               (a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.

               (b) Cancellation of Treasury Stock and Parent Owned Stock. Each
share of Company Common Stock that is owned by the Company or any Company
Subsidiary (as defined in Section 3.01(b)) and each share of Company Common
Stock that is owned by Parent, Sub or any other subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.

               (c) Conversion of Company Common Stock. Each share of Company
Common Stock issued and outstanding as of the Effective Time (other than shares
of Company Common Stock to be canceled in accordance with Section 2.01(b) and
any Dissenting Shares (as hereinafter defined)) shall be converted into the
right to receive from the Surviving Corporation $5.80 in cash, without interest
(the "Merger Consideration") upon delivery of the certificate representing such
shares of Company Common Stock or such other appropriate documents (in the case
of Uncertificated Shares, as defined below) in the manner provided in Section
2.02(b) (or in the case of a lost, stolen or destroyed certificate, upon
delivery of an affidavit (and bond, if required) in the manner provided in
Section 2.02(f)). As of the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and (x) each holder of a certificate
representing any such Company Common Stock (a "Certificate") and (y) each holder
of Company Common Stock not represented by a Certificate (an "Uncertificated
Share"), in each case shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration, without interest.


                                      A-2



               (d) Shares of Dissenting Stockholders. Notwithstanding anything
in this Agreement to the contrary, any issued and outstanding shares of Company
Common Stock held by a Person (as defined in Section 5.02) (a "Dissenting
Stockholder") who complies with all the provisions of Section 262 of the DGCL
concerning the right of holders of Company Common Stock to dissent from the
Merger and require appraisal of their shares of Company Common Stock
("Dissenting Shares") shall not be converted as described in Section 2.01(c) but
shall become the right to receive such consideration as may be determined to be
due to such Dissenting Stockholder pursuant to Section 262 of the DGCL. If,
after the Effective Time, such Dissenting Stockholder withdraws his demand for
appraisal or fails to perfect or otherwise loses his right of appraisal, in any
case pursuant to the DGCL, his shares of Company Common Stock shall be deemed to
be converted as of the Effective Time into the right to receive the Merger
Consideration, without interest. The Company shall give Parent (i) prompt notice
of any written demands, and withdrawals of any such demands, for appraisal of
shares of Company Common Stock received by the Company and (ii) the opportunity
to participate in all negotiations and proceedings with respect to any such
demands. The Company shall not, without the prior written consent of Parent,
make any payment with respect to, or settle, offer to settle or otherwise
negotiate, any such demands.

               (e) Withholding Tax. Parent shall be entitled to deduct and
withhold from the Merger Consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock outstanding
immediately prior to the Effective Time such amounts as may be required to be
deducted and withheld with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock outstanding
immediately prior to the Effective Time in respect of which such deduction and
withholding was made.

          Section 2.02 Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall designate a federally insured bank or trust company
reasonably acceptable to the Company to act as paying agent in the Merger (the
"Paying Agent"), and, from time to time on, prior to or after the Effective
Time, Parent shall make available, or cause the Surviving Corporation to make
available, to the Paying Agent funds in amounts and at the times necessary for
the payment of the Merger Consideration upon surrender or exchange of
Certificates or Uncertificated Shares, as applicable, as part of the Merger
pursuant to Section 2.01 (it being understood that any and all interest earned
on funds made available to the Paying Agent pursuant to this Agreement shall be
turned over to Parent).

               (b) Exchange Procedure. As soon as reasonably practicable after
the Effective Time, Parent shall cause the Paying Agent to mail to each holder
of record of one or more shares of Company Common Stock, (i) a letter of
transmittal in a form mutually agreed upon by Parent and the Surviving
Corporation, which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates or Uncertificated Shares shall pass, only
upon delivery of the Certificates to the Paying Agent or in the case of
Uncertificated Shares, such other documents as may reasonably be required by the
Paying Agent and (ii) instructions for use in effecting the surrender or
exchange of the Certificates or Uncertificated Shares in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent or in the case of Uncertificated
Shares, such other documents as may reasonably be required by the Paying Agent,
Parent or the Surviving Corporation shall pay or cause to be paid to the holder
of such Certificate or Uncertificated Share in exchange therefor the amount of
cash into which the shares of Company Common Stock theretofore represented by
such Certificate or Uncertificated Share shall have been converted pursuant to
Section 2.01, and the Certificate so surrendered shall forthwith be canceled. In
the event of a transfer of ownership of shares of Company Common Stock that is
not registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered or exchanged as contemplated by this Section 2.02, each
Certificate or Uncertificated Share shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender


                                      A-3



or exchange the amount of cash, without interest, into which the shares of
Company Common Stock theretofore represented by such Certificate or
Uncertificated Share shall have been converted pursuant to Section 2.01. No
interest will be paid or will accrue on the cash payable upon the surrender or
exchange of any Certificate or Uncertificated Share.

               (c) No Further Ownership Rights in Company Common Stock. All cash
paid upon the surrender or exchange of Certificates or Uncertificated Shares in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Company Common
Stock. At the Effective Time, the stock transfer books of the Company shall be
closed, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
the Paying Agent for any reason, they shall be canceled and exchanged as
provided in this Article II.

               (d) Termination of Fund; No Liability. At any time after the
first anniversary of the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to the Surviving Corporation any
funds (including any interest received with respect thereto) which had been made
available to the Paying Agent and which have not been disbursed to holders of
Company Common Stock, and thereafter such holders shall be entitled to look to
the Surviving Corporation (subject to abandoned property, escheat or other
similar laws) only as general creditors thereof with respect to the Merger
Consideration payable with respect to the shares of Company Common Stock,
without any interest thereon. Notwithstanding the foregoing, neither the
Surviving Corporation nor the Paying Agent shall be liable to any holder of
Company Common Stock for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate has not been surrendered or Uncertificated Share exchanged prior to
the fifth anniversary of the Effective Time (or immediately prior to such
earlier date on which Merger Consideration in respect of such Company Common
Stock would otherwise escheat to or become the property of any Governmental
Entity (as defined in Section 3.04), any such shares, cash, dividends or
distributions in respect of such Company Common Stock shall, to the extent
permitted by applicable Law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any Person previously entitled
thereto. For purposes of this Agreement, "Law" means any statute, law (including
common law), treaty, order, judgment, decree, directive, code, ordinance, rule,
regulation, or similar issuance by a Governmental Entity having the effect of
law.

               (e) Investment of Fund. The Paying Agent shall invest any funds
made available to the Paying Agent, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.

               (f) Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration; provided, however; that Parent may, in its discretion and as a
condition precedent to the payment of the Merger Consideration, require such
owner of a lost, stolen or destroyed Certificates to deliver a bond in such sum
as it may reasonably direct as indemnity against any claim that may be made
against Parent, the Surviving Corporation or the Paying Agent with respect to
the Certificates alleged to have been lost, stolen or destroyed.

          Section 2.03 Taking of Necessary Action; Further Action. If, at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of Company and Sub, the officers and directors
of Company and Sub will take all such lawful and necessary action.


                                      A-4



                                  Article III.

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except as set forth in the schedules dated as of the date hereof and
delivered by the Company to Parent in connection with the execution of this
Agreement (the "Company Disclosure Schedules"), the Company represents and
warrants to Parent and Sub as set forth below. The Company Disclosure Schedules
will be arranged in sections corresponding to sections of this Agreement to be
modified by such Company Disclosure Schedules.

          Section 3.01 Organization. (a) The Company and each Company Subsidiary
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and has all requisite corporate power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing would not have a
Material Adverse Effect (as defined in Section 9.04) on the Company or such
Company Subsidiary. The Company and each Company Subsidiary is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the Merger. The Company has provided Parent
with complete copies of the certificate (or articles) of incorporation and
bylaws of the Company and the organizational documents of each Company
Subsidiary with the minutes and written consents of the boards of directors,
board committees (other than the Special Committee of the Board created in
December of 2006) and stockholders of the Company and the comparable documents
for each Company Subsidiary (the "Corporate Documents"). Except as disclosed in
Schedule 3.01(a), the Corporate Documents are true and complete in all material
respects, as in effect as of the date of this Agreement and accurately reflect
all amendments thereto.

               (b) Schedule 3.01(b) lists each subsidiary of the Company (each a
"Company Subsidiary"). All the outstanding shares of capital stock of, or other
equity interests in, each Company Subsidiary have been duly and validly issued
and are fully paid and nonassessable under applicable Legal Requirements of the
jurisdiction in which such Company Subsidiary is incorporated or organized and
are, except as set forth on Schedule 3.01(b), owned directly or indirectly by
the Company, free and clear of all mortgages, pledges, claims, liens, charges,
encumbrances, claims, restrictions, options and security interests of any kind
or nature whatsoever, including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests, except for
restrictions imposed by applicable securities laws (collectively, "Liens").

          Section 3.02 Stock and Options. (a) Capitalization. The authorized
capital stock of the Company consists of 500,000,000 shares of Company Common
Stock, 10,000,000 Shares of class B Common Stock, par value $0.01 per share, and
60,000,000 shares of undesignated preferred stock, par value $0.01 per share
(the "Preferred Shares"). As of April 30, 2007, (i) 11,006,505 shares of Company
Common Stock were issued and outstanding, (ii) no shares of class B Common Stock
or Preferred Shares were issued and outstanding, (iii) no shares of Company
Common Stock were held by the Company in its treasury and (iv) except as set
forth on Schedule 3.02, 953,437 shares of Company Common Stock were reserved for
issuance upon exercise of outstanding Options (as defined in Section 6.04).
Except as set forth above, or on Schedule 3.02, and except for shares of Company
Common Stock issued upon the exercise of Options, as of the date of this
Agreement, no shares of capital stock or other voting securities of the Company
were issued, reserved for issuance or outstanding. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which Company Stockholders may vote. Except as set forth
above, or on Schedule 3.02, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any Company
Subsidiary is a party or by which any of them is bound obligating the Company or
any Company Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of the Company or any Company Subsidiary or obligating the Company or any
Company Subsidiary to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
Except as set forth in Section 6.04(a) in respect of Options and as set forth on
Schedule 3.02, as of


                                      A-5



and following the Effective Time, the Surviving Corporation will not have any
obligations under or otherwise in respect of any options, warrants, preemptive
or other rights (including convertible or exchangeable securities) issued,
granted, awarded or otherwise agreed to by the Company before the Effective Time
for the purchase or other acquisition of Company Common Stock or other
securities of the Company, including obligations in respect of any such options,
warrants, preemptive or other rights for the payment of money or issuance of new
or successor options, warrants, preemptive or other rights to purchase or
otherwise acquiring capital stock or other securities of the Surviving
Corporation. As of the date of this Agreement, there are not any outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company.

               (b) Schedule 3.02(b) sets forth the following information with
respect to each Option outstanding as of the date of this Agreement: (i) the
name of the optionee; (ii) the number of shares of the Company Common Stock
subject to each such Option; (iii) the exercise price of such Option; (iv) the
date on which such Option was granted; (v) the vesting schedule of such Option,
and (vi) the date on which such Option expires. The Company has made available
to Parent an accurate and complete copy of each Stock Option Plan (as defined in
Section 6.04) and the forms of all stock option agreements evidencing Options.
There are no Options outstanding to purchase shares of the Company Common Stock
(or any other capital stock of the Company) other than (1) pursuant to the Stock
Option Plans and (2) as disclosed in the Company's Form 10-K for the fiscal year
ended December 31, 2006.

               (c) All outstanding shares of the Company Common Stock, all
outstanding Options, and all outstanding shares of capital stock of each Company
Subsidiary have been issued and granted in compliance with (i) all applicable
federal, state and foreign securities laws and other applicable Legal
Requirements and (ii) except as disclosed in the Company Filed SEC Documents (as
defined in Section 3.06)), all requirements set forth in applicable agreements
or instruments. For the purposes of this Agreement, "Legal Requirements" means
any federal, state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, judgment, injunction, order, rule, regulation, ruling or requirement
issued, enacted, adopted, promulgated, implemented or otherwise put into effect
by or under the authority of any Governmental Entity.

               (d) Except as set forth on Schedule 3.02(d), the Company is not a
party to or bound by any agreement with respect to the voting (including voting
trusts, proxies, "poison pill" anti-takeover plans) registration under the
Securities Act, or sale or transfer (including agreements related to pre-emptive
rights, rights of first refusal, co-sale rights or "drag-along" rights but
excluding restrictions required by the Securities Act in connection with private
placements of securities) of any securities of the Company.

          Section 3.03 Authority. The Company has the requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of the terms of this Agreement by the holders of a
majority of the outstanding shares of Company Common Stock in accordance with
the DGCL and applicable securities laws (the "Company Stockholder Approval")).
The execution, delivery and performance of this Agreement and the consummation
by the Company of the Merger and of the other transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated in each case, other than, with respect to the Merger, the Company
Stockholder Approval. The Board of Directors of the Company, at a meeting duly
called and held at which all directors of the Company were present in accordance
with the By-laws of the Company, duly adopted resolutions (a) approving and
declaring advisable this Agreement, the Merger and the other transactions
contemplated hereby, (b) declaring that it is advisable and making a
determination that it is in the best interest of the Company and the Company's
stockholders that the Company enter into this Agreement and consummate the
Merger on the terms and subject to the conditions set forth in this Agreement,
(c) making a determination that this Agreement is fair to the Company and the
Company's stockholders, (d) directing that this Agreement be submitted to a vote
for adoption at a meeting of the Company's stockholders to be held as promptly
as practicable as set forth in Section 6.01 and (e) recommending that the
Company's stockholders adopt and approve this Agreement, the Merger and the
other transactions contemplated hereby, which


                                      A-6



resolutions have not been subsequently rescinded, modified or withdrawn in any
way. This Agreement has been duly executed and delivered by the Company and,
assuming this Agreement constitutes a valid and binding obligation of Parent and
Sub, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.

          Section 3.04 Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Exchange Act of
1934, as amended (the "Exchange Act") (including the filing with the Securities
and Exchange Commission (the "SEC") of the proxy statement relating to the
Company Stockholder Approval of this Agreement (the "Company Proxy Statement")),
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") or as may be required under any foreign anti-trust or competition law or
regulation, Section 203 of the DGCL, foreign laws and as set forth on Schedule
3.04, neither the execution, delivery or performance of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws of the Company or any Company
Subsidiary, (ii) require any filing with, or permit, authorization, consent or
approval of, any federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, domestic, foreign or supranational (a "Governmental
Entity") (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not have a Material Adverse
Effect on the Company or any Company Subsidiary, or prevent or materially delay
the consummation of the Merger), (iii) except as set forth on Schedule 3.04,
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any Company
Subsidiary is a party or by which any of them or any of their properties or
assets may be bound, or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any Company Subsidiary,
or any of their properties or assets, except in the case of clauses (iii) or
(iv) for violations, breaches or defaults that would not have a Material Adverse
Effect on the Company or prevent or materially delay the consummation of the
Merger.

          Section 3.05 SEC Reports and Financial Statements. (a) The Company has
filed with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it since December 31, 2004, pursuant to the Exchange Act
or the Securities Act of 1933, as amended (the "Securities Act") (such forms,
reports, schedules, statements and other documents, including any financial
statements or schedules included therein, are referred to as the "Company SEC
Documents"). The Company SEC Documents, at the time filed, (i) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. Except to the extent
revised or superseded by a subsequently filed Company SEC Document, the Company
SEC Documents, as of their respective dates, do not contain an untrue statement
of a material fact or omit to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that the foregoing does not cover future events
resulting from public announcement of the Merger). The financial statements of
the Company included in the Company SEC Documents comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Forms 10-Q and 8-K of the SEC) and fairly present (subject, in the
case of the unaudited statements, to normal, recurring audit adjustments) the
consolidated financial position of the Company as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.


                                      A-7



               (b) Since December 31, 2005, there have been no comment letters
or other correspondence received by the Company from the SEC (excluding letters
related to confidential treatment applications and orders of effectiveness) or
responses to such comment letters or other correspondence by or on behalf of the
Company that have not been provided to Parent, and the copies of such letters
and responses delivered or made available to Parent were true, correct and
complete. The Company maintains disclosure controls and procedures required by
Rule13a 15 or 15d 15 under the Exchange Act, and such controls and procedures
are sufficient to provide reasonable assurance that material information
relating to the Company, including Company Subsidiaries, required to be
disclosed in the reports it files or submits under the Exchange Act is
accumulated and communicated to the Company's principal executive officer and
principal financial officer to allow timely decisions regarding financial
disclosure. No Company Subsidiary is required to file with the SEC any report,
schedule, form, statement or other document. The Company currently is in
compliance with the requirements applicable to securities that are traded on the
Nasdaq Capital Market and since December 31, 2006, has not received any notice
from the Nasdaq Capital Market asserting any non compliance with such
requirements.

               (c) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Documents
(the "Company Financials"), (i) complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto then in effect at the same time as such filing,
(ii) was prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated therein or in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly
presented in all material respects the consolidated financial position of the
Company and the Company Subsidiaries that are required by GAAP to be
consolidated therein and fairly reflects its investment in any unconsolidated
Subsidiary as of the respective dates thereof and the consolidated results of
their operations and cash flows for the periods indicated, except that the
unaudited interim financial statements may not contain footnotes and were or are
subject to normal and recurring year-end adjustments. All Company Subsidiaries
that are required by GAAP to be consolidated in the Company Financials have been
so consolidated. The balance sheet of the Company contained in Company SEC
Documents as of December 31, 2006 is hereinafter referred to as the "Company
Balance Sheet." All accounts receivable of the Company that are reflected on the
financial statements in the Company SEC Documents represented valid obligations
arising from sales actually made or services actually performed by the Company
in the ordinary course of business. Unless paid prior to the Closing Date, such
accounts receivable are reasonably anticipated to be collectible net of the
allowances or reserves shown on such financial statements. Except as disclosed
in the Company Balance Sheet, neither the Company nor any Company Subsidiary has
any liabilities required under GAAP to be set forth on a balance sheet which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of the Company and the Company Subsidiaries
taken as a whole, except for liabilities incurred since the date of the Company
Balance Sheet in the ordinary course of business consistent with past practices
and liabilities incurred in connection with this Agreement. Since December 31,
2005, neither the Company nor any Company Subsidiary nor, to the Company's
knowledge, any director, officer, employee, auditor, accountant or
representative of the Company or the Company Subsidiaries has received or
otherwise had or obtained knowledge of any written complaint, allegation,
assertion or claim regarding the accounting or auditing practices, procedures,
methodologies or methods of the Company or Company Subsidiaries or their
respective internal accounting controls, including any complaint, allegation,
assertion or claim that the Company or the Company Subsidiaries has engaged in
questionable accounting or auditing practices (solely for purposes of this
sentence, "knowledge" shall be deemed to include the actual knowledge of the
Company's primary contact with the provider of the Company's Ethics and
Compliance Hotline). Since January 1, 2006, the Company's auditors have not
performed any non-audit services for the Company and the Company Subsidiaries.
Since December 31, 2005, no attorney representing the Company or any Company
Subsidiary, regardless whether employed by the Company or the Company
Subsidiaries, has reported evidence of a violation of securities laws, breach of
fiduciary duty or similar violation by the Company or any of its officers,
directors, employees or agents to the Company's Board of Directors or any
committee thereof or to any director or officer of the Company.

               (d) Neither the Company nor any Company Subsidiary is a party to,
or has any commitment to become a party to, any joint venture, partnership
agreement or any similar contract or agreement (including any Contract relating
to any transaction, arrangement or relationship between or among the Company or
any Company


                                      A-8



Subsidiary, on the one hand, and any unconsolidated Affiliate, including any
structured finance, special purpose or limited purpose Person, on the other
hand) where the purpose or intended effect of such arrangement is to avoid
disclosure of any transaction involving the Company or any Company Subsidiary in
the Company Financial Statements. For purposes of this Agreement, "Affiliate"
means any other Person directly or indirectly controlling or controlled by, or
under common control with that Person; for purposes of this definition,
"control"(including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with") as applied to any Person, means
the possession, directly or indirectly, of the power to direct or cause the
direction of management and polices of that Person, whether through the
ownership of voting securities, by contract or otherwise.

          Section 3.06 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed and publicly available prior to the date of
this Agreement (the "Company Filed SEC Documents") or on Schedule 3.06, since
December 31, 2006, the Company has conducted its business only in the ordinary
course consistent with past practice, and there has not been any Material
Adverse Change with respect to the Company. Except as disclosed in the Company
Filed SEC Documents or on Schedule 3.06, since December 31, 2006, there has not
been:

               (a) any granting by the Company or any Company Subsidiary to any
officer of the Company or any Company Subsidiary of any increase in
compensation, except in the ordinary course of business consistent with past
practice (ordinary course of business shall include in connection with
promotions);

               (b) any granting by the Company or any of it subsidiaries to any
officer thereof of any increase in severance or termination pay, except as part
of a standard employment package to any person promoted or hired;

               (c) except for employment arrangements in the ordinary course of
business consistent with past practice with employees other than any executive
officer of the Company or any Company Subsidiary, any entry by the Company or
any Company Subsidiary into any employment, severance or termination agreement
with any such employee or executive officer;

               (d) any increase in or establishment of any bonus, insurance,
deferred compensation, pension, retirement, profit-sharing, stock option
(including the granting of stock options, stock appreciation rights, performance
awards or restricted stock awards or the amendment of any existing stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan or agreement or
arrangement, except in the ordinary course of business consistent with past
practice;

               (e) any event, occurrence, development or state of circumstances
or facts which, individually or in the aggregate, has had or is reasonably
expected to have a Material Adverse Effect on the Company;

               (f) any sale, assignment, lease, or other transfer of any
material properties of the Company or any Company Subsidiary other than in the
ordinary course of business consistent with past practice;

               (g) any incurrence, assumption or guarantee by the Company or any
Company Subsidiary of any indebtedness for borrowed money other than in the
ordinary course of business consistent with past practice;

               (h) (A) any disposition or impairment of or permitting to lapse
of any Intellectual Property that would be material and adverse to the Company
or outside the ordinary course of business, (B) disposition of or disclosure
(except as necessary in the conduct of its business) to any Person other than
representatives of Parent any trade secret or other Intellectual Property Rights
not theretofore a matter of public knowledge to any party that is not subject to
a nondisclosure or similar agreement, or (C) any change to the Company's or any
Company Subsidiary's rights to use Intellectual Property Rights licensed from a
third party, except, in the case of (A) through (C) in the aggregate, as would
not have a Material Adverse Effect on the Company and the Company Subsidiaries,
taken as a whole;


                                      A-9



               (i) any creation or other incurrence of any Lien on any asset
other than in the ordinary course of business consistent with past practice and
other than for Taxes not yet due and payable or being contested in good faith;

               (j) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the Company or any Company Subsidiary which,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect on the Company;

               (k) any change in any method of accounting or accounting practice
by the Company or revaluation of any material assets of the Company or any
Company Subsidiary except as required by GAAP;

               (l) any cancellation of debts owed to or material claims held by
the Company or any Company Subsidiary, except in the ordinary course of business
consistent with past practice;

               (m) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock;

               (n) any split, combination or reclassification of any of the
Company's capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
the Company's capital stock or other securities of the Company (other than
shares of Company Common Stock issued or issuable upon exercise of outstanding
stock options under the Stock Option Plans as defined in Section 6.04 or in
connection with the restricted stock agreements entered into prior to the date
of this Agreement and listed on Schedule 3.06(n) or in connection with matching
contributions under the Company's 401(k) plan in accordance with such 401(k)
plan as of the date of this Agreement);

               (o) any Tax election made or changed, any annual tax accounting
period changed, any method of tax accounting adopted or changed, any material
amended returns or claims for material Tax refunds filed, any closing agreement
entered into, any Tax claim, audit or assessment settled, or any right to claim
a tax refund, offset or other reduction in Tax liability surrendered, or consent
or waiver of the statutory period of limitation applicable to any material Tax
claim;

               (p) any material write-down of the value of any assets or any
material write-off as uncollectible of any accounts receivable;

               (q) any loans or advances by the Company or any Company
Subsidiary to, material guarantees by the Company or any Company Subsidiary for
the benefit of, or material investment by the Company or any Company Subsidiary
in any other Person; or

               (r) any arrangement or commitment by the Company to do any of the
action referenced above in this Section 3.06.

          Section 3.07 Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in the
Company Proxy Statement or specifically provided in writing for inclusion or
incorporation by reference in the Financing Proxy Statement, will, at the time
the Company Proxy Statement or Financing Proxy Statement (as defined in Section
6.01(e)), as applicable, is first mailed to the Company Stockholders or Parent
stockholders, as applicable, or at the time of the Company Stockholders Meeting
(as defined in Section 6.01(a)) or Parent Stockholders Meeting (as defined in
Section 6.01(d)), as applicable, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Company Proxy Statement will comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation or warranty is
made by the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub specifically for
inclusion or incorporation by reference therein.


                                      A-10



          Section 3.08 Benefit Plans. Except as set forth on Schedule 3.08, and
except to the extent that the failure of the following to be true would not
reasonably be expected to have a Material Adverse Effect: (a) Each "employee
pension benefit plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (a "Pension Plan"), each
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA) (a
"Welfare Plan") or other arrangement providing medical, vision, dental, life or
other welfare benefits, (iii) all "specified fringe benefit plans" as defined in
Section 6039D of the Code, (iv) all "nonqualified deferred compensation plans"
as defined in Sections 409A(d)(1) or 3121(v)(2)(C) of the Code, (v) all
"multiemployer plans" as defined in Sections 3(37) or 4001(a)(3) of ERISA, and
(vi) all other agreements, plans, policies or arrangements relating to
employment, stock options, compensation, phantom stock, profit-sharing, employee
stock ownership, stock appreciation rights, deferred compensation, incentive
compensation, bonuses, retainer, retirement, savings, severance, change of
control benefits, fringe benefits or any other employee benefits, or providing
any remuneration or compensation, in each case entered into, maintained or
contributed to, or required to be maintained or contributed to, by the Company
or any Company Subsidiary or for which the Company or any Company Subsidiary
could have any liability, which benefit any present or former employee, officer,
independent contractor, shareholder or director or any spouse, child or other
dependent of such individuals (each of the foregoing, a "Benefit Plan") has been
administered in all material respects in accordance with its terms and
provisions. Each Benefit Plan, as well as the Company and the Company Subsidiary
with respect to the Benefit Plan, are (i) in compliance in all material respects
with the applicable provisions of ERISA, the Code, and all other applicable
Legal Requirements and (ii) operated and funded in such a manner as to qualify,
where appropriate, under applicable Legal Requirements, for income tax
exclusions as to its participants, the generation of tax-exempt income for its
funding vehicle, and the allowance of deductions and credits with respect to
contributions thereto. Schedule 3.08 sets forth a complete list of each Benefit
Plan and identifies which Benefit Plans are maintained by the Company or its
subsidiaries in the United States, and which Benefit Plans are maintained by the
Company or its subsidiaries in a foreign jurisdiction. Schedule 3.08 also
identifies any unwritten Benefit Plan, including a description of any material
terms of such plan, both as maintained by the Company or the Company
Subsidiaries in the United States, as well as each such plan maintained by the
Company or the Company Subsidiaries in a foreign jurisdiction.

               (a) No option granted under any of the Company's Stock Option
Plans was granted with an exercise price less than the fair market value of a
share of Company Common Stock on such option's actual grant date (as determined
under the applicable Stock Option Plan).

               (b) Neither the Company nor any Commonly Controlled Entity (as
defined below) maintains or contributes to any retirement arrangement on behalf
of employees situated at a foreign office of Company or the Company
Subsidiaries. No Pension Plan is subject to Title IV of ERISA or Section 412 of
the Code, no Benefit Plan is a multiple employer plan within the meaning of
Section 413(c) of the Code, and no Benefit Plan is a multiple employer welfare
arrangement within the meaning of Section 3(40)A of ERISA. None of the Company
or any other Person that, together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each, including the
Company, a "Commonly Controlled Entity"): (i) currently has an obligation to
contribute to, or during any time during the last six years had an obligation to
contribute to, a Pension Plan subject to Title IV of ERISA or Section412 of the
Code, or (ii) has incurred any liability to the Pension Benefit Guaranty
Corporation, which liability has not been fully paid. All contributions and
other payments required to be made by the Company to any Pension Plan with
respect to any period ending before the Closing Date have been made or reserves
adequate for such contributions or other payments have been or will be set aside
therefore and have been or will be reflected in financial statements.

               (c) Neither the Company nor any Commonly Controlled Entity is
required to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or has withdrawn from any multiemployer plan where such
withdrawal has resulted or would result in any "withdrawal liability" (within
the meaning of Section 4201 of ERISA) that has not been fully paid.

               (d) Each Benefit Plan (and its related trust) that is intended to
be qualified under Section 401(a) of the Code has been determined by the United
States Internal Revenue Service to qualify under such section (and the related
trust, if any, has been determined to be exempt under Section 501(a) of the
Code) and, to the knowledge of the Company, nothing has occurred to cause the
loss of such qualified status.


                                      A-11



               (e) The Company has heretofore made available to Parent correct
and complete copies of each of the following:

                    (i) Each Benefit Plan and all amendments thereto; the trust
          instrument and/or insurance contracts, if any, forming a part of such
          Benefit Plan and all amendments thereto;

                    (ii) If applicable, the most recently filed Form 5500 and
          all schedules thereto, if any;

                    (iii) The most recent determination letter issued by the
          United States Internal Revenue Service regarding the qualified status
          of each such Benefit Plan that is a Pension Plan;

                    (iv) The most recent accountant's report for each Benefit
          Plan, if any;

                    (v) The most recent summary plan description for each
          Benefit Plan, if any; and

                    (vi) Any summary of material modifications which relates to
          any Benefit Plan.

               (f) Except as provided in Section 6.04, the consummation of the
transactions contemplated by this Agreement will not accelerate the time of
payment or vesting, or increase the amount of compensation (including amounts
due under Benefit Plans) due to any employee, officer, former employee or former
officer of the Company or Company Subsidiary. No Benefit Plan, by its terms or
in effect, could reasonably be expected to require any payment or transfer of
money, property or other consideration on account of or in connection with the
transactions contemplated by this Agreement or any subsequent termination of
employment which payment could reasonably be expected to constitute an "excess
parachute payment" within the meaning of Section 280G of the Code. No amounts
payable under any Benefit Plan will fail to be deductible for federal income tax
purposes by virtue of 162(m) of the Code.

               (g) As of the date of this Agreement, there are no actions,
suits, investigations or claims pending or, to the knowledge of the Company,
threatened with respect to any Benefit Plan, or the assets thereof (other than
routine claims for benefits), and to the knowledge of the Company, there are no
facts which could reasonably give rise to any material liability, action, suit,
investigation, or claim against any Benefit Plan, any fiduciary or plan
administrator or other Person dealing with any Benefit Plan or the assets
thereof.

               (h) To the knowledge of the Company, no Person has entered into
any nonexempt "prohibited transaction," as such term is defined in ERISA and the
Code, with respect to any Benefit Plan that could result in a material tax or
penalty being imposed pursuant to either Section 4975 of the Code or Section 406
of ERISA.

               (i) Each Benefit Plan may be amended, terminated, modified or
otherwise revised by the Company, on and after the Closing Date, without further
liability to the Company.

               (j) No Benefit Plan provides medical, health, life insurance or
other welfare-type benefits to retirees or former employees or former
independent contractors or individuals who terminate (or have terminated)
employment with any of the Company or any Commonly Controlled Entity, or the
spouses or dependents of any of the foregoing (except for limited continued
medical benefit coverage for former employees, their spouses and other
dependents as required to be provided under Section 4980B of the Code or Part 6
of Subtitle B of Title I of ERISA ("COBRA") or applicable similar Laws).

               (k) Neither the Company nor any Company Subsidiary has, since
October 3, 2004, (A) granted to any Person an interest in a nonqualified
deferred compensation plan (as defined in Section 409A(d)(1) of the Code) which
interest has been or, upon the lapse of a substantial risk of forfeiture with
respect to such interest, will be subject to the tax imposed by Sections
409A(a)(1)(B) or (b)(4)(A) of the Code, or (B) modified the terms of any
nonqualified deferred compensation plan in a manner that could reasonably be
expected to cause an interest previously granted under such plan to become
subject to the tax imposed by Sections 409A(a)(1)(B) or


                                      A-12



(b)(4) of the Code. Each Benefit Plan that is a "nonqualified deferred
compensation plan" as defined in Section 409A of the Code either has been
operated and administered in good faith compliance with Section 409A of the Code
since January 1, 2005, or is not subject to Section 409A of the Code.

               (l) The transactions contemplated hereby will not constitute a
nonexempt prohibited transaction (as described in Section 406 of ERISA and
Section 4975 of the Code).

               (m) No Benefit Plan is or is funded by a Voluntary Employees'
Beneficiary Association within the meaning of Section 501(c)(9) of the Code.

               (n) With respect to each Benefit Plan maintained by the Company
or any Commonly Controlled Entity of the Company or any Company Subsidiary for
the benefit of, or relating to, any present or former employee, consultant or
director of the Company or Company Subsidiary who performs services outside of
the United States (each, an "International Benefit Plan"): (i) each
International Benefit Plan is in compliance with the applicable provisions of
the laws and regulations regarding employee benefits, mandatory contributions
and retirement plans of each jurisdiction in which each such International
Benefit Plan is maintained, to the extent those laws are applicable to such
International Benefit Plan; (ii) each International Benefit Plan has been
administered at all times in accordance with its terms; (iii) to the knowledge
of the Company, there are no pending investigations by any governmental body
involving any International Benefit Plan, and no pending claims (except for
claims for benefits payable in the normal operation of the International Benefit
Plans), suits or proceedings against any International Benefit Plan or asserting
any rights or claims to benefits under any International Benefit Plan; and (iv)
the transactions contemplated by this Agreement will not, by themselves or in
conjunction with any other agreements, events or occurrences, create or
otherwise result in any liability, accelerated payment or any enhanced benefits
with respect to any International Benefit Plan.

          Section 3.09 Litigation. As of the date of this Agreement, except as
disclosed in Schedule 3.09, there is no suit, claim, action, proceeding or
investigation pending before any Governmental Entity against the Company or any
Company Subsidiary that could reasonably be expected to have a Material Adverse
Effect on the Company and to the Company's knowledge none of the foregoing has
been threatened. Neither the Company nor any Company Subsidiary is subject to
any outstanding order, writ, injunction or decree that could reasonably be
expected to have a Material Adverse Effect on the Company. Except where such
matter would not reasonably be expected to have a Material Adverse Effect on the
Company, there has not been since December 31, 2006 nor are there currently any
internal material investigations or inquiries being conducted by the Company or
any Company Subsidiary, the Company Board or to the knowledge of the Company,
any third Person or Governmental Entity or at the request of any of the
foregoing concerning any financial, accounting, Tax, conflict of interest,
self-dealing, breach of fiduciary duty, fraudulent or deceptive conduct or other
misfeasance or malfeasance issues.

          Section 3.10 Compliance with Applicable Law. Except as set forth on
Schedule 3.10, the Company and each Company Subsidiary hold all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities necessary for the lawful conduct of its business (the "Company
Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals that would not have a Material Adverse Effect
on the Company. Except as set forth on Schedule 3.10, the Company Permits are in
full force and effect and the Company and the Company Subsidiaries are in
compliance with the terms of the Company Permits, except where the failure to be
in full force and effect or so to comply would not have a Material Adverse
Effect on the Company or any Company Subsidiary, taken as a whole. Except as
disclosed in the Company Filed SEC Documents and except as set forth on Schedule
3.10, to the knowledge of the Company, the business of the Company and the
Company Subsidiaries is not being conducted in violation of any Legal
Requirements, except for possible violations that would not have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Merger. Except as set forth on Schedule 3.10, as of the date of this
Agreement, no investigation or review by any Governmental Entity with respect to
the Company or any Company Subsidiary is pending or, to the knowledge of the
Company, threatened, nor has any Governmental Entity indicated an intention to
conduct any such investigation or review, other than, in each case, those the
outcome of which would not be reasonably expected to have a Material Adverse
Effect on the Company or prevent or materially delay the


                                      A-13



consummation of the Merger. Except as disclosed in the Company Filed SEC
Documents, since December 31, 2004, the Company has complied in all material
respects with the applicable rules, regulations and policies of the Nasdaq
Capital Market.

          Section 3.11 Tax Matters. Except as set forth on Schedule 3.11, and
except to the extent that the failure of the following to be true would not
reasonably be expected to have a Material Adverse Effect:

               (a) The Company and each Company Subsidiary has timely filed, or
has caused to be timely filed on its behalf, all Tax Returns required to be
filed by it, and all such Tax Returns are true, complete and accurate. All Taxes
whether or not shown to be due on such Tax Returns, have been, or will be,
timely paid.

               (b) The Company Financials reflect an adequate reserve for all
Taxes payable by the Company or any Company Subsidiary for all Taxable periods
and portions thereof through the date of such financial statements, and such Tax
reserve has been established in accordance with generally accepted accounting
principles, consistently applied. No deficiency with respect to any Taxes has
been proposed, asserted or assessed against the Company, and no requests for
waivers of the time to assess any such Taxes are pending.

               (c) Except as disclosed on Schedule 3.11, none of the Tax Returns
of Company or any Company Subsidiary have ever been audited by the Internal
Revenue Service or any other Governmental Entity. No examination of any Tax
Return of the Company or any Company Subsidiary is currently in progress, and
neither the Company nor any Company Subsidiary has received written notice of
any (i) pending or proposed audit or examination or (ii) request for information
regarding Tax matters. The statutory period for examinations of the Federal
Income Tax Returns of the Company and the Company Subsidiaries consolidated in
such Returns for all years through 2002 have expired except to the extent that
the utilization of tax net operating losses in future years could subject such
closed years to examination by the United States Internal Revenue Service.

               (d) There are no Liens for material Taxes (other than liens for
current Taxes not yet due and payable) on the assets of the Company.

               (e) Neither the Company nor any Company Subsidiary (i) has been a
member of an affiliated group filing a consolidated federal Income Tax Return
(other than a group the common parent of which was the Company), (ii) has any
liability for Taxes of any Person (other than the Company or any Company
Subsidiary) under Treasury Regulations section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise or (iii) has been a party to any joint venture,
partnership or other agreement that could be treated as a partnership for Tax
purposes.

               (f) The Company and each Company Subsidiary have collected all
sales, use, goods and services or other commodity Taxes required to be collected
and remitted or will remit the same to the appropriate Tax authority within the
prescribed time periods.

               (g) The Company has not engaged in a transaction that is the same
as or substantially similar to one of the types of transactions that the
Internal Revenue Service has determined to be a tax avoidance transaction and
identified by notice, regulation, or other form of published guidance as a
listed transaction, as set forth in U.S. Treas. Reg. Section 1.6011-4(b)(2).

               (h) Neither the Company nor any Company Subsidiary has
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of stock intended or purported to be governed by Section 355 or
Section 361 of the Code.

               (i) Neither the Company nor any Company Subsidiary will be
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date as a result of any of the following:


                                      A-14



                    (i) change in method of accounting for a taxable period
          ending on or prior to the Closing Date;

                    (ii) "closing agreement" as described in Code section 7121
          (or any corresponding or similar provision of state, local or foreign
          income Tax law) executed on or prior to the Closing Date;

                    (iii) intercompany transactions or any excess loss account
          described in Treasury Regulations under Code section 1502 (or any
          corresponding or similar provision of state, local or foreign income
          Tax law);

                    (iv) installment sale or open transaction disposition made
          on or prior to the Closing Date; or

                    (v) prepaid amount received on or prior to the Closing Date
          except for implementation, development and software maintenance fees
          deferred in accordance with the Company's standard accounting
          policies.

               (j) For purposes of this Agreement:

     "Taxes" includes all forms of taxation, whenever created or imposed, and
whether of the United States or elsewhere, and whether imposed by a local,
municipal, governmental, state, foreign, Federal or other Governmental Entity,
or in connection with any agreement with respect to Taxes, including all
interest, penalties and additions imposed with respect to such amounts.

     "Tax Return" means all Federal, state, local, provincial and foreign Tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax return relating to Taxes.

          Section 3.12 State Takeover Statutes. The Company Board has approved
the Merger and this Agreement and such approval is sufficient to render
inapplicable to the Merger, this Agreement and the transactions contemplated by
this Agreement the provisions of Section 203 of the DGCL. To the knowledge of
the Company without investigation, no other state takeover statute or similar
statute or regulation applies or purports to apply to the Merger, this
Agreement, or any of the transactions contemplated by this Agreement.

          Section 3.13 Brokers; Fees and Expenses. Except as set forth in
Schedule 3.13, no broker, investment banker, financial advisor or other person,
other than America's Growth Capital and Pharus Advisors, LLC, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company and no other bonuses or
payments will be required to be made by the Company as a result of or in
connection with the consummation of the Merger. The Company has provided Parent
true and correct copies of all agreements between the Company and America's
Growth Capital and Pharus Advisors, LLC relating to any fee arrangement.

          Section 3.14 Opinion of Financial Advisor. The Company has received
the respective opinions of America's Growth Capital and Pharus Advisors, LLC to
the effect that, as of the date of this Agreement, the consideration to be
received by the holders of the outstanding shares of Company Common Stock
pursuant to the Merger is fair to such holders from a financial point of view,
and complete and correct signed copies of such opinions have been, or promptly
upon receipt thereof will be, delivered to Parent.

          Section 3.15 Intellectual Property. (a) Schedule 3.15(a) sets forth a
correct and complete list of all (i) registered trademarks, service marks and
domain names, and applications to register the foregoing, (ii) copyright
registrations, and (iii) patents and patent applications, in each case which are
currently owned by the Company and the Company Subsidiaries Each item listed on
Schedule 3.15(a) has been duly registered or applied for with the U.S. Patent
and Trademark Office or other applicable governmental authority and are, to the
knowledge of the Company, valid and subsisting. All Intellectual Property owned
by the Company and the Company Subsidiaries is owned free and clear of any Liens
except for such Liens that would not reasonably be expected to materially and


                                      A-15



adversely affect the Company's use of the affected Intellectual Property. There
is no pending or, to the knowledge of the Company, threatened opposition,
interference or cancellation proceeding before any court or registration
authority in any jurisdiction against the registrations and applications listed
in Schedule 3.15(a). All such items of Intellectual Property are (i) to the
knowledge of the Company, valid, subsisting, enforceable, in full force and
effect, and (ii) have not been or are not, as applicable, canceled, expired,
abandoned or otherwise terminated, and payment of all renewal and maintenance
fees in respect thereof, and all filings related thereto, have been duly made.

               (b) Schedule 3.15(b) sets forth a correct and complete list of
all licenses with respect to the Intellectual Property under which the Company
or any Company Subsidiary is a licensor, licensee, distributor or reseller ("IP
Licenses"). The Company and the Company Subsidiaries have complied with the
terms and conditions of the IP Licenses in all material respects. To the
knowledge of the Company, all of the IP Licenses are valid, enforceable and in
full force and effect (subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer and conveyance, moratorium, reorganization, receivership and
similar laws relating to or affecting the enforcement of the rights and remedies
of creditors generally and (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law)). Except as set
forth in Schedule 3.15(b), the transactions contemplated by this Agreement will
not result in the termination of, or otherwise require the consent, approval or
other authorization of any party to, any IP License. Except as set forth and
quantified in Schedule 3.15(b), neither the Company nor any Company Subsidiary
is a party to or bound by any license or other contract requiring the payment by
the Company or any Company Subsidiary of any royalty or license payment.

               (c) To the knowledge of the Company, (i) none of the Company or
any Company Subsidiary has infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property of any other Person or (ii) there
is no basis for such a claim by any third party, in each case except for such
infringements, misappropriations or conflicts that would not reasonably be
expected to have a Material Adverse Effect on the Company. Except as disclosed
in Schedule 3.15(c), none of the Company or any Company Subsidiary has received
in writing since January 1, 2005, any charge, complaint, claim, demand or notice
alleging any such infringement, misappropriation or other conflict that has not
been settled or otherwise fully resolved. None of the Company or any Company
Subsidiary is party to or the subject of any pending or, to the knowledge of the
Company, threatened, suit, claim, action, investigation or proceeding with
respect to any such infringement, misappropriation or conflict, that has not
been settled or otherwise fully resolved. To the knowledge of the Company, no
other Person has infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property owned by the Company or any Company Subsidiary.
None of the Company or any Company Subsidiary has brought any action, suit or
proceeding for infringement of any Intellectual Property of the Company or any
Company Subsidiary, or for breach of any license or agreement involving any of
such Intellectual Property, against any party since January 1, 2004.

               (d) Each of the Company and the Company Subsidiaries has taken
all commercially reasonable action to protect (i) the proprietary nature and
value of the Company Intellectual Property and (ii) the secrecy, confidentiality
and value of their trade secrets.

               (e) Except as disclosed in Schedule 3.15(e), to the knowledge of
the Company, none of the Software products owned by the Company or any Company
Subsidiary incorporates or is comprised of or distributed with any "open source"
or similar third party license agreement that (i) requires the distribution of
source code in connection with the distribution of such software in object code
form; (ii) materially limits the Company's and the Company Subsidiaries' freedom
to seek full compensation in connection with marketing, licensing, and
distributing such software products; or (iii) allows a customer or requires that
a customer have the right to decompile, disassemble or otherwise reverse
engineer the software.

               (f) For purposes of this Agreement:

                    (i) "Intellectual Property" means all intellectual property,
          including (A) inventions (whether patentable or unpatentable and
          whether or not reduced to practice), ideas, research and techniques,
          technical designs, discoveries and specifications, improvements,
          modifications, adaptations, and derivations thereto, and patents,
          patent applications, models, industrial designs, inventor's
          certificates, and patent disclosures, together with reissuances,
          continuations, continuations-in-part, revisions, extensions and


                                      A-16



          reexaminations thereof (the "Patents"), (B) trademarks, all service
          marks, logos, trade dress, brand names and trade names, assumed names,
          corporate names and other indications of origin (whether registered or
          unregistered), (C) copyrights (whether registered or unregistered and
          any applications for registration therefor, including any
          modifications, extensions or renewals thereof), (D) trade secrets,
          know-how and confidential business information, (F) Software, and (G)
          internet domain names.

                    (ii) "Software" means any and all (A) computer programs,
          including any and all software implementations of algorithms, models
          and methodologies, whether in source code or object code, (B)
          databases and compilations, including any and all data and collections
          of data, whether machine readable or otherwise, (C) descriptions,
          schematics, flow-charts and other work product used to design, plan,
          organize and develop any of the foregoing and (D) all documentation,
          including user manuals and training materials, relating to any of the
          foregoing.

          Section 3.16 Labor Relations and Employment. (a) To the knowledge of
the Company, the Company and Company Subsidiaries have complied in all material
respects with all applicable Legal Requirements related to the employment of
labor, including provisions thereof relating to wages, hours, equal employment
opportunity, collective bargaining, non-discrimination, and withholding and
payment of social security and other Taxes. There are no complaints, charges,
lawsuits, arbitrations or other proceedings pending, or to the Company's
knowledge, threatened by or on behalf of any present or former employee of the
Company or any Company Subsidiary alleging any claim for material damages
including breach of any express or implied contract of employment, wrongful
termination, infliction of emotional distress or violation of any federal, state
or local statutes or regulations concerning terms and conditions of employment,
including wages and hours, employee safety, termination of employment and/or
workplace discrimination and harassment. Since January 1, 2005, neither the
Company nor any Company Subsidiary has retaliated against any employee (i) who
had previously submitted to his or her supervisor or anyone else in a position
of authority with the Company or Company Subsidiary any written, or to the
knowledge of the Company, oral complaint, concern or allegation regarding any
alleged unlawful conduct by any of the Company, the Company Subsidiaries or
their employees relating to accounting, internal accounting controls or auditing
matters, or (ii) who, to the knowledge of the Company, has provided information
to, or otherwise assisted any investigation by, any law enforcement, regulatory
or other governmental authority or a member of the United States Congress.
Except as set forth on Schedule 3.16, (x) there has been no labor union
organizing or, to Company's knowledge, attempting to organize any employees of
Company or any Company Subsidiary into one or more collective bargaining units,
(y) there is no labor strike, slowdown, stoppage or lockout actually pending,
or, to the knowledge of the Company, threatened against the Company or any
Company Subsidiary and (z) neither the Company nor any Company Subsidiary is not
a party to or bound by any collective bargaining or similar agreement with any
labor organization.

               (b) Since December 31, 2005, neither the Company nor any Company
Subsidiary has effectuated (i) a "plant closing" as defined in the WARN Act,
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of the Company or any Company
Subsidiary, in each case in the United States or (ii) a "mass layoff" (as
defined in the WARN Act) affecting any site of employment or facility of the
Company or any Company Subsidiary in the United States; nor has the Company or
any Company Subsidiary engaged in layoffs or employment terminations sufficient
in number to trigger application of any similar state, or local law or
regulation similar to the WARN Act that is applicable to the Company or any
Company Subsidiary operating in the United States. To the Company's knowledge,
neither the Company's nor any Company Subsidiary's employees in the United
States has suffered an "employment loss" (as defined in the WARN Act) in the
ninety (90) days prior to the date of this Agreement.

               (c) Except as set forth on Schedule 3.16(c), the employment of
each employee of the Company and its subsidiaries is terminable at will by the
Company and/or its subsidiaries without penalty, liability or severance
obligation incurred by the Company or any Company Subsidiary, except for
statutory obligations or such severance obligations incurred in the ordinary
course of business, and each independent contractor of the Company or any
Company Subsidiary has been correctly classified as such, and the Company and
any Company


                                      A-17



Subsidiary can have no liability as a result of any employee of such entity
incorrectly being classified as an independent contractor or otherwise.

          Section 3.17 Change of Control. Except as set forth on Schedule 3.17,
the transactions contemplated by this Agreement will not require the consent
from or the giving of notice to a third party, permit a third party to terminate
or accelerate vesting, repayment or repurchase rights, or create any other
detriment under the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, contract, agreement or other instrument or obligation
to which the Company or any Company Subsidiary is a party or by which any of
them or any of their properties or assets may be bound, except where the adverse
consequences resulting from such change of control or where the failure to
obtain such consents or provide such notices would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or prevent or delay the
consummation of the Merger.

          Section 3.18 Environmental Matters. (a) Except as disclosed on
Schedule 3.18, to the knowledge of the Company, the Company is in compliance in
all material respects with all applicable Environmental Laws (as this term and
the other terms in this Section 3.18 are defined below).

               (b) Except as specifically identified on Schedule 3.18, the
Company has provided to Parent copies of all environmental investigations,
studies, audits, tests, reviews, and reports, in draft or final form relating to
the Business, which are in the possession or control of the Company or any
Company Subsidiary.

               (c) Except as set forth on Schedule 3.18, to the knowledge of the
Company, the Company and the Company Subsidiaries possess all required material
Environmental Permits; all such Environmental Permits are in full force and
effect; and the Company and the Company Subsidiaries are in compliance in all
respects with all terms and conditions thereof, except where the failure to
possess or comply with such Environmental Permits or the failure for such
Environmental Permits to be in full force and effect would not, individually or
in the aggregate, have a Material Adverse Effect on the Company.

               (d) Except as disclosed on Schedule 3.18, and for such matters
that would not, individually or in the aggregate, have a Material Adverse Effect
on the Company, to the knowledge of the Company, neither the Company nor any
Company Subsidiary has received any written notification that the Company or any
Company Subsidiary as a result of any of the current or past operations of the
Business, or any property currently or formerly owned or leased or used in
connection with the Business, is or may be adversely affected by any proceeding,
investigation, claim, lawsuit or order by any Governmental Entity or other
Person relating to (i) any Remedial Action that is or may be needed to respond
to a Release or threat of Release of Hazardous Materials or (ii) any other
alleged liability or obligation arising under any Environmental Laws;

               (e) Except as disclosed on Schedule 3.18 and except for
Environmental Permits, neither the Company nor any Company Subsidiary has
entered into any Contract with any Person, including any Governmental Entity, by
which the Company has assumed the responsibility to implement or pay for any
Remedial Action, or to reimburse costs incurred by third parties with respect to
any Remedial Action;

               (f) Except as disclosed on Schedule 3.18, to the knowledge of the
Company, there is not now and has not been at any time in the past, any
circumstance, including any Release in connection with the current or former
conduct of the Business for which the Company or any Company Subsidiary is
required or is reasonably likely to be required to implement or pay for any
Remedial Action, or to reimburse costs incurred by third parties with respect to
any Remedial Action, or other alleged liability or obligation arising under any
Environmental Law.

               (g) The Company is not aware of any facts or circumstances likely
to delay or prevent implementation of this Agreement and the Merger, or to
require any Remedial Action, pursuant to property transfer statutes or
requirements, including the New Jersey Industrial Site Recovery Act, N.J.S.A.
13:1K and N.J.A.C. 7:26B or other Environmental Laws.

               (h) For purposes hereof:


                                      A-18



                    (i) "Business" means the current and former businesses of
          the Company or its current and former subsidiaries or any predecessors
          thereto.

                    (ii) "Environmental Laws" means all applicable national,
          state, provincial or local laws, statutes, rules, regulations, or
          ordinances (including without limitation those promulgated by any
          Governmental Entity in the United States, the United Kingdom, India,
          the United Arab Emirates, France and Germany) relating to the
          protection of human health or safety, or the environment, including
          any emission, discharge, generation, distribution, use, processing,
          storage, treatment, disposal, abatement, Release, threatened Release,
          permitting, investigation, cleanup, mitigation, remediation,
          transportation, or other handling of Hazardous Materials, and other
          orders, decrees, judgments, directives or other requirements of any
          Governmental Entity relating to or imposing liability or standards of
          conduct (including disclosure or notification) concerning protection
          of human health or the environment or Hazardous Materials or any
          activity involving Hazardous Materials, including the following
          federal laws and their state counterparts (i) the Comprehensive
          Environmental Response, Compensation and Liability Act, 42 U.S.C.
          Sections 9601, et seq. ("CERCLA"); (ii) the Resource Conservation and
          Recovery Act, 42 U.S.C. Sections 6901, et seq.; (iii) the Clean Water
          Act, 33 U.S.C. Sections 1251, et seq.; (iv) the Oil Pollution Act of
          1990, 33 U.S.C. Sections 2701, et seq.; (v) the Clean Air Act, 42
          U.S.C. Sections 7401, et seq.; (vi) the Emergency Planning and
          Community Right to Know Act, 42 U.S.C. Sections 11001, et seq.; (vii)
          the Hazardous Substances Transportation Act 49 U.S.C. Sections 1801 et
          seq.; and (viii) the Toxic Substances Control Act, 15 U.S.C. Sections
          2601, et. seq.

                    (iii) "Environmental Permits" means any permit, license,
          registration, consent, order, administrative consent order,
          certificate, approval, waiver, or other authorization necessary for
          the conduct of the Business as currently conducted, and wherever it is
          currently conducted, under any applicable Environmental Law.

                    (iv) "Hazardous Materials" means any substance that (x) is
          defined, listed, identified or otherwise regulated under any
          Environmental Law (including "hazardous", "toxic" or "solid"
          substances and wastes, radioactive substances including radon gas,
          polychlorinated-biphenyls, asbestos, mold, petroleum and petroleum
          derivatives, compounds, and products) or (y) requires investigation,
          remediation, or other protective measures under applicable
          Environmental Law.

                    (v) "Release" means any releasing, spilling, pouring,
          abandoning, discarding, emitting, leaking, pumping, dumping,
          injecting, depositing, disposing, discharging, dispersing, leaching,
          migrating or other placement or movement of Hazardous Materials into
          or through the environment (including air, soil, subsurface, surface
          water, groundwater, property, indoors or outdoors).

                    (vi) "Remedial Action" means all actions required by any
          Governmental Entity pursuant to Environmental Law or otherwise taken
          as necessary to comply with Environmental Law to (x) contain,
          immobilize, mitigate, clean up, remove, treat or in any other way
          remediate any Hazardous Materials; (y) prevent the release or
          threatened release of Hazardous Materials so that they do not migrate
          or endanger or threaten to endanger public health or welfare or the
          environment; or (z) perform studies, investigations or monitoring in
          respect of any such matter.

     Anything in this Agreement to the contrary notwithstanding, this Section
3.18 is the sole representation with respect to environmental matters.

          Section 3.19 Material Contracts. (a) The Company has provided or made
available to Parent true and complete copies of the following ("Material
Contracts") to the extent still in force and effect as of the date of this
Agreement:

                    (i) all contracts, agreements, obligations, promises,
          commitments, arrangements or undertakings (whether written or oral and
          whether express or implied) that are legally binding (collectively,
          "Contracts") of the Company or any Company Subsidiary with customers
          of the Company involving


                                      A-19



          payments to the Company or any Company Subsidiary in excess of
          $100,000 during 2006 or anticipated to involve payments to the Company
          or any Company Subsidiary in excess of $100,000 in 2007;

                    (ii) all Contracts of the Company or any Company Subsidiary
          with any vendor or supplier of the Company or any Company Subsidiary
          involving payments by or to the Company or the Company Subsidiaries in
          excess of (a) $100,000 during 2006, (b) $100,000 in anticipated
          payments in 2007, or (c) $250,000 in the aggregate;

                    (iii) all Contracts of the Company or any Company Subsidiary
          that (x) contain most favored customer pricing provisions with any
          third party or (y) grants any exclusive rights, rights of first
          refusal, rights of first negotiation or similar rights to any Person
          or (z) that restrict the ability of the Company or any Affiliate to
          compete in any business or area;

                    (iv) all material Contracts of the Company or any Company
          Subsidiary with any Affiliate, director, officer of the Company, other
          than Contracts which do not vary in any material respect from the
          standard form of such contracts provided to Parent;

                    (v) all Contracts of the Company or any Company Subsidiary
          pursuant to which the Company or such Company Subsidiary is granted
          rights in Intellectual Property of any third Person, other than (x)
          end user license Contracts entered into in the ordinary course of
          business consistent with past practice, which did not involve payments
          by the Company or the Company Subsidiaries in excess of $35,000 during
          2006 or anticipated in 2007, (y) Contracts pursuant to which
          independent contractors assign Intellectual Property to the Company in
          the ordinary course of business consistent with past practice or (z)
          Contracts pursuant to which the Company or a Company Subsidiary is
          granted rights in Intellectual Property, the absence of which would
          not be material to the Company;

                    (vi) all Contracts of the Company or any Company Subsidiary
          pursuant to which the Company or such Company Subsidiary is granted
          rights in the Intellectual Property of any third Person, other than
          Contracts consisting of "shrink wrap" or similar widely available
          commercial end user licenses, for (x) the distribution or sublicense
          by Company or any Company Subsidiary to any third Person as part of a
          value-added reseller or other similar arrangement; (y) use by Company
          or any Company Subsidiary in the provision of on-line services; or (z)
          for incorporation into any Software licensed by Company or any Company
          Subsidiary to any third Person;

                    (vii) all Contracts of the Company or any Company Subsidiary
          pursuant to which the Company or such Company Subsidiary grants
          material rights in Intellectual Property to any third Person, other
          than non-exclusive end user license agreements entered into in the
          ordinary course of business consistent with past practice;

                    (viii) all joint venture, partnership or other similar
          Contracts to which the Company or any Company Subsidiary is a party;

                    (ix) all Contracts relating to the borrowing of money or
          extension of credit (collectively, "Debt Obligations") pursuant to
          which any material indebtedness of the Company or any Company
          Subsidiary is outstanding or may be incurred and all material
          guarantees of or by the Company or any Company Subsidiary of any Debt
          Obligations of any other Person, other than standard form invoices
          relating to accounts payable of the Company or any Company Subsidiary
          disclosed in the SEC Financial Statements or incurred in the ordinary
          course of business consistent with past practice since December 31,
          2006; and

                    (x) all Contracts, not otherwise described in the foregoing,
          which are material to the Business or the Company.


                                      A-20


               (b) Each Material Contract is in full force and effect (except
for those Contracts that have expired in accordance with their terms and
conditions) and constitutes a legal, valid and binding agreement of the Company
or the Company Subsidiaries, as applicable, enforceable in accordance with its
terms and conditions (subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer and conveyance, moratorium, reorganization, receivership and
similar laws relating to or affecting the enforcement of the rights and remedies
of creditors generally and (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law)), and except as
disclosed in the Company Filed SEC Documents, the Company or the Company
Subsidiaries, as applicable, have performed in all material respects all of
their obligations under, and are not in material violation or breach of or
default under, any such Material Contract. To the knowledge of the Company, the
other parties to any Material Contract have performed all of their obligations
under, and are not in material violation or breach of or default under, any such
Material Contract, and other than in the ordinary course of business consistent
with past practice, have not notified the Company of any intention to terminate
such Material Contract or to require any amendment or waiver of the terms
thereof as a condition of renewing or not terminating such Material Contract.

               (c) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not conflict with or cause a breach of any
Material Contract, or require the approval of, or consent to be received from,
any party to any Material Contract in order for such Material Contract to remain
in full force and effect after the consummation of the Merger.

               (d) Except as set forth on Schedule 3.19, no officer or director
of the Company or any Company Subsidiary, no stockholder of the Company related
to any such officer or director, and no "associate" (as defined in Rule 14a-1
under the Exchange Act) of any of them, has any interest in any material
Contract of, or other business arrangement with, the Company or any Company
Subsidiary, or in any material property (including any real property and any
material personal property, tangible or intangible), used in or pertaining to
the business of the Company or any Company Subsidiary.

          Section 3.20 Property. Schedule3.20 accurately identifies all real
property, leases and other rights in real property, structures and other
buildings of the Company as of the date of this Agreement. All properties and
assets of the Company, real and personal, material to the conduct of its
business are, except for changes in the ordinary course of business consistent
with past practice since December 31, 2006, reflected in the balance sheet, and
except as set forth on Schedule 3.20, the Company has good and marketable title
to its real and personal property reflected on the balance sheet or acquired by
it since the date of the balance sheet, free and clear of all mortgages, liens,
pledges, encumbrances, charges, agreements, claims, restrictions and defects of
title. Except as set forth on Schedule 3.20, all real property, structures and
other buildings and material equipment of the Company is currently used in the
operation of the business of the Company and the Company Subsidiaries, are
adequately maintained and are in satisfactory operating condition and repair for
the requirements of the business of the Company and the Company Subsidiaries as
presently conducted.

          Section 3.21 Title to Properties. (a) Each of the Company and the
Company Subsidiaries has marketable and legal title to, or valid leasehold
interests in, all of its material properties and assets and, other than
properties and assets in which the Company or any Company Subsidiary has a
leasehold interest, except for defects in title, easements, restrictive
covenants and similar Liens and encumbrances that would not reasonably be
expected to have a Material Adverse Effect on the Company.

               (b) Each of the Company and the Company Subsidiaries has complied
in all material respects with the terms of all real property leases to which it
is a party, and all such real property leases are in full force and effect. The
Company and the Company Subsidiaries enjoy peaceful and undisturbed possession
under all such leases.

          Section 3.22 Insurance. All material physical assets of the Company
and the Company Subsidiaries carried for value on the Company Financial
Statements are covered by fire and other insurance against such risks and in
such amounts as are reasonable for prudent owners of comparable assets, and true
and complete copies of all such insurance policies have been delivered or made
available to Parent. Neither the Company nor any Company Subsidiary is in
default with respect to any of the provisions contained in any such policies of
insurance or has failed


                                      A-21



to give any notice or pay any premium or present any claim under any such
insurance policy, except for such defaults or failures that would not reasonably
be expected to have a Material Adverse Effect on the Company.. The Company has
no knowledge of and neither the Company nor any Company Subsidiary has received
written notice that any of such insurance policies will not be renewed by the
insurer upon the scheduled expiry of the policy or will be renewed by the
insurer only on the basis that there will be a material increase in the premiums
payable in respect of the policy.

          Section 3.23 Customers and Suppliers. Neither the Company nor any
Company Subsidiary has any agreements or arrangements establishing, creating or
relating to any rebate, promotion or other allowance that involves any
obligation or liability to any customer that is material or outside the ordinary
course of business.

          Section 3.24 No Other Representations and Warranties. Except for the
representations and warranties contained in this Article III, none of the
Company, any Affiliate of the Company or any other Person makes any
representations or warranties, and the Company hereby disclaims any other
representations or warranties, whether made by the Company, any affiliate of the
Company, or any of their officers, directors, employees, agents or
representatives, with respect to the negotiation, execution and delivery of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure, in writing or orally, to Parent, Sub or any of their officers,
directors, employees, agents or representatives of any documentation or other
information.

                                  Article IV.

                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

     Parent and Sub jointly and severally represent and warrant to the Company
as follows:

          Section 4.01 Organization. Each of Parent and Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing would not be
reasonably expected to prevent or materially delay the consummation of the
Merger.

          Section 4.02 Authority. Parent and Sub have requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Parent and
Sub and no other corporate proceedings on the part of Parent and Sub are
necessary to authorize this Agreement or to consummate such transactions. No
vote of Parent stockholders is required to execute this Agreement or (except as
set forth in the next sentence with respect to the Financing (as defined in
Section 4.06(b)) enter into the transactions contemplated hereby. The Company
acknowledges (for purposes of this Section 4.02 and Section 4.03) that the
Financing will require Parent Stockholder Approval (as defined below), provided,
it being expressly understood that consummation of the Financing is not a
condition precedent to Parent's and its subsidiaries obligations hereunder, and
the failure to consummate the Financing for any reason (including, without
limitation, the failure to obtain the Parent Stockholder Approval) will not
limit Parent's and its subsidiaries liabilities hereunder for breach of the
representations and warranties in Article IV including without limitation
Section 4.06. For purposes of this Agreement, "Parent Stockholder Approval"
means the approval and adoption by the holders of a majority of the issued and
outstanding shares of Parent's common stock, par value $0.01 per share ("Parent
Common Stock"), in accordance with the DGCL and the Nasdaq Capital Market
listing requirements, of (a) the issuance of the shares of Parent Common Stock
(the "Conversion Shares") issuable upon conversion of the convertible notes
contemplated by the Commitment and (b) the amendment to Parent's certificate of
incorporation (the "Parent Charter Amendment") to increase the number of
authorized shares of Common Stock by a number of shares not less than the number
of Conversion Shares. This Agreement has been duly executed and delivered by
Parent and Sub, as the case may be, and, assuming this Agreement constitutes a
valid and binding obligation of the Company, constitutes a valid and binding
obligation of each of Parent and Sub enforceable against them in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of


                                      A-22



creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.

          Section 4.03 Consents and Approvals; No Violations. Except as
otherwise stated on Schedule4.03 and for filings, permits, authorizations,
consents and approvals as may be required under, and other applicable
requirements of, the Exchange Act, the HSR Act or as may be required under any
foreign anti-trust or competition law or regulation and the DGCL, neither the
execution, delivery or performance of this Agreement by Parent and Sub nor the
consummation by Parent and Sub of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
certificate of incorporation or by-laws of Parent and Sub, (ii) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not be reasonably expected
to prevent or materially delay the consummation of the Merger), (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, lease, contract, agreement or
other instrument or obligation to which Parent or its subsidiaries is a party or
by which any of them or any of their properties or assets may be bound or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its subsidiaries or any of their properties or
assets, except in the case of clauses (iii) and (iv) for violations, breaches or
defaults which would not, individually or in the aggregate, be reasonably
expected to prevent or materially delay the consummation of the Merger.

          Section 4.04 Information Supplied. None of the information supplied or
to be supplied by Parent or Sub in writing specifically for inclusion or
incorporation by reference in the Company Proxy Statement will, at the time the
Company Proxy Statement is first mailed to the Company Stockholders or at the
time of the Company Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.

          Section 4.05 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.

          Section 4.06 Funds and Commitment. (a) Parent or Sub has or will have
at the Effective Time funds sufficient to consummate the Merger and make the
required payments pursuant to Section 9.11(a)(1).

               (b) Without limiting Section 4.06(a), Parent has a binding
written commitment, pursuant to a securities purchase agreement dated as of May
3, 2007, by and among Parent and the each of the purchasers identified on the
signature pages thereto, a true and complete copy of which has been furnished to
the Company (the "Commitment") to obtain the financing necessary, together with
the other funds to be provided by Parent to pay all amounts required to be paid
by Parent or Sub to consummate the Merger and make the required payments
pursuant to Section 9.11(a) (collectively the "Financing"). There are no
conditions precedent or other contingencies related to the Financing other than
as set forth in the Commitment. As of the date of this Agreement, Parent does
not have knowledge or any reason to believe that any of the conditions to the
Commitment will not be satisfied or that the Financing will not be available to
Parent or Sub on a timely basis to consummate the Merger.

          Section 4.07 Brokers. Except for the use of Oppenheimer & Co. Inc. by
Parent, none of Parent, Sub, or any of their respective officers, directors or
employees has employed any broker or finder or incurred any liability for any
broker or finder in connection with the transactions contemplated herein.


                                      A-23



                                   Article V.

                                    COVENANTS

          Section 5.01 Conduct of Business of the Company. Except as
contemplated by this Agreement or as expressly agreed to in writing by Parent,
during the period from the date of this Agreement until the Effective Time, the
Company will, and cause each Company Subsidiary to, conduct its operations
according to its ordinary and usual course of business and consistent with past
practice and, subject to its obligations under Section 6.04, use its
commercially reasonable efforts to preserve intact its current business
organization, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers, licensors, licensees,
advertisers, distributors and others having business dealings with it and to
preserve goodwill. Without limiting the generality of the foregoing, and except
as (x) otherwise expressly provided in this Agreement, (y) required by Law, or
(z) set forth on Schedule 5.01, the Company will not and shall not permit any
Company Subsidiary, in each case without the consent of Parent, which shall not
be unreasonably withheld, to:

                    (i) adopt or amend in any material respect any bonus, profit
          sharing, compensation, severance, termination, stock option, stock
          purchase, stock appreciation right, pension, retirement, employment or
          other employee benefit agreement, trust, plan or other arrangement for
          the benefit or welfare of any director, officer or employee of the
          Company or any Company Subsidiary or increase in any manner the
          compensation or fringe benefits of any director, officer or employee
          of the Company or any Company Subsidiary (except, in each case, for
          normal annual increases and cost of living increases for the benefit
          of officers and employees of the Company and the Company Subsidiaries)
          or pay any benefit not required by any existing agreement or place any
          assets in any trust for the benefit of any director, officer or
          employee of the Company (in each case, except in the ordinary course
          of business consistent with past practice);

                    (ii) incur any indebtedness for borrowed money in excess of
          its current line of credit;

                    (iii) expend funds for individual capital expenditures in
          excess of $100,000 or $1,000,000 in the aggregate for any 12-month
          period commencing after the date hereof;

                    (iv) sell, lease, license, mortgage or otherwise encumber or
          subject to any lien or otherwise dispose of any of its properties or
          assets other than immaterial properties or assets (including without
          limitation Intellectual Property) (or immaterial portions of
          properties or assets), except in the ordinary course of business
          consistent with past practice;

                    (v) (x) declare, set aside or pay any dividends on, or make
          any other distributions in respect of, any of its capital stock, (y)
          split, combine or reclassify any of its capital stock or issue or
          authorize the issuance of any other securities in respect of, in lieu
          of or in substitution for shares of its capital stock or (z) purchase,
          redeem or otherwise acquire any shares of capital stock of the Company
          or any Company Subsidiary or any other securities thereof or any
          rights, warrants or options to acquire any such shares or other
          securities;

                    (vi) other than pursuant to the terms of currently
          outstanding Options listed in Schedule 3.02, issuances in connection
          with the restricted stock agreements listed in Schedule 3.06(m) or in
          connection with matching contributions under the Company's 401(k) plan
          as in effect on the date of this Agreement (and consistent with past
          practice), authorize for issuance, issue, deliver, sell, modify or
          amend (including without limitation accelerating vesting of any
          existing rights thereunder) or agree or commit to issue, sell, deliver
          (whether through the issuance or granting of options, warrants,
          commitments, subscriptions, rights to purchase or otherwise), pledge
          or otherwise encumber any shares of its capital stock, any other
          voting securities or any securities convertible into, or any rights,
          warrants or options to acquire, any such shares, voting securities or
          convertible securities or any other securities or equity equivalents
          (including without limitation stock appreciation rights);


                                      A-24



                    (vii) amend its certificate of incorporation or by-laws or
          other organizational documents;

                    (viii) not including any expenditures otherwise permitted by
          Section 5.01(iii), make or agree to make any acquisition of assets
          which is material to the Company, taken as a whole, except for (x)
          purchases of equipment or services in the ordinary course of business
          consistent with past practice or (y) pursuant to purchase orders
          entered into in the ordinary course of business consistent with past
          practice which do not call for payments in excess of $100,000
          individually;

                    (ix) settle or compromise any shareholder derivative suits
          arising out of the transactions contemplated hereby or any other
          material litigation (whether or not commenced prior to the date of
          this Agreement) or settle, pay or compromise any material claims not
          required to be paid;

                    (x) adopt a plan of complete or partial liquidation,
          dissolution, consolidation, restructuring or recapitalization of the
          Company or any Company Subsidiary or otherwise permit the corporate
          existence of the Company or any Company Subsidiary to be suspended,
          lapsed or revoked;

                    (xi) directly or indirectly, sell, lease, sell and
          leaseback, mortgage or otherwise encumber or subject to any Lien or
          otherwise dispose of any of its material properties or assets or any
          interest therein, other than (i) the sale or distribution of personal
          property (including intangibles) held for such sale or distribution to
          customers in the ordinary course of business consistent with past
          practice, (ii) pursuant to existing contracts or commitments, (iii)
          any Liens for Taxes not yet due and payable or being contested in good
          faith and (iv) such mechanics' and similar Liens, if any, as do not
          materially detract from the value of any such properties or assets;

                    (xii) (i) repurchase, prepay or incur any indebtedness
          (other than pursuant to the Company's existing line of credit
          facility) or assume, guarantee or endorse any indebtedness of another
          Person or issue or sell any debt securities or options, warrants,
          calls or other rights to acquire any debt securities of the Company or
          any Company Subsidiary, or (ii) make any loans, advances or capital
          contributions to, or investments in, any other Person, other than to
          the Company or any direct or indirect wholly-owned Company Subsidiary
          of the Company in the ordinary course of business consistent with past
          practice;

                    (xiii) enter into, modify, amend or terminate, or waive,
          release or assign any material rights under, any Contract, except for
          any new contracts or any modifications, amendments, or terminations or
          waivers, releases or assignments to existing contracts in the ordinary
          course of business consistent with past practice which would not (i)
          impair in any material respect the ability of the Company to perform
          its obligations under this Agreement or (ii) prevent or delay the
          consummation of the transactions contemplated by this Agreement;

                    (xiv) (i) except as otherwise contemplated by this Agreement
          or as required to comply with applicable Law or any contract or
          Benefit Plans existing on the date of this Agreement, waive any
          material rights of the Company under or grant or pay any material
          benefit not provided for as of the date of this Agreement under any
          contract or Benefit Plan except as specifically provided in this
          Agreement, or (ii) enter into, modify, amend or terminate any Benefit
          Plan, or (iii) adopt or enter into any collective bargaining agreement
          or other labor union contract applicable to the employees of the
          Company or any Company Subsidiary;

                    (xv) permit to be canceled or terminated, or cancel or
          terminate, any insurance policy naming it as a beneficiary or loss
          payee, unless such policy is replaced by a policy with comparable
          coverage, or otherwise fail to maintain insurance at less than current
          levels or otherwise in a manner consistent with past practices in all
          material respects;


                                      A-25



                    (xvi) except as required by GAAP, revalue any of its
          material assets or make any material changes in accounting methods,
          principles or practices;

                    (xvii) except in the ordinary course of business consistent
          with past practices, (i) disclose to any Person, other than Company
          employees and representatives of Parent, that is not subject to a
          nondisclosure agreement, any material trade secret; (ii) transfer,
          modify or terminate any agreement pursuant to which the Company has
          licensed Intellectual Property Rights from any Person except which
          would be immaterial to the business of the Company; or (iii) disclose
          any source code to any third party except in the ordinary course of
          business consistent with past practices and only if such third party
          has executed an enforceable non-disclosure and invention assignment
          agreement;

                    (xviii) (x) enter into any material strategic alliance,
          material joint development or joint marketing agreement, or (y) enter
          into any agreement pursuant to which Parent or the Surviving
          Corporation or any Parent Subsidiary, or the Company or any Company
          Subsidiary will be subject to any exclusivity, noncompetition,
          nonsolicitation, most favored nations or other similar restriction or
          requirement on their respective businesses following the Closing;

                    (xix) (x) commence any litigation, except actions commenced
          (1) in the ordinary course of business against third parties or (2)
          pursuant to or in connection with this Agreement or (y) except in the
          ordinary course of business consistent with past practices or as
          required by applicable Law, seek a judicial order or decree (except in
          each case, pursuant to or in connection with this Agreement);

                    (xx) take any action that would make any representations and
          warranty of the Company hereunder inaccurate in any material respect
          at, or as of any time prior to, the Effective Time or omit to take any
          action necessary to prevent any such representations or warranty from
          being inaccurate in any respect at any such time;

                    (xxi) make or change any material Tax election, change any
          annual tax accounting period, adopt or change any method of tax
          accounting, file any material amended Tax Returns or claims for
          material Tax refunds, enter into any closing agreement, settle any Tax
          claim, audit or assessment, or surrender any right to claim a material
          Tax refund or offset or other material reduction in Tax liability; or

                    (xxii) fail to file any material federal or state income Tax
          return or an extension thereof.

          Section 5.02 No Solicitation. (a) From the date hereof until the
Closing, the Company shall not, and shall not permit any of its officers,
directors, employees, representatives, agents or affiliates (including, without
limitation, any investment banker, attorney or accountant retained by the
Company) to: (i) solicit, initiate or encourage or take any action in
furtherance of any discussions or negotiations with, any corporation,
partnership, limited liability company, person or other entity or group (each, a
"Person"), other than Parent, concerning any offer or proposal which constitutes
or is reasonably likely to lead to any Acquisition Proposal (as defined below)
or (ii) furnish any non-public information to any Person regarding the Company
or an Acquisition Proposal; provided, however, that the Company may furnish
information with respect to the Company to any Person making such Acquisition
Proposal and participate in discussions or negotiations regarding such
Acquisition Proposal, in response to an unsolicited Acquisition Proposal
received subsequent to the date hereof, if the Company Board determines in the
good-faith exercise of its fiduciary duties that such Acquisition Proposal is
reasonably likely to result in a Superior Proposal (as defined below). Any
information furnished to any Person in connection with an Acquisition Proposal
shall be provided pursuant to a confidentiality agreement in customary form.

               (b) The Company will promptly (but any event within 24 hours
after its receipt thereof) notify Parent orally and in writing if any proposal
is made, or any information is requested by any Person with respect to any
Acquisition Proposal or which could lead to an Acquisition Proposal, and shall
provide Parent the material terms of any such Acquisition Proposal in writing.


                                      A-26



               (c) For purposes of this Agreement, "Acquisition Proposal" means
any inquiry, proposal or offer from any Person (other than Parent) relating to
any direct or indirect acquisition or purchase of any shares of any class of
equity securities of the Company constituting 50% or more of the outstanding
equity securities of the Company, any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 50% or more of any
class of equity securities of the Company, any merger, consolidation, business
combination, sale of all or substantially all of the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company, other
than the transactions contemplated by this Agreement.

               (d) For purposes of this Agreement, "Superior Proposal" means any
written proposal made by a third party to consummate a tender offer, exchange
offer, merger, consolidation or similar transaction which would result in such
third party (or its stockholders) owning, directly or indirectly, a majority of
the shares of Company Common Stock then outstanding (or of the surviving entity
in a merger) or all or substantially all of the assets of the Company and its
subsidiaries, taken as a whole, and otherwise on terms which the Company Board
determines to be more favorable to the Company's stockholders, from a financial
point of view, than the transactions contemplated by this Agreement. In reaching
such determination, the Company Board shall give consideration to all the terms
and conditions, including without limitation whether any such third party
proposal includes definitive financing, the likelihood of completion of such
proposed transactions and applicable fees payable to Parent hereunder, and the
financial, regulatory, legal and other aspects of such proposal for which
financing to the extent required, is then fully committed or reasonably
determined by the Company Board to be available.

               (e) Upon having received an Acquisition Proposal that the Company
Board concludes if consummated would be a Superior Proposal, the Company Board
shall promptly notify Parent in writing of such determination, and four (4)
Business Days following Parent's receipt of such notification may withdraw or
modify its approval or recommendation of this Agreement or the Merger, approve
or recommend the Superior Proposal or terminate this Agreement pursuant to
Section 8.01(c); provided, that during such four (4) Business Day period, at the
option of Parent, the Company shall negotiate with Parent in good-faith to make
adjustments to the terms and conditions of this Agreement as would enable the
Company to proceed with the Merger on such adjusted terms.

               (f) Nothing contained in this Section 5.02 shall prohibit the
Company from complying with Rules 14d-9 and 14e-2 promulgated under the Exchange
Act or from making any disclosure to the Company Stockholders if, in the good
faith judgment of the Company Board, failure so to disclose would be
inconsistent with its obligations under applicable Law.

          Section 5.03 Other Actions. The Company shall not take any action that
would, or that could reasonably be expected to, result in (i) any of the
representations and warranties of the Company set forth in this Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) the Merger not being consummated (subject to the
Company's right to take actions specifically permitted by Section 5.02).

          Section 5.04 Notice of Certain Events. The Company and Parent shall
promptly notify each other of:

                    (i) any notice or other communication from any Person
          alleging that the consent of such Person is or may be required in
          connection with the transactions contemplated by this Agreement;

                    (ii) any notice or other communication from any Governmental
          Entity in connection with the transactions contemplated by this
          Agreement;

                    (iii) any action, suits, claims, investigations or
          proceedings commenced or, to the actual knowledge of the executive
          officers of the notifying Party, threatened against, relating to or
          involving or otherwise affecting such party, which would reasonably be
          expected to have a Material Adverse Effect on the Company;

                    (iv) an administrative or other order or notification
          relating to any material violation or claimed material violation of
          law;


                                      A-27



                    (v) the occurrence or non-occurrence of any event the
          occurrence or non occurrence of which would cause any representation
          or warranty contained in this Agreement to be untrue or inaccurate in
          any material respect at or prior to the Closing Date; and

                    (vi) any material failure of any Party to comply with or
          satisfy any covenant, condition or agreement to be complied with or
          satisfied by it hereunder; provided, however, that the delivery of any
          notice pursuant to this Section 5.04 shall not limit or otherwise
          affect the remedies available hereunder to the Party receiving such
          notice.

                                  Article VI.

                             ADDITIONAL AGREEMENTS

          Section 6.01 Stockholder Approvals; Preparation of Proxy Statements.
(a) The Company will as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of the Company
Stockholders (the "Company Stockholders Meeting") for the purpose of obtaining
the Company Stockholder Approval. Subject to the Company's right to take actions
specifically permitted by Section 5.02, the Company shall, through the Company
Board, (i) recommend to the Company Stockholders that the Company Stockholder
Approval be given, (ii) use its reasonable best efforts to solicit from its
stockholders proxies in favor of the adoption and approval of this Agreement,
the approval of the Merger and any other approvals reasonably related thereto,
(iii) include in the Company Proxy Statement a statement to the effect that the
Board of Directors of the Company has recommended that Company's stockholders
vote in favor of and adopt and approve this Agreement and the Merger at the
Stockholders' Meeting and (iv) neither the Board of Directors of the Company nor
any committee thereof shall withdraw, amend or modify, or resolve to withdraw,
amend or modify in a manner adverse to Parent, the recommendation of the Board
of Directors of the Company that the Company's stockholders vote in favor of and
adopt and approve this Agreement and the Merger.

               (b) The Company shall, as soon as practicable following the date
of this Agreement, prepare and file a preliminary Company Proxy Statement with
the SEC and will use its reasonable efforts to respond to any comments of the
SEC or its staff and to cause the Company Proxy Statement to be mailed to the
Company Stockholders as promptly as practicable after responding to all such
comments to the satisfaction of the staff. The Company will notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Company
Proxy Statement or for additional information and will supply Parent with copies
of all correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the
Company Proxy Statement or the Merger. If at any time prior to the Company
Stockholders Meeting there shall occur any event that should be set forth in an
amendment or supplement to the Company Proxy Statement, the Company will
promptly prepare and mail to the Company Stockholders such an amendment or
supplement. The Company will not mail any Company Proxy Statement, or any
amendment or supplement thereto, to which Parent reasonably objects.

               (c) Parent agrees to cause all shares of Company Common Stock
owned by Parent or any subsidiary of Parent to be voted in favor of the Company
Stockholder Approval.

               (d) Parent will as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of Parent's
stockholders (the "Parent Stockholders Meeting") for the purpose of obtaining
the approval and adoption of the terms of the Financing by the holders of a
majority of the outstanding shares of common stock of Parent in accordance with
the DGCL and applicable securities laws (the "Parent Stockholder Approval").
Parent shall, through Parent's board of directors, recommend to Parent's
stockholders that the Parent Stockholder Approval be given.

               (e) Parent shall, as soon as practicable following the date of
this Agreement, prepare and file a preliminary Financing Proxy Statement with
the SEC with respect to the Financing (the "Financing Proxy Statement") and will
use its reasonable efforts to respond to any comments of the SEC or its staff
and to cause the


                                      A-28



Financing Proxy Statement to be mailed to Parent's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. Parent will notify the Company promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Financing Proxy Statement or for additional
information and will supply the Company with copies of all correspondence
between Parent or any of its representatives, on the one hand, and the SEC or
its staff, on the other hand, with respect to the Financing Proxy Statement or
the Merger. If at any time prior to the Parent Stockholders Meeting there shall
occur any event that should be set forth in an amendment or supplement to the
Financing Proxy Statement, Parent will promptly prepare and mail to Parent's
stockholders such an amendment or supplement. Parent will not mail any Financing
Proxy Statement, or any amendment or supplement thereto, to which the Company
reasonably objects to any disclosure related to the Company, any Company
Subsidiary or the transactions contemplated hereby.

          Section 6.02 Access to Information. From the date hereof until the
Closing, the Company shall give Parent and Sub, their counsel, financial
advisors, auditors and other authorized representatives reasonable access to the
offices, properties, books and records of the Company and the Company
Subsidiaries during normal business hours, will furnish to Parent and Sub, their
counsel, financial advisors, financial institutions, auditors and other
authorized representatives such financial and operating data and other
information as such may be reasonably requested upon reasonable notice and will
instruct the employees of the Company and the Company Subsidiaries, its counsel
and financial advisors to cooperate with Parent and Sub in their investigation
of the business of the Company and the Company Subsidiaries; provided, however,
that the Company may restrict the foregoing access to the extent that (a) in the
reasonable judgment of the Company, any law, treaty, rule or regulation of any
Governmental Entity applicable to the Company requires the Company or the
Company Subsidiaries to restrict or prohibit access to any such properties or
information, (b) disclosure of such information would breach the express
provisions of a confidentiality Contract between the Company and a third Person,
or (c) disclosure of any such information or document could result in the loss
of attorney-client privilege; provided, however, that with respect to this
clause (c), the Company and/or its counsel shall use their reasonable efforts to
enter into such joint defense agreements or other arrangements, as appropriate,
so as to avoid the loss of attorney-client privilege, and provided, further,
that any information provided to Parent and/or Sub pursuant to this Section 6.02
shall be subject to the confidentiality agreement, dated as of February 12,
2007, (the "Confidentiality Agreement"), the terms of which shall continue to
apply, except as otherwise agreed by the Company notwithstanding termination of
this Agreement. In the event of any conflict between the terms of this Section
6.02 and the terms of the Confidentiality Agreement, the terms of the
Confidentiality Agreement shall control. As reasonably requested from time to
time by Parent, the Company will cooperate with, and provide related assistance
to, Parent in developing Parent's post-Closing integration plan for the Company.

          Section 6.03 Reasonable Efforts. (a) Each of the Company, Parent and
Sub agree to use all reasonable efforts to take, or cause to be taken, all
actions necessary to make all such filings and registrations and comply promptly
with all legal requirements which may be imposed on itself with respect to the
Merger (which actions shall include furnishing all information required under
the HSR Act and under similar other anti-trust, competition or trade law or
other similar laws of foreign Governmental Entities, and in connection with
approvals of or filings with any other Governmental Entity) and will promptly
cooperate with and furnish information to each other in connection with any such
requirements imposed upon any of them or any of their subsidiaries in connection
with the Merger. Each of the Company, Parent and Sub will, and will cause its
subsidiaries to, use its reasonable efforts to take all reasonable actions
necessary to obtain (and will cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, Sub, the Company or any of their subsidiaries in
connection with the Merger or the taking of any action contemplated thereby or
by this Agreement, except that no Party need waive any substantial rights, agree
to any material restriction on the conduct of it and its Affiliates' business or
agree to any substantial limitation on its operations or to dispose of any
assets, including assets of the Company; provided, however that such exception
shall not apply to a request for, or an undertaking to, hold assets separate
pending completion of an investigation pursuant to a voluntary competition law.

               (b) Parent hereby agrees to use commercially reasonable efforts
to arrange and complete the Financing on terms substantially the same as set
forth in the Commitment including, without limitation, to


                                      A-29



(i) negotiate definitive agreements with respect thereto, and (ii) satisfy all
conditions applicable to Parent and Sub in such definitive agreements. Parent
will keep the Company informed at all times with respect to the status of its
efforts to arrange and complete the Financing, including, without limitation,
with respect to the occurrence of any event which Parent believes may have a
materially adverse effect on the ability of Parent to obtain the Financing. The
Company hereby agrees to use its reasonable best efforts to assist Parent to
arrange and complete the Financing, including the satisfaction of all conditions
applicable to the Company in connection therewith, all at Parent's sole cost and
expense, so that the Company shall not be obligated to incur any monetary
obligations or expenditures in connection with such assistance not otherwise
payable by Parent.

          Section 6.04 Options and Restricted Shares. (a) The Company shall
amend, or cause to be amended, to the extent necessary to accomplish the actions
contemplated by this Section 6.04, any stock option plan and any other program
or arrangement pursuant to which there are holders of options to purchase shares
granted by the Company or stock appreciation rights with respect to shares of
Company Common Stock (each, an "Option") (collectively, the "Stock Option
Plans") to provide that, at the Effective Time, each director of the Company who
is a holder of an Option with an exercise price per share that is less than the
Merger Consideration (a "Director In-the-Money Option") (whether or not vested)
shall receive from the Surviving Corporation, in settlement of such Option, a
"Cash Amount" (less any applicable withholding taxes) equal to the product of
(i) the amount by which the Merger Consideration exceeds the Option exercise
price, and (ii) the number of underlying shares with respect to which the Option
had not been exercised prior to the Effective Time. The Aggregate of all such
Cash Amounts is referred to herein as the "Aggregate Option Consideration". The
Company shall cause the Stock Option Plans and any other related documents
pursuant to which Options have been granted to be amended so that, without cost
or expense to the Company, each Option held by a director shall terminate as of
the Effective Time.

               (b) The Company shall provide notice to participants in the Stock
Option Plans and other holders of Options to purchase shares of Company Common
Stock granted by the Company that the Company proposes to merge into another
corporation; that the participant under the plans or programs may exercise his
vested Options in full with respect to shares not theretofore purchased by him
prior to the Effective Time; and that the plans and programs have been amended
to provide that to the extent a participant does not exercise his vested Options
prior to the Effective Time, such Options (other than Options terminated
pursuant to Section 6.04(a)) shall be replaced by Parent with a substitute
option to purchase shares of Parent Common Stock (a "Substitute Option") as set
forth in Section 6.04(c).

               (c) At the Effective Time, each then outstanding Option that is
not held by a director shall be replaced by Parent with a Substitute Option, in
an amount and at an exercise price as determined in accordance with this Section
6.04(c). Parent shall, in its sole discretion, either (i) file with the SEC a
registration statement on Form S-8 or other appropriate form (the "Stock Plan
Registration Statement") to register the shares of Parent Common Stock issuable
upon the exercise of the Substitute Options and use its reasonable efforts to
cause the Stock Plan Registration Statement to be effective at the Effective
Time, or (ii) issue shares of Parent Common Stock under an existing registration
statement upon the exercise of the Substitute Options. Each Substitute Option by
which any Option is replaced pursuant to this Section 6.04(c) shall be subject
to, and exercisable and vested on, comparable terms and conditions as such
Option was in effect immediately prior to the Effective Time (provided, however,
that vesting will be fully accelerated if the Surviving Corporation terminates
the employment of such Substitute Option holder for any reason other than for
Cause (as defined in Section 6.04(e)), or if the holder terminates his
employment with the Surviving Corporation for Good Reason (as defined in Section
6.04(e)), except that each Substitute Option shall be exercisable for that
number of shares of Parent Common Stock (rounded down to the nearest number of
shares of Parent Common Stock on a holder-by-holder basis) equal to the number
of shares of Company Common Stock subject to such Option multiplied by the
Exchange Ratio (as defined below), at an exercise price (rounded up to the
nearest whole penny) per share of Parent Common Stock equal to the per share
exercise price specified in such Option divided by the Exchange Ratio. The
conversion of Options provided for in this Section 6.04(c) with respect to any
Options which are intended to be "incentive stock options" (as such term is
defined in Section 422 of the Code) shall be effected in a manner consistent
with Section 424(a) of the Code and Treas. Reg. 1.409A-1(b)(5)(v)(D). "Exchange
Ratio" shall mean the quotient obtained by dividing (a) the Merger Consideration
by (b) the Volume Weighted Average Price. "Volume Weighted Average Price" means
the quotient obtained by dividing (i) the sum of the product, calculated with
respect to each of the trades of Parent Common


                                      A-30



Stock made on the Nasdaq Capital Market during the 10 consecutive Trading Days
immediately preceding the Effective Time, of (x) the price at which the shares
of Parent Common Stock are bought and sold in such trade and (y) the number of
shares of Parent Common Stock bought and sold in such trade, by (ii) the
aggregate number of shares of Parent Common Stock bought and sold in all such
trades. "Trading Day" means a day during which trading in securities generally
occurs on the Nasdaq Capital Market.

               (d) Except as may be otherwise agreed to in writing by Parent or
Sub and the Company, the Company's Stock Option Plans shall terminate as of the
Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company shall be terminated as of the Effective Time.

               (e) The restricted shares of Company Common Stock set forth on
Schedule 6.04(e) with respect to which vesting restrictions have not lapsed as
of the Effective Time ("Restricted Stock") shall be converted into restricted
shares of Parent Common Stock (the "Substitute Restricted Stock"). Schedule
6.04(e) sets forth the name of each holder of Restricted Stock, his or her title
with the Company, the number of shares of Restricted Stock held and the
applicable vesting schedule. Each holder of Restricted Stock shall receive a
number of shares of Substitute Restricted Stock equal to (i) the product of the
Merger Consideration and the number of shares of Restricted Stock held by such
holder, (ii) divided by the Volume Weighted Average Price. Each share of
Substitute Restricted Stock by which any Restricted Stock is replaced pursuant
to this Section 6.04(e) shall be subject to the same vesting restrictions as
applied to such Restricted Stock immediately prior to the Effective Time,
provided, however, that all vesting restrictions shall lapse (and vesting will
be fully accelerated) if the Surviving Corporation terminates the employment of
such holder of Restricted Stock for any reason other than for Cause, or if the
holder terminates his employment with the Surviving Corporation for Good Reason.
For purposes of this Section 6.04, "Cause" shall have the meaning provided to
such term under an employment, severance or similar agreement applicable to such
holder or, in the absence of such a definition, shall mean the occurrence of any
of the following events: (i) the willful failure by the holder to follow lawful
directions communicated to him or her by the Board of Directors of the Company;
(ii) the willful engaging by the holder in conduct which is materially injurious
to the Company, monetarily or otherwise; (iii) a conviction of, a plea of nolo
contendere, a guilty plea or confession by the holder to an act of fraud,
misappropriation or embezzlement or to a felony; (iv) the holder's habitual
drunkenness or use of illegal substances; (v) a material breach by the holder of
his or her employment agreement; or (vi) an act of gross neglect or gross
misconduct which the Company deems to be good and sufficient cause; provided,
however, that the Company shall not be deemed to have Cause pursuant to the
foregoing clauses (i), (ii), (iv), (v) or (vi) unless the Company gives the
holder written notice that the specified conduct or event has occurred and the
holder fails to cure the conduct or event within thirty (30) days after receipt
of such notice. For purposes of this Section 6.04, "Good Reason" shall have the
meaning provided to such term under an employment, severance or similar
agreement applicable to such holder or, in the absence of such a definition,
shall mean the occurrence of any of the following events, in each case which is
not remedied within ten (10) Business Days after the holder provides notice of
such event to Parent: (w) any material diminution in the holder's duties,
responsibilities, reporting relationship or authorities; (x) any reduction in
the holder's base salary or target annual bonus opportunity; (y) the relocation
of the holder's principal place of employment to a location more than fifty (50)
miles from his principal place of employment immediately prior to the Effective
Time; or (z) any breach by Parent or Surviving Corporation of any material
provision of any employment, severance or similar agreement applicable to the
holder.

               (f) All vesting restrictions with respect to Company Common Stock
held in the Company's 401(k) plan shall lapse (and vesting will be fully
accelerated) as of the Effective Time.

               (g) The Company Board shall, prior to the Effective Time, take
appropriate action to approve, for purposes of exempting those transactions from
the short-swing liability provisions of Section 16(b) of the Exchange Act, the
conversion of Company Common Stock held by executive officers into the right to
receive the Merger Consideration, the conversion of Director In-the-Money
Options into the right to receive the Cash Amount which shall be effected as of
the Effective Time pursuant to the provisions of Sections 2.01(c) and 6.04(a),
the exchange of Options for Substitute Options described in Sections 6.04(c),
and the exchange of shares of Restricted Stock of Company Common Stock for
Substitute Restricted Stock described in Section 6.04(e). Parent's


                                      A-31



board of directors shall take appropriate action to approve, for purposes of
exempting those transactions from the short-swing liability provisions of
Section 16(b) of the Exchange Act, the grant of Substitute Options and
Substitute Restricted Stock described in Sections 6.04(c) and (e).

          Section 6.05 SEC Filings. (a) From the date hereof until the Effective
Time, the Company shall file on a timely basis all Company SEC Documents
required to be filed with the SEC pursuant to the Exchange Act or the Securities
Act. Such Company SEC Documents, at the time filed, (i) will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading and (ii) will
comply in all material respects with the applicable requirements of the Exchange
Act and the Securities Act, as the case may be, and the applicable rules and
regulations of the SEC thereunder.

               (b) Each of the Company Financials filed after the date hereof
shall (i) comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto then in effect at the same time as such filing, (ii) be prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated therein or in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly
present in all material respects the consolidated financial position of the
Company and the Company Subsidiaries that are required by GAAP to be
consolidated therein and fairly reflect its investment in any unconsolidated
Subsidiary as of the respective dates thereof and the consolidated results of
their operations and cash flows for the periods indicated, except that the any
unaudited interim Company Financials may not contain footnotes and may be
subject to normal and recurring year-end adjustments.

          Section 6.06 Indemnification; Insurance. (a) Parent and Sub agree that
all rights to indemnification for acts or omissions occurring prior to the
Effective Time now existing in favor of the current or former directors,
officers, employees, fiduciaries or agents of the Company and its subsidiaries
(the "Indemnified Parties"), including, without limitation, as provided in its
certificate of incorporation or by-laws (or similar organizational documents) or
existing indemnification contracts or existing employment agreements, shall
survive the Merger, shall become the obligation of Parent and the Surviving
Corporation, and shall continue in full force and effect in accordance with
their terms.

               (b) Until the sixth anniversary of the Effective Time, Parent and
the Surviving Corporation shall maintain in effect the Company's current
directors' and officers' liability insurance (or policies of at least
substantially the same coverage and amounts containing terms that are no less
advantageous to the insured parties) covering those individuals who are
currently covered by the Company's directors' and officers' liability insurance
policy (a copy of which has been heretofore delivered to Parent).

               (c) This Section 6.06 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, Parent, the
Surviving Corporation and the Indemnified Parties, and shall be binding on all
successors and assigns of Parent and the Surviving Corporation.

               (d) If the Company or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation of such
consolidation or merger, or (ii) transfers all or substantially all of its
properties to any Person, then, and in each case, proper provision shall be made
so that the successors and assigns of the Company and the Surviving Corporation,
as the case may be, shall assume the obligations set forth in this Section 6.06.

               (e) The provisions contained in this Section 6.06 shall not be
deemed to limit, in any way, any of the now existing rights of the Indemnified
Parties pursuant to any indemnification, employment or other agreements or
Company documents.

          Section 6.07 Employees. (a) Until December 31, 2007, Parent shall
maintain, or shall cause the Surviving Corporation and its subsidiaries to
maintain, the Company's Benefit Plans as in effect as of the Effective Time;
provided, however, that the agreements listed on Schedule 6.07(a) (the
"Severance Agreements") shall remain


                                      A-32



in full force and effect on and after December 31, 2007, pursuant to their
respective terms. After December 31, 2007, should Parent terminate one or more
of the Company's Benefit Plans (other than the Severance Agreements, which shall
remain in full force and effect on and after December 31, 2007 pursuant to their
respective terms), then Parent shall at that time include the employees of the
Company and the Company Subsidiaries ("Affected Employees") in the corresponding
employee benefit plans of Parent or its subsidiaries on substantially the same
basis and terms as Parent's similarly situated employees participate.

               (b) Parent shall, or shall cause the Surviving Corporation to,
honor all vacation, holiday, sickness and personal days accrued by Affected
Employees and, to the extent applicable, former employees of the Company as of
the Effective Time.

               (c) Parent shall, or shall cause the Surviving Corporation to,
give all Affected Employees full credit for purposes of eligibility, and vesting
under any employee benefit plan arrangement maintained by Parent or the
Surviving Corporation or any subsidiary thereof which is an employee pension
benefit plan (as defined in Section 3(2) of ERISA) for such Affected Employees'
service with the Company (or any prior employer) to the same extent recognized
by the Company or any comparable Benefit Plan immediately prior to the Effective
Time; provided, however, in no event shall any such credit be given if it would
detrimentally affect the tax-qualified status of a plan under Section 401(a) of
the Code or violate any applicable laws.

               (d) Parent shall, or shall cause the Surviving Corporation (i)
with respect to any life, health or long-term disability insurance plan, to
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements under any
welfare benefit plan established to replace any Benefit Plan in which Affected
Employees may be eligible to participate after the Effective Time, other than
limitations or waiting periods that are already in effect with respect to such
Affected Employees and that have not been satisfied as of the Effective Time
under any Welfare Plan maintained for the Affected Employees immediately prior
to the Effective Time, (ii) with respect to any health insurance plan, to obtain
credit for any co-payments and deductibles paid prior to the Effective Time in
satisfying any applicable deductible or out-of-pocket requirements under any
such plan that such Affected Employees are eligible to participate in after the
Effective Time and (iii) with respect to any life or long-term disability plan,
to waive any medical certification otherwise required in order to assure the
continuation of coverage at a level not less than that in effect immediately
prior to the implementation of such plan (but subject to any overall limit on
the maximum amount of coverage under such plans).

               (e) Without limiting the generality of Section 9.06, this Section
6.07 shall not create any rights to continued employment in favor of any
employee of the Company.

          Section 6.08 Transfer Taxes. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar Taxes (including interest,
penalties and additions to any such Taxes) ("Transfer Taxes") incurred in
connection with the transactions contemplated by this Agreement shall be paid by
either Sub or the Surviving Corporation, and the Company shall cooperate with
Sub and Parent in preparing, executing and timely filing any Tax Returns with
respect to such Transfer Taxes.

                                  Article VII.

                                   CONDITIONS

          Section 7.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each Party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:

               (a) Company Stockholder Approval. The Company Stockholder
Approval shall have been obtained.


                                      A-33



               (b) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition restricting,
preventing or prohibiting the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have used reasonable efforts
to prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered.

               (c) Parent Stockholder Approval. The Parent Stockholder Approval
shall have been obtained.

          Section 7.02 Conditions to Obligation of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:

               (a) Representations and Warranties. The representations and
warranties of the Company contained herein that are qualified as to materiality
shall be true and correct and the representations and warranties of the Company
contained herein that are not qualified by materiality shall be true and correct
in all material respects, in each case as though made as of the Closing Date
such that the aggregate effect of any inaccuracies in such representations and
warranties would not have a Material Adverse Effect on the Company, except that
the accuracy of representations and warranties that by their terms speak as of a
specified date will be determined as of such date.

               (b) Performance of Obligations of the Company. The Company shall
have performed any covenants or obligations required to be performed by it under
this Agreement at or prior to the Closing Date in all material respects, and
Parent shall have received a certificate signed on behalf of the Company by the
chief executive officer or the chief financial officer of the Company to such
effect.

               (c) Status Certificates. The Company shall have delivered to
Parent a good standing certificate relating to the Company from the Secretary of
State of Delaware and each jurisdiction in which it is qualified to conduct the
business.

               (d) Secretary's Certificate. The Company shall have delivered to
Parent a Secretary's Certificate of the Company attesting to the incumbency of
the officers executing this Agreement, resolutions authorizing the transaction
and other certificates and agreements delivered by or on behalf of the Company
at Closing.

               (e) Option Termination. The Company shall have provided to Parent
evidence, reasonably satisfactory to Parent, that all Stock Option Plans and all
Options and have been terminated and cancelled as of the Effective Time;
provided that, with respect to Director In-the-Money Options, such termination
shall not effect Parent's obligations to pay the Aggregate Option Consideration
to such former holders thereof.

               (f) No Material Adverse Effect. Since the date of this Agreement,
there shall have occurred no Material Adverse Effect on the Company.

               (g) HSR Approvals. The applicable waiting periods under the HSR
Act shall have expired or been terminated and any stay or application process as
may be required under any foreign anti-trust or competition law or regulation
shall have been completed or terminated.

               (h) FIRPTA. The Company shall have delivered to Parent a
certification pursuant to Treasury Regulations Sections 1.897-2(h) and
1.1445-2(c), signed by the Company and dated not more than 30 days prior to the
Effective Time to the effect that the Company is not nor has it been within five
(5) years of the date of the certification a "United States real property
holding corporation" as defined in Section 897 of the Code.


                                      A-34



               (i) Dissenting Shares. Dissenting Shares shall not represent more
than 15% of the outstanding Company Common Stock.

          Section 7.03 Conditions to Obligation of the Company. The obligation
of the Company to effect the Merger is further subject to the satisfaction or
waiver, on or prior to the Closing Date, of the following conditions:

               (a) Representations and Warranties. The representations and
warranties of Parent and Sub contained herein that are qualified as to
materiality shall be true and correct and the representations and warranties of
the Parent and Sub contained herein that are not qualified by materiality shall
be true and correct in all material respects, in each case as though made as of
the Closing Date such that the aggregate effect of any inaccuracies in such
representations and warranties would not have a Material Adverse Effect on the
Company, except that the accuracy of representations and warranties that by
their terms speak as of a specified date will be determined as of such date.

               (b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed any covenants or obligations required to be performed by
them under this Agreement at or prior to the Closing Date in all material
respects and the Company shall have received a certificate signed on behalf of
Parent and Sub by the chief executive officer or chief financial officer of
Parent and Sub to such effect.

               (c) Secretary's Certificate. Each of Parent and Sub shall have
delivered to the Company a Secretary's Certificate attesting to the incumbency
of the officers executing this Agreement, resolutions authorizing the
transaction and other certificates and agreements delivered by or on behalf of
Parent and Sub, respectively, at Closing;

               (d) Substitute Options and Substitute Restricted Stock. Parent
shall have provided to the Company evidence, reasonably satisfactory to the
Company, of the availability of the Substitute Options and the Substitute
Restricted Stock;

               (e) HSR Approvals. The applicable waiting periods under the HSR
Act shall have expired or been terminated and any stay or application process as
may be required under any foreign anti-trust or competition law or regulation
shall have been completed or terminated; and

               (f) Consents. Parent shall have procured all of the consents,
approvals and waivers of third parties or any regulatory body or authority
referred to in Section 4.03.

               (g)

          Section 7.04 Frustration of Closing Conditions. None of Parent, Sub or
the Company may rely on the failure of any condition set forth in Section 7.01,
Section 7.02 and Section 7.03, as applicable, to be satisfied if such failure
was caused by such Party's failure to use reasonable efforts to consummate the
Merger, as required by and subject to Section 6.03.

                                 Article VIII.

                        TERMINATION, AMENDMENT AND WAIVER

          Section 8.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement
by the Company Stockholders:

               (a) by mutual written consent of Parent and the Company, by
action of their respective boards of directors.

               (b) by either the Company or Parent, if:


                                      A-35



                    (i) any Governmental Entity, the taking of action by which
          is a condition to the obligations of either the Company or Parent to
          consummate the transactions contemplated hereby, shall have determined
          not to take such action and all appeals of such determination shall
          have been taken and have been unsuccessful, or any court of competent
          jurisdiction or other competent Governmental Entity shall have issued
          an order, decree or ruling or taken any other action making illegal or
          otherwise restricting, preventing or prohibiting the Merger and such
          order shall have become final and nonappealable; provided, however,
          that the Party seeking to terminate this Agreement shall have used its
          reasonable efforts to remove or lift such order, decree, ruling or
          other action;

               (c) by the Company, if, prior to the Closing, any Person has made
a proposal relating to an Acquisition Proposal, or has commenced a tender or
exchange offer for the shares of Company Common Stock, and the Company Board
concludes that such proposal or tender or exchange offer if consummated would be
a Superior Proposal;

               (d) by Parent, if, prior to the Closing, the Company Board or any
committee thereof shall have (i) failed to recommend to the Company Stockholders
that they approve and adopt this Agreement (the "Stockholder Acceptance"), (ii)
withdrawn or materially modified its approval or recommendation of this
Agreement or the Merger, (iii) approved or recommended a Superior Proposal or
(iv) resolved to effect any of the foregoing;

               (e) by Parent, if, prior to consummation of the Merger, there has
been a material violation or breach by the Company (or, where qualified by
materiality, any violation or breach by the Company) of any representation,
warranty, covenant or agreement contained in this Agreement that (i) would give
rise to the failure of a condition set forth in Section 7.02 and (ii) cannot be
cured by the Company within thirty (30) days after written notice reasonably
describing such breach);

               (f) by the Company, if, prior to the consummation of the Merger,
there has been a material violation or breach by Parent or Sub (or, where
qualified by materiality, any violation or breach by Parent or Sub) of any
representation, warranty, covenant or agreement contained in this Agreement
(which violation or breach is not cured by Parent or Sub within ten (10) days
after written notice reasonably describing such breach);

               (g) by Parent or the Company, if the Merger shall not have been
consummated on or before the 120th day after the date hereof; provided, that the
right to terminate this Agreement under this Section 8.01(g) shall not be
available to any Party whose failure to satisfy a material obligation hereunder
has been the cause of, or resulted in, the failure of the Closing to occur on or
before such date;

               (h) by Parent or the Company, if the Company Stockholders Meeting
is held and the Company fails to obtain the Company Stockholder Approval or the
Company Stockholder Approval is not obtained after an adjournment thereof; or

               (i) by Parent or the Company, if the Parent Stockholders Meeting
is held and Parent fails to obtain the Parent Stockholder Approval or the Parent
Stockholder Approval is not obtained after an adjournment thereof.

          Section 8.02 Effect of Termination. (a) In the event of a termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become null and void and there shall be no liability or obligation on the part
of Parent, Sub or the Company or their respective officers or directors, except
with respect to Section 3.13, the terms of the Confidentiality Agreement
discussed in the last clause of the first sentence of Section 6.02, this Section
8.02 and Article IX; provided, however, that nothing herein shall relieve any
Party for liability for any breach hereof (including, without limitation, any
representation and warranty in Section 4.06).

               (b) The Company shall pay to Parent a termination fee of
$2,500,000 (the "Termination Fee") in the event that (i) this Agreement is
validly terminated pursuant to Section8.01(c), or (ii) this Agreement is
validly terminated pursuant to Section 8.01(h) and after the date hereof but
prior to the Company Stockholders


                                      A-36



Meeting an event specified in Section 8.01(c) shall have occurred and such
proposal or tender or exchange offer shall not have been rejected, withdrawn or
terminated prior to the Company Stockholders Meeting or the termination of this
Agreement.

               (c) Any amounts payable pursuant to Section 8.02(b) shall be
payable as promptly as practicable following the earlier of execution of the
definitive agreement regarding a Business Combination or, as the case may be,
the consummation of any such Business Combination in immediately available funds
by wire transfer to an account designated by Parent.

               (d) For the purposes of this Section 8.02, "Business Combination"
means, with respect to the Company, a transaction with a party other than
Parent, Sub or one of Parent's subsidiaries involving (i) a merger,
reorganization, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution, or similar transaction involving
such party as a result of which either (A) the Company's stockholders prior to
such transaction in the aggregate cease to own at least 50% of the voting
securities of the entity surviving or resulting from such transaction (or the
ultimate parent entity thereof) or, regardless of the percentage of voting
securities held by such stockholders, if any Person shall beneficially own,
directly or indirectly, at least 50% of the voting securities of such ultimate
parent entity or (B) the individuals comprising the Company Board prior to such
transaction do not constitute a majority of the board of directors of such
ultimate parent entity, (ii) a sale, lease, exchange, transfer or other
disposition of all or substantially all of the assets of the Company and the
Company Subsidiaries, taken as a whole, in a single transaction or a series of
related transactions, or (iii) the acquisition, directly or indirectly, by a
Person of beneficial ownership of 50% or more of the outstanding shares of
Company Common Stock whether by merger, consolidation, share exchange, business
combination, tender or exchange offer or otherwise (other than a merger,
reorganization, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction upon the
consummation of which the Company's stockholders would in the aggregate
beneficially own greater than 50% of the voting securities of such Person).

               (e) In the event that this Agreement is validly terminated
pursuant to Section 8.01(i), Parent or Sub shall pay to the Company the
Termination Fee. For the avoidance of doubt, in no event shall this Section
8.02(e) limit or be deemed to limit any and all remedies the Company has to
assert any claim or pursue any remedy for damages in excess of the Termination
Fee against Parent or Sub resulting from the breach of Section 4.06.

               (f) Any amounts payable pursuant to Section 8.02(e) shall be
payable as promptly as practicable in immediately available funds by wire
transfer to an account designated by the Company.

          Section 8.03 Amendment. This Agreement may be amended by the Parties,
by action taken or authorized by their respective boards of directors, at any
time before or after obtaining the Company Stockholder Approval, but, after any
such approval, no amendment shall be made which by law requires further approval
by such shareholders without obtaining such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the Parties.

          Section 8.04 Extension; Waiver. At any time prior to the Effective
Time, the Parties, by action taken or authorized by their respective boards of
directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other Parties, (ii)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto or (iii) waive compliance with the
agreements or conditions for the benefit of such Party contained herein. Any
agreement on the part of a Party to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of such Party. The
failure of any Party to assert any of its rights hereunder or otherwise shall
not constitute a waiver of those rights.


                                      A-37



                                   Article IX.

                                  MISCELLANEOUS

          Section 9.01 Nonsurvival of Representations and Warranties. The
representations and warranties in this Agreement or in any instrument delivered
pursuant hereto shall terminate at the Effective Time, unless the survival
thereof is provided for by their terms.

          Section 9.02 Assumption of Obligations. Effective upon the Closing,
Parent unconditionally assumes all obligations of the Company under the letter
agreement between America's Growth Capital and the Company, dated as of December
22, 2006 and the letter agreement between Pharus Advisors, LLC and the Company,
dated as of February 15, 2007.

          Section 9.03 Notices. All notices, approvals, consents, waivers and
other communications hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (which is confirmed), sent by overnight courier
(providing proof of delivery) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a Party as shall be specified by like notice):

               (a)  if to Parent or Sub, to:

                    Internet Commerce Corporation
                    6025 The Corners Parkway, Suite 100
                    Norcross, GA 30092

                    Attention: Glen Shipley

                    Telecopy No.: (678) 229-9087

                    with a copy to:

                    Morris, Manning & Martin LLP
                    1600 Atlanta Financial Center
                    3343 Peachtree Road, NE
                    Atlanta, GA 30326

                    Attention: Larry W. Shackelford

                    Telecopy No.: (404) 365-9532

                    and

               (b)  if to the Company, to:

                    EasyLink Services Corporation
                    33 Knightsbridge Road
                    Piscataway, NJ 08654

                    Attention: Thomas F. Murawski

                    Telecopy No.: (732) 352-6646


                                      A-38



                    with a copy to:

                    Pillsbury Winthrop Shaw Pittman LLP
                    1540 Broadway
                    New York, New York 10036

                    Attention: Ronald A. Fleming Jr., Esq.

                    Telecopy No.: (212) 298-9931

          Section 9.04 Interpretation. When a reference is made in this
Agreement to an Article, Schedule or a Section, such reference shall be to an
Article, Schedule or a Section, respectively, of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if requested
by the party to whom such information is to be made available. As used in this
Agreement, the term "subsidiary" of any Person means another Person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person. As used in this Agreement, "Material Adverse Change" or "Material
Adverse Effect" means, when used in connection with the Company, any change,
development, event, occurrence or effect that, individually or in the aggregate,
has or would reasonably be expected to have a material and adverse effect on the
business, liabilities (including contingent liabilities), financial condition,
results of operations or assets of the Company and the Company Subsidiaries
taken as a whole or the ability of the Company to perform its obligations
hereunder or to consummate the Merger or other transactions contemplated hereby.
Notwithstanding the foregoing, a Material Adverse Change or Material Adverse
Effect shall not include any material adverse change or material adverse effect
caused by (i) any adverse change resulting from the Merger, or the announcement
or pendancy of or any costs or expenses associated with the Merger, including a
decline in the trading price of Company Common Stock, (ii) any adverse changes
in general market and economic conditions, (iii) any adverse changes affecting
the Company's industry generally, (iv) any adverse regulatory or legislative
changes affecting the Company or companies in general, (v) any adverse change
relating to changes in generally accepted accounting principles in the United
States of America and (vi) hurricanes, earthquakes or similar catastrophes, or
acts of war (whether declared or undeclared), sabotage, terrorism, military
action or any escalation or worsening thereof. As used in this Agreement, the
term "material" refers to the Company and the Company Subsidiaries taken as a
whole. As used in this Agreement, "knowledge" means, with respect to matters
relating to the Company or any subsidiary thereof, the actual knowledge of the
Chief Executive Officer, President, Chief Financial Officer, Executive Vice
President and General Manager, Senior Vice President Business Development, Vice
President and Managing Director, EasyLink International, Controller and Vice
President of Sales.

          Section 9.05 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, including delivery by
facsimile, it being understood that all parties need not sign the same
counterpart.

          Section 9.06 Entire Agreement; Third Party Beneficiaries. This
Agreement (including the documents and schedules attached hereto) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 6.06, is not
intended to confer upon any Person other than the Parties any rights or remedies
hereunder.

          Section 9.07 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.


                                      A-39



          Section 9.08 Publicity. Except as otherwise required by law or by
obligations pursuant to the rules of any listing exchange, for so long as this
Agreement is in effect, neither the Company nor Parent shall, or shall permit
any of its subsidiaries to, issue or cause the publication of any press release
or other public announcement with respect to the transactions contemplated by
this Agreement without the consent of the other party, which consent shall not
be unreasonably withheld. In addition, the Parties will consult with each other
before issuing, and provide each other the opportunity to review and comment
upon any such press release or other public statement. Notwithstanding anything
in this Section 9.08 to the contrary, in no event shall any of the foregoing
result in any filing required by law or pursuant to the rules of any listing
exchange to be delayed beyond the required filing date.

          Section 9.09 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the Parties
(whether by operation of law or otherwise) without the prior written consent of
the other parties, except that Sub may assign, in its sole discretion, any or
all of its rights, interests and obligations hereunder to any direct or indirect
wholly owned subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.

          Section 9.10 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York or Delaware or in a New York or Delaware state
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the Parties hereto (i) consents to submit
to the personal jurisdiction of any Federal court located in the States of New
York or Delaware or any New York or Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees that such Party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that such Party will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a Federal court sitting in the State of New York or Delaware or a New York or
Delaware state court and (iv) waives any right to trial by jury with respect to
any claim or proceeding related to or arising out of this Agreement or any of
the transactions contemplated hereby.

          Section 9.11 Fees and Expenses. (a) Except as otherwise specifically
provided for herein, (1) if the Merger is consummated, all costs and expenses
(including change of control payments, the executive sales bonus and the fees
and expenses of any accounting firms, investment bankers, financial advisors and
attorneys) incurred in connection with this Agreement and the transactions
contemplated by this Agreement and the Company's obligations for certain
indebtedness shall be paid by Parent to the Company (for immediate payment) at
or prior to Closing and (2) if the Merger is not consummated, all such costs and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the Party incurring such
expenses.

               (b) The prevailing Party in any legal action undertaken to
enforce this Agreement or any provision hereof shall be entitled to recover from
the other Party the costs and expenses (including attorneys' and expert witness
fees and expenses) incurred in connection with such action.

                  [signatures follow immediately on next page]


                                      A-40



     IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.

                                        INTERNET COMMERCE CORPORATION


                                        By: /s/ Thomas J. Stallings
                                            ------------------------------------
                                        Name: Thomas J. Stallings
                                        Title: Chief Executive Officer


                                        JETS ACQUISITION SUB, INC.


                                        By: /s/ Thomas J. Stallings
                                            ------------------------------------
                                        Name: Thomas J. Stallings
                                        Title: Chief Executive Officer


                                        EASYLINK SERVICES CORPORATION


                                        By: /s/ Thomas F. Murawski
                                            ------------------------------------
                                        Name: Thomas F. Murawski
                                        Title: Chairman, President and
                                               Chief Executive Officer


                                      A-41


                                     ANNEX B

                    OPINION OF AMERICA'S GROWTH CAPITAL, LLC

                       (AMERICA'S GROWTHCAPITAL LOGO)

May 1, 2007

Board of Directors
EasyLink Services Corporation
33 Knightsbridge Road
Piscataway, NJ 08854

Gentlemen,

You have requested our opinion (the "Opinion") as to the fairness, from a
financial point of view, to EasyLink Services Corporation ("EasyLink" or the
"Company") of the Per Share Merger Consideration (as defined below) to be paid
to EasyLink shareholders pursuant to the terms of the Agreement and Plan of
Merger dated as of May 1, 2007 (the "Agreement"), by and among the Company,
Internet Commerce Corporation ("ICC") and a wholly owned subsidiary of ICC
("Merger Sub"). The merger of the Merger Sub with EasyLink is herein referred to
as the "Transaction."

As more specifically set forth in the Agreement, and subject to the terms,
conditions and adjustments set forth in the Agreement, ICC intends to purchase
all of the outstanding shares of Common Stock of EasyLink (the "Common Shares")
in exchange for an amount equal to $5.80 per Common Share (the "Per Share Merger
Consideration"). ICC will also pay EasyLink's expenses incurred in the
Transaction (including, without limitation, legal and financial advisor fees and
any and all other professional advisory fees and costs incurred in connection
with the Transaction, as well as any change of control bonus associated with the
Transaction) and will assume or otherwise pay debt of EasyLink remaining on
EasyLink's balance sheet as of the closing of the Transaction (the "Closing").
In addition, each option held by a director of the Company with an exercise
price per share that is less than the Per Share Merger Consideration (whether or
not vested) shall receive a "Cash Amount" (less any applicable withholding
taxes) equal to the product of (i) the amount by which the Per Share Merger
Consideration exceeds the option exercise price, and (ii) the number of
underlying shares with respect to which the Option had not been exercised prior
to the Effective Time. Each outstanding option to purchase Common Stock not held
by directors of the Company will be replaced by ICC with a substitute option, in
an amount and at an exercise price as determined in accordance with Section
6.04(c) of the Agreement.

America's Growth Capital, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes.

In arriving at the Opinion, America's Growth Capital has taken the actions set
forth below and reviewed and considered the following financial and other
information (the "Information") and other matters as we have deemed relevant,
including among other things:

     i.   A draft of the Agreement dated May 1, 2007;

     ii.  Annual Reports on Form 10-K of EasyLink for the three fiscal years
          ended December 31, 2006, 2005 and 2004; certain interim reports to
          shareholders and Quarterly Reports on Form 10-Q of EasyLink; certain
          business, financial and other information regarding EasyLink that was
          publicly available or furnished to






          America's Growth Capital by EasyLink's management; and certain
          internal financial forecasts regarding EasyLink furnished to America's
          Growth Capital by EasyLink's management (the "EasyLink Forecasts");

     iii. Held discussions with the management of EasyLink concerning the
          business, past and current operations, financial condition and future
          prospects of EasyLink, including discussions with the management of
          EasyLink concerning the EasyLink Forecasts and the risks and
          uncertainties of EasyLink continuing to pursue an independent
          strategy; iv. Compared EasyLink's historical performance to
          management's historical forecasts;

     v.   Participated in discussions and negotiations among representatives of
          EasyLink, ICC and their respective financial and legal advisors;

     vi.  Prepared an analysis of the discounted cash flows of EasyLink;

     vii. Compared the historical and present financial condition of EasyLink
          with those of other companies that America's Growth Capital deemed
          relevant;

     viii. Compared the proposed financial terms of the merger agreement with
          the financial terms of certain other business combinations and
          transactions that America's Growth Capital deemed relevant;

     ix.  Considered bids received from third parties to acquire all or parts of
          EasyLink and the results of America's Growth Capital's extensive
          efforts to solicit indications of interest and definitive proposals
          with respect to a sale of the Company;

     x.   Reviewed the stock price and trading history of EasyLink common stock;

     xi.  Considered the qualified opinion of its auditors in 2000, 2001, 2002,
          2003, 2004 and 2005 that stated the Company has a working capital
          deficiency and an accumulated deficit that raised doubt about its
          ability to continue as a going concern; and

     xii. Considered other information and analyses to the extent deemed
          relevant by America's Growth Capital. In addition, America's Growth
          Capital has conducted discussions with members of senior management
          and representatives of the Board of Directors of EasyLink.

In conducting our review and arriving at our Opinion, we have, with your
consent, assumed and relied, without independent investigation, upon the
accuracy and completeness of all financial and other information provided to us
by the Company or that is publicly available. We have not undertaken any
responsibility for the accuracy, completeness or reasonableness of, or attempted
to independently verify, the Information, although we are not aware of any
material inaccuracies. In addition, we have not conducted nor have we assumed
any obligation to conduct any physical inspection of the properties or
facilities of the Company. We have further relied upon the assurance of
management of the Company that they are unaware of any facts that would make the
Information incomplete or misleading in any respect. We have, with your consent,
assumed that the financial forecasts that we examined were reasonably prepared
by the management of the Company on bases reflecting the best currently
available estimates and good faith judgments of such management as to the future
performance of the Company.

We have not made or obtained any independent evaluations, valuations or
appraisals of the assets or liabilities of the Company, nor have we been
furnished with such materials. We have not made any review of or sought or
obtained advice of legal counsel regarding legal matters relating to the
Company, and we understand that the Company has relied and will rely only on the
advice of legal counsel to the Company as to such matters. Our services to the
Company in connection with the Transaction have been comprised of (i) advising
members of the Company's management and Board of Directors regarding financial
matters relevant to the Transaction, and (ii) rendering an opinion as to the
fairness, from a financial point of view, to the holders of the Common Shares of
the Company of the Per Share Merger Consideration to be received by such
holders. The Opinion is necessarily based upon economic and market conditions
and other circumstances as they exist and can be evaluated by us on the date
hereof. It should be understood that although subsequent developments may affect
our Opinion, we do not have any obligation to update, revise or reaffirm our
Opinion (except upon the request of the Company in accordance with our
engagement letter) and we expressly disclaim any responsibility to do so (except
as provided in our engagement letter with the Company).


                                      B-2



For purposes of rendering our Opinion we have assumed in all respects material
to our analysis, that the representations and warranties of each party contained
in the Agreement are true and correct as of the date of the Opinion, that each
party will perform all of the covenants and agreements required to be performed
by it under the Agreement and that all conditions to the consummation of the
Transaction will be satisfied. We have assumed that the final form of the
Agreement will be substantially the same as the last draft reviewed by us. We
have also assumed that all governmental, regulatory and other consents and
approvals contemplated by the Agreement will be obtained and that in the course
of obtaining any of those consents no restrictions will be imposed or waivers
made that would have an adverse effect on the contemplated benefits of the
Transaction.

In preparing the Opinion, America's Growth Capital performed a variety of
financial and comparative analyses. The preparation of a fairness opinion is a
complex process involving various determinations as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular circumstances and, therefore, a fairness opinion is not readily
susceptible to partial analysis or summary description. America's Growth Capital
arrived at its ultimate opinion based on the results of all analyses undertaken
by it and assessed as a whole and did not draw, in isolation, conclusions from
or with regard to any one factor or method of analysis. Accordingly, America's
Growth Capital believes that its analyses must be considered as a whole and that
selecting portions of its analyses and factors or focusing on information
presented in tabular format, without considering all analyses and factors or the
narrative description of the analyses, could create a misleading or incomplete
view of the processes underlying its analyses and opinion.

In its analyses, America's Growth Capital considered industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond EasyLink's control. No company, transaction or business
used in America's Growth Capital's analyses as a comparison is identical to
EasyLink or the proposed merger, and an evaluation of the results of those
analyses is not entirely mathematical. Rather, the analyses involve complex
considerations and judgments concerning financial and operating characteristics
and other factors that could affect the acquisition, public trading or other
values of the companies, business segments or transactions analyzed. The
estimates contained in America's Growth Capital's analyses and the ranges of
valuations resulting from any particular analysis are not necessarily indicative
of actual values or predictive of future results or values, which may be
significantly more or less favorable than those suggested by the analyses. In
addition, analyses relating to the value of businesses or securities do not
purport to be appraisals or to reflect the prices at which businesses or
securities actually may be sold. Accordingly, the estimates used in, and the
results derived from, America's Growth Capital's analyses are inherently subject
to substantial uncertainty.

It is understood that this letter is intended exclusively for the benefit and
use of the Board of Directors of the Company in its consideration of the
Transaction and shall not be disclosed to any third party or circulated or
referred to publicly without our prior written consent. Reference to or
reproduction of our opinion or reference to America's Growth Capital included in
any information statement or similar disclosure made to the stockholders of the
Company, or any filing with the Securities and Exchange Commission, shall be
permitted only if our opinion is reproduced in full and any other references to
us or to our opinion or advice is approved by us in writing in advance (which
approval will not be unreasonably withheld, conditioned or delayed). This letter
does not constitute a recommendation to any stockholder of the Company to take
any action in connection with the Transaction or otherwise. We have not been
requested to opine as to, and our opinion does not in any manner address and
should not be construed to address, the Company's underlying business decision
to effect the Transaction or the relative merits of the Transaction or
alternative business strategies that may be available to the Company.

Based upon and subject to the foregoing, including the various assumptions and
limitations set forth herein, it is our opinion that, as of the date hereof, the
Per Share Merger Consideration to be paid in the Transaction to the holders of
the Common Shares of the Company is fair to such holders from a financial point
of view.

Very truly yours,


AMERICA'S GROWTH CAPITAL, LLC


                                      B-3



                                     ANNEX C

                         OPINION OF PHARUS ADVISORS, LLC

(PHARUS ADVISORS LOGO)

                                                                     May 1, 2007

The Board of Directors of EasyLink Services Corporation
33 Knightsbridge Road
Piscataway, NJ 08854

Dear Members of the Board of Directors:

     We understand that EasyLink Services Corporation ("EasyLink" or the
"Company") and Internet Commerce Corporation ("ICC" or "Parent") and an entity
to be defined ("Sub") propose to enter into an Agreement and Plan of Merger (the
"Agreement"), pursuant to which, among other things, Sub shall be merged with
and into EasyLink, with EasyLink being the surviving entity and becoming a
wholly owned subsidiary of ICC (the "Merger"). Pursuant to the Agreement,
subject to certain exceptions, each issued and outstanding share of Class A
common stock, par value $0.01 per share, of EasyLink (the "Company Common
Stock") will be converted into the right to receive $5.80 in cash per share (the
"Merger Consideration"). The terms and conditions of the Merger are set forth in
more detail in the Agreement.

     In connection with its review and analysis of the Merger, the Board of
Directors of EasyLink Services Corporation has requested that Pharus Advisors,
LLC render our opinion (this "Opinion"), as to whether the Merger Consideration
is fair, from a financial point of view, to EasyLink's public stockholders. The
Opinion shall not address the Company's underlying business decision to effect
the Merger. We have not been engaged to initiate any discussions with or
otherwise solicit interest from any third parties with respect to possible
alternatives transactions with the Company or its stockholders, and we have not
so initiated any discussions or solicited interest. We did not negotiate with
any of the parties.

     In connection with this Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:

     -    reviewed draft of the Agreement dated April 25, 2007;

     -    reviewed the Company's Annual Reports to stockholders on Form 10-K for
          the fiscal years ended December 31, 2004, December 31, 2005 and
          December 31, 2006, its Annual Report to stockholders on Form 10-K/A
          for fiscal year ended December 31, 2006, its Quarterly Reports on Form
          10-Q for the periods ended March 31, 2006, June 30, 2006 and September
          30, 2006, its internal financial statements for Q1 2007 and its
          Current Reports on Form 8-K filed since February 7, 2006;

     -    reviewed certain operating and financial information relating to the
          Company's business and prospects, including internal budgets for the
          four years ended December 31, 2007, interim management reports, and
          projections for the five years ended December 31, 2011 (the
          "Projections"), all as prepared and provided to us by the Company's
          management;

551 Fifth Avenue, 31st Floor, New York,        tel 212 599 3400 fax 215 895 9715
NY 10176






The Board of Directors
EasyLink Services Corporation
May 1, 2007
Page 2


     -    spoken with certain members of the management of the Company regarding
          the operations, financial condition, future prospects and projected
          operations and performance of the Company and regarding the Merger,
          and spoken with representatives of the Company's investment bankers
          and counsel regarding the Company, the Merger and related matters;

     -    reviewed certain business, financial and other information regarding
          EasyLink which was furnished to us by EasyLink through its management
          or was publicly available;

     -    reviewed the historical market prices and trading volume for the
          Company's publicly traded securities;

     -    reviewed certain publicly available financial data for certain
          companies that we deemed relevant for purposes of our analysis and
          publicly available transaction prices and premiums paid in other
          transactions that we deemed relevant for purposes of our analysis;

     -    participated in discussions with the Special Committee of the
          Company's Board of Directors and its counsel regarding the
          Projections, among other matters;

     -    performed discounted cash flow analyses based on the Projections; and

     -    conducted such other financial studies, analyses and inquiries as we
          have deemed appropriate.

     We have relied upon and assumed, without independent verification, the
accuracy and completeness of all data, material and other information furnished,
or otherwise made available, to us, discussed with or reviewed by us, or
publicly available, and do not assume any responsibility with respect to such
data, material and other information. In addition, management of the Company has
advised us, and we have assumed, that the Projections have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the future financial results and condition of the Company, and we
express no opinion with respect to such forecasts and projections or the
assumptions on which they are based. We have relied upon and assumed, without
independent verification, that there has been no material change in the assets,
liabilities, financial condition, results of operations, business or prospects
of the Company since the date of the most recent financial statements provided
to us, and that there is no information or facts that would make the information
reviewed by us incomplete or misleading. We have also assumed that neither the
Company nor ICC is party to any material pending transaction, including, without
limitation, any external financing (other than in connection with the Merger),
recapitalization, acquisition or merger, divestiture or spin-off (other than the
Merger or other publicly disclosed transactions).

     We have relied upon and assumed, without independent verification, that (a)
the representations and warranties of all parties to the agreements identified
in the Agreement and all other related documents and instruments that are
referred to therein are true and correct, (b) each party to each such agreement,
document or instrument will perform all of the covenants and agreements required
to be performed by such party, (c) all conditions to the consummation of the
Merger will be satisfied without waiver thereof, and (d) the Merger will be
consummated in a timely manner in accordance with the terms described in the
agreements provided to us, without any amendments or modifications thereto or
any adjustment to the aggregate consideration (through offset, reduction,
indemnity claims, post-closing purchase price adjustments or otherwise). We have
also relied upon and assumed, without independent verification, that all
governmental, regulatory, and other consents and approvals necessary for the
consummation of the Merger will be obtained and that no delay, limitations,
restrictions or conditions will be imposed. In addition, we have relied upon and
assumed, without independent verification, that the final forms of the documents
identified above will not differ in any material respect from the drafts of such
documents received by us.

     We have not been requested to make, and have not made, any physical
inspection or independent appraisal or evaluation of any of the assets,
properties or liabilities (contingent or otherwise) of the Company, ICC or any
other party. Furthermore, we have undertaken no independent analysis of any
potential or actual litigation, governmental investigation, regulatory action,
possible unasserted claims or other contingent liabilities to which the Company
or

551 Fifth Avenue, 31st Floor, New York,        tel 212 599 3400 fax 215 895 9715
NY 10176


                                      C-2



The Board of Directors
EasyLink Services Corporation
May 1, 2007
Page 3


ICC is a party or may be subject. With your consent, this Opinion makes no
assumption concerning, and therefore does not consider, the potential effects of
any such litigation, claims or investigations or possible assertions of claims,
outcomes or damages arising out of any such matters.

     This Opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof. We have not undertaken, and are under no obligation, to update,
revise, reaffirm or withdraw this Opinion, or otherwise comment on or consider
events occurring after the date hereof. Subsequent events that could materially
affect the conclusions set forth in this Opinion include, without limitation,
adverse changes in industry performance or market conditions; changes to the
business, financial condition and results of operations of the Company or ICC;
changes in the terms of the Merger; and the failure to consummate the Merger
within a reasonable period of time.

     This Opinion is furnished to the Board of Directors of EasyLink Services
Corporation in connection with its consideration of the Merger and is not
intended to be, and does not constitute, a recommendation to any security holder
as to how such security holder should vote with respect to the Merger. This
Opinion may not be disclosed, reproduced, disseminated, quoted, summarized or
referred to at any time, in any manner or for any purpose, nor shall any
references to Pharus Advisors be made by any recipient of this Opinion, without
the prior written consent of Pharus Advisors; provided however that this letter
may be included in its entirety in any proxy statement to be distributed to the
holders of Company Common Stock in connection with the Merger

     Prior to this engagement, Pharus Advisors has not provided financial
advisory or investment banking services to the Company. We will receive a fee
for providing this Opinion, which is not contingent upon the consummation of the
Merger. The Company also has agreed to reimburse us for expenses and indemnify
us against certain liabilities and expenses.

     We have not been requested to opine as to, and this Opinion does not
address: (i) the underlying business decision of the Company to proceed with or
effect the Merger, (ii) any other aspect of the Merger other than the fairness,
from a financial point of view, of the Merger Consideration, to be received by
the public holders of the Company Common Stock, (iii) the fairness of any
portion or aspect of the Merger to the holders of any class of securities,
creditors or other constituencies of the Company, other than the fairness, from
a financial point of view, of the Merger Consideration, to be received by the
public holders of the Company Common Stock, (iv) the relative merits of the
Merger as compared to any alternative business strategies that might exist for
the Company or the effect of any other transaction in which the Company might
engage, or (v) the tax or legal consequences of the Merger to either the
Company, its security holders, or any other party.

     Based upon and subject to the foregoing, and in reliance thereon, it is our
opinion that, as of the date hereof, the Merger Consideration to be received in
the Merger by the public holders of the Company Common Stock is fair to them
from a financial point of view.

Very truly yours,


PHARUS ADVISORS, LLC

551 Fifth Avenue, 31st Floor, New York,        tel 212 599 3400 fax 215 895 9715
NY 10176


                                      C-3



                                     ANNEX D

     SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

SECTION 262. APPRAISAL RIGHTS.

(a)  Any stockholder of a corporation of this State who holds shares of stock on
     the date of the making of a demand pursuant to subsection (d) of this
     section with respect to such shares, who continuously holds such shares
     through the effective date of the merger or consolidation, who has
     otherwise complied with subsection (d) of this section and who has neither
     voted in favor of the merger or consolidation nor consented thereto in
     writing pursuant to Section 228 of this title shall be entitled to an
     appraisal by the Court of Chancery of the fair value of the stockholder's
     shares of stock under the circumstances described in subsections (b) and
     (c) of this section. As used in this section, the word "stockholder" means
     a holder of record of stock in a stock corporation and also a member of
     record of a nonstock corporation; the words "stock" and "share" mean and
     include what is ordinarily meant by those words and also membership or
     membership interest of a member of a nonstock corporation; and the words
     "depository receipt" mean a receipt or other instrument issued by a
     depository representing an interest in one or more shares, or fractions
     thereof, solely of stock of a corporation, which stock is deposited with
     the depository.

(b)  Appraisal rights shall be available for the shares of any class or series
     of stock of a constituent corporation in a merger or consolidation to be
     effected pursuant to Section 251 (other than a merger effected pursuant to
     Section 251(g) of this title), Section 252, Section 254, Section 257,
     Section 258, Section 263 or Section 264 of this title:

     (1)  Provided, however, that no appraisal rights under this section shall
          be available for the shares of any class or series of stock, which
          stock, or depository receipts in respect thereof, at the record date
          fixed to determine the stockholders entitled to receive notice of and
          to vote at the meeting of stockholders to act upon the agreement of
          merger or consolidation, were either (i) listed on a national
          securities exchange or designated as a national market system security
          on an interdealer quotation system by the National Association of
          Securities Dealers, Inc. or (ii) held of record by more than 2,000
          holders; and further provided that no appraisal rights shall be
          available for any shares of stock of the constituent corporation
          surviving a merger if the merger did not require for its approval the
          vote of the stockholders of the surviving corporation as provided in
          subsection (f) of Section 251 of this title.

     (2)  Notwithstanding paragraph (1) of this subsection, appraisal rights
          under this section shall be available for the shares of any class or
          series of stock of a constituent corporation if the holders thereof
          are required by the terms of an agreement of merger or consolidation
          pursuant to Sections 251, 252, 254, 257, 258, 263 and 264 of this
          title to accept for such stock anything except:

          a.   Shares of stock of the corporation surviving or resulting from
               such merger or consolidation, or depository receipts in respect
               thereof;

          b.   Shares of stock of any other corporation, or depository receipts
               in respect thereof, which shares of stock (or depository receipts
               in respect thereof) or depository receipts at the effective date
               of the merger or consolidation will be either listed on a
               national securities exchange or designated as a national market
               system security on an interdealer quotation system by the
               National Association of Securities Dealers, Inc. or held of
               record by more than 2,000 holders;

          c.   Cash in lieu of fractional shares or fractional depository
               receipts described in the foregoing subparagraphs a. and b. of
               this paragraph; or





          d.   Any combination of the shares of stock, depository receipts and
               cash in lieu of fractional shares or fractional depository
               receipts described in the foregoing subparagraphs a., b. and c.
               of this paragraph.

     (3)  In the event all of the stock of a subsidiary Delaware corporation
          party to a merger effected under Section 253 of this title is not
          owned by the parent corporation immediately prior to the merger,
          appraisal rights shall be available for the shares of the subsidiary
          Delaware corporation.

(c)  Any corporation may provide in its certificate of incorporation that
     appraisal rights under this section shall be available for the shares of
     any class or series of its stock as a result of an amendment to its
     certificate of incorporation, any merger or consolidation in which the
     corporation is a constituent corporation or the sale of all or
     substantially all of the assets of the corporation. If the certificate of
     incorporation contains such a provision, the procedures of this section,
     including those set forth in subsections (d) and (e) of this section, shall
     apply as nearly as is practicable.

(d)  Appraisal rights shall be perfected as follows:

     (1)  If a proposed merger or consolidation for which appraisal rights are
          provided under this section is to be submitted for approval at a
          meeting of stockholders, the corporation, not less than 20 days prior
          to the meeting, shall notify each of its stockholders who was such on
          the record date for such meeting with respect to shares for which
          appraisal rights are available pursuant to subsection (b) or (c)
          hereof that appraisal rights are available for any or all of the
          shares of the constituent corporations, and shall include in such
          notice a copy of this section. Each stockholder electing to demand the
          appraisal of such stockholder's shares shall deliver to the
          corporation, before the taking of the vote on the merger or
          consolidation, a written demand for appraisal of such stockholder's
          shares. Such demand will be sufficient if it reasonably informs the
          corporation of the identity of the stockholder and that the
          stockholder intends thereby to demand the appraisal of such
          stockholder's shares. A proxy or vote against the merger or
          consolidation shall not constitute such a demand. A stockholder
          electing to take such action must do so by a separate written demand
          as herein provided. Within 10 days after the effective date of such
          merger or consolidation, the surviving or resulting corporation shall
          notify each stockholder of each constituent corporation who has
          complied with this subsection and has not voted in favor of or
          consented to the merger or consolidation of the date that the merger
          or consolidation has become effective; or

     (2)  If the merger or consolidation was approved pursuant to Section 228 or
          Section 253 of this title, then either a constituent corporation
          before the effective date of the merger or consolidation or the
          surviving or resulting corporation within 10 days thereafter shall
          notify each of the holders of any class or series of stock of such
          constituent corporation who are entitled to appraisal rights of the
          approval of the merger or consolidation and that appraisal rights are
          available for any or all shares of such class or series of stock of
          such constituent corporation, and shall include in such notice a copy
          of this section. Such notice may, and, if given on or after the
          effective date of the merger or consolidation, shall, also notify such
          stockholders of the effective date of the merger or consolidation. Any
          stockholder entitled to appraisal rights may, within 20 days after the
          date of mailing of such notice, demand in writing from the surviving
          or resulting corporation the appraisal of such holder's shares. Such
          demand will be sufficient if it reasonably informs the corporation of
          the identity of the stockholder and that the stockholder intends
          thereby to demand the appraisal of such holder's shares. If such
          notice did not notify stockholders of the effective date of the merger
          or consolidation, either (i) each such constituent corporation shall
          send a second notice before the effective date of the merger or
          consolidation notifying each of the holders of any class or series of
          stock of such constituent corporation that are entitled to appraisal
          rights of the effective date of the merger or consolidation or (ii)
          the surviving or resulting corporation shall send such a second notice
          to all such holders on or within 10 days after such effective date;
          provided, however, that if such second notice is sent more than 20
          days following the sending of the first notice, such second


                                      D-2



          notice need only be sent to each stockholder who is entitled to
          appraisal rights and who has demanded appraisal of such holder's
          shares in accordance with this subsection. An affidavit of the
          secretary or assistant secretary or of the transfer agent of the
          corporation that is required to give either notice that such notice
          has been given shall, in the absence of fraud, be prima facie evidence
          of the facts stated therein. For purposes of determining the
          stockholders entitled to receive either notice, each constituent
          corporation may fix, in advance, a record date that shall be not more
          than 10 days prior to the date the notice is given, provided, that if
          the notice is given on or after the effective date of the merger or
          consolidation, the record date shall be such effective date. If no
          record date is fixed and the notice is given prior to the effective
          date, the record date shall be the close of business on the day next
          preceding the day on which the notice is given.

(e)  Within 120 days after the effective date of the merger or consolidation,
     the surviving or resulting corporation or any stockholder who has complied
     with subsections (a) and (d) hereof and who is otherwise entitled to
     appraisal rights, may file a petition in the Court of Chancery demanding a
     determination of the value of the stock of all such stockholders.
     Notwithstanding the foregoing, at any time within 60 days after the
     effective date of the merger or consolidation, any stockholder shall have
     the right to withdraw such stockholder's demand for appraisal and to accept
     the terms offered upon the merger or consolidation. Within 120 days after
     the effective date of the merger or consolidation, any stockholder who has
     complied with the requirements of subsections (a) and (d) hereof, upon
     written request, shall be entitled to receive from the corporation
     surviving the merger or resulting from the consolidation a statement
     setting forth the aggregate number of shares not voted in favor of the
     merger or consolidation and with respect to which demands for appraisal
     have been received and the aggregate number of holders of such shares. Such
     written statement shall be mailed to the stockholder within 10 days after
     such stockholder's written request for such a statement is received by the
     surviving or resulting corporation or within 10 days after expiration of
     the period for delivery of demands for appraisal under subsection (d)
     hereof, whichever is later.

(f)  Upon the filing of any such petition by a stockholder, service of a copy
     thereof shall be made upon the surviving or resulting corporation, which
     shall within 20 days after such service file in the office of the Register
     in Chancery in which the petition was filed a duly verified list containing
     the names and addresses of all stockholders who have demanded payment for
     their shares and with whom agreements as to the value of their shares have
     not been reached by the surviving or resulting corporation. If the petition
     shall be filed by the surviving or resulting corporation, the petition
     shall be accompanied by such a duly verified list. The Register in
     Chancery, if so ordered by the Court, shall give notice of the time and
     place fixed for the hearing of such petition by registered or certified
     mail to the surviving or resulting corporation and to the stockholders
     shown on the list at the addresses therein stated. Such notice shall also
     be given by one or more publications at least one week before the day of
     the hearing, in a newspaper of general circulation published in the City of
     Wilmington, Delaware or such publication as the Court deems advisable. The
     forms of the notices by mail and by publication shall be approved by the
     Court, and the costs thereof shall be borne by the surviving or resulting
     corporation.

(g)  At the hearing on such petition, the Court shall determine the stockholders
     who have complied with this section and who have become entitled to
     appraisal rights. The Court may require the stockholders who have demanded
     an appraisal for their shares and who hold stock represented by
     certificates to submit their certificates of stock to the Register in
     Chancery for notation thereon of the pendency of the appraisal proceedings;
     and if any stockholder fails to comply with such direction, the Court may
     dismiss the proceedings as to such stockholder.

(h)  After determining the stockholders entitled to an appraisal, the Court
     shall appraise the shares, determining their fair value exclusive of any
     element of value arising from the accomplishment or expectation of the
     merger or consolidation, together with a fair rate of interest, if any, to
     be paid upon the amount determined to be the fair value. In determining
     such fair value, the Court shall take into account all relevant factors. In
     determining the fair rate of interest, the Court may consider all relevant
     factors, including the rate of interest which the surviving or resulting
     corporation would have had to pay to borrow money during the pendency of
     the proceeding. Upon application by the surviving or resulting corporation
     or by any


                                      D-3



     stockholder entitled to participate in the appraisal proceeding, the Court
     may, in its discretion, permit discovery or other pretrial proceedings and
     may proceed to trial upon the appraisal prior to the final determination of
     the stockholder entitled to an appraisal. Any stockholder whose name
     appears on the list filed by the surviving or resulting corporation
     pursuant to subsection (f) of this section and who has submitted such
     stockholder's certificates of stock to the Register in Chancery, if such is
     required, may participate fully in all proceedings until it is finally
     determined that such stockholder is not entitled to appraisal rights under
     this section.

(i)  The Court shall direct the payment of the fair value of the shares,
     together with interest, if any, by the surviving or resulting corporation
     to the stockholders entitled thereto. Interest may be simple or compound,
     as the Court may direct. Payment shall be so made to each such stockholder,
     in the case of holders of uncertificated stock forthwith, and the case of
     holders of shares represented by certificates upon the surrender to the
     corporation of the certificates representing such stock. The Court's decree
     may be enforced as other decrees in the Court of Chancery may be enforced,
     whether such surviving or resulting corporation be a corporation of this
     State or of any state.

(j)  The costs of the proceeding may be determined by the Court and taxed upon
     the parties as the Court deems equitable in the circumstances. Upon
     application of a stockholder, the Court may order all or a portion of the
     expenses incurred by any stockholder in connection with the appraisal
     proceeding, including, without limitation, reasonable attorney's fees and
     the fees and expenses of experts, to be charged pro rata against the value
     of all the shares entitled to an appraisal.

(k)  From and after the effective date of the merger or consolidation, no
     stockholder who has demanded appraisal rights as provided in subsection (d)
     of this section shall be entitled to vote such stock for any purpose or to
     receive payment of dividends or other distributions on the stock (except
     dividends or other distributions payable to stockholders of record at a
     date which is prior to the effective date of the merger or consolidation);
     provided, however, that if no petition for an appraisal shall be filed
     within the time provided in subsection (e) of this section, or if such
     stockholder shall deliver to the surviving or resulting corporation a
     written withdrawal of such stockholder's demand for an appraisal and an
     acceptance of the merger or consolidation, either within 60 days after the
     effective date of the merger or consolidation as provided in subsection (e)
     of this section or thereafter with the written approval of the corporation,
     then the right of such stockholder to an appraisal shall cease.
     Notwithstanding the foregoing, no appraisal proceeding in the Court of
     Chancery shall be dismissed as to any stockholder without the approval of
     the Court, and such approval may be conditioned upon such terms as the
     Court deems just.

(l)  The shares of the surviving or resulting corporation to which the shares of
     such objecting stockholders would have been converted had they assented to
     the merger or consolidation shall have the status of authorized and
     unissued shares of the surviving or resulting corporation.


                                      D-4



                                     ANNEX E

                            FORM OF VOTING AGREEMENT

                            COMPANY VOTING AGREEMENT

     THIS COMPANY VOTING AGREEMENT (this "AGREEMENT") is dated as of May 3, 2007
between Internet Commerce Corporation, a Delaware corporation ("PARENT"), and
the undersigned stockholder ("STOCKHOLDER") of EasyLink Services Corporation, a
Delaware corporation (the "COMPANY").

                                    RECITALS

     A. Concurrently with the execution and delivery of this Agreement, Parent,
the Company and Jets Acquisition Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of Parent ("MERGER SUB"), have entered into an Agreement and
Plan of Merger of even date herewith (the "MERGER AGREEMENT"), pursuant to which
the parties thereto have agreed, upon the terms and subject to the conditions
set forth therein, to merge Merger Sub with and into the Company (the "MERGER").

     B. Stockholder is the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of the number of shares of Class A
common stock, par value $0.01 per share, of the Company (the "COMPANY STOCK"),
as indicated on the signature page of this Agreement (such shares of Company
Stock, together with any other shares of capital stock of the Company acquired
by such Stockholder after the date hereof and during the term of this Agreement
(including through the exercise of any stock options, warrants or similar
instruments), being collectively referred to herein as the "SECURITIES" of
Stockholder).

     C. In consideration of the execution of the Merger Agreement by Parent, and
as inducement and a condition to entering into the Merger Agreement, Parent has
required Stockholder to agree, and Stockholder has agreed, to enter into this
Agreement.

     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Merger Agreement and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:

          1.   DEFINITIONS.

               In addition to the terms defined elsewhere herein, capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed to them in the Merger Agreement. For purposes of this Agreement:

               1.1 "TRANSFER", when used as a verb, shall mean to sell, pledge,
assign, encumber, dispose of or otherwise transfer (including by merger,
testamentary disposition, or otherwise by operation of law), or, when used as a
noun, shall mean a sale, pledge, assignment, encumbrance, disposition or other
transfer (including a merger, testamentary disposition, or other transfer by
operation of law).

          2.   VOTING OF SECURITIES.

               Stockholder hereby agrees to appear, or cause the holder of
record on any applicable record date to appear, for the purpose of obtaining a
quorum at any annual or special meeting of stockholders of the Company and at
any postponement or adjournment thereof. At every meeting of the stockholders of
the Company, and at every postponement or adjournment thereof, and on every
action or approval by written consent of the stockholders of the Company,
Stockholder hereby irrevocably agrees to vote the Securities, or cause the
Securities to be voted, (a) in favor of approval and adoption of the Merger





Agreement and the approval of the Merger and all other actions contemplated by
the Merger Agreement and this Agreement and any action required in furtherance
thereof or hereof and (b) against: (i) any Acquisition Proposal; (ii) any
dissolution, liquidation or winding up of or by the Company or any of its
subsidiaries or the amendment of the Company's or any of its subsidiaries'
certificate of incorporation or by-laws; or (iii) any proposal or transaction
which would (x) in any manner impede, frustrate, delay, prevent, nullify or
adversely affect any transaction contemplated by the Merger Agreement (including
the Merger) or the likelihood of consummation thereof, (y) result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or (z) would result in any of the
conditions to the Company's or Parent's obligations under the Merger Agreement
not being fulfilled. Stockholder shall not commit or agree to take any action,
or enter into any agreement or understanding with any person, the effect of
which would be inconsistent with or violative of any provision contained in this
Section 2.

          3.   IRREVOCABLE PROXY.

               Stockholder is hereby delivering to Parent an irrevocable proxy
in the form attached hereto as Exhibit A (the "IRREVOCABLE PROXY"), such
Irrevocable Proxy to cover the total number of Securities in respect of which
Stockholder is entitled to vote. Upon the execution of this Agreement by
Stockholder, Stockholder hereby revokes any and all prior proxies, powers of
attorney or similar authorizations given thereby with respect to the Securities
and agrees not to grant any subsequent proxies, powers of attorney or similar
authorizations with respect to the Securities.

          4.   RESTRICTION ON TRANSFER OF SECURITIES.

               Prior to the Expiration Date (as defined herein), Stockholder
shall not, either directly or indirectly, consent to any Transfer of, or enter
into any contract, agreement, obligation, commitment, arrangement,
understanding, instrument, option or other arrangement (including any profit
sharing arrangement) with respect to the Transfer of, any Securities (or any
interest therein); provided that, the foregoing requirements shall not prohibit
any Transfer under Stockholder's will or pursuant to the laws of descent and
distribution or any such Transfer to an immediate family member or a family
trust for the benefit of immediate family member(s), so long as, in each case,
as a precondition to such Transfer the transferee: (i) executes a counterpart of
this Agreement and an Irrevocable Proxy in the form attached hereto as Exhibit A
(with such modifications as Parent may reasonably request); and (ii) agrees in
writing to hold such Securities (or interest in such Securities) subject to all
of the terms and provisions of this Agreement. Stockholder agrees that
Stockholder shall not (a) deposit (or permit the deposit of) any Securities in a
voting trust or grant any proxy, power of attorney or similar authority (other
than for fulfilling the terms of this Agreement) or enter into any voting
agreement or similar agreement in contravention of the obligations of
Stockholder under this Agreement with respect to any of the Securities or (b)
take any action that would make any representation or warranty of Stockholder
contained herein untrue or incorrect or that would in any way restrain, limit or
interfere with the performance of Stockholder's obligations under this Agreement
or the transactions contemplated hereby and by the Merger Agreement.

          5.   REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER.

               5.1 Stockholder (i) is the sole record and beneficial owner of,
and has good and marketable title to, the Securities set forth on the signature
page of this Agreement, which at the date of this Agreement and at all times
until the termination of this Agreement, will be free and clear of any liens,
claims, options, rights of first refusal, co-sale rights, charges or other
encumbrances; (ii) does not own, of record or beneficially, any shares of
capital stock of the Company other than the Securities set forth opposite his,
her or its name on the signature page of this Agreement; and (iii) has the sole
right to vote such Securities (except to the extent that such Securities are
issuable upon the exercise of options or warrants that have not been exercised
by such Stockholder). Except as contemplated by this Agreement, none of the
Securities is subject to any voting trust or other agreement, arrangement or
restriction with


                                      E-2



respect to the voting of such Securities. No trust of which Stockholder is a
trustee requires the consent of any beneficiary to the execution and delivery of
this Agreement or to the consummation of the transactions contemplated hereby.
If this Agreement is being executed in a representative or fiduciary capacity,
the Person signing this Agreement has full power and authority to enter into and
perform this Agreement.

               5.2 Stockholder has all requisite power and authority to execute
and deliver this Agreement and the Irrevocable Proxy, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by Stockholder of this
Agreement and consummation of the transactions contemplated hereby and thereby
have been duly authorized by all necessary action on the part of Stockholder and
no other proceedings on the part of Stockholder are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby and thereby.
Each of this Agreement and the Irrevocable Proxy has been duly and validly
executed and delivered by Stockholder and constitutes the valid and binding
obligations of Stockholder, enforceable against Stockholder in accordance with
its respective terms. The execution and delivery of this Agreement and the
Irrevocable Proxy by Stockholder do not, and the performance of Stockholder's
obligations hereunder will not, (a) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any right to terminate, amend, accelerate or
cancel any right or obligation under, or result in the creation of any lien or
encumbrance on any Securities pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligations to which Stockholder is a party or by which Stockholder or the
Securities are or will be bound or affected or (b) violate any order, writ,
injunction, decree, judgment, statute, rule or regulation applicable to
Stockholder or any of Stockholder's properties or assets. No consent, approval,
order or authorization of, or registration, declaration or filing with, or
notice to, any state or federal public body or authority is required by or with
respect to Stockholder in connection with the execution and delivery of this
Agreement and the Irrevocable Proxy by Stockholder or the consummation by
Stockholder of any of the transactions contemplated hereby or thereby.

          6.   ADDITIONAL DOCUMENTS.

               Stockholder (in his or her capacity as such) hereby covenants and
agrees to execute and deliver any additional documents necessary or desirable,
in the reasonable opinion of Parent, to carry out the purpose and intent of this
Agreement.

          7.   LEGENDING OF SECURITIES.

               Stockholder agrees that it shall forthwith surrender all
certificates representing the Securities so that they shall bear a conspicuous
legend stating that they are subject to this Agreement (and the restrictions on
transfer provided for herein) and to an Irrevocable Proxy. Stockholder agrees
that it shall not Transfer the Securities without first having the
aforementioned legend affixed to the certificates representing the Securities
(and subject, in any event, to the limitations set forth in Section 4). In
furtherance of this Agreement, Stockholder shall, and hereby authorizes Parent
to, notify the Company's transfer agent that the Securities are subject to a
"stop transfer" order.

          8.   NO SOLICITATION.

               8.1 Stockholder acknowledges that he or she also has read, and
understands, the restrictions set forth in Section 5.02 of the Merger Agreement
and agrees to comply with them as if a party to such Merger Agreement.

               8.2 Until the Expiration Date, Stockholder shall use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement.


                                      E-3



          9.   CONFIDENTIALITY.

               Stockholder agrees (i) to hold any information regarding this
Agreement and the Merger in strict confidence and (ii) not to divulge any such
information to any third person, except to the extent any of the same is
hereafter publicly disclosed by Parent.

          10.  STOCKHOLDER CAPACITY.

               Stockholder is executing and delivering into this Agreement
solely in its capacity as the owner of the Securities. If Stockholder is a
natural person, nothing contained in this Agreement shall restrict Stockholder
from taking any action required by his or her fiduciary duties solely in his or
her capacity as an officer, director or employee of the Company.

          11.  TERMINATION.

               This Agreement, and all rights and obligations of the parties
hereunder, shall be effective as of the date hereof and shall terminate upon the
earlier of (i) the date upon which the Merger Agreement is terminated in
accordance with its terms and (ii) the Effective Time (the "EXPIRATION DATE") of
the Merger.

          12.  GENERAL PROVISIONS.

               12.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

               12.2 Binding Effect and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but, except as otherwise specifically provided
herein, neither this Agreement nor any of the rights, interests or obligations
of the parties hereto may be assigned by any of the parties without prior
written consent of the others. Nothing contained in this Agreement, express or
implied, is intended to confer upon any person other than the parties hereto and
their respective successors and permitted assigns any rights or remedies of any
nature whatsoever by reason of this Agreement.

               12.3 Amendments and Modification. This Agreement may be amended
by the parties hereto and the terms and conditions hereof may be waived only by
an instrument in writing signed on behalf of each of the parties hereto or, in
the case of a waiver, by an instrument signed on behalf of the party waiving
compliance. The failure of any party hereto to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of these rights.

               12.4 Specific Performance. The parties hereto acknowledge that
Parent shall be immediately and irreparably harmed and injured if for any reason
any of the provisions of this Agreement are not performed in accordance with
their specific terms or are otherwise breached by any of the other parties
hereto. Therefore, it is agreed that, in addition to any other remedies that may
be available to Parent upon any such violation, Parent shall have the right to
enforce such covenants and agreements by specific performance, injunctive relief
or by any other means available to Parent at law or in equity. If Parent brings
an action in equity to enforce the provisions of this Agreement, Stockholder
will not allege, and Stockholder waives the defense, that there is an adequate
remedy at law.

               12.5 Notice. All notices and other communications pursuant to
this Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally, sent by
facsimile if confirmation is received by sender, sent by nationally-recognized


                                      E-4



overnight courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following address (or at such
other address for a party as shall be specified by like notice):

               if to Parent, to:

                  Internet Commerce Corporation
                  6025 The Corners Parkway, Suite 100
                  Norcross, GA 30092

                  Attention: Glen Shipley

                  Telecopy No.: (678) 229-9087

               with a copy to:

                  Morris, Manning & Martin LLP
                  1600 Atlanta Financial Center
                  3343 Peachtree Road, NE
                  Atlanta, GA 30326|

                  Attention: Larry W. Shackelford

                  Telecopy No.: (404) 365-9532

               if to Stockholder, to the address for notice set forth on the
               signature page hereof,

               with copies to:

                  EasyLink Services Corporation
                  33 Knightsbridge Road
                  Piscataway, NJ 08654

                  Attention: Thomas F. Murawski

                  Telecopy No.: (732) 352-6646

               with a copy to:

                  Pillsbury Winthrop Shaw Pittman LLP
                  1540 Broadway
                  New York, New York 10036

                  Attention: Ronald A. Fleming Jr., Esq.

                  Telecopy No.: (212) 298-9931

               12.6 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law thereof. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby shall be brought
exclusively in any federal court located in the State of Delaware or any state
court of the State of Delaware, and each of the parties hereto consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or


                                      E-5



proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
form. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 12.5 shall be deemed effective service of
process on such party.

               12.7 Entire Agreement. This Agreement and the Irrevocable Proxy
contain the entire understanding of the parties in respect of the subject matter
hereof, and supersede all prior negotiations and understandings between the
parties with respect to such subject matter.

               12.8 Descriptive Headings. The section headings are for
convenience only and shall not affect the construction or interpretation of this
Agreement.

               12.9 Interpretation. When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Wherever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".

               12.10 Counterparts. This Agreement may be executed in
counterparts, each of which will be deemed to be an original, but all of which,
taken together, will constitute one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

               12.11. Expenses. All fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees, costs and expenses.

               12.12 Effectiveness. This Agreement shall become effective
simultaneously with the execution and delivery of the Merger Agreement.


                                        E-6



               IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.

INTERNET COMMERCE CORPORATION


By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


STOCKHOLDER:

-------------------------------------


By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

-------------------------------------

-------------------------------------
Print Address

-------------------------------------
Telephone

-------------------------------------
Facsimile No.

                               Number of Securities beneficially owned:

                               ________   shares of Company Stock of the Company

                               ________   shares of Company Stock of the Company
                                          issuable upon exercise of outstanding
                                          options or warrants


                                      E-7


                                                                       EXHIBIT A

                                IRREVOCABLE PROXY

     The undersigned stockholder of EasyLink Services Corporation, a Delaware
corporation (the "COMPANY"), hereby irrevocably (to the fullest extent permitted
by law) appoints the members of the Board of Directors of Internet Commerce
Corporation, a Delaware corporation ("PARENT"), and each of them, or any other
designee of Parent, as the sole and exclusive attorneys-in-fact and proxies of
the undersigned, with full power of substitution and resubstitution, to vote and
exercise all voting and related rights (to the full extent that the undersigned
is entitled to do so) with respect to (i) all of the outstanding shares of Class
A common stock, par value $0. 01 per share, of the Company ("COMPANY STOCK")
owned of record by Stockholder as of the date of this Irrevocable Proxy and (ii)
any and all other shares of capital stock of the Company (including through the
exercise of any stock options, warrants or similar instruments) which
Stockholder may acquire on or after the date hereof (collectively, the
"SECURITIES") in accordance with the terms of this Irrevocable Proxy. The
Securities beneficially owned by the undersigned Stockholder of the Company as
of the date of this Irrevocable Proxy are listed on the signature page of this
Irrevocable Proxy. Upon the undersigned's execution of this Irrevocable Proxy,
any and all prior proxies given by the undersigned with respect to any
Securities are hereby revoked and the undersigned agrees not to grant any
subsequent proxies with respect to the Securities.

     This proxy is irrevocable, is coupled with an interest and is granted
pursuant to that certain Company Voting Agreement of even date between Parent
and the undersigned stockholder (the "VOTING AGREEMENT"), and is granted in
consideration of and as a condition to Parent entering into that certain
Agreement and Plan of Merger (the "MERGER AGREEMENT"), by and among Parent, Jets
Acquisition Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of
Parent ("MERGER SUB"), and the Company. The Merger Agreement provides for the
merger of the Merger Sub with and into the Company in accordance with its terms
(the "MERGER").

     The attorneys-in-fact and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time set forth in the Voting
Agreement, to act as the undersigned's attorney-in-fact and Irrevocable Proxy to
demand that the Secretary of the Company call a special meeting of stockholders
of the Company for the purpose of considering any action related to the Merger
Agreement and to vote the Securities, and to exercise all voting, consent and
similar rights of the undersigned with respect to the Securities (including,
without limitation, the power to execute and deliver written consents) at every
annual, special, postponed or adjourned meeting of stockholders of the Company
and in every written consent in lieu of such meeting (a) in favor of approval
and adoption of the Merger Agreement and the approval of the Merger and all
other actions contemplated by the Merger Agreement and this Agreement and any
action required in furtherance thereof or hereof and (b) against: (i) any
Acquisition Proposal; (ii) any dissolution, liquidation or winding up of or by
the Company or any of its subsidiaries or the amendment of the Company's or any
of its subsidiaries' certificate of incorporation or by-laws; or (iii) any
proposal or transaction which would (x) in any manner impede, frustrate, delay,
prevent, nullify or adversely affect any transaction contemplated by the Merger
Agreement (including the Merger) or the likelihood of consummation thereof, (y)
result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or (z) would
result in any of the conditions to the Company's or Parent's obligations under
the Merger Agreement not being fulfilled.

     If any provision of this Irrevocable Proxy or any part of any such
provision is held under any circumstances to be invalid or unenforceable in any
jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Irrevocable Proxy. Each provision
of this Irrevocable Proxy is separable from every other provision of this
Irrevocable Proxy, and each part of each provision of this Irrevocable Proxy is
separable from every other part of such provision.


                                      E-8



     This Irrevocable Proxy shall be governed by and construed in accordance
with the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of law thereof.

     This proxy granted by Stockholder shall terminate and be of no further
force and effect upon termination of the Voting Agreement in accordance with its
terms.

     Any obligation of the undersigned hereunder shall be binding upon the
heirs, estate, executors, personal representatives, and permitted successors and
assigns of the undersigned.


                                      E-9



          Delivery of an executed signature page to this Irrevocable Proxy by
facsimile shall be effective as delivery of a manually executed signature page
of this Agreement.

Dated: May 3, 2007

STOCKHOLDER:

-------------------------------------


By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

                      Number of shares beneficially owned:

                      _____ shares of the company stock of the Company

                      _____ shares of the company stock of the Company issuable
                            upon exercise of outstanding options or warrants


                                      E-10


                                    ANNEX F
                              INFORMATION ABOUT ICC
                          INTERNET COMMERCE CORPORATION

             INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE



                                                                                               PAGE
                                                                                               ----
                                                                                            
Report of Independent Registered Public Accounting Firm                                        F-2
Consolidated balance sheets                                                                    F-3
Consolidated statements of operations                                                          F-4
Consolidated statements of changes in stockholders' equity and comprehensive income
   (loss)                                                                                      F-5
Consolidated statements of cash flows                                                          F-7
Notes to consolidated financial statements                                                     F-8


                                      F-1


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Internet Commerce Corporation
Norcross, Georgia

      We have audited the accompanying consolidated balance sheets of Internet
Commerce Corporation and subsidiaries (the "Company") as of July 31, 2006 and
2005, and the related consolidated statements of operations, changes in
stockholders' equity and comprehensive income (loss), and cash flows for the
years then ended. Our audit also included the financial statement schedule
listed at Item 15. These financial statements and the financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on the financial statements and the financial statement
schedule based on our audits.

      We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of their internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

      In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Internet Commerce Corporation
and subsidiaries as of July 31, 2006 and 2005 and the results of their
operations and their cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.

/s/ TAUBER & BALSER, P.C.
-------------------------
Atlanta, GA
September 28, 2006

                                      F-2


                          INTERNET COMMERCE CORPORATION
                           CONSOLIDATED BALANCE SHEETS



                                                                                             AS OF JULY 31,
                                                                                      -----------------------------
                                                                                          2006            2005
                                                                                      -------------   -------------
                                                                                                
ASSETS
Current assets:
   Cash and cash equivalents                                                          $   6,988,753   $   3,983,005
   Accounts receivable, net of allowance for doubtful accounts and
     allowance for sales returns and allowances of $458,061 and
     $581,907, respectively                                                               3,631,135       3,476,211
   Prepaid expenses and other current assets                                                461,778         403,659
                                                                                      -------------   -------------
     Total current assets                                                                11,081,666       7,862,875

Restricted cash                                                                             432,974         417,330
Property and equipment, net                                                               1,113,701         629,919
Goodwill                                                                                  6,148,332       3,842,536
Other intangible assets, net                                                              4,829,772       1,772,757
Other assets                                                                                 37,822          32,373
                                                                                      -------------   -------------
     Total assets                                                                     $  23,644,267   $  14,557,790
                                                                                      =============   =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                                   $     662,151   $     226,097
   Accrued expenses                                                                         574,783       1,490,604
   Accrued dividends -- preferred stock                                                     232,329         232,329
   Deferred revenue                                                                         261,214         152,434
   Capital lease obligation                                                                      --           3,645
   Lease liability from acquisition                                                         249,940         748,949
   Other current liabilities                                                                116,280         145,250
                                                                                      -------------   -------------
     Total current liabilities                                                            2,096,697       2,999,308

Long-term lease liability from acquisition                                                  967,442       1,216,280
                                                                                      -------------   -------------
     Total liabilities                                                                    3,064,139       4,215,588
                                                                                      -------------   -------------
Commitments and contingencies (See Note 11)

Stockholders' Equity:

Preferred stock -- 5,000,000 shares authorized, including 10,000
  shares of series C and 250 shares of series D:

   Series C Preferred Stock -- par value $.01 per share, 44.76 votes
     per share; 10,000 shares issued and outstanding (liquidation value
     of $10,232,329)                                                                            100             100
   Series D Preferred Stock -- par value $.01 per share, 769 votes per
     share; 250 shares issued and outstanding (liquidation value of
     $250,000)                                                                                    3               3
Common stock:
   Class A -- par value $.01 per share, 40,000,000 shares authorized,
    one vote per share; 22,712,944 and 19,414,420 shares issued and
     outstanding, respectively                                                              227,129         194,144
   Class B -- par value $.01 per share, 2,000,000 shares authorized,
     six votes per share; none issued and outstanding                                            --              --
Additional paid-in capital                                                              103,042,746      95,813,761
Accumulated deficit                                                                     (82,689,850)    (85,665,806)
                                                                                      -------------   -------------
     Total stockholders' equity                                                          20,580,128      10,342,202
                                                                                      -------------   -------------
     Total liabilities and stockholders' equity                                       $  23,644,267   $  14,557,790
                                                                                      =============   =============


                       See notes to consolidated financial statements.

                                      F-3


                          INTERNET COMMERCE CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                                                YEAR ENDED JULY 31,
                                                                           -----------------------------
                                                                               2006            2005
                                                                           -------------   -------------
                                                                                     
Service revenues                                                           $  19,771,095   $  16,704,631
                                                                           -------------   -------------
Expenses:
     Cost of services                                                          6,780,232       6,046,593
     Product development and enhancement                                         632,674         854,913
     Selling and marketing                                                     2,107,949       2,672,627
     General and administrative                                                8,096,708       6,903,360
                                                                           -------------   -------------
                                                                              17,617,563      16,477,493
                                                                           -------------   -------------
Operating income                                                               2,153,532         227,138
                                                                           -------------   -------------

Other income and (expense):
     Interest and investment income                                              200,328          39,240
     Interest expense                                                           (158,687)         (4,569)
     Gain on sale of patents                                                     783,750              --
     Other income                                                                 57,671           2,575
                                                                           -------------   -------------
                                                                                 883,062          37,246
                                                                           -------------   -------------
Income before income taxes                                                     3,036,594         264,384
                                                                           -------------   -------------
Provision for income taxes, current                                               60,638          30,390
                                                                           -------------   -------------
Net income                                                                     2,975,956         233,994

Dividends on preferred stock                                                    (400,000)       (400,000)
                                                                           -------------   -------------
Net income (loss) attributable to common stockholders                      $   2,575,956   $    (166,006)
                                                                           =============   =============
Basic income (loss) per common share                                       $        0.12   $       (0.01)
                                                                           =============   =============
Diluted income (loss) per common share                                     $        0.11   $       (0.01)
                                                                           =============   =============
Anti-dilutive stock options and warrants outstanding                           1,584,704       4,698,717
                                                                           =============   =============
Weighted average number of common shares outstanding --
   basic                                                                      20,643,139      19,230,869
                                                                           =============   =============
Weighted average number of common shares outstanding --
   diluted                                                                    22,640,496      19,603,540
                                                                           =============   =============


                 See notes to consolidated financial statements.

                                      F-4


                          INTERNET COMMERCE CORPORATION

         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND
                           COMPREHENSIVE INCOME (LOSS)



                                      PREFERRED STOCK                         COMMON STOCK
                            -----------------------------         --------------------------------------
                              SERIES C         SERIES D                   CLASS A             CLASS B      ADDITIONAL
                           --------------  --------------         -----------------------  -------------    PAID-IN
                            SHARES AMOUNT  SHARES  AMOUNT            SHARES      AMOUNT    SHARES AMOUNT    CAPITAL
                            -------------  ------  ------         -----------  ----------  ------ ------  ------------
                                                                               
Balance -- July
  31, 2004                  10,000  $ 100    250   $    3          19,058,187  $  190,582    --   $ --     $95,143,356

  Proceeds from
    exercise of
    employee
    stock options                                                      34,300         343                       41,932

  Common stock
    issued for
    services
    related to
    2004 private
    placement                                                                                                  (23,512)

  Common stock
    issued to
    directors                                                          85,666         856                      121,020

  Stock based
    compensation
    expense                                                                                                    508,992

  Common stock
    issued as
    payment for
    dividends on
    preferred
    stock, net
    of tax                                                            236,267       2,363                      397,637

  Forfeiture of
    cash related
    to options
    issued in
    acquisition
    of RTCI                                                                                                     23,878

  Accrued
    dividends on
    preferred
    stock                                                                                                     (399,542)

Net income

Balance -- July
  31, 2005                  10,000  $ 100    250   $    3          19,414,420  $  194,144    --   $ --     $95,813,761
                            ======  =====    ===   ======         ===========  ==========   ====  ====     ===========


                                       ACCUMULATED
                            -----------------------------------
                                                    OTHER                  TOTAL
                                                 COMPREHENSIVE          STOCKHOLDERS'
                              DEFICIT            INCOME(LOSS)              EQUITY
                            ------------        --------------        ----------------
                                                             
Balance -- July
  31, 2004                  $(85,899,800)          $  --              $   9,434,241

  Proceeds from
    exercise of
    employee
    stock options                                                            42,275

  Common stock
    issued for
    services
    related to
    2004 private
    placement                                                               (23,512)

  Common stock
    issued to
    directors                                                               121,876

  Stock based
    compensation
    expense                                                                 508,992

  Common stock
    issued as
    payment for
    dividends on
    preferred
    stock, net
    of tax                                                                  400,000

  Forfeiture of
    cash related
    to options
    issued in
    acquisition
    of RTCI                                                                  23,878

  Accrued
    dividends on
    preferred
    stock                                                                  (399,542)

Net income                       233,994                                    233,994
                            ------------                               ------------
Balance -- July
  31, 2005                  $(85,665,806)         $   --               $ 10,342,202
                            ============          ======               ============


                 See notes to consolidated financial statements.

                                      F-5


                          INTERNET COMMERCE CORPORATION

               CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
               EQUITY AND COMPREHENSIVE INCOME (LOSS) (CONTINUED)



                                      PREFERRED STOCK                         COMMON STOCK
                            -----------------------------         --------------------------------------
                              SERIES C         SERIES D                   CLASS A             CLASS B      ADDITIONAL
                           --------------  --------------         -----------------------  -------------    PAID-IN
                            SHARES AMOUNT  SHARES  AMOUNT            SHARES      AMOUNT    SHARES AMOUNT    CAPITAL
                           ------- ------  ------  ------         -----------  ----------  ------ ------  ------------
                                                                               
Balance -- July
  31, 2005                  10,000  $ 100    250   $    3          19,414,420  $  194,144    --   $ --    $ 95,813,761

  Proceeds from
    exercise of
    employee
    stock options                                                     467,720       4,783                      727,638

  Common stock
    issued
    related to the
    acquisition of
    Enable                                                            686,324       6,863                    2,625,876

  Common stock
    issued to
    directors                                                          29,998         300                       86,700

  Stock based
    compensation
    expense                                                                                                    631,005

  Common stock
    issued as
    payment for
    dividends on
    preferred
    stock, net
    of tax                                                            141,844       1,418                      398,582

  Forfeiture of
    cash related
    to options
    issued in
    acquisition
    of RTCI                                                                                                     20,962

  Accrued
    dividends on
    preferred
    stock                                                                                                     (400,000)

  Refund of
    withholding
    taxes on
    preferred stock
    dividend                                                                                                    60,000

  Proceeds from
    exercise of
     warrants                                                       1,973,595      19,631                    3,078,212

  Other                                                                  (957)        (10)                          10

Net income

Balance -- July
  31, 2006                  10,000  $ 100    250   $    3          22,712,944  $  227,129    --   $ --    $103,042,746
                            ======  =====    ===   ======         ===========  ==========   ====  ====    ============


                                       ACCUMULATED
                            -----------------------------------
                                                    OTHER                  TOTAL
                                                 COMPREHENSIVE          STOCKHOLDERS'
                              DEFICIT            INCOME(LOSS)              EQUITY
                            ------------        --------------        ----------------
                                                             
Balance -- July
  31, 2005                  $(85,665,806)          $  --              $  10,342,202

  Proceeds from
    exercise of
    employee
    stock options                                                           732,421

  Common stock
    issued
    related to the
    acquisition of
    Enable                                                                2,632,739

  Common stock
    issued to
    directors                                                                87,000

  Stock based
    compensation
    expense
                                                                            631,005

  Common stock
    issued as
    payment for
    dividends on
    preferred
    stock, net
    of tax                                                                  400,000

  Forfeiture of
    cash related
    to options
    issued in
    acquisition
    of RTCI                                                                  20,962

  Accrued
    dividends on
    preferred
    stock                                                                  (400,000)

  Refund of
    withholding
    taxes on
    preferred stock
    dividend                                                                 60,000

  Proceeds from
    exercise of
     warrants                                                             3,097,843

  Other                                                                          --

Net income                     2,975,956                                  2,975,956
                            ------------                               ------------
Balance -- July
  31, 2006                  $(82,689,850)         $   --               $ 20,580,128
                            ============          ======               ============


                 See notes to consolidated financial statements.

                                      F-6


                          INTERNET COMMERCE CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                   YEAR ENDED JULY 31,
                                                                --------------------------
                                                                    2006          2005
                                                                ------------  ------------
                                                                        
Cash flows from operating activities:
Net income                                                      $  2,975,956  $    233,994
Adjustments to reconcile net income (loss) to net cash
   provided by (used in) operating activities:
   Depreciation and amortization                                   1,289,592     1,537,543
   Bad debt expense                                                  629,141       431,584
   Non-cash interest expense                                         159,208            --
   Realized loss on disposal of fixed assets                          21,656            --
   Gain on sale of patents                                          (783,750)           --
Non-cash charges for equity instruments issued for
   compensation and services                                         646,005       692,452
   Changes in assets and liabilities, net of effects from
     acquisitions:
     Accounts receivable                                             278,257    (1,753,332)
     Prepaid expenses and other assets                                (1,416)      (28,529)
     Accounts payable                                                222,309      (297,606)
     Accrued expenses                                               (962,113)     (320,465)
     Deferred revenue                                               (190,640)       19,371
     Lease liability from acquisition                               (747,847)     (325,806)
     Other liabilities                                              (177,625)     (275,861)
                                                                ------------  ------------
     Net cash provided by operating activities                     3,358,733       554,275
                                                                ------------  ------------
Cash flows from investing activities:
   Payment for purchase of acquisitions, net of cash acquired     (4,413,372)      208,605
   Additional costs of previous acquisition                          (65,000)     (121,296)
   Purchases of property and equipment                              (549,046)     (415,431)
   Proceeds from sale of patents                                     783,750            --
   Proceeds from sales of property and equipment                       4,064            --
                                                                ------------  ------------
     Net cash used in investing activities                        (4,239,604)     (328,122)
                                                                ------------  ------------
Cash flows from financing activities:
   Common stock issued for services related to 2004 private
     placement                                                            --       (23,512)
   Proceeds from exercise of warrants                              3,097,843            --
   Proceeds from exercise of employee stock options                  732,421        42,275
   Refund of withholding taxes on preferred stock dividends           60,000            --
   Payments of capital lease obligations                              (3,645)      (51,554)
                                                                ------------  ------------
     Net cash provided by (used in) financing activities           3,886,619       (32,791)
                                                                ------------  ------------
Net increase in cash and cash equivalents
                                                                   3,005,748       193,362
Cash and cash equivalents, beginning of year                       3,983,005     3,789,643
                                                                ------------  ------------
Cash and cash equivalents, end of year                          $  6,988,753  $  3,983,005
                                                                ============  ============

Supplemental disclosure of cash flow information:
   Cash paid for interest                                       $        257  $      4,569
   Cash paid for income taxes                                   $    113,750  $         --


                 See notes to consolidated financial statements.

                                      F-7


                          INTERNET COMMERCE CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF BUSINESS

      Internet Commerce Corporation ("ICC" or the "Company") provides
Internet-based services for the e-commerce business-to-business communication
services market. ICC.NET(TM), the Company's global Internet-based value added
network, or VAN, provides supply chain connectivity solutions for electronic
data interchange, or EDI, and offers users a vehicle to securely send and
receive files of any format and size.

      The ICC.NET system uses the Internet and proprietary technology to deliver
customers' documents and data files to members of their trading communities,
many of which have incompatible systems, by translating the documents and data
files into any format required by the receiver. The system can be accessed using
a standard Web browser or multiple other communications protocols.

      The Company has the capability to facilitate the development and operation
of comprehensive business-to-business electronic commerce solutions. The Company
can provide professional service electronic commerce solutions involving EDI
through mission critical electronic commerce consulting, electronic commerce
software, outsourced electronic commerce services and technical resource
management.

     ICC's capabilities also include an EDI EC Service Bureau ("EC Service
Bureau"), which provides EDI services to small and mid-sized companies on an
outsourced basis. The EC Service Bureau's services include the conversion of
electronic forms into hard copies and the conversion of hard copies to an EDI
format. The EC Service Bureau also provides Universal Product Code ("UPC")
services and maintains UPC catalogs for its customers.

2. SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES

PRINCIPLES OF CONSOLIDATION:

      The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions
have been eliminated in consolidation.

RECLASSIFICATIONS:

      Certain prior year balances have been reclassified to confirm to the
current year presentation. In fiscal year 2005, other liabilities have been
reclassified into lease liability from acquisition, which had no impact on the
consolidated balance sheets, consolidated statements of changes in stockholders'
equity and comprehensive income (loss), but did have an impact on certain
captions on the consolidated statements of cash flows.

REVENUE RECOGNITION:

      The Company derives revenue from subscriptions to its ICC.NET service,
which includes transaction, mailbox and fax transmission fees. The subscription
fees are comprised of both fixed and usage-based fees. Fixed subscription fees
are recognized on a pro-rata basis over the subscription period, generally three
to six months. Usage fees are recognized in the period the services are
rendered. The Company also derives revenue through implementation fees,
interconnection fees and by providing data mapping services to its customers.
Implementation fees are recognized over the life of the subscription period.
Interconnection fees are fees charged to connect to another VAN service and are
recognized when the data is transmitted

                                      F-8


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES (CONTINUED)

to the connected service. Revenue from data mapping services is recognized when
the map has been completed and delivered to the customer.

      Revenue from professional service contracts are recognized using the
percentage-of-completion method of accounting, as prescribed by SOP 81-1
"Accounting for Performance of Construction-Type and Certain Production-Type
Contracts." The percentage of completion for each contract is determined based
on the ratio of direct labor hours incurred to total estimated direct labor
hours required to complete the contract. The Company may periodically encounter
revisions in estimated costs and other factors that may lead to a change in the
estimated profitability of a fixed-price contract. In such circumstances,
adjustments to cost and profitability estimates are made in the period in which
the underlying factors requiring such revisions become known. If such revisions
indicate a loss on a contract, the entire loss is recorded at such time. Amounts
billed in advance of services being performed are recorded as deferred revenue.
Certain fixed-fee contracts may have substantive customer acceptance provisions.
The acceptance terms generally include a single review and revision cycle for
each deliverable to incorporate the customer's suggested or required
modifications. Deliverables are considered accepted upon completion of the
review and revision cycle and revenue is recognized upon that acceptance. The
revenue calculated under the percentage of completion method was not significant
in the current year.

      The Company also derives revenue from its EC Service Bureau. EC Service
Bureau revenue is comprised of EDI services, including data translation
services, purchase order and invoice processing from EDI-to-print and
print-to-EDI and UPC services, including UPC number generation, UPC catalog
maintenance and UPC label printing. The EC Service Bureau also derives revenue
from software licensing and provides software maintenance and support. Revenue
from the EDI services and UPC services is recognized when the services are
provided. The Company accounts for its EDI software license sales in accordance
with the American Institute of Certified Public Accountants Statement of
Position 97-2, "Software Revenue Recognition," as amended ("SOP 97-2"). Revenue
from software licenses is recognized when all of the following conditions are
met: (1) a non-cancelable, non-contingent license agreement has been signed; (2)
the software product has been delivered; (3) there are no material uncertainties
regarding customer acceptance; and (4) collection of the resulting receivable is
probable. Revenue from software maintenance and support contracts is recognized
ratably over the life of the contract. The EC Service Bureau's software license
revenue was not significant in any of the periods presented.

      In addition, SOP 97-2 generally requires that revenue from software
arrangements involving multiple elements be allocated among each element of the
arrangement based on the relative fair values of the elements, such as software
licenses, post contract customer support, installation or training. Furthermore,
SOP 97-2 requires that revenue be recognized as each element is delivered and
the Company has no significant performance obligations remaining. The Company's
multiple element arrangements generally consist of a software license and post
contract support. The Company allocates the aggregate revenue from multiple
element arrangements to each element based on vendor specific objective
evidence. The

                                      F-9


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES (CONTINUED)

Company has established vendor specific objective evidence for each of the
elements as it sells both the software and post contract customer support
independent of multiple element agreements. Customers are charged standard
prices for the software and post contract customer support and these prices do
not vary from customer to customer.

      If the Company enters into a multiple element agreement where vendor
specific objective evidence of fair value for each element of the arrangement
does not exist, all revenue from the arrangement is deferred until all elements
of the arrangement are delivered. Service revenue from maintenance contracts is
recognized ratably over the term of the maintenance contract, on a straight-line
basis. Other service revenue is recognized at the time the service is performed.

DEFERRED REVENUE:

      Deferred revenue is comprised of deferrals for subscription fees,
professional services, license fees and maintenance associated with contracts
for which amounts have been received in advance of services to be performed or
prior to the shipment of software.

PROPERTY AND EQUIPMENT:

      Property and equipment are stated at cost and are depreciated using the
straight-line method over the estimated useful lives of the related assets,
generally three to seven years. Leasehold improvements are amortized using the
straight-line method over the shorter of the term of the lease or the estimated
useful life of the asset.

ACCOUNTS RECEIVABLE:

      Accounts receivable are stated at the amount management expects to collect
from outstanding balances. Management provides for estimated uncollectible
amounts through an allowance for doubtful accounts and an allowance for sales
returns and allowances. The allowance for doubtful accounts results in a charge
to earnings and a credit to a valuation allowance based on its assessment of the
current status of individual accounts. Balances that are still outstanding after
management has performed reasonable collection efforts are written off through a
charge to the valuation allowance and a credit to accounts receivable. The
allowance for sales returns and allowances is recorded as a reduction of total
revenue and a credit to the allowance account based on specific review of
account balances. Credit is granted to customers without requiring collateral.
The amount of accounting loss for which we are at risk in these unsecured
accounts receivable is limited to their carrying value.

EARNINGS PER SHARE OF COMMON STOCK:

      The Company calculates its earnings per share ("EPS") under the provisions
of Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS 128"). SFAS 128 requires dual presentation of "basic" and "diluted"
earnings per share on the face of the statement of operations. In accordance
with SFAS 128, basic earnings per common share is computed by dividing the net
income (loss) attributable to common stockholders by the weighted average number
of shares of common stock outstanding during each period. Diluted earnings per
share is calculated by dividing net income (loss) attributable to common
stockholders by the weighted average number of shares of common stock
outstanding and all dilutive potential common shares that were outstanding
during the period. The per

                                      F-10


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES (CONTINUED)

share effects of potential common shares such as warrants, options and
convertible preferred stock have been excluded from the calculation of diluted
loss per share for the year ended July 31, 2005, as the effect would be
antidilutive in the period.

      The following data show the amounts used in computing earnings per share
and the effect on income and the weighted average number of shares of dilutive
potential common stock:



                                                                          FOR THE YEAR ENDED
                                                                             JULY 31, 2006
                                                                ----------------------------------------
                                                                                             PER SHARE
                                                                  INCOME         SHARES        AMOUNT
                                                                ------------    ----------   -----------
                                                                                    
Net income                                                      $ 2,975,956
   Less: Series C preferred dividends                           $  (400,000)
Basic EPS
   Income available to common stockholders                      $ 2,575,956     20,643,139    $  0.12
                                                                                              =======
Effect of Dilutive Securities
   Warrants                                                              --        240,992
   Stock options                                                         --      1,564,058
   Series D preferred stock                                              --        192,307
                                                                -----------     ----------
Diluted EPS
   Income available to common stockholders                      $ 2,575,956     22,640,496    $  0.11
                                                                ===========     ==========    =======


      Options and warrants of 1,137,076 were not included in computing diluted
EPS nor were series C preferred convertible shares of 447,628 because their
effects were antidilutive.

SOFTWARE DEVELOPMENT COSTS:

      The Company capitalizes software development costs under the provisions of
either Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1") or Statement of
Financial Accounting Standards No. 86, "Computer Software to be Sold, Leased, or
Otherwise Marketed" ("SFAS 86"), based on the intended use of the software.

      The Company capitalizes the costs of acquiring, developing and testing
software to meet the Company's internal needs. Under the provisions of SOP 98-1,
the Company capitalizes costs associated with software developed or obtained for
internal use when both the preliminary project stage is completed and management
has authorized further funding for the project which it deems probable will be
completed and used to perform the function intended. Capitalized costs include
only (1) external direct costs of materials and services consumed in developing
or obtaining internal-use software, (2) payroll and payroll-related costs for
employees who are directly associated with and devote time to the internal-use
software project and (3) interest costs incurred while developing internal-use
software. Capitalization of such costs ceases no later than the point at which
the project is substantially complete and ready for its intended use. Software
development costs are amortized using a straight-line method over a three-year
period. Accumulated amortization of software development costs included in
internally developed systems was $537,230 and $193,642 at July 31, 2006 and
2005, respectively. No amounts were capitalized in the fiscal years ended July
31, 2006 and 2005.

      The Company capitalizes the costs of computer software to be sold or
otherwise marketed in accordance with the provisions of SFAS 86. Costs related
to the conceptual formulation and design of

                                      F-11


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES (CONTINUED)

software are expensed as product development. Costs incurred subsequent to the
establishment of technological feasibility are capitalized. Capitalization of
costs ceases when the product is available for general release to customers.
Capitalized software costs are amortized over the shorter of three years or the
expected life of the product. The Company did not record any amortization of
software development costs for the fiscal years ended July 31, 2006 and 2005. No
development costs were capitalized under the provisions of SFAS 86 during the
fiscal years ended July 31, 2006 and 2005.

STOCK-BASED COMPENSATION:

      In December 2004, the FASB issued Statement of Financial Accounting
Standards No. 123 (revised 2004), "Share-Based Payment"("SFAS 123R"), which
revises Statement of Financial Accounting Standards No. 123 ("SFAS 123") and
supersedes Accounting Principles Board Opinion No. 25 ("APB 25"). SFAS 123R
requires companies to record in the financial statements all share-based
payments to employees, including grants of stock options, based on the
fair-value of the grant date of the stock. The company adopted SFAS 123R on
August 1, 2005. In January 2004, the Company had adopted the fair value
provisions of SFAS 123, which are now required by SFAS 123R. Pursuant to the
transition provisions of SFAS 148, "Accounting for Stock-Based Compensation --
Transition and Disclosure" ("SFAS 148"), the Company had elected the prospective
method and applied the fair value method of accounting to all equity instruments
issued to employees on or after August 1, 2003. The fair value method is not
applied to stock option awards granted in fiscal years prior to the fiscal year
ended July 31, 2004. Such awards will continue to be accounted for under the
intrinsic value method pursuant to Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), except to the extent that
prior years' awards are modified subsequent to August 1, 2003. Option awards
granted prior to August 1, 2003 that have not been modified or settled continue
to be accounted for under the intrinsic value method of APB 25. Therefore, the
cost related to stock-based employee compensation included in the determination
of the net income or loss for the fiscal years ended July 31, 2005 is less than
that which would have been recognized if the fair value based method had been
applied to all awards since their date of grant. The following table illustrates
the effect on net income (loss) and net income (loss) per common share if the
fair value based method had been applied to all outstanding and unvested awards
in each period.

                                      F-12


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES (CONTINUED)



                                                                   2006           2005
                                                                ------------  ------------
                                                                        
Net income (loss), as reported                                  $ 2,575,956   $   (166,006)
Add: Stock-based employee compensation expense included in
   reported net income (loss)                                       631,005        508,992
Deduct: Total stock-based employee compensation expense
   determined under fair value based method for all awards         (631,005)      (512,557)
                                                                ------------  ------------
   Pro forma net income (loss)                                  $ 2,575,956   $   (169,571)
                                                                ============  ============
Basic income (loss) per common share:
   As reported                                                  $      0.12   $     (0.01)
   Pro forma                                                    $      0.12   $     (0.01)
Diluted income (loss) per common share:
   As reported                                                  $      0.11   $     (0.01)
   Pro forma                                                    $      0.11   $     (0.01)


INCOME TAXES:

      Deferred income taxes are determined by applying enacted statutory rates
in effect at the balance sheet date to the differences between the tax bases of
assets and liabilities and their reported amounts in the consolidated financial
statements and for income tax reporting carryforwards. A valuation allowance is
provided, based on the weight of available evidence, if it is considered more
likely than not that some portion, or all, of the deferred tax assets will not
be realized.

CASH AND CASH EQUIVALENTS:

      The Company considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash equivalents.

USE OF ESTIMATES:

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and reported amounts of revenue and expense during
the reporting period. Actual results could differ from those estimates.
Significant accounting estimates used in the preparation of the Company's
consolidated financial statements include the fair value of equity securities
underlying stock based compensation, the realizability of deferred tax assets,
the carrying value of goodwill, intangible assets and long-lived assets and
depreciation and amortization.

IMPAIRMENT AND REVIEW OF LONG-LIVED ASSETS:

      Long-lived assets of the Company, including amortizable intangibles, are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable. When such events
or changes in circumstances occur, the Company tests for impairment by comparing
the carrying value of the long-lived asset to the estimated undiscounted future
cash flows expected to result from use of the asset and its eventual
disposition. Management also reevaluates the periods of amortization of
long-lived assets to determine whether events and circumstances warrant

                                      F-13


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES (CONTINUED)

revised estimates of useful lives. If the sum of the expected undiscounted
future cash flows is less than the carrying amount of the asset, the Company
would recognize an impairment loss. The amount of the impairment loss will be
determined by comparing the carrying value of the long-lived asset to its fair
value (See Note 4).

GOODWILL:

      Goodwill consists of the excess of the purchase price over the fair value
of identifiable net assets of businesses acquired. Effective August 1, 2001, the
Company adopted SFAS 141, "Business Combinations" ("SFAS 141") and SFAS 142,
"Goodwill and Other Intangible Assets" ("SFAS 142").

      SFAS 142 requires that goodwill no longer be amortized; instead, goodwill
is to be evaluated for impairment at least annually and whenever events or
circumstances indicate impairment may have occurred. The assessment requires the
comparison of the fair value of each of the Company's reporting units to the
carrying value of its respective net assets, including allocated goodwill. If
the carrying value of the reporting unit exceeds its fair value, the Company
must perform a second test to measure the amount of impairment. The second step
of the goodwill impairment test compares the implied fair value of reporting
unit goodwill with the carrying amount of that goodwill. The Company allocates
the fair value of a reporting unit to all of the assets and liabilities of that
unit as if the reporting unit had been acquired in a business combination and
the fair value of the reporting unit was the price paid to acquire the reporting
unit. The excess of the fair value of a reporting unit over the amounts assigned
to its assets and liabilities is the implied fair value of goodwill. If the
carrying amount of reporting unit goodwill exceeds the implied fair value of
that goodwill, an impairment loss would be recognized by the Company in an
amount equal to that excess (see Note 4). The Company performs its annual
goodwill impairment test as of August 1.

MARKETABLE SECURITIES:

      Marketable securities are classified as available for-sale securities.
Unrealized holding gains and losses are recorded as other comprehensive income,
net of any related tax effect.

FAIR VALUE OF FINANCIAL INSTRUMENTS:

      The carrying amounts of the Company's financial instruments, including
cash and cash equivalents, accounts receivable, restricted time deposits,
accounts payable, accrued expenses and other liabilities, approximate fair value
due to their short maturities.

3. ACQUISITIONS

ENABLE

      On May 9, 2006, the Company acquired all of the outstanding shares of
Enable Corp. ("Enable"), a privately held corporation with offices in New York
City that provides trading community portals, web based EDI trading tools, and
EDI professional services to a variety of industries. Under the terms of the
Share Purchase Agreement, the Company paid $4.2 million in cash and issued
686,324 shares of its class A common stock valued at approximately $2.6 million.

                                      F-14


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. ACQUISITIONS (CONTINUED)

      The following table sets forth the components of the purchase price for
Enable as of July 31, 2006.


                                                                
Cash on closing                                                    $ 4,203,000
ICC class A common stock issued                                      2,632,739
Transaction costs                                                      416,208
                                                                   -----------
        Total purchase price                                       $ 7,251,947
                                                                   ===========


      The following table provides the estimated fair value of assets acquired
and liabilities assumed in the Enable acquisition:


                                                                
Cash                                                               $   991,747
Accounts receivable                                                    705,386
Restricted cash                                                         15,000
Other assets                                                            14,975
Fixed assets                                                           246,520
Intangible assets -- acquired technology                             1,775,000
Intangible assets -- trade names                                       250,000
Intangible assets -- customer relationships                          1,500,000
Liabilities                                                           (510,778)
                                                                   -----------
Fair value of net assets acquired                                  $ 4,987,850
                                                                   -----------
Goodwill                                                           $ 2,264,097
                                                                   -----------
        Total purchase price                                       $ 7,251,947
                                                                   ===========


      The recorded other net tangible assets are estimated to have a life of two
to three years. The acquired technology intangibles are estimated to have a life
between one and four years, and the customer relationship and trade names
intangibles are estimated to have a life of seven years. We recorded $2,264,000
in goodwill from the Enable acquisition. Revenue from the Enable acquisition
includes hosting and transaction fees, administrative fees and professional
services, which are part of our ICC.NET segment. Goodwill and intangible assets
are deductible for tax purposes.

                     ENABLE PRO FORMA FINANCIAL INFORMATION

      The following unaudited pro forma summary financial information presents
the consolidated results of operations of the Company as if the acquisition of
Enable had occurred on August 1, 2004. The pro forma results are shown for
illustrative purposes only and do not purport to be indicative of the results
that would have been reported if the acquisition had occurred on the date
indicated or indicative of the results which may occur in the future. The
results of operations of Enable are consolidated with the results of operations
of the Company subsequent to the acquisition date.



                                                              JULY 31, 2006    JULY 31, 2005
                                                              -------------    -------------
                                                                         
Revenues                                                      $   22,857,358   $  18,370,000
Net income (loss)                                             $    1,901,067   $    (712,000)
Basic income (loss) per common share                          $         0.09   $       (0.06)
Diluted income (loss) per common share                        $         0.08   $       (0.06)


                                      F-15


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. ACQUISITIONS (CONTINUED)

      The acquisition of Enable was made to strengthen the Company's web based
trading technology offering and customer base.

KODIAK

      On November 1, 2005, the Company acquired the outstanding share of the
Kodiak Group, Inc. ("Kodiak"), a privately held company delivering EDI
outsourcing and global data synchronization services to blue chip customers in a
variety of industries. Under the terms of the Share Purchase Agreement, the
Company paid $1.0 million in cash on close, will pay an additional $1.0 million
in cash should the Kodiak operations generate revenue of no less than $3.0
million over the first twelve months following the acquisition, and up to an
additional $0.5 million on a pro-rated basis should the Kodiak operations
generate between $3.25 and $4.0 million in revenue over the first twelve months
following the acquisition. The Company has based its allocation of the purchase
price on the assumption that the sellers of Kodiak will not receive any of the
additional payments outlined above.


                                                             
Cash on closing                                                 $  1,000,000
Transaction costs                                                     53,942
                                                                ------------
        Total purchase price                                    $  1,053,942
                                                                ============


     The following table provides the estimated fair value of assets acquired
and liabilities assumed in the Kodiak acquisition:


                                                             
Cash                                                            $   167,323
Accounts receivable                                                 358,168
Other assets                                                         61,252
Fixed assets                                                        109,597
Intangible assets -- customer relationships                         425,947
Liabilities                                                         (68,345)
                                                                ------------
        Total purchase price                                    $ 1,053,942
                                                                ============


      The recorded other net tangible assets are estimated to have a life of two
years and the customer relationship intangible is estimated to have a life of
five years. Revenue from the Kodiak acquisition includes professional services
and mapping revenue, which is a part of our ICC.NET segment and EDI outsourcing,
which is a part of our EC Service Bureau segment. There was no goodwill recorded
as a result of this acquisition. The results of operations of Kodiak are
consolidated with the results of operations of the Company subsequent to the
acquisition date. The acquisition of Kodiak was made to enhance the Company's
professional services offerings as well as expand the Company's customer base.
No pro forma information regarding revenue and income for Kodiak is provided as
the effect of the acquisition on the consolidated financial statements is not
material. Acquired intangible assets are deductible for tax purposes.

                                      F-16


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. ACQUISITIONS (CONTINUED)

MEC

      On March 17, 2005, the Company completed the acquisition of QRS
Corporation's ("QRS") Managed EC(TM) business ("MEC"), from the parent company
of QRS, Inovis International, Inc. ("Inovis"). The consideration for the
acquisition of this business was the assumption of certain liabilities that have
been recorded on the Company's books per Statement of Financial Accounting
Standards No. 141 "Business Combinations" ("FASB 141").

      As part of the transaction, the Company assumed an unfavorable lease for
office space located in New York. Per FASB 141, the Company recorded the present
value of the estimated difference between the estimated cash amounts due under
the existing terms of the lease; cash received from Inovis as part of the
transaction net of the estimated current market value of cash flows receivable
from a sublease. In January of 2006, the Company entered into a sublease for the
MEC space and adjusted the Company's original estimated sublease cash flows to
the actual expected cash flow per the terms of the sublease. As of March 17,
2005, the Company has recorded approximately $2,268,000 as other liabilities
under the original lease. In addition, the Company assumed certain employee
obligations, transition services fees payable to Inovis and other estimated
closing costs of the MEC New York location that have been recorded as other
accrued liabilities for approximately $376,000. The total allocated purchase
price was $2,355,480.

      Under the FASB 141 allocation, the Company recorded fixed assets and
leasehold improvements of approximately $210,000, restricted cash of
approximately $420,000, intangibles for customer relationships of approximately
$737,000 and goodwill of approximately $1,224,000. The recorded fixed assets are
estimated to have a life of two years; the leasehold improvements are being
amortized over the term of the lease and the customer relationship intangible
will be amortized over five years. The recorded goodwill will be subject to
annual impairment testing under Statement of Financial Accounting Standards No.
142 "Goodwill and Other Intangibles".

      At the date of acquisition, the intangible assets of MEC consisted of its
customer relationships, valued at $737,000.

      The following table sets forth the components of the purchase price for
MEC as of March 17, 2005:


                                                             
Assumption of lease                                             $  2,267,734
Transaction costs                                                     87,746
                                                                ------------
        Total purchase price                                    $  2,355,480
                                                                ============


                                      F-17


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. ACQUISITIONS (CONTINUED)

      The following table provides the estimated fair value of assets acquired
and liabilities assumed in the MEC acquisition:


                                                             
Cash                                                            $   231,351
Restricted cash                                                     420,122
Fixed assets                                                        209,623
Intangible assets -- customer relationships                         736,739
Liabilities                                                        (466,056)
                                                                -----------
Fair value of net assets acquired                                 1,131,779
                                                                -----------
Goodwill                                                        $ 1,223,701
                                                                -----------
        Total purchase price                                    $ 2,355,480
                                                                ===========


                       MEC PRO FORMA FINANCIAL INFORMATION

      The following unaudited pro forma summary financial information presents
the consolidated results of operations of the Company as if the acquisition of
MEC had occurred on August 1, 2004. The pro forma results are shown for
illustrative purposes only and do not purport to be indicative of the results
that would have been reported if the acquisitions had occurred on the dates
indicated or indicative of the results which may occur in the future. The
results of operations of MEC are consolidated with the results of operations of
the Company subsequent to the acquisition date.



                                                               JULY 31, 2005
                                                               -------------
                                                            
Revenues                                                       $  19,792,678
Net income                                                     $     234,213
Basic and diluted income per common share                      $        0.01


      The acquisition of MEC was completed in order to strengthen the Company's
EC Service Bureau segment and to acquire approximately 1,500 new customers. The
purchase price was composed of the assumption of liabilities, primarily the
assumption of an unfavorable lease. As a service business, the MEC had little in
the way of hard assets resulting in a purchase price allocation for intangibles
composed primarily of goodwill.

                                      F-18


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. GOODWILL AND ACQUIRED INTANGIBLE ASSETS

      Intangible assets are summarized as follows (in thousands):



                                               WEIGHTED
                                               AVERAGE                        JULY 31,
                                              AMORTIZATION        --------------------------------
                                                PERIOD                   2006           2005
                                             -------------        ---------------- ---------------
                                                                          
Mapping technology                                 5               $    4,780,000  $   4,780,000
Purchased customer relationships                   6                    2,878,592        952,645
Internally developed systems                       4                    2,651,870        876,870
Tradenames                                         7                      250,000             --
                                                                   --------------  -------------
     Intangible assets, gross                                          10,560,462      6,609,515
                                                                   --------------  -------------
Less accumulated amortization:

Mapping technology                                                     (4,780,000)    (4,541,000)
Purchased customer relationships                                         (405,325)      (102,116)
Internally developed systems                                             (537,230)      (193,642)
Tradenames                                                                 (8,135)            --
                                                                   --------------  -------------
     Accumulated amortization                                          (5,730,690)    (4,836,758)
                                                                   --------------  -------------
     Intangible assets, net                                        $    4,829,772  $   1,772,757
                                                                   ==============  =============


      At July 31, 2006 and 2005, mapping technology was related entirely to the
RTCI acquisition and was fully amortized at year end. Internally developed
systems as of July 31, 2006 included internally developed systems acquired from
the ECS and Enable acquisitions, while at July 31, 2005, the balance only
represented systems acquired from the ECS acquisition.

      At July 31, 2006 and 2005, intangible assets included customer
relationships acquired from the ECS, MEC, Kodiak and Enable acquisitions.
Tradenames as of July 31, 2006 were related entirely to the Enable acquisition.

      The Company did not have any indefinite lived intangible assets that were
not subject to amortization as of July 31, 2006 and 2005. The aggregate
amortization expense for other intangible assets was $893,000 and $1,229,000 for
the years ended July 31, 2006 and 2005, respectively.

      As of July 31, 2006, estimated amortization expense for other intangible
assets for the remaining life of those assets are as follows:



FISCAL                                                             ESTIMATED AMORTIZATION
YEAR                                                                       EXPENSE
----                                                               -----------------------
                                                                
2007                                                                     $  1,350,081
2008                                                                     $  1,046,598
2009                                                                     $  1,023,832
2010                                                                     $    694,907
2011                                                                     $    271,298
2012                                                                     $    250,000
2013                                                                     $    193,056


                                      F-19


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. GOODWILL AND ACQUIRED INTANGIBLE ASSETS (CONTINUED)

     The changes in the carrying amount of goodwill for the years ended July 31,
2006 and 2005 are as follows:



                                                                           EC SERVICE
                                                           ICC.NET           BUREAU           TOTAL
                                                         ------------     -------------    -------------
                                                                                  
Balance at July 31, 2004                                 $     26,132     $  2,513,106     $  2,539,238
Acquired goodwill                                                  --        1,303,297        1,303,297
Balance at July 31, 2005                                 $     26,132     $  3,816,403     $  3,842,535
Acquired goodwill                                           2,264,097           41,700        2,305,797
                                                         ------------     ------------     ------------
Balance at July 31, 2006                                 $  2,290,229     $  3,858,103     $  6,148,332
                                                         ============     ============     ============


     The goodwill of all reporting units is tested annually for impairment as of
August 1.

5. PROPERTY AND EQUIPMENT

     Property and equipment consists of the following:



                                                             ESTIMATED               JULY 31,
                                                            USEFUL LIVES   --------------------------------
                                                              (YEARS)          2006            2005
                                                            -------------  -------------   ---------------
                                                                                  
Computers and office equipment                                   3         $   4,898,756   $   3,211,264
Furniture and fixtures                                           7               442,459         374,194
Purchased software                                               3             1,262,640       1,045,527
Leasehold improvements                                        Various            331,728         313,558
                                                                           -------------   -------------
                                                                               6,935,583       4,944,543
Less accumulated depreciation and amortization                                (5,821,882)     (4,314,624)
                                                                           -------------   -------------
                                                                           $   1,113,701   $     629,919
                                                                           =============   =============


      Depreciation and amortization expense related to property and equipment,
including property and equipment acquired under capital leases, was
approximately $396,000 and $291,000 for the years ended July 31, 2006 and 2005,
respectively. As of July 31, 2006 and 2005, property and equipment acquired
under capital leases had a cost basis of $419,921 and accumulated amortization
of $419,921 and $416,276, respectively.

6. GAIN ON SALE OF PATENTS

      On June 12, 2006, the Company sold four outstanding patents and related
patent applications of same relating to information security technology to
Harmony Logic Systems LLC ("Purchaser"). These patents

                                      F-20


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. GAIN ON SALE OF PATENTS (CONTINUED)

were not being used in the Company's services offerings and were considered
immaterial to business operations. The Purchaser paid the Company $825,000 in
cash in consideration for the assignment of these patents and granted us a
royalty-free, irrevocable worldwide license for the patents. In addition, the
Company may receive a royalty of 10% of the net consideration from the licensing
of the patents, if any. Costs related to the sale of the patent were $41,250,
resulting in a net gain on the sale of $783,750.

7. ACCRUED EXPENSES

     Accrued expenses consist of the following:



                                                                                      JULY 31,
                                                                              --------------------------
                                                                                 2006          2005
                                                                              ----------   -------------
                                                                                     
Employee compensation and severance                                           $  134,834   $    630,000
Royalties                                                                         57,204             --
Vacation                                                                         147,889        300,598
Professional fees                                                                 10,000         20,000
Medical benefit premiums                                                         106,006             --
Board of directors fees                                                               --        162,000
Other                                                                            118,850        378,006
                                                                              ----------   ------------
                                                                              $  574,783   $  1,490,604
                                                                              ==========   ============


                                      F-21


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. STOCKHOLDERS' EQUITY

CLASS A COMMON STOCK:

     Holders of class A common stock are entitled to one vote per share on all
matters to be voted on by 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 holders of class A
common stock, identical per-share distributions must be made to the holders of
class B common stock, even if the distributions are in class A common stock. In
the event of liquidation, dissolution or winding up of ICC, the holders of class
A common stock are entitled to share equally with holders of 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 series C preferred stock, series D preferred stock or any other
series of preferred stock the Company may designate in the future.

CLASS B COMMON STOCK:

      Class B common stock is convertible into class A common stock on a
one-for-one basis both upon the request of the holder of the class B common
stock or automatically upon transfer of the class B common stock to a
stockholder that did not hold any class B common stock before the transfer.
Class B common stock is entitled to six votes per share, but in all other
respects each share of class B common stock is identical to a share of class A
common stock. There were no shares of class B common stock outstanding as of
July 31, 2006 and 2005.

SERIES C PREFERRED STOCK:

      During the fiscal year ended July 31, 2000, the Company issued 10,000
shares of series C preferred stock and warrants to purchase 400,000 shares of
class A common stock, at an exercise price of $22.21 per share, to Cable &
Wireless, PLC ("C&W") for a total consideration of $10,000,000. On January 12,
2000, C&W filed both a Form 3 and a Schedule 13D with the Securities and
Exchange Commission stating that the series C preferred stock were directly held
by Cable & Wireless USA ("C&W USA").

      A beneficial conversion feature resulted from the allocation of the
proceeds between the fair value of the series C preferred stock and the fair
value of the warrants, which resulted in a discount on the preferred stock in
the amount of $4,549,535, which amount was immediately accreted and treated as a
deemed dividend to the holder of the shares of series C preferred stock as all
of the series C preferred stock was eligible for conversion upon issuance.

      Series C preferred stock is convertible, at the option of the holder, into
447,628 shares of class A common stock, subject to certain customary
anti-dilution adjustments. On any matter presented to stockholders, series C
preferred stock is entitled to the number of votes per share equal to the number
of whole shares of class A common stock into which such share of series C
preferred stock is convertible on the record date for the determination of
stockholders that are entitled to vote on that matter.

                                      F-22


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. STOCKHOLDERS' EQUITY (CONTINUED)

      Series C preferred stock is redeemable, in whole or part, by the Company
at the option of the Company, at any time after January 1, 2005. The redemption
price for each share of series C preferred stock is $1,000 plus accrued and
unpaid dividends. Notice of redemption must be given 45 days prior to the
redemption date. Series C preferred stock shall be preferred as to assets over
all other classes or series of preferred stock of the Company in the event of
any liquidation, dissolution or winding up of the Company. In any liquidation,
dissolution or winding up, the holders of series C preferred stock are entitled
to receive an amount in cash equal to $1,000 per share plus any accrued and
unpaid dividends before any distribution is made to holders of common stock.

      The holders of the outstanding shares of series C preferred stock are
entitled to receive a 4% per share annual cumulative dividend payable in cash or
shares of common stock at the option of the Company. Each share of series C
preferred stock is deemed to have a value of $1,000 and each share of common
stock to be paid as a dividend shall be valued at the average of the Market
Price (as defined by the certificate of designation of the series C convertible
preferred stock) for ten consecutive trading days ending two days prior to the
payment date. Dividends are payable on January 1 of each year. Dividends accrue
and are cumulative on a daily basis, whether or not earned or declared.

      On October 14, 2004, the Board of Directors declared a dividend on the
series C preferred stock for 2004 payable on January 1, 2005 in shares of class
A common stock in the amount of $400,000, which, per the terms of the series C
preferred stock, amounted to 236,267 shares. After the Company had recorded the
issuance of the shares as payment for the dividend, but before the certificate
representing the class A common stock was physically issued, the Company began
discussions with Cable & Wireless PLC ("C&W"), purported owner of the series C
preferred stock, about retiring the series C preferred stock. As these
discussions progressed, the Company realized that there was substantial evidence
that the series C preferred stock was held by C&W USA, a formerly wholly owned
subsidiary of C&W that filed Chapter 11 bankruptcy in the United States on
December 8, 2003. On January 6, 2006 the Company filed a complaint for
declaratory judgment in the United States Bankruptcy Court ("the Court") naming
Omega Liquidating Trust ("Omega"), the liquidating trust for the bankrupt C&W
USA, and C&W as defendants. The Company seeks to have Omega declared the
rightful owner of the series C preferred stock and of any of the class A common
stock that have been issued but not distributed as dividends of the series C
preferred stock. On March 10, 2006, defendant C&W entered a motion in the court
to dismiss the complaint for declaratory judgment for lack of subject matter
jurisdiction, or in the alternative, abstention by the Court. A hearing was
scheduled by the Court for oral arguments on the motion for July 13, 2006. This
hearing has been postponed indefinitely as the result of Omega and C&W reaching
a settlement agreement. The Company expects Omega and C&W will file a motion of
compromise and settlement for the Court's approval. Until the Court has approved
any settlement, the Company will continue to hold the undistributed dividends.

      As of July 31, 2006 and 2005 the Company had accrued $232,329 for
dividends payable. The total liquidation value of series C preferred stock was
$10,000,000 plus accrued dividends of $232,329 as of July 31, 2006.

                                      F-23


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. STOCKHOLDERS' EQUITY (CONTINUED)

SERIES D PREFERRED STOCK:

      Series D preferred stock is convertible at the option of the holder into
192,307 shares of class A common stock subject to certain customary
anti-dilution adjustments.

      Series D preferred stock is redeemable, in whole or in part, by the
Company at the option of the Company at any time after April 30, 2005 if the
price of class A common stock is greater than or equal to $2.60 per share for
thirty consecutive trading days. The redemption price for each share of series D
preferred stock is $1,000 plus any accrued and unpaid dividends. Series D
preferred stock shall have preference as to assets over all other classes or
series of common and preferred stock of the Company, except for series C
preferred stock, in the event of any liquidation, dissolution, or winding up of
the Company. In any liquidation, dissolution or winding up, the holders of
series D preferred are entitled to receive an amount in cash equal to $1,000 per
share plus any accrued and unpaid dividends before any distribution is made to
holders of common and preferred stock, except for series C preferred stock.

      The holders of the outstanding shares of series D preferred stock are
entitled to receive dividends at the discretion of the Board of Directors. On
any matter presented to stockholders, holders of series D preferred stock are
entitled to the number of votes per share equal to the number of whole shares of
class A common stock into which such share of series D preferred stock is
convertible on the record date for the determination of stockholders that are
entitled to vote on that matter.

WARRANTS:

      As of July 31, 2006, the following warrants to purchase class A common
stock were outstanding:



                                                                           EXERCISE
                                                       NUMBER OF SHARES     PRICE      EXPIRATION DATE
                                                       ----------------    --------  --------------------
                                                                             
2001 Private Placement Warrants                            109,091(a)       $ 3.58    October 28, 2006
2001 Private Placement Commission Warrants                  25,000(a)(b)    $ 3.50    October 28, 2006
2002 Warrant Exchange Offer Warrants                       263,715(a)       $ 3.50    April 24, 2007
ING Warrants                                                60,000(a)       $ 3.50    July 11, 2007
2004 Private Placement Warrants                            721,222          $ 2.22    October 20, 2009
2004 Private Placement Commission Warrants                  88,922(c)       $ 2.22    October 20, 2009
                                                         ---------
   Total number of Shares                                1,267,950
                                                         =========


----------
As of July 31, 2005, there were 3,250,762 outstanding warrants. During the
current year, the following warrants were exercised: 40,000 Silicon Valley Bank
Warrants with an exercise price of $1.39, 322,533 2004 Private Placement
Warrants with an exercise price of $2.22, and 1,620,279 2003 Private Placement
Warrants with an exercise price of $1.47. As of July 31, 2006, there were
outstanding warrants to purchase 1,267,950 shares of common stock with a
weighted-average exercise price of $2.69 per share.

a)    Redeemable by the Company at $0.10 per warrant under certain conditions.

b)    Issued to solicitation agents for their role in the October 2001 private
      placement.

c)    Issued to the private placement agent in the 2004 private placement.

      The fair market value of warrants issued for compensation and services has
been recognized as an expense in the period in which the respective services
were performed.

                                      F-24


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. STOCKHOLDERS' EQUITY (CONTINUED)

STOCK INCENTIVES:

      The Internet Commerce Corporation 2005 Stock Incentive Plan (the "2005
Plan") was adopted by the Company in November 2005 and approved by the
stockholders on January 4, 2006. The total shares of class A common stock
subject to the 2005 Plan shall not exceed the sum of 2,000,000 shares plus any
shares that were reserved and available for issuance under the Company's retired
Amended and Restated Stock Option Plan (the "Amended Plan"), as of the effective
date of the 2005 Plan, which totaled 1,173,233 shares of class A common stock.
The Board of Directors or its Compensation Committee may grant the following
stock incentives under the 2005 Plan: stock options to purchase shares of class
A common stock, including incentive stock options and non-qualified stock
options; restricted stock awards; restricted stock units; and stock appreciation
rights. Each of the above stock incentives will be evidenced by a stock
incentive agreement in such form and with such terms and conditions as the Board
of Directors or Compensation Committee may, pursuant to the provisions of the
2005 Plan, determine in their discretion. As of July 31, 2006, the only stock
incentives outstanding under the 2005 Plan are stock options.

      In January 2004, the Company implemented a voluntary stock option exchange
program whereby the Company offered to exchange outstanding options to purchase
shares of the Company's common stock held by eligible employees of the Company
with exercise prices per share greater than or equal to $11.50 for new options
to purchase shares of the Company's common stock (the "Offer to Exchange").
Under the terms of the Offer to Exchange, the 26 participating employees agreed
to cancel as of January 30, 2004 their existing options to purchase 823,500
shares of the Company's common stock and were granted options to purchase
494,100 shares of the Company's common stock with an exercise price of $1.25 per
share, the closing market price per share on January 20, 2004. Each new employee
option was fully vested at the date of grant. Additionally, under the terms of
the Offer to Exchange, two directors cancelled as of January 30, 2004 existing
options to purchase 250,000 shares of the Company's common stock and were
granted options to purchase 150,000 shares of the Company's common stock with an
exercise price of $2.00 per share. The options granted to directors vested in
two equal annual installments commencing one year after the date of grant. One
director was eligible but declined to participate in the exchange and
surrendered to the Company options to purchase 50,000 shares of common stock
with an exercise price of $19 per share.

      Prior to August 1, 2003, the Company accounted for its employee stock
options under the intrinsic value method of APB Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"), and related interpretations. Under APB
25, no stock-based employee compensation expense is reflected in the statement
of operations for options granted to employees to purchase common stock granted
with an exercise price equal to or greater that the market value of the
underlying common stock on the date of grant. Effective August 1, 2003, the
Company adopted the fair value recognition provisions of FASB Statement No. 123,
"Accounting for Stock-Based Compensation." The fair value method has been
applied prospectively to all employee awards granted, modified or settled after
August 1, 2003. Options granted prior to August 1, 2003 that have not been
modified or settled continue to be accounted for under the intrinsic value
method of APB 25.

                                      F-25


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. STOCKHOLDERS' EQUITY (CONTINUED)

      The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model using the following
weighted-average assumptions:



                                                                YEAR ENDED JULY 31,
                                                                -------------------
                                                                 2006      2005
                                                                 -----    ------
                                                                    
Risk-free interest rate                                           4.25%    3.21%
Expected lives                                                       3        3
Expected volatility                                                 81%      79%
Expected dividend yield                                              0%       0%


      The weighted-average fair value at the date of grant for options granted
during the fiscal years ended July 31, 2006 and 2005 was $1.27 and $0.68 per
share, respectively.

      The following table summarizes the Company's stock options outstanding as
of July 31, 2006 and 2005, as well as changes during the years then ended:



                                                 YEAR ENDED JULY 31,
                                      ------------------------------------------
                                             2006                  2005
                                      --------------------  --------------------
                                                 WEIGHTED-             WEIGHTED-
                                                 AVERAGE               AVERAGE
                                                 EXERCISE             EXERCISE
                                      SHARES      PRICE      SHARES      PRICE
                                      --------  ----------  --------  ----------
                                                (SHARES IN THOUSANDS)
                                                          
Options outstanding at beginning
   of year                            4,958.6    $  4.38    5,236.6    $  4.51
Granted                                 577.0    $  2.31      526.5    $  1.26
Forfeited                              (454.1)   $  2.84     (770.2)   $  3.25
Exercised                              (783.8)   $  2.07      (34.3)   $  1.23
                                      -------               -------
Options outstanding at end of year    4,297.7    $  4.69    4,958.6    $  4.38
                                      =======               =======
Options exercisable at end of year    3,522.9    $  5.29    4,347.6    $  4.78
                                      =======               =======


      The following table presents information relating to stock options
outstanding as of July 31, 2006.

                                      F-26


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. STOCKHOLDERS' EQUITY (CONTINUED)



                                                       OPTIONS OUTSTANDING           OPTIONS EXERCISABLE
                                               ---------------------------------- --------------------------
                                                           WEIGHTED-
                                                            AVERAGE     WEIGHTED-              WEIGHTED-
                                                           REMAINING     AVERAGE                AVERAGE
RANGE OF EXERCISE                                         CONTRACTUAL   EXERCISE               EXERCISE
PRICES                                           SHARES   LIFE(YEARS)     PRICE      SHARES      PRICE
------------------------                         ------   -----------  -----------   -------   ----------
                                                                  (SHARES IN THOUSANDS)
                                                                                
0.26 - 0.96                                        854.4      4.8        $  0.67       787.7    $  0.65
1.01 - 1.40                                        554.8      5.8        $  1.23       506.5    $  1.24
1.53 - 2.00                                        683.8      7.5        $  1.87       259.0    $  1.88
2.26 - 2.57                                        689.0      6.2        $  2.45       614.0    $  2.44
2.65 - 2.71                                        596.4      5.7        $  2.70       596.4    $  2.70
2.75 - 3.90                                        306.8      8.5        $  2.95       146.8    $  3.17
4.00 - 5.13                                        158.9      4.7        $  4.92       158.9    $  4.92
12.00 - 12.54                                      303.6      2.9        $ 12.01       303.6    $ 12.01
40.00 - 40.00                                       50.0      2.9        $ 40.00        50.0    $ 40.00
60.00 - 60.00                                       50.0      2.9        $ 60.00        50.0    $ 60.00
80.00 - 80.00                                       50.0      2.9        $ 80.00        50.0    $ 80.00
                                                 -------                             -------
                                                 4,297.7      5.8        $  4.69     3,522.9    $  5.29
                                                 =======                             =======


      The Company had 2,996,934 options-shares available for grant under the
Plan as of July 31, 2006.

      As of November 1, 2005, each non-employee member of the board of directors
receives annual compensation of $36,000 for his current term of office. Prior to
this date, each non-employee member of the board of directors received annual
compensation of $25,000, which was payable quarterly in shares of class A common
stock of the Company. The Company issued 29,998 and 85,666 shares of class A
common stock for the fiscal years ended July 31, 2006 and 2005, respectively,
and recorded a non-cash compensation charge related to these shares of $87,000
and $121,876 for the fiscal years ended July 31, 2006 and 2005, respectively.
The shares were fully vested on issuance. The 29,998 shares of class A common
stock issued in the fiscal year ended July 31, 2006 were related to 4 months of
services provided in 2005 and services provided for the first quarter of fiscal
year 2006.

                                      F-27


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. INCOME TAXES

      The Company has net operating loss carryforwards for tax purposes of
approximately $73.3 million as of July 31, 2006. These carryforwards expire from
2010 to 2024.

      The Internal Revenue Code and Income Tax Regulations contain provisions
which limit the use of available net operating loss carryforwards in any given
year should significant changes (greater than 50%) in ownership interests occur.
Due to the private placement of series A preferred stock in April 1999, the net
operating loss carryover of approximately $19.6 million incurred prior to the
private placement is subject to an annual limitation of approximately $1.4
million until that portion of the net operating loss is utilized or expires. Due
to a 100% ownership change of RTCI in November 2000, the acquired net operating
loss of approximately $6.5 million incurred prior to the ownership change is
subject to an annual limitation of approximately $1.1 million until that portion
of the net operating loss is utilized or expires. Additionally, this transaction
created an ownership change for the Company as defined by IRC Section 382. As
such, its net operating loss of approximately $49.4 million incurred prior to
the ownership change is subject to an annual limitation of approximately $2.8
million until that portion of the net operating loss is utilized or expires.
Finally, due to a 100% ownership change of ECS in June 2004, the acquired net
operating loss of approximately $1.2 million incurred prior to the ownership
change is subject to an annual limitation of approximately $128,000 until that
portion of the net operating loss is utilized or expires.

      The Company's effective tax rate varied from the statutory federal income
tax rate as follows:



                                                                         FOR THE YEAR ENDED JULY 31,
                                                                         ---------------------------
                                                                            2006         2005
                                                                           ------       -------
                                                                                  
Expected federal statutory rate (benefit)                                   34.0%        34.0%
Increase (decrease) in taxes resulting from:
Other permanent differences                                                   --           --
State and local income tax (benefit), net of federal effect                  5.8          6.4
Other                                                                       (1.0)         2.6
Increase (decrease) in valuation allowance                                 (36.8)       (31.5)
                                                                           -----        -----
Effective tax rate                                                           2.0%        11.5%
                                                                           =====        =====


                                      F-28


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. INCOME TAXES (CONTINUED)

      Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes and for tax reporting
carryforwards. Significant components of the Company's deferred tax assets,
liabilities and the valuation allowance at July 31, 2006 and 2005 are as
follows:



                                                                                   JULY 31,
                                                                       ----------------------------------
                                                                            2006             2005
                                                                       --------------   ----------------
                                                                                  
Deferred tax assets:
   Accrued expenses                                                    $      230,746   $      353,002
   Deferred revenues                                                           62,322           57,204
   Deferred rent                                                                4,856              614
   Inventory                                                                    4,000               --
   Property and equipment                                                     127,767           65,784
   Non-cash compensation associated with options                                   --          536,354
   Credit for increasing research activity carryforwards                      243,009          182,371
   Capital loss carryforwards                                                 100,036          100,036
   Federal, state and local net operating loss carryforwards               29,327,701       30,575,821
                                                                       --------------   --------------
                                                                           30,100,437       31,862,178

Deferred tax liabilities:
   Purchased intangibles                                                     (661,299)        (561,275)
                                                                       --------------   --------------
                                                                             (661,299)        (561,275)
   Net deferred tax asset before valuation allowance                       29,439,138       31,309,911
   Valuation allowance                                                    (29,439,138)     (31,309,911)
                                                                       --------------   --------------
   Net deferred tax asset                                              $           --   $           --
                                                                       ==============   ==============


      The Company has provided a valuation allowance of 100% of its net deferred
tax asset due to the uncertainty of generating future profits that would allow
for the realization of such deferred tax asset. The net decrease in the total
valuation allowance for the year ended July 31, 2006 and 2005 was $1,870,773 and
$126,645, respectively.

10. ACCOUNTS RECEIVABLE FINANCING AGREEMENT

      On May 30, 2003, the Company executed an Accounts Receivable Financing
Agreement ("Financing Agreement") with Silicon Valley Bank ("Bank") originally
with a term of one year. Per the terms of the Financing Agreement, the Company
issued the bank warrants to purchase 40,000 shares of class A common stock which
were exercised in 2006. The warrants are immediately exercisable at an exercise
price of $1.39, equal to the fair market value of the class A common stock on
the date of closing of the Financing Agreement. The fair value of the warrants
in the amount of approximately $34,000 was fully amortized to interest expense
in the year ended July 31, 2004. The Financing Agreement has been amended on
October 22, 2003, August 31, 2004 and March 16, 2005. As of the last amendment
to the Financing Agreement, the Company may borrow, subject to certain
conditions, up to 80% of its outstanding accounts receivable up to a maximum of
$2,000,000. The applicable interest rate is the prime rate plus .25% as long as
our adjusted quick ratio is 1.25% or greater and prime rate plus .75% if the
Company's adjusted quick ratio is less than 1.25%. The Company also pays a
collateral handling fee equal to .15% on the average daily outstanding
receivable balance as long as its adjusted quick ratio is 1.25% or greater,
going to .35% if

                                      F-29


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. ACCOUNTS RECEIVABLE FINANCING AGREEMENT (CONTINUED)

the adjusted quick ratio is less than 1.25%. Interest is payable monthly. The
Bank has been granted a security interest in substantially all of the Company's
assets. The amended Financing Agreement terminated March 16, 2006 and has not
been renewed. At July 31, 2006 and 2005 there were no amounts outstanding under
the Financing Agreement.

11. COMMITMENTS AND CONTINGENCIES

OBLIGATIONS UNDER OPERATING LEASES:

      The Company has non-cancelable operating lease commitments for office
space expiring on various dates through November 2010. Rent expense under these
leases was approximately $649,000 and $810,000 for the fiscal years ended July
31, 2006 and 2005 ,respectively. Certain leases contain escalation clauses for
operating expenses.

      As part of the MEC acquisition, the Company assumed a lease in New York,
New York. The estimated present value of the net liability under this lease was
recorded as part of the purchase price in accrued liabilities. Total rent
payments under this lease were $978,470 and $294,912 for the year ending July
31, 2006 and 2005, respectively. In January 2006, the Company entered into a
sublease agreement for the remaining term of the lease through November 2010.

     As of July 31, 2006, minimum future rental payments due under
non-cancelable operating leases are as follows:



FISCAL
YEAR                                                  AMOUNT
------------                                       -------------
                                                
2007                                               $  1,535,716
2008                                               $  1,517,049
2009                                               $  1,429,073
2010                                               $  1,188,485
2011                                               $    335,924


      Total minimum future rental payments have not been reduced by $3,068,000
of sublease rentals to be received in the future under non-cancelable subleases.
Prior to July 31 2005, the Company leased office space in Norcross, Georgia from
a company controlled by a member of the Board of Directors. The Company paid
$72,370 to the related party director under this lease, which expired on July
31, 2005.

REPRESENTATIONS AND WARRANTIES:

      As part of its standard license agreements, the Company agrees to
indemnify its customers against liability if the Company's products infringe a
third party's intellectual property rights. Historically, the Company has not
incurred any significant costs related to performance under these indemnities.
As of July 31, 2006, the Company was not subject to or aware of any potential
significant litigation alleging that the Company's products infringe the
intellectual property rights of any third parties.

                                      F-30


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES (CONTINUED)

LETTERS OF CREDIT:

      The Company has provided cash collateral for certificates of deposit in
the aggregate amount of $417,330 at July 31, 2006 and 2005 which serve as
security deposits for certain lease agreements. These amounts have been recorded
as restricted cash in the Company's consolidated balance sheets.

SEPARATION AGREEMENTS:

      In June 2004, ICC entered into a Separation Agreement with its former
Chief Financial Officer which required the Company to pay $95,000, payable in
semi-monthly installments of $7,917 commencing on June 30, 2004. $71,250 was
paid in fiscal year 2005.

12. CONCENTRATION OF CREDIT RISK AND REVENUES

      Financial instruments that potentially subject the Company to
concentrations of credit risk primarily consist of cash and accounts receivable.
The Company invests its excess cash in money-market instruments with
institutions of high credit-quality. All accounts receivable are unsecured. The
Company believes that any credit risk associated with receivables is minimal due
to the number and creditworthiness of its customers. Receivables are stated at
estimated net realizable value, which approximates fair value.

      For the fiscal years ended July 31, 2006 and 2005, no single customer
accounted for more than 10% of revenue. No single customer accounted for more
than 10% of accounts receivable at July 31, 2006 and 2005.

     Revenue by geographic region, based on customer location is as follows:



YEAR ENDED                                   NORTH
JULY 31,                                    AMERICA        EUROPE       OTHER         TOTAL
-------------------                      -------------   ----------   ---------   --------------
                                                                      
2006                                     $  19,574,918   $  112,768   $  83,409   $  19,771,095
2005                                     $  16,609,951   $   48,510   $  46,170   $  16,704,631


13. BUSINESS SEGMENT INFORMATION

      The Company's two operating segments are:

      ICC.NET(TM) -- the Company's global Internet-based value added network, or
VAN, uses the Internet and proprietary technology to deliver 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, and the development and operation of
comprehensive business-to-business e-commerce solutions.

                                      F-31


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. BUSINESS SEGMENT INFORMATION (CONTINUED)

      EC Service Bureau -- the EC Service Bureau manages and translates the data
of small and mid-sized companies that exchange EDI data with large companies and
provides various EDI and UPC (universal product code) services. The EC Service
Bureau also licenses EDI software.

      The table below summarizes information about operations and long-lived
assets as of and for the years ended July 31, 2006 and 2005:



                                                            ICC.NET      EC SERVICE BUREAU      TOTAL
                                                         -------------   -----------------  -------------
                                                                                   
Year Ended -- July 31, 2006
Revenues                                                 $  12,772,131     $  6,998,964     $  19,771,095
                                                         =============     ============     =============
Operating income(1)                                      $   1,987,174     $    166,358     $   2,153,532
Other income (expense), net                                  1,042,270         (159,208)          883,062
                                                         -------------     ------------     -------------
Income before income taxes                               $   3,029,444     $      7,150     $   3,036,594
Income tax expense                                              60,638                0            60,638
                                                         -------------     ------------     -------------
Net income                                               $   2,968,806     $      7,150     $   2,975,956
                                                         =============     ============     =============

Supplemental segment information:
Amortization and depreciation                            $     857,901     $    431,691     $   1,289,592
Non-cash charges for stock-based compensation and
   services                                              $     621,833     $     24,172     $     646,005
As of July 31, 2006
Property and equipment, net                              $     931,675     $    182,026     $   1,113,701
Acquired identified intangibles, net                         3,299,842        1,529,930         4,829,772
Goodwill                                                     2,290,229        3,858,103         6,148,332
                                                         -------------     ------------     -------------
Long lived assets, net                                   $   6,521,746     $  5,570,059     $  12,091,805
                                                         =============     ============     =============
Capital expenditures                                     $     506,809     $     42,237     $     549,046
                                                         =============     ============     =============


                                      F-32


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. BUSINESS SEGMENT INFORMATION (CONTINUED)



                                                           ICC.NET             EC SERVICE BUREAU            TOTAL
                                                        --------------         -----------------       ---------------
                                                                                              
Year Ended -- July 31, 2005
Revenues                                                $   11,266,057           $ 5,438,574           $  16,704,631
                                                        ==============           ===========           =============
Operating income (loss)(1)                              $     (901,129)          $ 1,128,267           $     227,138
Other income, net                                               37,246                    --                  37,246
                                                        --------------           -----------           -------------
Income (loss)before income taxes                        $     (863,883)          $ 1,128,267           $     264,384
Income tax expense                                                  --               (30,390)                (30,390)
                                                        --------------           -----------           -------------
Net income (loss)                                       $     (863,883)          $ 1,097,877           $     233,994
                                                        ==============           ===========           =============
Supplemental segment information:
Amortization and depreciation                           $    1,171,950           $   365,593           $   1,537,543
Non-cash charges for stock-based compensation and
   services                                             $      692,452           $        --           $     692,452
As of July 31, 2005
Property and equipment, net                             $      608,105           $    21,814           $     629,919
Acquired identified intangibles, net                           239,000             1,533,757               1,772,757
Goodwill                                                        26,132             3,816,403               3,842,535
                                                        --------------           -----------           -------------
Long lived assets, net                                  $      873,237           $ 5,371,974           $   6,245,211
                                                        ==============           ===========           =============
Capital expenditures                                    $      406,050           $     9,381           $     415,431
                                                        ==============           ===========           =============


----------
(1)  Certain costs for executive management, human resources, accounting and
     finance are allocated to the EC Service Bureau from ICC.NET based on the
     level of services performed. In an effort to operate more efficiently and
     to reduce costs, these functions were consolidated and are now performed by
     ICC.NET(TM) personnel. ICC.NET(TM) allocated $990,000 and $570,000 of these
     costs to the EC Service Bureau for the fiscal years ended July 31, 2006 and
     2005, respectively.

                                      F-33


                          INTERNET COMMERCE CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. SUPPLEMENTAL NON-CASH DISCLOSURES TO STATEMENTS OF CASH FLOWS

      The Company had the following non-cash investing and financing activities:



                                                                   YEAR ENDED JULY 31,
                                                             -------------------------------
                                                                  2006           2005
                                                             --------------  -------------
                                                                       
Amounts related to business combinations:
   Fair value of assets acquired, net of cash acquired        $   7,726,279  $  2,548,486
     Less:
        Liabilities assumed                                         680,739     2,757,091
        Fair value of equity instruments issued                   2,632,739            --
                                                                  3,312,907     2,757,091
                                                              -------------  ------------
   Net cash acquired from (paid for) acquisitions             $  (4,413,372) $    208,605
                                                              =============  ============
Issuance of common stock for dividends on preferred stock           400,000       400,000


15. QUARTERLY INFORMATION (UNAUDITED)

      The following unaudited quarterly financial information (in thousands,
except for per share data) includes, in the Company's opinion, all normal and
recurring adjustments necessary to fairly state its consolidated results of
operations and related information for the periods presented.



                                                          FIRST       SECOND        THIRD       FOURTH
                                                         QUARTER      QUARTER      QUARTER      QUARTER
                                                        --------     ---------    ---------   -----------
                                                                                  
Year ended July 31, 2006
Revenues, net                                           $  5,018     $  5,012     $  4,535      $ 5,206
Total costs and expenses                                   4,278        4,615        4,053        4,671
                                                        --------     --------     --------      -------
Operating income                                             740          397          482          535
Interest income (expense), net                                 7          (32)          79          829
Benefit (Provision) for income taxes                         (24)           7          (11)         (33)
                                                        --------     --------     --------      -------
Net income                                              $    723     $    372     $    550        1,331
                                                        ========     ========     ========      =======
Basic income per common share
                                                        $   0.03     $   0.01     $   0.02         0.06
                                                        ========     ========     ========      =======
Diluted income per common share                         $   0.03     $   0.01     $   0.02         0.05
                                                        ========     ========     ========      =======
Year ended July 31, 2005
Revenues, net                                           $  3,746     $  3,493     $  4,388      $ 5,078
Total costs and expenses                                   4,151        3,788        4,105        4,434
                                                        --------     --------     --------      -------
Operating income (loss)                                     (405)        (295)         283          644
Interest income, net                                           3            7           13           14
Provision for income taxes                                    --           --           --          (30)
                                                        --------     --------     --------      -------
Net income (loss)                                       $   (402)    $   (288)    $    296          628
                                                        ========     ========     ========      =======
Basic and diluted income (loss) per common share        $  (0.03)    $  (0.02)    $   0.01      $  0.03
                                                        ========     ========     ========      =======


                                      F-34

SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS





                                         BALANCE AT   ADDITIONS                                  BALANCE AT
                                         BEGINNING    CHARGED TO    ADDITIONS                      END OF
                                         OF PERIOD     EXPENSE      ACQUIRED      DEDUCTIONS       PERIOD
                                        -----------   ---------     ---------     -----------    -----------
                                                                                  
Year ended July 31, 2006
   Allowance for doubtful accounts...   $   581,907   $   629,141   $   249,619   $(1,020,821)   $   439,846
   Allowance for sales returns and
     allowances .....................   $        --   $   284,000   $        --   $  (265,785)   $    18,215
   Allowance on deferred tax asset...   $31,309,911   $        --   $        --   $(1,870,773)   $29,439,138
Year ended July 31, 2005
   Allowance for doubtful accounts...   $   308,867   $   431,584   $        --   $  (158,544)   $   581,907
   Allowance on deferred tax asset...   $31,436,556   $        --   $        --   $  (126,645)   $31,309,911


                                      F-35








================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

[MARK ONE]

   [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2006

                                       OR

   [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

           FOR THE TRANSITION PERIOD FROM ____________ TO ____________

                        COMMISSION FILE NUMBER: 000-24996

                          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 No.)
 Incorporation or Organization)

  6025 THE CORNERS PARKWAY, SUITE 100                     30092
           NORCROSS, GEORGIA                            (Zip Code)
(Address of Principal Executive Offices)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (678) 533-8000

Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

   Large accelerated filer [ ]  Accelerated Filer [ ]  Non-accelerated filer [X]

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of December 13, 2006, the Registrant had outstanding 22,820,810 shares of
class A common stock.

================================================================================



                               INDEX TO FORM 10-Q



                                                                                                              PAGE
                                                                                                           
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets as of October 31, 2006 (unaudited) and July 31, 2006.......     3

         Condensed Consolidated Statements of Operations for the three months ended
         October 31, 2006 (unaudited) and October 31, 2005 (unaudited)....................................     4

         Condensed Consolidated Statements of Cash Flows for the three months ended
         October 31, 2006 (unaudited) and October 31, 2005 (unaudited)....................................     5

         Notes to Condensed Consolidated Financial Statements (unaudited).................................     6

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations............    10

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.......................................    16

Item 4.  Controls and Procedures..........................................................................    16

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings................................................................................    17

Item 1A. Risk Factors.....................................................................................    17

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds......................................    22

Item 3.  Defaults Upon Senior Securities..................................................................    22

Item 4.  Submission of Matters to a Vote of Security Holders .............................................    22

Item 5.  Other Information................................................................................    22

Item 6.  Exhibits.........................................................................................    22

SIGNATURES................................................................................................    23

EXHIBIT INDEX.............................................................................................    24

CERTIFICATIONS


                                       2



PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS



                                                                                    OCTOBER 31,      JULY 31,
                                                                                       2006            2006
                                                                                   -------------   -------------
                                                                                    (UNAUDITED)
                                                                                             
ASSETS
Current assets:
   Cash and cash equivalents                                                       $   7,932,846   $   6,988,753
   Accounts receivable, net of allowance for doubtful accounts and
      allowance for sales returns and allowances of $532,409 and
          $458,061, respectively                                                       4,211,304       3,631,135
   Prepaid expenses and other current assets                                             421,760         461,778
                                                                                   -------------   -------------
      Total current assets                                                            12,565,910      11,081,666

Restricted cash                                                                          432,974         432,974
Property and equipment, net                                                            1,050,716       1,113,701
Goodwill                                                                               6,168,883       6,148,332
Other intangible assets, net                                                           4,469,873       4,829,772
Other assets                                                                              40,554          37,822
                                                                                   -------------   -------------
      Total assets                                                                 $  24,728,910   $  23,644,267
                                                                                   =============   =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                                $     425,983   $     662,151
   Accrued expenses                                                                      977,145         574,783
   Accrued dividends - preferred stock                                                   333,151         232,329
   Deferred revenue                                                                      248,876         261,214
   Lease liability from acquisition                                                      273,060         249,940
   Other current liabilities                                                             129,976         116,280
                                                                                   -------------   -------------
      Total current liabilities                                                        2,388,191       2,096,697

Long-term lease liability from acquisition                                               905,864         967,442
                                                                                   -------------   -------------
      Total liabilities                                                                3,294,055       3,064,139
                                                                                   -------------   -------------
Stockholders' equity:
Preferred stock - 5,000,000 shares authorized, including 10,000 shares of series
      C and 250 shares of series D:
   Series C - par value $.01 per share, 44.76 votes per share; 10,000 shares
      issued and outstanding (liquidation value of $10,333,151)                              100             100
   Series D - par value $.01 per share, 769 votes per share; 250 shares issued
      and outstanding (liquidation value of $250,000)                                          3               3
Common stock:
   Class A - par value $.01 per share, 40,000,000 shares authorized, one vote
             per share; 22,743,277 and 22,712,944 shares issued and outstanding,
             respectively                                                                227,433         227,129
   Class B - par value $.01 per share, 2,000,000 shares authorized, six votes
             per share; none issued and outstanding                                           --              --
                                                                                   -------------   -------------
Additional paid-in capital                                                           103,322,571     103,042,746
Accumulated deficit                                                                 (82,115,252)     (82,689,850)
                                                                                   -------------   -------------
      Total stockholders' equity                                                      21,434,855      20,580,128
                                                                                   -------------   -------------
      Total liabilities and stockholders' equity                                   $  24,728,910   $  23,644,267
                                                                                   =============   =============


            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       3


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)



                                                                      THREE MONTHS ENDED
                                                                          OCTOBER 31,
                                                                 ----------------------------
                                                                    2006            2005
                                                                 ------------    ------------
                                                                           
Service revenues                                                 $  5,807,727    $  5,017,833
                                                                 ------------    ------------
Expenses:
Cost of services                                                    1,859,292       1,905,397
Product development and enhancement                                   716,644         102,983
Selling and marketing                                                 519,957         415,357
General and administrative                                          2,108,816       1,854,255
                                                                 ------------    ------------

                                                                    5,204,709       4,277,992
                                                                 ------------    ------------

Operating income                                                      603,018         739,841
                                                                 ------------    ------------

Other income (expense):
   Interest and investment income                                      82,392          25,670

   Interest expense                                                   (20,586)        (35,787)

   Other income (expense)                                             (22,619)         17,087
                                                                 ------------    ------------
                                                                       39,187           6,970
                                                                 ------------    ------------
Income before income taxes                                            642,205         746,811

Provision for income taxes, current                                    67,607          24,265
                                                                 ------------    ------------
Net income                                                            574,598         722,546

Dividends on preferred stock                                         (100,822)        (99,822)
                                                                 ------------    ------------
Income attributable to common stockholders                       $    473,776    $    622,724
                                                                 ============    ============
Basic income per common share                                    $       0.02    $       0.03
                                                                 ============    ============
Diluted income per common share                                  $       0.02    $       0.03
                                                                 ============    ============
Anti-dilutive stock options and warrants outstanding                1,075,498       3,108,137
                                                                 ============    ============
Weighted average number of common shares outstanding - basic       22,716,466      19,510,748
                                                                 ============    ============
Weighted average number of common shares outstanding - diluted     24,974,611      21,536,286
                                                                 ============    ============


            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       4


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



                                                                            THREE MONTHS ENDED OCTOBER 31,
                                                                            ------------------------------
                                                                               2006                2005
                                                                            -----------        -----------
                                                                                         
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                                                 $   574,598        $   722,546
 Adjustments to reconcile net income to net cash provided by operating
   activities:
      Depreciation and amortization                                             493,475            404,238
      Bad debt expense                                                           80,011            126,571
      Non-cash interest expense                                                  20,586             35,615
      Non-cash charges for equity instruments issued for compensation and
          services                                                              280,467            187,098
   Changes in assets and liabilities:
          Accounts receivable                                                  (660,179)          (370,433)
          Prepaid expenses and other assets                                      38,031            119,215
          Accounts payable                                                     (236,168)           324,496
          Accrued expenses                                                      402,362           (478,980)
          Deferred revenue                                                      (12,338)           (21,750)
          Other liabilities                                                     (45,349)          (355,490)
                                                                            -----------        -----------

          Net cash provided by operating activities                             935,496            693,126
                                                                            -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Additional costs of previous acquisition                                     (20,551)           (65,000)
   Purchases of property and equipment                                          (70,591)           (94,495)
                                                                            -----------        -----------

          Net cash used in investing activities                                 (91,142)          (159,495)
                                                                            -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments of capital lease obligations                                             --             (2,155)
   Proceeds from exercise of warrants                                            89,500                 --
   Proceeds from exercise of employee stock options                              10,239            166,165
                                                                            -----------        -----------

          Net cash provided by financing activities                              99,739            164,010
                                                                            -----------        -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                       944,093            697,641

Cash and cash equivalents, beginning of period                                6,988,753          3,983,005
                                                                            -----------        -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                    $ 7,932,846        $ 4,680,646
                                                                            ===========        ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid for interest during the period                               $        --        $       172
     Cash paid for income taxes during the period                                71,791              4,770

SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITY:
     Issuance of  20,283 shares of class A common stock upon exercise of
     warrants                                                                        --                203


            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       5


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

      The accompanying unaudited condensed consolidated financial statements of
Internet Commerce Corporation (the "Company" or "ICC") have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP") for interim financial information. In the opinion of
management, such statements include all adjustments (consisting only of normal
recurring adjustments) necessary for the fair presentation of the Company's
financial position, results of operations and cash flows at the dates and for
the periods indicated. Pursuant to the requirements of the Securities and
Exchange Commission (the "SEC") applicable to Quarterly Reports on Form 10-Q,
the accompanying financial statements do not include all the disclosures
required by GAAP for annual financial statements. While the Company believes
that the disclosures presented are adequate to make the information not
misleading, these unaudited interim condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
related notes included in the Company's Annual Report on Form 10-K for the year
ended July 31, 2006. Operating results for the three month period ended October
31, 2006 are not necessarily indicative of the results that may be expected for
the fiscal year ending July 31, 2007 or any future period.

1. ORGANIZATION AND NATURE OF BUSINESS

      ICC creates, deploys and manages the secure and reliable electronic
exchange of essential business documents. With the Company's value added network
("VAN"), desktop software and hosted applications, managed services, consulting
and professional services, ICC is a trusted provider of e-commerce solutions to
connect businesses, regardless of size and level of technical sophistication,
with their trading communities. Thousands of customers, ranging from sole
proprietorships to large corporations, in a variety of industries rely on the
value delivered from ICC's broad line of solutions, expertise and 24x7 customer
service to help meet the unique requirements for trading partner compliance,
coordination and collaboration.

2. RECENT ACQUISITIONS

      ENABLE

      On May 9, 2006, the Company acquired all of the outstanding shares of
Enable Corp. ("Enable"), a privately held corporation with offices in New York
City that provides trading community portals, web based EDI trading tools, and
EDI professional services to a variety of industries. Under the terms of the
Share Purchase Agreement, the Company paid $4.2 million in cash and issued
686,324 shares of its class A common stock valued at approximately $2.6 million.

      The following table sets forth the components of the purchase price for
Enable as of October 31, 2006.


                                         
Cash on closing                             $ 4,203,000
ICC class A common stock issued               2,632,739
Transaction costs                               416,208
Additional costs since July 31, 2006             20,551
                                            -----------
     Total purchase price                   $ 7,272,498
                                            ===========


      The following table provides the estimated fair value of assets acquired
and liabilities assumed in the Enable acquisition:

                                       6



                                         
Cash                                        $   991,747
Accounts receivable                             705,386
Restricted cash                                  15,000
Other assets                                     14,975
Fixed assets                                    246,520
Intangible assets - acquired technology       1,775,000
Intangible assets - trade names                 250,000
Intangible assets - customer relationships    1,500,000
Liabilities                                    (510,778)
                                            -----------
Fair value of net assets acquired           $ 4,987,850
                                            -----------
Goodwill                                    $ 2,284,648
                                            -----------
     Total purchase price                   $ 7,272,498
                                            ===========


      The recorded fixed and other assets are estimated to have a life of two to
three years. The acquired technology intangibles are estimated to have a life
between one and four years, and the customer relationship and trade names
intangibles are estimated to have a life of seven years. We recorded $2,285,000
in goodwill resulting from the Enable acquisition. Revenue from the Enable
acquisition includes hosting and transaction fees, administrative fees and
professional services, which are part of our EC Solutions segment. Goodwill and
intangible assets are deductible for tax purposes. The results of operations of
Enable are consolidated with the results of operations of the Company subsequent
to the acquisition date. The acquisition of Enable was made to strengthen the
Company's web based trading technology offering and customer base.

      KODIAK GROUP, INC.

      On November 1, 2005, the Company acquired the outstanding share of the
Kodiak Group, Inc. ("Kodiak"), a privately held company delivering EDI
outsourcing and global data synchronization services to blue chip customers in a
variety of industries. Under the terms of the Share Purchase Agreement, the
Company paid $1.0 million in cash on close and committed to pay up to an
additional $1.5 million in cash should the Kodiak operations generate revenue of
more than $3.0 million for the twelve month period ended October 31, 2006. For
that period, the Kodiak operations did not achieve the revenue goal of $3.0
million. Therefore, the Company has no additional payment obligations. The
following table sets forth the purchase price for Kodiak as of October 31, 2006.


                                               
Cash on closing                                   $ 1,000,000
Transaction costs                                      53,942
                                                  -----------
     Total purchase price                         $ 1,053,942
                                                  ===========


      The following table sets forth the components of the purchase price for
Kodiak as of October 31, 2006.


                                               
Cash                                              $   167,323
Accounts receivable                                   358,168
Other assets                                           61,252
Fixed assets                                          109,597
Intangible assets - customer relationships            425,947
Liabilities                                           (68,345)
                                                  -----------
     Total purchase price                         $ 1,053,942
                                                  ===========


                                       7


      The recorded fixed and other assets are estimated to have a life of two
years and the customer relationship intangible is estimated to have a life of
five years. Revenue from the Kodiak acquisition includes professional services
and mapping revenue, which was included as part of our ICC.NET segment for
fiscal year 2006, and EC outsourcing, which is a part of our EC Services
segment. Due to the realignment of our product lines for fiscal year ended 2007,
Kodiak's professional services, mapping revenue and EC outsourcing are included
in the EC Services segment. There was no goodwill recorded as a result of this
acquisition. The results of operations of Kodiak are consolidated with the
results of operations of the Company subsequent to the acquisition date. The
acquisition of Kodiak was made to enhance the Company's professional services
offerings as well as expand the Company's customer base. Acquired intangible
assets are deductible for tax purposes.

3. BUSINESS SEGMENT INFORMATION

            The Company's two reportable segments are:

      -     Electronic Commerce Solutions ("EC Solutions") segment, which
            includes ICC.NET VAN services, browser-based and hosted
            applications, and desktop software; and

      -     Electronic Commerce Services ("EC Services ") segment, which is
            comprised of the EC Service center, EC outsourcing, mapping and
            professional services.

         The Company changed its reportable segments as of August 1, 2006 to
coincide with management's realignment of the business operations to follow our
service and product lines. The EC Solutions segment was formed to consolidate
the services and products offered with direct or indirect connections to our
VAN. The EC Services segment was formed and consolidates all of our
professional, managed and outsourcing services. Specifically, professional
service revenue and mapping revenue were moved from the old ICC.NET segment to
the EC Services segment. Hosted applications and desktop software were moved to
the EC Solutions segment from the old EC Service Bureau segment. The
browser-based and hosted applications acquired from Enable were also added to
the EC Solutions segment. In addition, the Company will no longer allocate 100%
of its operating expenses to the reporting segments. Only those expenses that
are directly related to the development and delivery of a reporting segment's
products and services will be allocated. The Company has restated the previous
period's reporting segments for comparability purposes between the periods.

      The tables below summarize information about operations as of and for the
three month periods ended October 31, 2006 and 2005.



                                    EC SOLUTIONS         EC SERVICES           TOTAL
                                    ------------         -----------        -----------
                                                                   
THREE MONTHS  - OCTOBER 31, 2006

Revenues from external customers     $ 3,936,640         $ 1,871,087        $ 5,807,727
                                     ===========         ===========        ===========
Segment operating income             $ 2,371,602         $   789,310        $ 3,160,912
                                     ===========         ===========        ===========


The following is a reconciliation of operating segment income to net income for
the period ending October 31, 2006:


                                         
Segment operating income                    $ 3,160,912
Corporate expenses                           (2,557,894)
                                            -----------
Operating income                                603,018
Other income (expense), net                      39,187
                                            -----------
Income before income taxes                      642,205
Income tax expense                               67,607
                                            -----------
NET INCOME                                  $   574,598
                                            ===========


                                       8




                                    EC SOLUTIONS         EC SERVICES           TOTAL
                                    ------------         ------------       -----------
                                                                   
THREE MONTHS  - OCTOBER 31, 2005

Revenues from external customers    $  3,213,963         $  1,803,870       $ 5,017,833
                                     ===========         ============       ===========
Segment operating income            $  2,131,633         $    829,290       $ 2,960,923
                                     ===========         ============       ===========


The following is a reconciliation of operating segments income to net income for
the period ending October 31, 2005:


                                                      
Reportable segment income                                $ 2,960,923
Corporate expenses                                        (2,221,082)
                                                         -----------
Operating income                                             739,841
Other income (expense), net                                    6,970
                                                         -----------
Income before income taxes                                   746,811
Income tax expense                                            24,265
                                                         -----------
Net income                                               $   722,546
                                                         ===========


4. RECENT ACCOUNTING PROCOUNCEMENTS

      In July 2006, the Financial Accounting Standards Board issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with FASB Statement No. 109, Accounting for
Income Taxes. FIN 48 describes a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return and also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006 and will be effective for the Company in
fiscal 2008. The Company does not believe the impact of this new accounting
interpretation will be material on its financial statements.

5. INCOME TAXES

      A provision for income taxes has been provided for the three months ended
October 31, 2006 and 2005 for estimated federal alternative minimum taxes and
certain state income taxes, as the Company has sufficient net operating loss
carryforwards to offset regular taxable income. As of October 31, 2006, the
Company continues to maintain a valuation allowance against the total net
deferred tax balance. The Company will continue to evaluate its prospects going
forward. If the Company's operations continue at current levels and future
business projections indicate continued profitability, the Company will review
the valuation allowance and may reverse, in the near future, a portion of the
deferred tax asset valuation reserve.

                                       9


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

      This Quarterly Report on Form 10-Q contains a number of "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Specifically, all statements other
than statements of historical facts included in this Quarterly Report 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 Report,
the words "anticipate," "believe," "estimate," "expect," "may," "will," "hope,"
"continue" and "intend," and words or phrases of similar import, as they relate
to our financial position, business strategy and plans, or objectives of
management, are intended to identify forward-looking statements. These
statements reflect our current view with respect to future events and are
subject to risks, uncertainties and assumptions related to various factors
including, without limitation, those factors discussed in Item 1 (Business) of
Part I and Item 7 (Management's Discussion and Analysis of Financial Condition
and Results of Operations) of Part II of our Annual Report on Form 10-K filed on
October 30, 2006, Item 2 and Item 1A of Part II of our Quarterly Reports. You
should carefully review those risks, as well as additional risks described in
other documents we file from time to time with the Securities and Exchange
Commission.

      Although we believe that our expectations are reasonable, we cannot assure
you that our expectations will prove to be correct. 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
Quarterly Report as anticipated, believed, estimated, expected or intended.

OVERVIEW

      Internet Commerce Corporation creates, deploys and manages the secure and
reliable electronic exchange of essential business documents. With our value
added network ("VAN"), desktop software and hosted applications, managed
services, consulting and professional services, we are a trusted provider of
e-commerce solutions to connect businesses, regardless of their size and level
of technical sophistication, with their trading communities. Thousands of
customers, ranging from sole proprietorships to large corporations, in a variety
of industries rely on the value delivered from ICC's broad line of solutions,
expertise and 24x7 customer service to help meet the unique requirements for
trading partner compliance, coordination and collaboration.

      We pioneered the use of the Internet for electronic data interchange
("EDI") business-to-business (B2B) solutions and continue to lead as new
technologies and requirements emerge for more efficient business communication.
Organizationally, our two segments of business are known as the:

      -     EC Solutions segment, which includes ICC.NET VAN services,
            browser-based and hosted applications, and desktop software; and

      -     EC Services segment, whose operations primarily focus on
            facilitating the EDI communications of small and mid-sized
            businesses with their trading partners. The EC Services segment
            includes the EC Service center, EC Outsourcing, mapping and
            professional services.

      These segments compliment one another and give us the ability to provide
solutions to many different kinds of enterprises, from sole proprietorships to
large corporations, operating in a variety of industries.

                                       10


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The discussion and analysis of our financial condition and results of
operations are based upon our condensed consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amount of
assets, liabilities, revenues and expenses. We consider certain accounting
policies related to revenue recognition, valuation of acquired intangibles and
impairment of long-lived assets including goodwill, and valuation of investments
to be critical policies due to the estimation process involved in each.
Management discusses its estimates and judgments with the Audit Committee of our
Board of Directors.

      For a more detailed description on the application of these and other
accounting policies, see Note 2 of the Consolidated Financial Statements
included in our Annual Report on Form 10-K for the fiscal year ended July 31,
2006. Reference is also made to the discussion of the application of these
critical accounting policies and estimates contained in Management's Discussion
and Analysis in our Annual Report on Form 10-K for fiscal 2006. During the three
months ended October 31, 2006, there were no significant or material changes in
the application of critical accounting policies that would require an update to
the information provided in the Form 10-K for fiscal 2006.

                                       11


THREE MONTHS ENDED OCTOBER 31, 2006 COMPARED WITH THREE MONTHS ENDED OCTOBER 31,
2005.

RESULTS OF OPERATIONS - EC SOLUTIONS

      Our EC Solutions segment uses the Internet and our proprietary technology
to deliver our customers' documents and data files to members of their trading
communities. The following table summarizes operating results for our EC
Solutions services for the three months ended October 31, 2006 and 2005:



                                             THREE MONTHS ENDED
                                                OCTOBER 31,                    VARIANCE
                                         -------------------------       -------------------
                                            2006          2005              $            %
                                         ----------   ------------       -------       -----
                                                                           
Revenues:
   Services                              $3,936,640   $  3,213,963       722,677          22
                                         ----------   ------------       -------

Expenses:
   Cost of services                         951,632      1,007,558       (55,926)         (6)
   Product development and enhancement      551,897         30,831       521,066       1,690
   General and administrative                61,509         43,941        17,568          40
                                         ----------   ------------       -------
          Total expenses                  1,565,038      1,082,330       482,708          45
                                         ----------   ------------       -------

   Segment operating income              $2,371,602   $  2,131,633       239,969          11
                                         ==========   ============       =======


      Revenues - EC Solutions - Revenue from EC Solutions segment was 68% of
consolidated revenues for the quarter ended October 31, 2006 ("2007 Quarter")
compared to 64% for the quarter ended October 31, 2005 ("2006 Quarter"). EC
Solutions revenues increased $723,000 for the 2007 Quarter compared to the 2006
Quarter, principally from the browser-based and hosted services revenue acquired
from Enable.

      Cost of services - EC Solutions - Cost of services relating to our EC
Solutions segment was 24% of revenue from the EC Solutions services for the 2007
Quarter, compared to 31% for the 2006 Quarter. Total cost of services decreased
$56,000 for the 2007 Quarter compared to the 2006 Quarter. Cost of services
consists primarily of salaries and employee benefits, connectivity fees,
amortization, allocation of product and development expenses and rent. This
decrease was primarily the result of lower salary and benefit expenses of
$35,000, a reduction in the cost of our telephone and connectivity fees of
$74,000 offset by the royalty expense of $32,000 related to the hosting and
browser-based revenue from the Enable acquisition.

      Product development and enhancement - EC Solutions - Product development
and enhancement costs relating to our EC Solutions segment consist primarily of
salaries and employee benefits. Product development and enhancement costs
increased $521,000 in the 2007 Quarter compared with the 2006 Quarter. This
increase is related to the additional staff, consulting and rent expenses from
the Enable operations.

      General and administrative - EC Solutions - General and administrative
expenses supporting our EC Solutions segment consist primarily of depreciation,
telephone, and computer maintenance expenses. General and administrative costs
increased $18,000 in the 2007 Quarter compared to the 2006 Quarter. The increase
was mainly due to higher telephone expenses and computer maintenance costs.

                                       12


RESULTS OF OPERATIONS - EC SERVICES

      Our EC Services operations primarily focus on facilitating the EDI
communications of small and mid-sized businesses with their trading partners
through our EC Service center, E-Commerce outsourcing and professional services.
The following table summarizes operating results for our EC Services segment for
the three months ended October 31, 2006 and 2005:



                                           THREE MONTHS ENDED
                                              OCTOBER 31,                VARIANCE
                                         -----------------------     ------------------
                                            2006         2005            $          %
                                         ----------   ----------     --------     -----
                                                                      
Revenues:
   Services                              $1,871,087   $1,803,870       67,217         4
                                         ----------   ----------     --------

Expenses:
   Cost of services                         907,660      897,839        9,821         1
   Product development and enhancement      119,271       72,152       47,119        65
   General and administrative                54,846        4,589       50,257     1,095
                                         ----------   ----------     --------
         Total expenses                   1,081,777      974,580      107,197        11
                                         ----------   ----------     --------

   Segment operating income              $  789,310   $  829,290      (39,980)       (5)
                                         ==========   ==========     ========


      Revenue - EC Services - Revenue from our EC Services was 32% of
consolidated revenues for the 2007 Quarter compared to 36% for the 2006 Quarter.
The revenue increased $67,000 for the 2007 Quarter compared to the 2006 Quarter.
This increase was a result of our recent acquisitions, including approximately
$302,000 from our E-Commerce outsourcing and $198,000 from our professional
services, offset by a reduction in revenue from our EC Service Center of
approximately $434,000 primarily due to year over year customer attrition.

      Cost of services - EC Services - Cost of services relating to our EC
Services segment was 49% of revenue in the 2007 Quarter, compared to 50% in the
2006 Quarter. Cost of services consist primarily of salaries and employee
benefits, amortization, connectivity fees and rent. As a result of an increase
in amortization and rent expense at our EC Service center, cost of services
increased $10,000 in the 2007 Quarter compared to the 2006 Quarter.

      Product development and enhancement - EC Services - Product development
and enhancement costs consist primarily of salaries and employee benefits.
Product development and enhancement costs incurred by our EC Services segment
increased $47,000 in the 2007 Quarter compared to the 2006 Quarter primarily as
a result of increased headcount.

      General and administrative - EC Services - General and administrative
expenses relating to our EC Services segment consist primarily of office
expenses, depreciation, computer maintenance expense, telephone and rent.
General and administrative expenses incurred by our EC Services segment
increased $50,000 in the 2007 Quarter compared to the 2006 Quarter. The increase
was mainly related to higher depreciation and computer maintenance expenses
related to recent investments in capital expenditures.

CORPORATE EXPENSES

      Our Corporate expenses represent the general, administrative, corporate
and executive expenses not directly related to our EC Solutions or EC Services
segments. The following table summarizes operating expenses for our corporate
expenses for the three months ended October 31, 2006 and 2005:



                                            THREE MONTHS ENDED
                                               OCTOBER 31,                  VARIANCE
                                         -----------------------     ---------------------
                                             2006        2005           $               %
                                         -----------------------     ---------------------
                                                                           

Expenses:
   Product development and enhancement   $   45,476   $       --       45,476           --
   Selling and marketing                    519,957      415,357      104,600           25
   General and administrative             1,992,461    1,805,725      186,736           10
                                         ----------   ----------
         Total expenses                  $2,557,894   $2,221,082      336,812           15
                                         ==========   ==========     ========


                                       13


      Product development and enhancement - Corporate - Product development and
enhancement costs included in our Corporate expenses consist primarily of
salaries and employee benefits. Product development and enhancement costs
increased $45,000 in the 2007 Quarter compared to the 2006 Quarter. The increase
is primarily a result of unallocable salary and benefit costs not directly
related to the EC Solutions or EC Services segments.

      Selling and marketing - Corporate - Selling and marketing costs included
in our Corporate expenses consist primarily of salaries and employee benefits
and amortization. Selling and marketing expenses increased $105,000 in the 2007
Quarter compared to the 2006 Quarter primarily due to the planned increase in
our sales force headcount, commissions expense and a one-time training expense.

      General and administrative - Corporate - General and administrative costs
included in our Corporate expenses consist primarily of salaries and employee
benefits, office expenses, legal and accounting expenses, depreciation, computer
maintenance expenses, telephone and rent. General and administrative expenses
increased $187,000 in the 2007 Quarter compared to the 2006 Quarter. The
increase is primarily a result of higher legal and accounting fees of $85,000,
an increase in non-cash compensation of $102,000 related to option expense, and
an increase in depreciation and computer maintenance expense of $74,000, offset
by a reduction of rent expense of $77,000.

LIQUIDITY AND CAPITAL RESOURCES

      Our principal sources of liquidity, which consist of unrestricted cash and
cash equivalents, increased to $7,933,000 as of October 31, 2006 from $6,989,000
as of July 31, 2006. We believe these resources will provide us with sufficient
liquidity to continue in operation through October 31, 2007.

      During the quarter ending October 31, 2006, 5,333 stock options were
exercised resulting in the issuance of an equal number of shares of class A
common stock for which we received $10,239.

      During the quarter ending October 31, 2006, the holders of 25,000 warrants
exercisable into the same number of shares of our class A common stock at $3.58
per share that were originally issued in a private placement that closed in
October of 2001 voluntarily exercised their warrants, resulting in our receiving
$89,500 in cash.

      The Company has net operating loss carryforwards for tax purposes of
approximately $71.9 million as of October 31, 2006. These carryforwards expire
from 2011 to 2024.

      The Internal Revenue Code and Income Tax Regulations contain provisions
which limit the use of available net operating loss carryforwards in any given
year should significant changes (greater than 50%) in ownership interests occur.
Due to the private placement of series A preferred stock in April 1999, the net
operating loss carryover of approximately $19.6 million incurred prior to the
private placement is subject to an annual limitation of approximately $1.4
million until that portion of the net operating loss is utilized or expires. Due
to a 100% ownership change of an acquired company in November 2000, the
purchased net operating loss of approximately $6.5 million incurred prior to the
ownership change is subject to an annual limitation of approximately $1.1
million until that portion of the net operating loss is utilized or expires.
Additionally, this transaction created an ownership change for the Company as
defined by IRC Section 382. As such, its net operating loss of approximately
$49.4 million incurred prior to the ownership change is subject to an annual
limitation of approximately $2.8 million until that portion of the net operating
loss is utilized or expires. Finally, due to a 100% ownership change of an
acquired company in June 2004, the purchased net operating loss of approximately
$1.2 million incurred prior to the ownership change is subject to an annual
limitation of approximately $128,000 until that portion of the net operating
loss is utilized or expires.

CONSOLIDATED WORKING CAPITAL

      Consolidated working capital increased to $10,178,000 at October 31, 2006
from $8,985,000 at July 31, 2006. This increase was primarily due to an increase
in cash of $944,000, an increase in accounts receivable of approximately
$580,000 principally from the Enable acquisition, offset by an increase in
accrued expenses of $402,000.

                                       14


ANALYSIS OF CASH FLOWS

      Cash provided by operating activities was $935,000 in the three months
ended October 31, 2006 compared to cash provided by operating activities of
$693,000 in the three months ended October 31, 2005. Cash provided by operating
activities in the three months ended October 31, 2006 resulted primarily from
net income of $575,000, non-cash charges for depreciation and amortization of
$493,000, non-cash charges for equity instruments issued for compensation and
services of $280,000, and an increase in accrued expenses of $402,000, offset by
an increase in accounts receivable of $660,000 and a decrease in accounts
payable of $236,000. Cash provided by operating activities in the three months
ended October 31, 2005 resulted primarily from net income of $723,000, non-cash
charges for depreciation and amortization of $404,000, non-cash charges for
equity instruments issued for compensation and services of $187,000, and an
increase in accounts payable of $324,000, offset by an increase in accounts
receivable of $370,000 and a decrease in accrued expenses of $479,000.

      Cash used in investing activities decreased to $91,000 in the three months
ended October 31, 2006 from $159,000 in the three months ended October 31, 2005.
Cash used in investing activities in the three months ended October 31, 2006
resulted from the purchase of property and equipment of $71,000 and additional
costs relating to acquisitions of $20,000. Cash used in investing activities in
the three months ended October 31, 2005 resulted from the purchase of property
and equipment of $94,000 and additional costs relating to acquisitions of
$65,000.

      Cash provided by financing activities was $100,000 in the three months
ended October 31, 2006 compared to cash provided by financing activities of
$164,000 in the three months ended October 31, 2005. Cash provided by financing
activities in the three months ended October 31, 2006 was the result of proceeds
from the exercise of employee stock options of $10,000 and proceeds from the
exercise of warrants of $90,000. Cash provided by financing activities in the
three months ended October 31, 2005 was the result of proceeds from the exercise
of employee stock options of $164,000 offset by capital lease payments of
$2,000.

OFF BALANCE SHEET ARRANGEMENTS

      We provide indemnifications of varying scope and amount to certain
customers against claims of intellectual property infringement made by third
parties arising from the use of our products and services. We evaluate estimated
losses for such indemnification under Statement of Financial Accounting
Standards No. 5, Accounting for Contingencies, as interpreted by Financial
Accounting Standards Board Interpretation No. 45, Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. We consider factors such as the degree of probability of
an unfavorable outcome and the ability to make a reasonable estimate of the
amount of loss. To date, we have not encountered material costs as a result of
such obligations and have not accrued any material liabilities related to such
indemnifications in our financial statements.

CONTRACTUAL OBLIGATIONS

      Our contractual obligations are comprised of future minimum rental
payments due under non-cancelable operating leases. The following table is a
summary of our contractual obligations as of October 31, 2006:



FISCAL
YEAR                                                  AMOUNT
------                                             ------------
                                                
2007                                               $  1,188,056
2008                                               $  1,524,649
2009                                               $  1,429,073
2010                                               $  1,188,485
2011                                               $    335,924


      The minimum future rental payments have not been reduced by $2,900,291 of
sublease rentals to be received in the future under non-cancelable subleases.

                                       15


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

      We may invest our cash in a variety of financial instruments. If invested,
we account for our investment instruments in accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" ("SFAS No. 115"). All of the cash equivalents and
investments are treated as available-for-sale under SFAS No. 115. Investments
that are classified as cash and cash equivalents have original maturities of
three months or less. Investments in both fixed rate and floating rate interest
earning instruments carry a degree of interest rate risk. Fixed rate securities
may have their fair market value adversely impacted due to a rise in interest
rates, while floating rate securities may produce less income than expected if
interest rates fall. Due in part to these factors, our future investment income
may vary widely due to changes in interest rates, or we may suffer losses in
principal if forced to sell securities that have seen a decline in market value
due to changes in interest rates. For the quarter ended October 31, 2006, our
cash investments consisted entirely of overnight cash sweep accounts invested in
a fund composed primarily of triple A rated commercial paper and government
agency bonds. As of October 31, 2006, the interest rate for this investment was
4.62%.

ITEM 4. CONTROLS AND PROCEDURES

      Our management, including our chief executive officer and chief financial
officer, has carried out an evaluation of the effectiveness of our disclosure
controls and procedures as of October 31, 2006, as required by paragraph (b) of
Exchange Act Rules 13(a)-15 and 15(d)-15. Based upon that evaluation, our chief
executive officer and chief financial officer have concluded that as of such
date, our disclosure controls and procedures are effective. There was no change
in our internal control over financial reporting during the quarter ended
October 31, 2006 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

                                       16


PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

      On January 6, 2006 we filed a complaint for declaratory judgment in the
United States Bankruptcy Court (the "Court") naming Omega Liquidating Trust
("Omega"), the liquidating trust for the bankrupt Cable & Wireless USA (C&W
USA), and Cable & Wireless PLC (C&W) as defendants (together the "Defendants").
We seek to have Omega declared the rightful owner of our series C preferred
stock and of any of our shares of class A common stock that have been issued but
not distributed as dividends of the series C preferred stock. On March 10, 2006,
defendant C&W entered a motion in the court to dismiss the complaint for
declaratory judgment for lack of subject matter jurisdiction, or in the
alternative, abstention by the Court. A hearing was scheduled by the Court for
oral arguments on the motion for July 13, 2006. On October 19, 2006, the
Defendants filed a motion to have the suit dismissed as the result of a
compromise settlement having been reached between the Defendants. The compromise
names defendant Omega as owner of the disputed shares, but splits the proceeds
from any sale of our stock fifty-fifty between the Defendants. An order
approving the settlement was signed by the Court on November 7, 2006.

      In May 2006, Internet Commerce Corporation, a Georgia corporation with the
identical name as the Company (the "Plaintiff"), filed a lawsuit against the
Company alleging claims for federal and state service mark infringement, federal
unfair competition, dilution of service mark, unfair competition and deceptive
trade practices and claims under the Georgia Deceptive Trade Practices Act based
upon the Plaintiff's claim that it has priority of the use of the services marks
"Internet Commerce Corporation" and "ICC." The Company settled all claims on
August 4, 2006 by agreeing to change the Company's name within twelve months of
the settlement date and paying Plaintiff an immaterial amount to cover costs.

      We are party to various legal proceedings and claims, either asserted or
unasserted, which arise in the ordinary course of business. While the outcome of
these matters cannot be predicted with certainty, we do not believe that the
outcome of any of these claims or any of the above mentioned legal matters will
have a material adverse effect on our consolidated financial position, results
of operations or cash flow.

ITEM 1A. RISK FACTORS

      The following Risk Factor disclosure updates the risk factors as disclosed
in our 2006 Annual Report on Form 10-K previously filed with the Securities and
Exchange Commission.

RISKS RELATING TO OUR COMPANY

      WE MAY NOT REMAIN PROFITABLE IN THE FUTURE. We have incurred significant
losses since the Company was founded in 1991, and, as of October 31, 2006, we
had an accumulated deficit of approximately $82.1 million. We realized
profitability for the first time in the fiscal year ending July 31, 2005 and
have remained so since. However, there can be no assurances that we may not
incur losses again in the future.

      WE MUST CONTINUE TO GROW OUR BUSINESS IN ORDER TO REMAIN COMPETITIVE. Over
the past year, the VAN business has remained significantly price competitive.
Our major competitors appear to be restructuring their VAN operations to reduce
their overhead and other costs to better compete against Internet-based networks
such as our ICC.NET service. While we have been successful in maintaining our
margins and we have increased the volume of data transmitted through our VAN, we
have experienced price erosion in competing for larger customers. Although we
expect to continue to add new customers and increase the volume of data
transmitted through our service, we do not expect our revenue from VAN services
to continue to grow as rapidly as in the past. If our revenues grow at a slower
rate than we anticipate, or decrease and we are unable to adjust spending in a
timely manner or if our expenses increase without commensurate increases in
revenues, our operating results will suffer and we may again report losses.

      IF WE ARE NOT SUCCESSFUL IN SELLING OUR PRODUCTS AND SERVICES, OUR RESULTS
OF OPERATIONS WILL SUFFER. While our primary focus in the past has been on
growing our ICC.NET VAN service, we have attempted to diversify by acquiring
Electronic Commerce Systems in June 2004, the MEC operations of Inovis
International, Inc. in March 2005 and Enable Corp. in May 2006. However, the
success of our services depends to a large extent on the future of
business-to-business electronic commerce and our ability to effectively compete
in the marketplace. In

                                       17


particular, our success depends on the number of customers that subscribe to our
services, the volume of the data, documents or other information they send or
retrieve and the price we are able to charge for these services in light of
competitive pressures. In connection with the assimilation of our new customers
acquired from the MEC operation and the Enable acquisition, we expect to see
attrition to these newly acquired customer bases due to the seasonal trends,
integration difficulties, and customer defections to alternative EDI solutions.
As a result, a portion of our revenues may be adversely affected. While we are
learning to manage these new customers, there is no assurance that we will
accurately assess the trends of these new customers. Accordingly, the value of
these new customers, the volume of our services subscribed by them and the
possibility of payment collection may differ materially from our current
expectation. Further, since our operating expense levels are based significantly
on our expectations of future revenue, our inability to assess the trends may
render us vulnerable in the case of a significant shortfall in revenues or
orders from these new customers, in which case we may not be able to reduce our
operating expenses quickly in response. Therefore, any significant shortfall in
revenue or orders could have an immediate adverse effect on our operating
results.

      WE MAY NOT BE SUCCESSFUL IN COMPETING AGAINST OUR COMPETITORS. We face a
significant number of competitors, ranging from very large enterprises or
divisions of very large companies to a number of relatively small organizations.
These competitors are diverse in terms of their histories, business models,
corporate strategies, financial strength, name recognition, company reputation,
customer base and breadth of offerings. Many of our large competitors have more
history, significantly greater financial resources, larger customer bases and
more easily recognized names than we do. As a result, our competitors 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. New competition
is emerging in the form of web services networks, collaborative applications,
application service providers, e-marketplaces and integration broker suites. We
have enhanced our technologies to communicate with these web-based technologies.
However, there can be no assurance that our product and service offerings will
compete effectively and generate any significant revenues. We believe that the
high cost of implementation and the ongoing costs of supporting a company's
trading partners may be a barrier to the wider acceptance of our new product
offerings in the marketplace. As a result, we may not be successful in competing
against our competitors.

      IF WE ARE UNABLE TO MAINTAIN OR REPLACE OUR EXISTING INTERCONNECT
ARRANGEMENTS, OUR RESULTS OF OPERATIONS WOULD SUFFER. We rely on many of our
competitors to interconnect with our service to promote an "open community" so
all businesses can take advantage of the efficiencies of EDI, no matter what
network they choose as their provider. Although we have interconnect agreements
with the major VAN providers, there can be no assurances that these agreements
will not be terminated or will continue with acceptable terms. If terminated, we
would have to find an acceptable alternative. If available, such an alternative
could add significant operating costs to our business.

      WE MUST CONTINUE TO DEVELOP NEW PRODUCTS AND SERVICES. 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. 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. If we cannot keep pace with these changes and maintain
the performance and reliability of our network and customer service levels, our
business will suffer. The intense competition in our industry requires us to
continue to develop strategic business and Internet solutions that enhance and
improve the customer service features, functions and responsiveness of our
products and services and we must constantly keep pace with continuing changes
in information technology and customer requirements. While we actively search
for ways to expand our business and our products and services to keep pace with
the rapidly changing technology, customer demands and intense competition, there
can be no assurance that we will be able to keep pace with these changes. If we
are not successful in developing and marketing enhancements to our products and
services that respond to technological change or customer demands, our business
will suffer.

      WE MAY NEED TO OBTAIN ADDITIONAL FINANCING ON SATISFACTORY TERMS TO
CONTINUE TO COMPETE SUCCESSFULLY. If we are unable to obtain necessary future
capital, our business will suffer. We may need to raise additional funds if
competitive pressures or technological changes are greater than anticipated, if
we are unable to increase revenue at anticipated rates, if our expenses increase
significantly or if our customers delay payment of our receivables or if we
identify a suitable acquisition candidate that requires a cash outlay in order
to complete the transaction. We cannot assure you that any additional financing
will be available on reasonable terms or at all. Raising additional funds in

                                       18


the future by issuing securities could adversely affect our stockholders and
negatively impact our publicly traded share price. 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 common stock or securities convertible into or exchangeable for
common stock, the percentage ownership of our then-existing stockholders will
decrease and they may experience additional dilution. In addition, any
convertible or exchangeable securities may have rights, preferences and
privileges more favorable to the holders than those of the common stock.

      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. We have experienced outages in the past and
could experience outages, delays and other difficulties due to system failures
unrelated to our internal activities in the future. These types of occurrences
could also cause users to perceive our services as not functioning properly and
therefore cause them to use other methods to deliver and receive information. We
have limited control over these third parties and cannot assure you that we will
be able to maintain satisfactory relationships with any of them on acceptable
commercial terms or that the quality of services that they provide will remain
at the levels needed to enable us to conduct our business effectively.

      WE MAY SUFFER SYSTEMS FAILURES AND BUSINESS INTERRUPTIONS THAT WOULD HARM
OUR BUSINESS. Our success depends in part on the efficient and uninterrupted
operation of our VAN service and Enable's web hosting sites. Almost all of our
network operating systems are located in third party co-location facilities.
Although these facilities are designed to prevent operational interrupts, 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. 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.

      IF WE ARE UNABLE TO SUCCESSFULLY INTEGRATE ACQUISITIONS, OUR FINANCIAL
RESULTS WILL SUFFER. Our ability to implement our business plan successfully
requires effective planning and strong execution skills. If we cannot manage the
integration of anticipated acquisitions, 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 continually improve our financial
systems, procedures and controls and will need to expand, train and manage our
workforce, particularly our information technology and sales and marketing
staffs.

      IF WE LOSE OUR NET OPERATING LOSS CARRYFORWARD OF APPROXIMATELY $71.9
MILLION, 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 create a limitation
on our ability to utilize our net operating losses for tax purposes in the
future. We are currently subject to certain limitations on the utilization of
portions of our net operating loss carryforward.

         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. 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 and higher-profile employment opportunities than
we can.

         WE DEPEND ON OUR INTELLECTUAL PROPERTY, WHICH MAY BE DIFFICULT AND
COSTLY TO PROTECT. If we fail to adequately protect our proprietary rights,
competitors could offer similar products relying on technologies we developed,
potentially harming our competitive position and decreasing our revenues. We
attempt to protect our intellectual property rights by limiting access to the
distribution of our software, documentation and other proprietary information
and by relying on a combination of copyright, trademark and trade secret laws.
In addition, we enter into confidentiality agreements with our employees and
certain customers, vendors and strategic partners. In some circumstances,
however, we may, if required by a business relationship, provide our licensees
with access to

                                       19


our data model and other proprietary information underlying our licensed
applications. Despite the precautions we take, it may be possible for
unauthorized third parties to copy aspects of our current or future products or
to obtain and use information that we regard as proprietary. Policing
unauthorized use of software is difficult, and some foreign laws do not protect
proprietary rights to the same extent as United States laws. Litigation may be
necessary in the future to enforce our intellectual property rights, to protect
our trade secrets or to determine the validity and scope of the proprietary
rights of others, any of which could be costly and adversely affect our
operating results.

      INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS AGAINST US COULD HARM OUR
BUSINESS. It is possible our products and service may infringe upon the
proprietary rights of others and other parties may assert infringement claims
against us. Any such claims and any resulting litigation could subject us to
significant liability for damages and could invalidate our proprietary rights.
We could be required to enter into royalty and licensing agreements, which may
be costly or otherwise burdensome or which may not be available on terms
acceptable to us.

      WE MUST COMPLY IN THE FUTURE WITH NEW AND COSTLY REPORTING REQUIREMENTS.
Under current Securities and Exchange Commission ("SEC") regulations, we are
considered a non-accelerated filer as our market capitalization as of January
31, 2006 was under $75 million. Under current SEC regulations, we will have to
be compliant with Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX") by July
31, 2007, although proposed rule changes would extend that date to July 31,
2008. The costs of implementing the requirements of the SOX have ranged from
approximately $500,000 to over $1 million for smaller companies. Although we
began our SOX compliance efforts, there can be no assurance that we can be in
full compliance when required for reasonable costs.

RISKS RELATING TO THE INTERNET AND ONLINE COMMERCE ASPECTS OF OUR BUSINESS

      IF INTERNET USAGE DOES NOT CONTINUE TO GROW OR IF ITS INFRASTRUCTURE
FAILS, OUR BUSINESS WILL SUFFER. 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 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.

      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. 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 user privacy, security, pricing and taxation, contents and distribution.

      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 OUR CLASS A COMMON STOCK

      THE MARKET PRICE OF OUR CLASS A COMMON STOCK IS LIKELY TO BE HIGHLY
VOLATILE. The market price of our class A common stock has been very volatile in
the past, ranging from a low of $1.82 to a high of $4.66 during fiscal 2006 and
is likely to fluctuate substantially in the future. If our class A common stock
falls under $1.00 per share and fails to maintain a minimum bid price of $1.00
for 30 consecutive trading days, it may no longer be eligible for trading in the
Nasdaq Capital Market, which would adversely affect the ability of investors to
sell their shares of our class A common stock.

                                       20


      SHARES ELIGIBLE FOR FUTURE SALE BY OUR EXISTING STOCKHOLDERS MAY ADVERSELY
AFFECT OUR STOCK PRICE MAKING IT DIFFICULT TO SELL CLASS A COMMON STOCK. Between
January 1, 2003 and May 2006, we registered the resale under the Securities Act
of 1933 of an aggregate of 10,676,141 shares of our class A common stock, which
includes 3,016,917 shares of class A common stock issuable upon the exercise of
warrants to purchase shares of class A common stock and 192,307 shares of class
A common stock issuable upon conversion of our series D preferred. 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.

      THE MARKET FOR OUR CLASS A COMMON STOCK ON THE NASDAQ CAPITAL MARKET MAY
BE ILLIQUID, WHICH WOULD RESTRICT THE ABILITY TO SELL SHARES OF CLASS A COMMON
STOCK AND 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 many factors, including investors' perceptions of our
business, our financial condition, operating results and prospects, the use of
the Internet for business purposes and general economic and market conditions.

         Our Board of Directors can issue preferred stock with rights adverse to
the holders of class A common stock. Our Board of Directors is authorized,
without further stockholder approval, to determine the provisions of and to
issue up to 4,989,750 shares of preferred stock. Issuance of preferred shares
with rights to dividends and other distributions, voting rights or other rights
superior to the class A common stock could be adverse to the holders of class A
common stock. In addition, issuance of preferred shares could have the effect of
delaying, deterring or preventing an unsolicited change in control of our
company, or could impose various procedural and other requirements that could
make it more difficult for holders of our class A common stock to effect certain
corporate actions, including the replacement of incumbent directors and the
completion of transactions opposed by the incumbent Board of Directors. The
rights of the holders of our class A common stock would be subject to, and may
be adversely affected by, the rights of the holders of any preferred stock that
may be issued in the future.

      WE MAY HAVE TO USE 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.

         WE MIGHT NOT BE ABLE TO RETIRE THE SERIES C PREFERRED STOCK, THE
EXISTENCE OF WHICH MAY POSE AN IMPEDIMENT TO OUR FUTURE FUND RAISING EFFORTS. We
believe the 4% annual dividend and the $10,000,000 liquidating preference of our
series C preferred stock may inhibit our ability to raise capital. In 2005, we
began discussions with Cable & Wireless, PLC ("C&W"), the purported owner of the
series C preferred stock, about buying back the series C preferred stock. As
these discussions progressed, we realized that there was substantial evidence
that the series C preferred stock was originally issued to Cable & Wireless USA
("C&W USA"), a formerly wholly-owned subsidiary of C&W that filed Chapter 11
bankruptcy in the United States on December 8, 2003. On January 6, 2006 we filed
a complaint for declaratory judgment in the United States Bankruptcy Court (the"
Court") naming Omega Liquidating Trust ("Omega") and C&W as defendants. We
sought to have Omega, as the liquidating trust for the bankrupt C&W USA,
declared the rightful owner of our series C preferred stock and of any of our
shares of class A common stock that have been issued but not distributed as
dividends of the series C preferred stock. Omega and C&W reached a settlement
agreement on October 19, 2006. An order approving the settlement was signed by
the Court on November 7, 2006. The compromise names defendant Omega as owner of
the disputed shares, but splits the proceeds from the potential sale of our
series C preferred stock or class A common stock issued as dividends fifty-fifty
between the Defendants. Even though ownership has been established, we cannot be
assured that we will be able to reach acceptable terms with Omega for the
repurchase of our series C preferred stock or that some other entity may
purchase the series C preferred stock.

                                       21


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

      On October 27, 2006, we issued a total of 25,000 shares of class A common
stock in consideration for an aggregate price of $89,500 or $3.58 per share, in
a private placement transaction. These shares were issued upon the exercise of
outstanding warrants issued in 2001 in connection with a private placement of
the class A common stock.

      The Company intends to use the proceeds for general corporate purposes.
The Company relied on the exemptions from registration requirements provided by
Section 4(2) and Rule 506 of Regulation D promulgated under the Securities Act
of 1933, as amended, for the issuance and sale of the shares of class A common
stock upon the exercise of the warrants.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      None. As the result of the settlement described in Part II, Item 1. Legal
Proceedings on page 17 the certificate for all past declared dividends has been
issued.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None.

ITEM 5. OTHER INFORMATION

      None.

ITEM 6. EXHIBITS


      
31.1     Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
         of 2002.

31.2     Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
         of 2002.

32.1     Certification of the Chief Executive Officer and Chief Financial Officer
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*


*  In accordance with Release No. 34-47986, this Exhibit is hereby furnished
   to the SEC as an accompanying document and is not deemed "filed" for
   purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise
   subject to the liabilities of that Section, nor shall it be deemed
   incorporated by reference into any filing under the Securities Act of
   1933.

                                       22


                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date: December 14, 2006

                                    INTERNET COMMERCE CORPORATION

                                    By:      /s/ Thomas J. Stallings
                                             ---------------------------------
                                             Thomas J. Stallings
                                             Chief Executive Officer

                                    By:      /s/ Glen E.  Shipley
                                             ---------------------------------
                                             Glen E. Shipley
                                             Chief Financial Officer

                                       23


                                  EXHIBIT INDEX


EXHIBIT NO.       DOCUMENT
               
Exhibit 31.1      Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
                  of 2002

Exhibit 31.2      Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
                  of 2002

Exhibit           32.1 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002*


*  In accordance with Release No. 34-47986, this Exhibit is hereby furnished
   to the SEC as an accompanying document and is not deemed "filed" for
   purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise
   subject to the liabilities of that Section, nor shall it be deemed
   incorporated by reference into any filing under the Securities Act of
   1933.

                                       24


                                                                    EXHIBIT 31.1

     CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

I, Thomas J. Stallings, certify that:

1.    I have reviewed this report on Form 10-Q of Internet Commerce Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:

      a.    Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      b.    Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      c.    Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based
      on our most recent evaluation of internal control over financial
      reporting, to the registrant's auditors and the audit committee of
      registrant's board of directors (or persons performing the equivalent
      functions):

      a.    All significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      b.    Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.

Date: December 14, 2006

By: /s/ Thomas J. Stallings
    Thomas J. Stallings
    Chief Executive Officer



                                                                    EXHIBIT 31.2

     CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

I, Glen E. Shipley, certify that:

1.    I have reviewed this report on Form 10-Q of Internet Commerce Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:

      a.    Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      b.    Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      c.    Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based
      on our most recent evaluation of internal control over financial
      reporting,, to the registrant's auditors and the audit committee of
      registrant's board of directors (or persons performing the equivalent
      functions):

      a.    All significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      b.    Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.

Date: December 14, 2006

By: /s/ Glen E. Shipley
    Glen E. Shipley
    Chief Financial Officer



                                                                    EXHIBIT 32.1

                  CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
            CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(B) OF THE
                       SECURITIES EXCHANGE ACT, AS AMENDED

      This Certification is being delivered pursuant to the requirements of
Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal
Procedures) of the United States Code and shall not be relied on by any person
for any other purpose.

      The undersigned, who are the Chief Executive Officer and Chief Financial
Officer, respectively, of Internet Commerce Corporation (the "Company"), hereby
each certify that, to the undersigned's knowledge:

      The Quarterly Report on Form 10-Q of the Company for the three months
ended October 31, 2006 (the "Report"), which accompanies this Certification,
fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, and all information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.

      Dated this 14th day of December, 2006.

                                  /s/ Thomas J. Stallings
                                  ----------------------------------------------
                                  Thomas J. Stallings, Chief Executive Officer

                                  /s/ Glen E. Shipley
                                  ----------------------------------------------
                                  Glen E. Shipley, Chief Financial Officer

      In accordance with SEC Release No. 34-47986, this Exhibit is furnished to
the SEC as an accompanying document and is not deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the
liabilities of that Section, nor shall it be deemed incorporated by reference
into any filing under the Securities Act of 1933. A signed original of this
written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has
been provided to the registrant and will be retained by the registrant and
furnished to the Securities and Exchange Commission or its staff upon request.


================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

[MARK ONE]
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2007

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      FOR THE TRANSITION PERIOD FROM ____________ TO ____________

                        COMMISSION FILE NUMBER: 000-24996

                          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 No.)
     Incorporation or Organization)

  6025 THE CORNERS PARKWAY, SUITE 100                      30092
           NORCROSS, GEORGIA                            (Zip Code)
(Address of Principal Executive Offices)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (678) 533-8000

Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
  Large accelerated filer [ ] Accelerated Filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of March 13, 2007, the Registrant had outstanding 22,737,653 shares of class
A common stock.

================================================================================



                               INDEX TO FORM 10-Q



                                                                                                             PAGE
                                                                                                             ----
                                                                                                       
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets as of January 31, 2007 (unaudited) and July 31, 2006.......     3

         Condensed Consolidated Statements of Operations for the three and six months ended
         January 31, 2007 (unaudited) and January 31, 2006 (unaudited)....................................     4

         Condensed Consolidated Statements of Cash Flows for the six months ended
         January 31, 2007 (unaudited) and January 31, 2006 (unaudited)....................................     5

         Notes to Condensed Consolidated Financial Statements (unaudited).................................     6

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations............    11

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.......................................    20

Item 4.  Controls and Procedures..........................................................................    20

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings...............................................................................     21

Item 1A. Risk Factors....................................................................................     21

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.....................................     26

Item 3.  Defaults Upon Senior Securities.................................................................     26

Item 4.  Submission of Matters to a Vote of Security Holders ............................................     26

Item 5.  Other Information...............................................................................     26

Item 6.  Exhibits........................................................................................     27

SIGNATURES................................................................................................    28

EXHIBIT INDEX.............................................................................................    29

CERTIFICATIONS


                                       2


PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS



                                                                                         JANUARY 31,        JULY 31,
                                                                                            2007             2006
                                                                                        -------------    -------------
                                                                                         (UNAUDITED)
                                                                                                   
ASSETS
Current assets:
  Cash and cash equivalents                                                             $   6,094,972    $   6,988,753
  Accounts receivable, net of allowance for doubtful accounts and
   allowance for sales returns and allowances of $518,314 and $458,061,
   respectively                                                                             3,878,283        3,631,135
  Prepaid expenses and other current assets                                                   630,985          461,778
                                                                                        -------------    -------------
   Total current assets                                                                    10,604,240       11,081,666

Restricted cash                                                                               433,322          432,974
Property and equipment, net                                                                 1,141,729        1,113,701
Goodwill                                                                                    6,168,883        6,148,332
Other intangible assets, net                                                                4,375,732        4,829,772
Other assets                                                                                   40,554           37,822
                                                                                        -------------    -------------
   Total assets                                                                         $  22,764,460    $  23,644,267
                                                                                        =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                                      $     500,473    $     662,151
  Accrued expenses                                                                            756,945          574,783
  Accrued dividends - preferred stock                                                          16,986          232,329
  Deferred revenue                                                                            239,061          261,214
  Lease liability from
acquisition                                                            304,759          249,940
  Other current liabilities                                                                   138,634          116,280
                                                                                        -------------    -------------
   Total current liabilities                                                                1,956,858        2,096,697

Long-term lease liability from acquisition                                                    841,843          967,442
                                                                                        -------------    -------------
   Total liabilities                                                                        2,798,701        3,064,139
                                                                                        -------------    -------------

Stockholders' equity:
Preferred stock - 5,000,000 shares authorized, 5,000 and 10,000 shares of
   series C, respectively, and 250 shares of series D:
   Series C - par value $.01 per share, 44.76 votes per share; 5,000 shares
    issued and outstanding (liquidation value of $5,016,986) and 10,000 shares issued
    and outstanding (liquidation value of $10,333,151), respectively                               50              100
   Series D - par value $.01 per share, 769 votes per share; 250 shares issued
    and outstanding (liquidation value of $250,000)                                                 3                3
Common stock:
   Class A - par value $.01 per share, 40,000,000 shares authorized, one vote
    per share; 22,702,653 and 22,712,944 shares issued and outstanding,
    respectively                                                                              227,027          227,129
   Class B - par value $.01 per share, 2,000,000 shares authorized, six votes
    per share; none issued and outstanding                                                         --               --
Additional paid-in capital                                                                101,150,524      103,042,746
Accumulated deficit                                                                       (81,411,845)     (82,689,850)
                                                                                        -------------    -------------
   Total stockholders' equity                                                              19,965,759       20,580,128
                                                                                        -------------    -------------
   Total liabilities and stockholders' equity                                           $  22,764,460    $  23,644,267
                                                                                        =============    =============


            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       3


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)



                                                           THREE MONTHS ENDED               SIX MONTHS ENDED
                                                               JANUARY 31,                     JANUARY 31,
                                                       ----------------------------    ----------------------------
                                                           2007            2006            2007            2006
                                                       ------------    ------------    ------------    ------------
                                                                                           
Service revenues                                       $  5,302,468    $  5,012,240    $ 11,110,196    $ 10,030,073
                                                       ------------    ------------    ------------    ------------

Expenses:
  Cost of services                                        1,969,683       1,750,182       3,828,975       3,655,579
  Product development and enhancement                       585,697         206,928       1,302,341         309,911
  Selling and marketing                                     369,359         577,301         889,316         992,658
  General and administrative                              1,720,310       2,080,540       3,829,126       3,934,795
                                                       ------------    ------------    ------------    ------------
                                                          4,645,049       4,614,951       9,849,758       8,892,943
                                                       ------------    ------------    ------------    ------------
Operating income                                            657,419         397,289       1,260,438       1,137,130
                                                       ------------    ------------    ------------    ------------

Other income (expense):
  Interest and investment income                             81,293          34,563         163,686          60,233
  Interest expense                                          (19,687)        (77,507)        (40,274)       (113,293)
  Other income (expense)                                      1,044          10,465         (21,576)         27,551
                                                       ------------    ------------    ------------    ------------
                                                             62,650         (32,479)        101,836         (25,509)
                                                       ------------    ------------    ------------    ------------

Income before income taxes                                  720,069         364,810       1,362,274       1,111,621

Provision (benefit) for income taxes, current                16,663          (7,093)         84,270          17,172
                                                       ------------    ------------    ------------    ------------

Net income                                                  703,406         371,903       1,278,004       1,094,449

Dividends on preferred stock                                (83,836)       (101,822)       (184,658)       (201,644)
Extinguishment of dividends on retired preferred
  stock                                                     200,000              --         200,000              --
                                                       ------------    ------------    ------------    ------------
Income attributable to common stockholders             $    819,570    $    270,081    $  1,293,346    $    892,805
                                                       ============    ============    ============    ============
Basic income per common share                          $       0.04    $       0.01    $       0.06    $       0.05
                                                       ============    ============    ============    ============
Diluted income per common share                        $       0.03    $       0.01    $       0.05    $       0.05
                                                       ============    ============    ============    ============
Anti-dilutive stock options and warrants outstanding      1,710,399       1,652,695       1,710,399       2,527,457
                                                       ============    ============    ============    ============
Weighted average number of common shares outstanding
  - basic                                                22,740,594      19,462,025      22,728,530      19,560,428
                                                       ============    ============    ============    ============
Weighted average number of common shares outstanding
  - diluted                                              24,963,417      22,124,182      25,066,145      21,865,940
                                                       ============    ============    ============    ============


            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       4


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



                                                                              SIX MONTHS ENDED JANUARY 31,
                                                                              ----------------------------
                                                                                  2007             2006
                                                                              -----------      -----------
                                                                                         
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                                                   $ 1,278,004      $ 1,094,449
 Adjustments to reconcile net income to net cash provided by operating
   activities:
      Depreciation and amortization                                               993,142          614,745
      Bad debt expense                                                            156,535          333,611
      Non-cash interest expense                                                    40,274          113,871
      Non-cash charges for equity instruments issued for compensation and         493,999          474,685
      services
      Changes in assets and liabilities, net of effects from acquisitions:
          Accounts receivable                                                    (362,767)        (123,068)
          Prepaid expenses and other assets                                      (165,933)        (119,882)
          Accounts payable                                                       (161,678)         275,551
          Accrued expenses                                                        167,161         (900,881)
          Deferred revenue                                                        (22,153)         (26,927)
          Other liabilities                                                       (88,700)        (703,294)
                                                                              -----------      -----------
          Net cash provided by operating activities                             2,327,885        1,032,860
                                                                              -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Payment for purchase of acquisitions, net of cash acquired                    (300,000)        (886,619)
   Additional costs of previous acquisition                                       (20,551)         (65,000)
   Purchases of property and equipment                                           (296,084)        (114,848)
                                                                              -----------      -----------
          Net cash used in investing activities                                  (616,635)      (1,066,467)
                                                                              -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments of capital lease obligations                                               --           (3,645)
   Payment to reacquire class A common stock                                     (613,587)              --
   Payment to reacquire series C preferred stock                               (2,261,413)              --
   Proceeds from exercise of warrants                                             247,564               --
   Proceeds from exercise of employee stock options                                22,405          348,633
                                                                              -----------      -----------
          Net cash provided by (used in) financing activities                  (2,605,031)         344,988
                                                                              -----------      -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             (893,781)         311,381

Cash and cash equivalents, beginning of period                                  6,988,753        3,983,005
                                                                              -----------      -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                      $ 6,094,972      $ 4,294,386
                                                                              ===========      ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid for interest during the period                                 $        --      $       201
     Cash paid for income taxes during the period                                 221,417            4,850

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITY:
     Payment for purchase of acquisition                                               --           23,300

SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITY:
     Issuance of  20,283 shares of class A common stock upon exercise of
     warrants                                                                          --              203
     Issuance of 50,117 shares of class A common stock upon exercise of
     355,713 stock options                                                             --              501
     Issuance of common stock for dividends on preferred stock                    200,000          400,000


            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       5


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

      The accompanying unaudited condensed consolidated financial statements of
Internet Commerce Corporation (the "Company" or "ICC") have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP") for interim financial information. In the opinion of
management, such statements include all adjustments (consisting only of normal
recurring adjustments) necessary for the fair presentation of the Company's
financial position, results of operations and cash flows at the dates and for
the periods indicated. Pursuant to the requirements of the Securities and
Exchange Commission (the "SEC") applicable to Quarterly Reports on Form 10-Q,
the accompanying financial statements do not include all the disclosures
required by GAAP for annual financial statements. While the Company believes
that the disclosures presented are adequate to make the information not
misleading, these unaudited interim condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
related notes included in the Company's Annual Report on Form 10-K for the year
ended July 31, 2006. Operating results for the six month period ended January
31, 2007 are not necessarily indicative of the results that may be expected for
the fiscal year ending July 31, 2007 or any future period.

1.    ORGANIZATION AND NATURE OF BUSINESS

      ICC creates, deploys and manages the secure and reliable electronic
exchange of essential business documents. With the Company's value added network
("VAN"), desktop software and hosted applications, managed services, consulting
and professional services, ICC is a trusted provider of e-commerce solutions to
connect businesses, regardless of size and level of technical sophistication,
with their trading communities. Thousands of customers, ranging from sole
proprietorships to large corporations, in a variety of industries rely on the
value delivered from ICC's broad line of solutions, expertise and 24x7 customer
service to help meet the unique requirements for trading partner compliance,
coordination and collaboration.

2.    RECENT ACQUISITIONS

      STEWART TECHNICAL SERVICES

      On January 31, 2007, the Company completed the acquisition of certain
assets of Stewart Technical Services, Inc. ("STS") STS provides EDI services and
software and will be included in our EC Solutions segment. In accordance with
the Asset Purchase Agreement ("Agreement"), the Company paid $300,000 upon close
and has a contingent payment of up to an additional one times revenue for the
first year's revenue less the $300,000 payment made at closing. Additionally, if
the first year's revenues are less than $400,000, then no additional earn-out
will be paid. The Company received tangible assets of approximately $49,000,
which included accounts receivable of $44,000 and fixed assets of $5,000, and
intangible assets of approximately $266,000, which are comprised of internally
developed software of $166,000 and customer relationships of $100,000. Under the
Agreement, the Company also recorded a liability of $15,000 for transition
costs. The fixed assets are estimated to have a useful life of three years and
customer relationships and internally developed software are estimated to have
useful lives of five and four years, respectively.

      ENABLE

      On May 9, 2006, the Company acquired all of the outstanding shares of
Enable Corp. ("Enable"), a privately held corporation with offices in New York
City that provides trading community portals, web based EDI trading tools, and
EDI professional services to a variety of industries. Under the terms of the
Share Purchase Agreement, the Company paid $4.2 million in cash and issued
686,324 shares of its class A common stock valued at approximately $2.6 million.

      The following table sets forth the components of the purchase price for
Enable as of January 31, 2007.


                                     
Cash on closing                         $ 4,203,000
ICC class A common stock issued           2,632,739
Transaction costs                           416,208
Additional costs since July 31, 2006         20,551
                                        -----------
     Total purchase price               $ 7,272,498
                                        ===========


                                       6


      The following table provides the estimated fair value of assets acquired
and liabilities assumed in the Enable acquisition:


                                           
Cash                                          $   991,747
Accounts receivable                               705,386
Restricted cash                                    15,000
Other assets                                       14,975
Fixed assets                                      246,520
Intangible assets - acquired technology         1,775,000
Intangible assets - trade names                   250,000
Intangible assets - customer relationships      1,500,000
Liabilities                                      (510,778)
                                              -----------
Fair value of net assets acquired             $ 4,987,850
                                              -----------
Goodwill                                      $ 2,284,648
                                              -----------
     Total purchase price                     $ 7,272,498
                                              ===========


      The recorded fixed and other assets are estimated to have a life of two to
three years. The acquired technology intangibles are estimated to have a life
between one and four years, and the customer relationship and trade names
intangibles are estimated to have a life of seven years. We recorded $2,285,000
in goodwill resulting from the Enable acquisition. Revenue from the Enable
acquisition includes hosting and transaction fees, administrative fees and
professional services, which are part of our EC Solutions segment. Goodwill and
intangible assets are deductible for tax purposes. The results of operations of
Enable are consolidated with the results of operations of the Company subsequent
to the acquisition date. The acquisition of Enable was made to strengthen the
Company's web based trading technology offering and customer base.

3.    REPURCHASE OF PREFERRED STOCK

      On December 14, 2006, two subsidiaries of 3V Capital LLC (3V Capital Fund
Ltd. and Distressed/High Yield Trading Opportunities, Ltd. (collectively, the
"3V Entities")) acquired from Omega Liquidating Trust, the liquidating trust for
the bankrupt Cable & Wireless USA, 10,000 shares of the series C preferred stock
and 381,111 shares of the class A common stock of Internet Commerce Corporation
("ICC" or the "Company"). Thereafter, on December 20, 2006, ICC entered into a
Stock Purchase Agreement with each of the 3V Entities, pursuant to which ICC
reacquired a total of 5,000 shares of its series C preferred stock and 190,555
shares of its class A common stock for an aggregate purchase price of
$2,875,000. Following this reacquisition of shares by ICC, the 3V Entities
together continue to own the remaining 5,000 shares of ICC's series C preferred
stock and 190,556 shares of ICC's class A common stock. The repurchased shares
were subsequently retired during the quarter.

                                       7


4.    BUSINESS SEGMENT INFORMATION

      The Company's two reportable segments are:

      -     Electronic Commerce Solutions ("EC Solutions") segment, which
            includes ICC.NET VAN services, browser-based and hosted
            applications, and desktop software; and

      -     Electronic Commerce Services ("EC Services ") segment, which is
            comprised of the EC service center, EC outsourcing, mapping and
            professional services.

      The Company changed its reportable segments as of August 1, 2006 to
coincide with management's realignment of the business operations to follow our
service and product lines. The EC Solutions segment was formed to consolidate
the services and products offered with direct or indirect connections to our
VAN. The EC Services segment was formed and consolidates all of our
professional, managed and outsourcing services. Specifically, professional
service revenue and mapping revenue were moved from the old ICC.NET segment to
the EC Services segment. Hosted applications and desktop software were moved to
the EC Solutions segment from the old EC Service Bureau segment. The
browser-based and hosted applications acquired from Enable were also added to
the EC Solutions segment. In addition, the Company will no longer allocate 100%
of its operating expenses to the reporting segments. Only those expenses that
are directly related to the development and delivery of a reporting segment's
products and services will be allocated. The Company has restated the previous
period's reporting segments for comparability purposes between the periods.

      The tables below summarize information about operations for the three and
six month periods ended January 31, 2007 and 2006.



                                      EC SOLUTIONS    EC SERVICES      TOTAL
                                      ------------   ------------   ------------
                                                           
THREE MONTHS  - JANUARY 31, 2007
Revenues from external customers      $  3,880,022   $  1,422,446   $  5,302,468
                                      ============   ============   ============
Segment operating income              $  2,259,701   $    385,219   $  2,644,920
                                      ============   ============   ============


      The following is a reconciliation of operating segment income to net
      income for the three month period ending January 31, 2007:


                              
Segment operating income         $   2,644,920
Corporate expenses                  (1,987,501)
                                 -------------
Operating income                       657,419
Other income (expense), net             62,650
                                 -------------
Income before income taxes             720,069
Income tax expense                      16,663
                                 -------------
NET INCOME                       $     703,406
                                 =============


                                       8




                                      EC SOLUTIONS    EC SERVICES      TOTAL
                                      ------------   ------------   ------------
                                                           
SIX MONTHS  - JANUARY 31, 2007
Revenues from external customers      $  7,816,663   $  3,293,533   $ 11,110,196
                                      ============   ============   ============
Segment operating income              $  4,631,303   $  1,174,530   $  5,805,833
                                      ============   ============   ============


      The following is a reconciliation of operating segment income to net
      income for the six month period ending January 31, 2007:


                              
Segment operating income         $   5,805,833
Corporate expenses                  (4,545,395)
                                 -------------
Operating income                     1,260,438
Other income (expense), net            101,836
                                 -------------
Income before income taxes           1,362,274
Income tax expense                      84,270
                                 -------------
NET INCOME                       $   1,278,004
                                 =============




                                      EC SOLUTIONS    EC SERVICES      TOTAL
                                      ------------   ------------   ------------
                                                           
THREE MONTHS  - JANUARY 31, 2006
Revenues from external customers      $  3,156,784   $  1,855,456   $  5,012,240
                                      ============   ============   ============
Segment operating income              $  2,130,144   $    874,038   $  3,004,182
                                      ============   ============   ============


   The following is a reconciliation of operating segments income to net income
   for the three month period ending January 31, 2006:


                              
Segment operating income         $   3,004,182
Corporate expenses                  (2,606,893)
                                 -------------
Operating income                       397,289
Other income (expense), net            (32,479)
                                 -------------
Income before income taxes             364,810
Income tax (benefit) expense            (7,093)
                                 -------------
NET INCOME                       $     371,903
                                 =============




                                      EC SOLUTIONS    EC SERVICES     TOTAL
                                      ------------   ------------   ------------
                                                           
SIX MONTHS  - JANUARY 31, 2006
Revenues from external customers      $  6,370,747   $  3,659,326   $ 10,030,073
                                      ============   ============   ============
Segment operating income              $  4,261,777   $  1,703,328   $  5,965,105
                                      ============   ============   ============


   The following is a reconciliation of operating segments income to net income
   for the six month period ending January 31, 2006:


                              
Segment operating income         $   5,965,105
Corporate expenses                  (4,827,975)
                                 -------------
Operating income                     1,137,130
Other income (expense), net            (25,509)
                                 -------------
Income before income taxes           1,111,621
Income tax expense                      17,172
                                 -------------
NET INCOME                       $   1,094,449
                                 =============


                                       9


5.    RECENT ACCOUNTING PRONOUNCEMENTS

      In July 2006, the Financial Accounting Standards Board issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with FASB Statement No. 109, Accounting for
Income Taxes. FIN 48 describes a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return and also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006 and will be effective for the Company in
fiscal 2008. The Company is currently evaluating the impact of this new
accounting interpretation on its financial statements.

      In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, "Fair Value Measurements". SFAS No. 157 clarifies
the principle that fair value should be based on the assumptions market
participants would use when pricing an asset or liability and establishes a fair
value hierarchy that prioritizes the information used to develop those
assumptions. SFAS No. 157 requires fair value measurements to be separately
disclosed by level within the fair value hierarchy. SFAS No. 157 is effective
for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. The Company is currently
evaluating the impact of adopting SFAS No. 157 on its financial statements.

      In September 2006, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 108, "Considering the Effects of Prior Year
Misstatements When Quantifying Misstatements in Current Year Financial
Statements". SAB No. 108 provides interpretive guidance on the consideration of
the effects of prior year misstatements in quantifying current year
misstatements for the purpose of assessing materiality. SAB No. 108 is effective
for fiscal years ending after November 15, 2006. The Company is currently
evaluating the impact of adopting SAB No. 108 on its financial statements.

6.    INCOME TAXES

      A provision for income taxes has been provided for the three and six
months ended January 31, 2007 and 2006 for estimated federal alternative minimum
taxes and certain state income taxes, as the Company has sufficient net
operating loss carryforwards to offset regular taxable income. As of January 31,
2007, the Company continues to maintain a valuation allowance against the total
net deferred tax balance. The Company will continue to evaluate its prospects
going forward. If the Company's operations continue at current levels and future
business projections indicate continued profitability, the Company will review
the valuation allowance and may reverse, in the near future, a portion of the
deferred tax asset valuation reserve.

                                       10


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

      This Quarterly Report on Form 10-Q contains a number of "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Specifically, all statements other
than statements of historical facts included in this Quarterly Report 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 Report,
the words "anticipate," "believe," "estimate," "expect," "may," "will," "hope,"
"continue" and "intend," and words or phrases of similar import, as they relate
to our financial position, business strategy and plans, or objectives of
management, are intended to identify forward-looking statements. These
statements reflect our current view with respect to future events and are
subject to risks, uncertainties and assumptions related to various factors
including, without limitation, those factors discussed in Item 1 (Business) of
Part I and Item 7 (Management's Discussion and Analysis of Financial Condition
and Results of Operations) of Part II of our Annual Report on Form 10-K filed on
October 30, 2006, Item 2 and Item 1A of Part II of our Quarterly Reports. You
should carefully review those risks, as well as additional risks described in
other documents we file from time to time with the Securities and Exchange
Commission.

      Although we believe that our expectations are reasonable, we cannot assure
you that our expectations will prove to be correct. 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
Quarterly Report as anticipated, believed, estimated, expected or intended.

OVERVIEW

      Internet Commerce Corporation creates, deploys and manages the secure and
reliable electronic exchange of essential business documents. With our value
added network ("VAN"), desktop software and hosted applications, managed
services, consulting and professional services, we are a trusted provider of
e-commerce solutions to connect businesses, regardless of their size and level
of technical sophistication, with their trading communities. Thousands of
customers, ranging from sole proprietorships to large corporations, in a variety
of industries rely on the value delivered from ICC's broad line of solutions,
expertise and 24x7 customer service to help meet the unique requirements for
trading partner compliance, coordination and collaboration.

      We pioneered the use of the Internet for electronic data interchange
("EDI") business-to-business (B2B) solutions and continue to lead as new
technologies and requirements emerge for more efficient business communication.
Organizationally, our two segments of business are known as the:

      -     EC Solutions segment, which includes ICC.NET VAN services,
            browser-based and hosted applications, and desktop software; and

      -     EC Services segment, whose operations primarily focus on
            facilitating the EDI communications of small and mid-sized
            businesses with their trading partners. The EC Services segment
            includes the EC service center, EC outsourcing, mapping and
            professional services.

      These segments compliment one another and give us the ability to provide
solutions to many different kinds of enterprises, from sole proprietorships to
large corporations, operating in a variety of industries.

                                       11


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The discussion and analysis of our financial condition and results of
operations are based upon our condensed consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amount of
assets, liabilities, revenues and expenses. We consider certain accounting
policies related to revenue recognition, valuation of acquired intangibles and
impairment of long-lived assets including goodwill, and valuation of investments
to be critical policies due to the estimation process involved in each.
Management discusses its estimates and judgments with the Audit Committee of our
Board of Directors.

      For a more detailed description on the application of these and other
accounting policies, see Note 2 of the Consolidated Financial Statements
included in our Annual Report on Form 10-K for the fiscal year ended July 31,
2006. Reference is also made to the discussion of the application of these
critical accounting policies and estimates contained in Management's Discussion
and Analysis in our Annual Report on Form 10-K for fiscal 2006. During the six
months ended January 31, 2007, there were no significant or material changes in
the application of critical accounting policies that would require an update to
the information provided in the Form 10-K for fiscal 2006.

                                       12


THREE MONTHS ENDED JANUARY 31, 2007 COMPARED WITH THREE MONTHS ENDED JANUARY 31,
2006.

RESULTS OF OPERATIONS - EC SOLUTIONS

      Our EC Solutions segment uses the Internet and our proprietary technology
to deliver our customers' documents and data files to members of their trading
communities. The following table summarizes operating results for our EC
Solutions services for the three months ended January 31, 2007 and 2006:



                                               THREE MONTHS ENDED
                                                    JANUARY 31,              VARIANCE
                                           ---------------------------   ---------------
                                               2007          2006           $         %
                                           ------------   ------------   -------     ---
                                                                         
Revenues:
   Services                                $  3,880,022   $  3,156,784   723,238      23
                                           ------------   ------------   -------
Expenses:
   Cost of services                           1,104,319        830,655   273,664      33
   Product development and enhancement          438,841        148,458   290,383     196
   General and administrative                    77,161         47,527    29,634      62
                                           ------------   ------------   -------
          Total expenses                      1,620,321      1,026,640   593,681      58
                                           ------------   ------------   -------
   Segment operating income                $  2,259,701   $  2,130,144   129,557       6
                                           ============   ============   =======


      Revenues - EC Solutions - Revenue from EC Solutions segment was 73% of
consolidated revenues for the quarter ended January 31, 2007 ("2007 Quarter")
compared to 63% for the quarter ended January 31, 2006 ("2006 Quarter"). EC
Solutions revenues increased $723,000 for the 2007 Quarter compared to the 2006
Quarter, principally from the browser-based and hosted services revenue acquired
from Enable and an increase in VAN related transaction volume and mailbox fees.

      Cost of services - EC Solutions - Cost of services relating to our EC
Solutions segment was 28% of revenue from the EC Solutions services for the 2007
Quarter, compared to 26% for the 2006 Quarter. Total cost of services increased
$274,000 for the 2007 Quarter compared to the 2006 Quarter. Cost of services
consists primarily of salaries and employee benefits, connectivity fees,
amortization, allocation of product and development expenses and rent. The
increase was primarily related to the increased allocation of product
development of $145,000 and an increase in acquired technology and customer list
amortization expense of $247,000, offset by a reduction in the cost of our
telephone and connectivity fees of $75,000.

      Product development and enhancement - EC Solutions - Product development
and enhancement costs relating to our EC Solutions segment consist primarily of
salaries and employee benefits. Product development and enhancement costs
increased $290,000 in the 2007 Quarter compared with the 2006 Quarter. This
increase is related to the additional staff, consulting and rent expenses from
the Enable operations.

      General and administrative - EC Solutions - General and administrative
expenses supporting our EC Solutions segment consist primarily of depreciation,
telephone, and computer maintenance expenses. General and administrative costs
increased $30,000 in the 2007 Quarter compared to the 2006 Quarter. The increase
was mainly due to computer maintenance expenses.

      Operating Income - EC Solutions - Operating income from EC Solutions
increased $129,557, or 6%, for the 2007 Quarter compared with the 2006 Quarter,
due to the increased revenue from the Enable acquisition and VAN related
transaction volume and mailbox fees, offset principally by the additional staff,
consulting and rent expenses from the Enable operations. We expect our EC
Solutions segment to remain profitable as we continue to build our browser-based
and hosted services customer portfolio.

                                       13


RESULTS OF OPERATIONS - EC SERVICES

      Our EC Services operations primarily focus on facilitating the EDI
communications of small and mid-sized businesses with their trading partners
through our EC Service center, E-Commerce outsourcing and professional services.
The following table summarizes operating results for our EC Services segment for
the three months ended January 31, 2007 and 2006:



                                                THREE MONTHS ENDED
                                                    JANUARY 31,               VARIANCE
                                           ---------------------------   -----------------
                                               2007           2006          $          %
                                           ------------   ------------   --------    -----
                                                                         
Revenues:
   Services                                $  1,422,446   $  1,855,456   (433,010)     (23)
                                           ------------   ------------   --------
Expenses:
   Cost of services                             865,364        919,527    (54,163)      (6)
   Product development and enhancement          112,402         58,470     53,932       92
   General and administrative                    59,461          3,421     56,040    1,638
                                           ------------   ------------   --------
         Total expenses                       1,037,227        981,418     55,809        6
                                           ------------   ------------   --------
   Segment operating income                $    385,219   $    874,038   (488,819)     (56)
                                           ============   ============   ========


      Revenue - EC Services - Revenue from our EC Services was 27% of
consolidated revenues for the 2007 Quarter compared to 37% for the 2006 Quarter.
Revenue decreased $433,000 for the 2007 Quarter compared to the 2006 Quarter.
Mainly due to customer attrition, revenues decreased at our EC service center
approximately $256,000 and our EC outsourcing services approximately $156,000.
We believe the attrition from the MEC and Kodiak acquisitions has stabilized and
we anticipate that our third and fourth quarter will depict more comparative
quarter to quarter results.

      Cost of services - EC Services - Cost of services relating to our EC
Services segment was 61% of revenue in the 2007 Quarter, compared to 50% in the
2006 Quarter. Cost of services decreased $54,000 for the 2007 Quarter compared
to the 2006 Quarter. Cost of services consists primarily of salaries and
employee benefits, amortization, connectivity fees and rent. The decrease was
mainly a result of lower salary and benefit expense at our EC service center
offset by increased amortization expense. We do not anticipate any further
significant reductions in salaries and benefits related to our EC Services
segment as the increase in the 2006 Quarter was primarily related to the higher
levels of staff required to transition the backlog of work from to the MEC
acquisition.

      Product development and enhancement - EC Services - Product development
and enhancement costs consist primarily of salaries and employee benefits.
Product development and enhancement costs incurred by our EC Services segment
increased $54,000 in the 2007 Quarter compared to the 2006 Quarter. The increase
was primarily the result of increased salary and benefits expense of
approximately $100,000, offset by a higher allocation of product development to
other departments of $47,000.

      General and administrative - EC Services - General and administrative
expenses relating to our EC Services segment consist primarily of office
expenses, depreciation, computer maintenance expense, telephone and rent.
General and administrative expenses incurred by our EC Services segment
increased $56,000 in the 2007 Quarter compared to the 2006 Quarter. The increase
was mainly related to higher depreciation and computer maintenance expenses
related to recent investments in capital expenditures.

      Operating Income - EC Services - Operating income from EC Services
decreased $488,819, or 56%, for the 2007 Quarter compared with the 2006 Quarter,
due primarily to the decreased revenue in the segment. We anticipate that future
periods will be more comparable due to the stabilization of the customer
attrition from the MEC and Kodiak acquisitions.

                                       14


CORPORATE EXPENSES

      Our Corporate expenses represent the general, administrative, corporate
and executive expenses not directly related to our EC Solutions or EC Services
segments. The following table summarizes operating expenses for our corporate
expenses for the three months ended January 31, 2007 and 2006:



                                           THREE MONTHS ENDED
                                                JANUARY 31,           VARIANCE
                                         -----------------------   ---------------
                                            2007         2006          $        %
                                         ----------   ----------   ---------   ---
                                                            
Expenses:
   Product development and enhancement   $   34,454   $      --      34,454     --
   Selling and marketing                    369,359      577,301   (207,942)   (36)
   General and administrative             1,583,688    2,029,592   (445,904)   (22)
                                         ----------   ----------   ---------
         Total expenses                  $1,987,501   $2,606,893   (619,392)    24
                                         ==========   ==========   =========


      Product development and enhancement - Corporate - Product development and
enhancement costs included in our Corporate expenses consist primarily of
salaries and employee benefits. Product development and enhancement costs
increased $34,000 in the 2007 Quarter compared to the 2006 Quarter. The increase
is primarily a result of unallocable salary and benefit costs not directly
related to the EC Solutions or EC Services segments.

      Selling and marketing - Corporate - Selling and marketing costs included
in our Corporate expenses consist primarily of salaries and employee benefits
and amortization. Selling and marketing expenses decreased $208,000 in the 2007
Quarter compared to the 2006 Quarter primarily due to the lower salary, benefits
and commission expense of approximately $110,000 and the reclassification of
ECS, MEC and Kodiak customer list amortization of $68,000 to cost of sales in
the EC Services segment.

      General and administrative - Corporate - General and administrative costs
included in our Corporate expenses consist primarily of salaries and employee
benefits, office expenses, legal and accounting expenses, depreciation, computer
maintenance expenses, telephone and rent. General and administrative expenses
decreased $446,000 in the 2007 Quarter compared to the 2006 Quarter. The
decrease is primarily related to the reduction of office rent of $163,000 due to
the closing of our Cary, North Carolina and Charlottesville, Virginia offices, a
reduction of bad debt expense of $131,000 due to stronger collection activity
and a reduction of $113,000 in option related non-cash compensation.

SIX MONTHS ENDED JANUARY 31, 2007 COMPARED WITH SIX MONTHS ENDED JANUARY 31,
2006.

RESULTS OF OPERATIONS - EC SOLUTIONS

      Our EC Solutions segment uses the Internet and our proprietary technology
to deliver our customers' documents and data files to members of their trading
communities. The following table summarizes operating results for our EC
Solutions services for the six months ended January 31, 2007 and 2006:



                                            SIX MONTHS ENDED
                                                 JANUARY 31,           VARIANCE
                                         -----------------------   ---------------
                                            2007         2006         $         %
                                         ----------   ----------   ---------   ---
                                                                   
Revenues:
   Services                              $7,816,663   $6,370,747   1,445,916    23
                                         ----------   ----------   ---------

Expenses:
   Cost of services                       2,055,951    1,838,214     217,737    12
   Product development and enhancement      990,738      179,288     811,450   453
   General and administrative               138,671       91,468      47,203    52
                                         ----------   ----------   ---------
          Total expenses                  3,185,360    2,108,970   1,076,390    51
                                         ----------   ----------   ---------
   Segment operating income              $4,631,303   $4,261,777     369,526     9
                                         ==========   ==========   =========


         Revenues - EC Solutions - Revenue from EC Solutions segment was 70% of
consolidated revenues for the six months ended January 31, 2007 ("2007 Six
Months") compared to 64% for the six months ended January 31, 2006 ("2006 Six
Months"). EC Solutions revenues increased $1,446,000 for the 2007 Six Months
compared to the

                                       15


2006 Six Months, principally from the browser-based and hosted services revenue
acquired from Enable and an increase in VAN transaction volume.

      Cost of services - EC Solutions - Cost of services relating to our EC
Solutions segment was 26% of revenue from the EC Solutions services for the 2007
Six Months, compared to 29% for the 2006 Six Months. Total cost of services
increased $218,000 for the 2007 Six Months compared to the 2006 Six Months. Cost
of services consists primarily of salaries and employee benefits, connectivity
fees, amortization, allocation of product and development expenses and rent. The
increase was primarily the result of approximately a $250,000 net increase in
acquired technology and customer list amortization expense related to the Enable
acquisition and a $121,000 increase in product development expense allocation
offset by a $154,000 reduction in telephone and connectivity fees.

      Product development and enhancement - EC Solutions - Product development
and enhancement costs relating to our EC Solutions segment consist primarily of
salaries and employee benefits. Product development and enhancement costs
increased $811,000 in the 2007 Six Months compared with the 2006 Six Months.
This increase is related to the additional staff, consulting and rent expenses
from the Enable operations.

      General and administrative - EC Solutions - General and administrative
expenses supporting our EC Solutions segment consist primarily of depreciation,
telephone, and computer maintenance expenses. General and administrative costs
increased $47,000 in the 2007 Six Months compared to the 2006 Six Months. The
increase was mainly due to higher computer maintenance expenses.

      Operating Income - EC Solutions - Operating income from EC Solutions
increased $369,526, or 9%, for the 2007 Six Months compared with the 2006 Six
Months, due to the increased revenue from the Enable acquisition and VAN related
transaction volume, offset principally by the additional staff, consulting and
rent expenses from the Enable operations. We expect our EC Solutions segment to
remain profitable as we continue to build our browser-based and hosted services
customer portfolio.

RESULTS OF OPERATIONS - EC SERVICES

      Our EC Services operations primarily focus on facilitating the EDI
communications of small and mid-sized businesses with their trading partners
through our EC service center, E-Commerce outsourcing and professional services.
The following table summarizes operating results for our EC Services segment for
the six months ended January 31, 2007 and 2006:



                                                     SIX MONTHS ENDED
                                                         JANUARY 31,              VARIANCE
                                                 --------------------------------------------
                                                    2007            2006         $        %
                                                 -----------    -----------------------------
                                                                            
Revenues:
  Services                                       $ 3,293,533    $ 3,659,326  (365,793)    (10)
                                                 -----------    ---------------------

Expenses:
  Cost of services                                 1,773,024      1,817,365   (44,341)      2
  Product development and enhancement                231,672        130,623   101,049      77
  General and administrative                         114,307          8,010   106,297   1,327
                                                 -----------    ---------------------
         Total expenses                            2,119,003      1,955,998   163,005       8
                                                 -----------    ---------------------

  Segment operating income                       $ 1,174,530    $ 1,703,328  (528,798)    (31)
                                                 ===========    =====================


      Revenue - EC Services - Revenue from our EC Services was 30% of
consolidated revenues for the 2007 Six Months compared to 36% for the 2006 Six
Months. The revenue decreased $366,000 for the 2007 Six Months compared to the
2006 Six Months. The decrease was a primarily a result of reduced revenue from
our EC service center of approximately $756,000 due to year over year customer
attrition, offset by increased revenue of $202,000 from our EC outsourcing and
$191,000 from professional services. We believe the customer attrition from the
MEC and Kodiak acquisitions has stabilized and we anticipate that our third and
fourth quarter will depict more comparative quarter to quarter results.

                                       16



      Cost of services - EC Services - Cost of services relating to our EC
Services segment was 54% of revenue in the 2007 Six Months, compared to 50% in
the 2006 Six Months. Cost of services decreased $44,000 for the 2007 Quarter
compared to the 2006 Quarter. Cost of services consists primarily of salaries
and employee benefits, amortization, connectivity fees and rent. The decrease
was mainly a result of lower salary and benefit expense at our EC service center
offset by increased amortization expense.

      Product development and enhancement - EC Services - Product development
and enhancement costs consist primarily of salaries and employee benefits.
Product development and enhancement costs incurred by our EC Services segment
increased $101,000 in the 2007 Six Months compared to the 2006 Six Months. The
increase was primarily the result of increased salary and benefits expense of
approximately $189,000, offset by a higher allocation of product development to
other departments of $88,000.

      General and administrative - EC Services - General and administrative
expenses relating to our EC Services segment consist primarily of office
expenses, depreciation, computer maintenance expense, telephone and rent.
General and administrative expenses incurred by our EC Services segment
increased $106,000 in the 2007 Six Months compared to the 2006 Six Months. The
increase was mainly related to higher depreciation and computer maintenance
expenses related to recent investments in capital expenditures.

      Operating Income - EC Services - Operating income from EC Services
decreased $528,798, or 31%, for the 2007 Six Months compared with the 2006 Six
Months, due primarily to the decreased revenue in the segment. We anticipate
that future periods will be more comparable due to the stabilization of the
customer attrition from our MEC and Kodiak acquisitions.

CORPORATE EXPENSES

      Our Corporate expenses represent the general, administrative, corporate
and executive expenses not directly related to our EC Solutions or EC Services
segments. The following table summarizes operating expenses for our corporate
expenses for the six months ended January 31, 2007 and 2006:



                                                 SIX MONTHS ENDED
                                                     JANUARY 31,               VARIANCE
                                              -------------------------------------------
                                                  2007         2006            $        %
                                              -----------  ------------------------------
                                                                           
Expenses:
   Product development and enhancement        $    79,931  $        --       79,931    --
   Selling and marketing                          889,316      992,658     (103,342)   10
   General and administrative                   3,576,148    3,835,317     (259,169)   (7)
                                              -----------  ------------------------
         Total expenses                       $ 4,545,395  $ 4,827,975     (282,580)   (7)
                                              ===========  ========================


      Product development and enhancement - Corporate - Product development and
enhancement costs included in our Corporate expenses consist primarily of
salaries and employee benefits. Product development and enhancement costs
increased $80,000 in the 2007 Six Months compared to the 2006 Six Months. The
increase is primarily a result of unallocable salary and benefit costs not
directly related to the EC Solutions or EC Services segments.

      Selling and marketing - Corporate - Selling and marketing costs included
in our Corporate expenses consist primarily of salaries and employee benefits
and amortization. Selling and marketing expenses decreased $103,000 in the 2007
Six Months compared to the 2006 Six Months primarily related to the
reclassification of amortization expenses related to the Kodiak and MEC customer
lists to the EC Services segment cost of sales.

      General and administrative - Corporate - General and administrative costs
included in our Corporate expenses consist primarily of salaries and employee
benefits, office expenses, legal and accounting expenses, depreciation, computer
maintenance expenses, telephone and rent. General and administrative expenses
decreased $259,000 in the 2007 Six Months compared to the 2006 Six Months. The
decrease is primarily a result of a reduction in bad debt expense of $177,000
due to stronger collection activity, a reduction of $73,000 in general office
expenses and a $50,000 reduction in repairs and maintenance costs, offset by an
increase of $52,000 in salary and benefit expenses.

LIQUIDITY AND CAPITAL RESOURCES

                                       17



      Our principal sources of liquidity, which consist of unrestricted cash and
cash equivalents, decreased to $6,095,000 as of January 31, 2007 from $6,989,000
as of July 31, 2006. We believe these resources will provide us with sufficient
liquidity for the short term and long term requirements of the company.

      The principal uses of cash for the six month period ended January 31, 2007
were for the repurchase of our series C preferred stock of $2,261,000 and our
class A common stock of $614,000. On December 14, 2006, two subsidiaries of 3V
Capital LLC (3V Capital Fund Ltd. and Distressed/High Yield Trading
Opportunities, Ltd. (collectively, the "3V Entities")) acquired from Omega
Liquidating Trust, the liquidating trust for the bankrupt Cable & Wireless USA,
10,000 shares of the series C preferred stock and 381,111 shares of the class A
common stock of Internet Commerce Corporation ("ICC" or the "Company").
Thereafter, on December 20, 2006, ICC entered into a Stock Purchase Agreement
with each of the 3V Entities, pursuant to which ICC reacquired a total of 5,000
shares of its series C preferred stock and 190,555 shares of its class A common
stock for an aggregate purchase price of $2,875,000. Following this
reacquisition of shares by ICC, the 3V Entities together continue to own the
remaining 5,000 shares of ICC's series C preferred stock and 190,556 shares of
ICC's class A common stock. The repurchased shares were subsequently retired
during the quarter.

      Additionally during the period, we used $300,000 for the acquisition of
certain assets of Stewart Technical Services, Inc. and $208,000 in capital
expenditures to upgrade and relocate the equipment from our Enable data center.

      The principal sources of cash during the period were cash generated from
continued operations of $2,328,000 and proceeds from the exercise of 71,200
warrants that were originally issued in a private placement that closed in
October 2004 of $248,000.

      The Company has net operating loss carryforwards for tax purposes of
approximately $71.0 million as of January 31, 2007. These carryforwards expire
from 2011 to 2024.

      The Internal Revenue Code and Income Tax Regulations contain provisions
which limit the use of available net operating loss carryforwards in any given
year should significant changes (greater than 50%) in ownership interests occur.
Due to the private placement of series A preferred stock in April 1999, the net
operating loss carryover of approximately $19.6 million incurred prior to the
private placement is subject to an annual limitation of approximately $1.4
million until that portion of the net operating loss is utilized or expires. Due
to a 100% ownership change of an acquired company in November 2000, the
purchased net operating loss of approximately $6.5 million incurred prior to the
ownership change is subject to an annual limitation of approximately $1.1
million until that portion of the net operating loss is utilized or expires.
Additionally, this transaction created an ownership change for the Company as
defined by IRC Section 382. As such, its net operating loss of approximately
$49.4 million incurred prior to the ownership change is subject to an annual
limitation of approximately $2.8 million until that portion of the net operating
loss is utilized or expires. Finally, due to a 100% ownership change of an
acquired company in June 2004, the purchased net operating loss of approximately
$1.2 million incurred prior to the ownership change is subject to an annual
limitation of approximately $128,000 until that portion of the net operating
loss is utilized or expires.

OFF BALANCE SHEET ARRANGEMENTS

      We provide indemnifications of varying scope and amount to certain
customers against claims of intellectual property infringement made by third
parties arising from the use of our products and services. We evaluate estimated
losses for such indemnification under Statement of Financial Accounting
Standards No. 5, Accounting for Contingencies, as interpreted by Financial
Accounting Standards Board Interpretation No. 45, Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. We consider factors such as the degree of probability of
an unfavorable outcome and the ability to make a reasonable estimate of the
amount of loss. To date, we have not encountered material costs as a result of
such obligations and have not accrued any material liabilities related to such
indemnifications in our financial statements.

                                       18



CONTRACTUAL OBLIGATIONS

      Our contractual obligations are comprised of future minimum rental
payments due under non-cancelable operating leases. The following table is a
summary of our contractual obligations as of January 31, 2007:



FISCAL
 YEAR                                                 AMOUNT
------                                             ------------
                                                
2007                                               $    794,797
2008                                               $  1,524,649
2009                                               $  1,429,073
2010                                               $  1,188,485
2011                                               $    335,924


      The minimum future rental payments have not been reduced by $2,718,336 of
sublease rentals to be received in the future under non-cancelable subleases.

                                       19



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

      We may invest our cash in a variety of financial instruments. If invested,
we account for our investment instruments in accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" ("SFAS No. 115"). All of the cash equivalents and
investments are treated as available-for-sale under SFAS No. 115. Investments
that are classified as cash and cash equivalents have original maturities of
three months or less. Investments in both fixed rate and floating rate interest
earning instruments carry a degree of interest rate risk. Fixed rate securities
may have their fair market value adversely impacted due to a rise in interest
rates, while floating rate securities may produce less income than expected if
interest rates fall. Due in part to these factors, our future investment income
may vary widely due to changes in interest rates, or we may suffer losses in
principal if forced to sell securities that have seen a decline in market value
due to changes in interest rates. For the quarter ended January 31, 2007, our
cash investments consisted entirely of overnight cash sweep accounts invested in
a fund composed primarily of triple A rated commercial paper and government
agency bonds. As of January 31, 2007, the interest rate for this investment was
4.62%.

ITEM 4. CONTROLS AND PROCEDURES

      Our management, including our chief executive officer and chief financial
officer, has carried out an evaluation of the effectiveness of our disclosure
controls and procedures as of January 31, 2007, as required by paragraph (b) of
Exchange Act Rules 13(a)-15 and 15(d)-15. Based upon that evaluation, our chief
executive officer and chief financial officer have concluded that as of such
date, our disclosure controls and procedures are effective. There was no change
in our internal control over financial reporting during the quarter ended
January 31, 2007 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

                                       20



PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      On January 6, 2006 we filed a complaint for declaratory judgment in the
United States Bankruptcy Court (the "Court") naming Omega Liquidating Trust
("Omega"), the liquidating trust for the bankrupt Cable & Wireless USA (C&W
USA), and Cable & Wireless PLC (C&W) as defendants (together the "Defendants").
We sought to have Omega declared the rightful owner of our series C preferred
stock and of any of our shares of class A common stock that have been issued but
not distributed as dividends of the series C preferred stock. On October 19,
2006, the Defendants filed a motion to have the suit dismissed as the result of
a compromise settlement having been reached between the Defendants. The
compromise names defendant Omega as owner of the disputed shares, but splits the
proceeds from any sale of our stock fifty-fifty between the Defendants. An order
approving the settlement was signed by the Court on November 7, 2006.

      We are party to various legal proceedings and claims, either asserted or
unasserted, which arise in the ordinary course of business. While the outcome of
these matters cannot be predicted with certainty, we do not believe that the
outcome of any of these claims or any of the above mentioned legal matters will
have a material adverse effect on our consolidated financial position, results
of operations or cash flow.

ITEM 1A. RISK FACTORS

      The following Risk Factor disclosure updates the risk factors as disclosed
in our 2006 Annual Report on Form 10-K previously filed with the Securities and
Exchange Commission.

RISKS RELATING TO OUR COMPANY

      WE MAY NOT REMAIN PROFITABLE IN THE FUTURE. We have incurred significant
losses since the Company was founded in 1991, and, as of January 31, 2007, we
had an accumulated deficit of approximately $81.4 million. We realized
profitability and have done so for the past 8 consecutive quarters. However,
there can be no assurances that we may not incur losses again in the future.

      WE MUST CONTINUE TO GROW OUR BUSINESS IN ORDER TO REMAIN COMPETITIVE. Over
the past year, the VAN business has remained significantly price competitive.
Our major competitors appear to be restructuring their VAN operations to reduce
their overhead and other costs to better compete against Internet-based networks
such as our ICC.NET service. While we have been successful in maintaining our
margins and we have increased the volume of data transmitted through our VAN, we
have experienced price erosion in competing for larger customers. Although we
expect to continue to add new customers and increase the volume of data
transmitted through our service, we do not expect our revenue from VAN services
to continue to grow rapidly as in the past. If our revenues grow at a slower
rate than we anticipate, or decrease and we are unable to adjust spending in a
timely manner or if our expenses increase without commensurate increases in
revenues, our operating results will suffer and we may again report losses.

      IF WE ARE NOT SUCCESSFUL IN SELLING OUR PRODUCTS AND SERVICES, OUR RESULTS
OF OPERATIONS WILL SUFFER. While our primary focus in the past has been on
growing our ICC.NET VAN service, we have attempted to diversify by acquiring
Electronic Commerce Systems in June 2004, the MEC operations of Inovis
International, Inc. in March 2005 and Enable Corp. in May 2006. However, the
success of our services depends to a large extent on the future of
business-to-business electronic commerce and our ability to effectively compete
in the marketplace. In particular, our success depends on the number of
customers that subscribe to our services, the volume of the data, documents or
other information they send or retrieve and the price we are able to charge for
these services in light of competitive pressures. In connection with the
assimilation of our new customers acquired from the MEC operation and the Enable
acquisition, we expect to see attrition to these newly acquired customer bases
due to the seasonal trends, integration difficulties, and customer defections to
alternative EDI solutions. As a result, a portion of our revenues may be
adversely affected. While we are learning to manage these new customers, there
is no assurance that we will accurately assess the trends of these new
customers. Accordingly, the value of these new customers, the volume of our
services subscribed by them and the possibility of payment collection may differ
materially from our current expectation. Further, since our operating expense
levels are based significantly on our expectations of future revenue, our
inability to assess the trends may render us vulnerable in the case of a
significant shortfall in revenues

                                       21



or orders from these new customers, in which case we may not be able to reduce
our operating expenses quickly in response. Therefore, any significant shortfall
in revenue or orders could have an immediate adverse effect on our operating
results.

      WE MAY NOT BE SUCCESSFUL IN COMPETING AGAINST OUR COMPETITORS. We face a
significant number of competitors, ranging from very large enterprises or
divisions of very large companies to a number of relatively small organizations.
These competitors are diverse in terms of their histories, business models,
corporate strategies, financial strength, name recognition, company reputation,
customer base and breadth of offerings. Many of our large competitors have more
history, significantly greater financial resources, larger customer bases and
more easily recognized names than we do. As a result, our competitors 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. New competition
is emerging in the form of web services networks, collaborative applications,
application service providers, e-marketplaces and integration broker suites. We
have enhanced our technologies to communicate with these web-based technologies.
However, there can be no assurance that our product and service offerings will
compete effectively and generate any significant revenues. We believe that the
high cost of implementation and the ongoing costs of supporting a company's
trading partners may be a barrier to the wider acceptance of our new product
offerings in the marketplace. As a result, we may not be successful in competing
against our competitors.

      IF WE ARE UNABLE TO MAINTAIN OR REPLACE OUR EXISTING INTERCONNECT
ARRANGEMENTS, OUR RESULTS OF OPERATIONS WOULD SUFFER. We rely on many of our
competitors to interconnect with our service to promote an "open community" so
all businesses can take advantage of the efficiencies of EDI, no matter what
network they choose as their provider. Although we have interconnect agreements
with the major VAN providers, there can be no assurances that these agreements
will not be terminated or will continue with acceptable terms. If terminated, we
would have to find an acceptable alternative. If available, such an alternative
could add significant operating costs to our business.

      WE MUST CONTINUE TO DEVELOP NEW PRODUCTS AND SERVICES. 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. 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. If we cannot keep pace with these changes and maintain
the performance and reliability of our network and customer service levels, our
business will suffer. The intense competition in our industry requires us to
continue to develop strategic business and Internet solutions that enhance and
improve the customer service features, functions and responsiveness of our
products and services and we must constantly keep pace with continuing changes
in information technology and customer requirements. While we actively search
for ways to expand our business and our products and services to keep pace with
the rapidly changing technology, customer demands and intense competition, there
can be no assurance that we will be able to keep pace with these changes. If we
are not successful in developing and marketing enhancements to our products and
services that respond to technological change or customer demands, our business
will suffer.

      WE MAY NEED TO OBTAIN ADDITIONAL FINANCING ON SATISFACTORY TERMS TO
CONTINUE TO COMPETE SUCCESSFULLY. IF WE ARE UNABLE TO OBTAIN NECESSARY FUTURE
CAPITAL, OUR BUSINESS WILL SUFFER. We may need to raise additional funds if
competitive pressures or technological changes are greater than anticipated, if
we are unable to increase revenue at anticipated rates, if our expenses increase
significantly or if our customers delay payment of our receivables or if we
identify a suitable acquisition candidate that requires a cash outlay in order
to complete the transaction. 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 publicly traded share price. 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 common stock or securities convertible into or exchangeable for
common stock, the percentage ownership of our then-existing stockholders will
decrease and they may experience additional and substantial dilution. In
addition, any convertible or exchangeable securities may have rights,
preferences and privileges more favorable to the holders than those of the
common stock.

                                       22



      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. We have experienced outages in the past and
could experience outages, delays and other difficulties due to system failures
unrelated to our internal activities in the future. These types of occurrences
could also cause users to perceive our services as not functioning properly and
therefore cause them to use other methods to deliver and receive information. We
have limited control over these third parties and cannot assure you that we will
be able to maintain satisfactory relationships with any of them on acceptable
commercial terms or that the quality of services that they provide will remain
at the levels needed to enable us to conduct our business effectively.

      WE MAY SUFFER SYSTEMS FAILURES AND BUSINESS INTERRUPTIONS THAT WOULD HARM
OUR BUSINESS. Our success depends in part on the efficient and uninterrupted
operation of our VAN service and Enable's web hosting sites. Almost all of our
network operating systems are located in third party co-location facilities.
Although these facilities are designed to prevent operational interrupts, 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. 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.

      IF WE ARE UNABLE TO SUCCESSFULLY INTEGRATE ACQUISITIONS, OUR FINANCIAL
RESULTS WILL SUFFER. Our ability to implement our business plan successfully
requires effective planning and strong execution skills. If we cannot manage the
integration of anticipated acquisitions, 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 continually improve our financial
systems, procedures and controls and will need to expand, train and manage our
workforce, particularly our information technology and sales and marketing
staffs.

      IF WE LOSE OUR NET OPERATING LOSS CARRYFORWARD OF APPROXIMATELY $71.0
MILLION, 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 create a limitation
on our ability to utilize our net operating losses for tax purposes in the
future. We are currently subject to certain limitations on the utilization of
portions of our net operating loss carryforward.

      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. 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 and higher-profile employment opportunities than
we can.

      WE DEPEND ON OUR INTELLECTUAL PROPERTY, WHICH MAY BE DIFFICULT AND COSTLY
TO PROTECT. If we fail to adequately protect our proprietary rights, competitors
could offer similar products relying on technologies we developed, potentially
harming our competitive position and decreasing our revenues. We attempt to
protect our intellectual property rights by limiting access to the distribution
of our software, documentation and other proprietary information and by relying
on a combination of copyright, trademark and trade secret laws. In addition, we
enter into confidentiality agreements with our employees and certain customers,
vendors and strategic partners. In some circumstances, however, we may, if
required by a business relationship, provide our licensees with access to our
data model and other proprietary information underlying our licensed
applications. Despite the precautions we take, it may be possible for
unauthorized third parties to copy aspects of our current or future products or
to obtain and use information that we regard as proprietary. Policing
unauthorized use of software is difficult, and some foreign laws do not protect
proprietary rights to the same extent as United States laws. Litigation may be
necessary in the future to enforce our intellectual property rights, to protect
our trade secrets or to determine the validity and scope of the proprietary
rights of others, any of which could be costly and adversely affect our
operating results.

      INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS AGAINST US COULD HARM OUR
BUSINESS. It is possible our products and service may infringe upon the
proprietary rights of others and other parties may assert infringement claims

                                       23



against us. Any such claims and any resulting litigation could subject us to
significant liability for damages and could invalidate our proprietary rights.
We could be required to enter into royalty and licensing agreements, which may
be costly or otherwise burdensome or which may not be available on terms
acceptable to us.

      WE MUST COMPLY IN THE FUTURE WITH NEW AND COSTLY REPORTING REQUIREMENTS.
Under current Securities and Exchange Commission ("SEC") regulations, we are
considered a non-accelerated filer as our market capitalization as of January
31, 2007 was under $75 million. We will have to be compliant with Section
404(a), management's assertion portion of the Sarbanes-Oxley Act of 2002 ("SOX")
by July 31, 2008 and compliant with Section 404(b), the independent audit
requirement of SOX by July 31, 2009. The costs of implementing the requirements
of the SOX have ranged from approximately $500,000 to over $1 million for
smaller companies. Although we began our SOX compliance efforts, there can be no
assurance that we can be in full compliance when required for reasonable costs.

RISKS RELATING TO THE INTERNET AND ONLINE COMMERCE ASPECTS OF OUR BUSINESS

      IF INTERNET USAGE DOES NOT CONTINUE TO GROW OR IF ITS INFRASTRUCTURE
FAILS, OUR BUSINESS WILL SUFFER. 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 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.

      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. 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 user privacy, security, pricing and taxation, contents and distribution.

      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 OUR CLASS A COMMON STOCK

      THE MARKET PRICE OF OUR CLASS A COMMON STOCK IS LIKELY TO BE HIGHLY
VOLATILE. The market price of our class A common stock has been very volatile in
the past, ranging from a low of $2.30 to a high of $3.98 during fiscal 2007 and
is likely to fluctuate substantially in the future. If our class A common stock
falls under $1.00 per share and fails to maintain a minimum bid price of $1.00
for 30 consecutive trading days, it may no longer be eligible for trading in the
Nasdaq Capital Market, which would adversely affect the ability of investors to
sell their shares of our class A common stock.

      SHARES ELIGIBLE FOR FUTURE SALE BY OUR EXISTING STOCKHOLDERS MAY ADVERSELY
AFFECT OUR STOCK PRICE MAKING IT DIFFICULT TO SELL CLASS A COMMON STOCK. Between
January 1, 2003 and May 2006, we registered the resale under the Securities Act
of 1933 of an aggregate of 10,676,141 shares of our class A common stock, which
includes 3,016,917 shares of class A common stock issuable upon the exercise of
warrants to purchase shares of class A common stock and 192,307 shares of class
A common stock issuable upon conversion of our series D preferred. 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.

                                       24



      THE MARKET FOR OUR CLASS A COMMON STOCK ON THE NASDAQ CAPITAL MARKET MAY
BE ILLIQUID, WHICH WOULD RESTRICT THE ABILITY TO SELL SHARES OF CLASS A COMMON
STOCK AND 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 many factors, including investors' perceptions of our
business, our financial condition, operating results and prospects, the use of
the Internet for business purposes and general economic and market conditions.

      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 4,994,750 shares of preferred stock. Issuance of preferred shares
with rights to dividends and other distributions, voting rights or other rights
superior to the class A common stock could be adverse to the holders of class A
common stock. In addition, issuance of preferred shares could have the effect of
delaying, deterring or preventing an unsolicited change in control of our
company, or could impose various procedural and other requirements that could
make it more difficult for holders of our class A common stock to effect certain
corporate actions, including the replacement of incumbent directors and the
completion of transactions opposed by the incumbent Board of Directors. The
rights of the holders of our class A common stock would be subject to, and may
be adversely affected by, the rights of the holders of any preferred stock that
may be issued in the future.

      WE MAY HAVE TO USE 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.

                                       25



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

      During the quarter ending January 31, 2007, 71,200 warrants that were
originally issued in a private placement that closed in October 2004, were
exercised at $2.22 resulting in the issuance of the same number of shares of our
class A common stock for which we received $158,064.

      The Company intends to use the proceeds for general corporate purposes.
The Company relied on the exemptions from registration requirements provided by
Section 4(2) and Rule 506 of Regulation D promulgated under the Securities Act
of 1933, as amended, for the issuance and sale of the shares of class A common
stock upon the exercise of the warrants.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a) Our 2006 Annual Meeting of Stockholders (the "Annual Meeting") was held on
January 4, 2007. There were present at the Annual Meeting, in person or by
proxy, holders of 18,597,603 shares (or 83.15%) of the common stock entitled to
vote.

(b) The following directors were elected to hold office until the next annual
meeting of stockholders or until their successors are elected and qualified,
with the vote for each director being reflected below:



        Name                      Votes For       Votes Withheld
        ----                     ----------       --------------
                                            
Richard J. Berman                17,631,882           965,721
Kim D. Cooke                     18,108,888           488,715
Donald R. Harkleroad             18,389,606           207,997
Paul D. Lapides                  18,485,346           112,257
Arthur R. Medici                 18,146,518           451,085
Matthew W. Shaw                  18,390,606           206,997
John S. Simon                    18,390,606           206,997
Thomas J. Stallings              18,388,606           208,997


      The affirmative vote of the holders of a plurality of the outstanding
shares of common stock represented at the Annual Meeting was required to elect
each director.

(c) The appointment of Tauber & Balser, P.C. as independent public auditors to
audit the consolidated financial statements of the Company and its subsidiaries
for the year ending July 31, 2007, was ratified with 18,425,016 affirmative
votes cast, 148,593 negative votes cast and 23,994 abstentions. The affirmative
vote of the holders of a majority of the outstanding shares of common stock
voting on the proposal at the Annual Meeting was required to ratify the
appointment of Tauber & Balser, P.C.

ITEM 5. OTHER INFORMATION

      None.

                                       26



ITEM 6. EXHIBITS

      31.1  Certification of the Chief Executive Officer pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

      31.2  Certification of the Chief Financial Officer pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

      32.1  Certification of the Chief Executive Officer and Chief Financial
            Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

-----------
*     In accordance with Release No. 34-47986, this Exhibit is hereby furnished
      to the SEC as an accompanying document and is not deemed "filed" for
      purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise
      subject to the liabilities of that Section, nor shall it be deemed
      incorporated by reference into any filing under the Securities Act of
      1933.

                                       27



                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date: March 15, 2007

                                        INTERNET COMMERCE CORPORATION

                                        By: ______________________________
                                            Thomas J. Stallings
                                            Chief Executive Officer

                                        By: ______________________________
                                            Glen E. Shipley
                                            Chief Financial Officer

                                       28



                                  EXHIBIT INDEX



EXHIBIT NO.   DOCUMENT
           
Exhibit 31.1  Certification of the Chief Executive Officer pursuant to Section
              302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2  Certification of the Chief Financial Officer pursuant to Section
              302 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1  Certification of the Chief Executive Officer and Chief Financial
              Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*


------------
*     In accordance with Release No. 34-47986, this Exhibit is hereby furnished
      to the SEC as an accompanying document and is not deemed "filed" for
      purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise
      subject to the liabilities of that Section, nor shall it be deemed
      incorporated by reference into any filing under the Securities Act of
      1933.

                                       29



                                                                    EXHIBIT 31.1

   CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE
                           SARBANES-OXLEY ACT OF 2002

I, Thomas J. Stallings, certify that:

1.    I have reviewed this report on Form 10-Q of Internet Commerce Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:

      a.    Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      b.    Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      c.    Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based
      on our most recent evaluation of internal control over financial
      reporting, to the registrant's auditors and the audit committee of
      registrant's board of directors (or persons performing the equivalent
      functions):

      a.    All significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      b.    Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.

Date: March 15, 2007

By: _______________________________
    Thomas J. Stallings
    Chief Executive Officer



                                                                    EXHIBIT 31.2

   CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE
                           SARBANES-OXLEY ACT OF 2002

I, Glen E. Shipley, certify that:

1.    I have reviewed this report on Form 10-Q of Internet Commerce Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:

      a.    Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      b.    Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      c.    Disclosed in this report any cha