<PAGE> 1
SCHEDULE 14A--INFORMATION REQUIRED IN PROXY STATEMENT
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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
INFORMATION RESOURCE ENGINEERING, INC.
(Name of Registrant as Specified in its Charter)
------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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:
[ ] Fee paid previously with preliminary materials.
[ ] 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:
<PAGE> 2
INFORMATION RESOURCE ENGINEERING, INC.
8029 CORPORATE DRIVE
BALTIMORE, MARYLAND 21236
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 17, 1997 AT 10:30 A.M.
TO THE SHAREHOLDERS OF INFORMATION RESOURCE ENGINEERING, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
INFORMATION RESOURCE ENGINEERING, INC. (the "Company") will be held at the
Company's offices located at 8029 Corporate Drive, Baltimore, Maryland 21236 at
10:30 a.m. on July 17, 1997 for the following purposes:
1. To elect five (5) directors, each to hold office for a term of one (1)
year or until their respective successors shall have been duly elected
or appointed;
2. To amend the stock option plan to increase the shares issuable under
the plan; AND
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Company's Common Stock, $.01 par value (the "Common Stock") is the
only issued and outstanding class of stock. Only holders of shares of Common
Stock of record on the Company's books at the close of business on May 30, 1997
will be entitled to vote at the meeting. All such shareholders are requested to
be represented at the meeting either in person or by proxy. The stock transfer
books will not be closed.
Enclosed is a copy of the Annual Report on Form 10-K for the year
ended December 31, 1996 along with a proxy statement and a proxy card.
It is desirable that all holders of Common Stock of the Company be
represented at the meeting either in person or by proxy.
SUCH SHAREHOLDERS WHO CANNOT ATTEND THE MEETING IN PERSON ARE
REQUESTED TO DATE AND EXECUTE THEIR PROXIES AND RETURN THEM TO THE COMPANY IN
THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE.
By Order of the Board of Directors,
David A. Skalitzky
Secretary
April 30, 1997
Baltimore, Maryland
<PAGE> 3
INFORMATION RESOURCE ENGINEERING, INC.
8029 CORPORATE DRIVE
BALTIMORE, MARYLAND 21236
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 17, 1997
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
of proxies by the management of INFORMATION RESOURCE ENGINEERING, INC. (the
"Company"), a Delaware corporation, for use at the Annual Meeting of
Shareholders to be held on July 17, 1997 and at any postponements or
adjournments thereof. This material is first being mailed to shareholders on or
about June 6, 1997.
The cost of such solicitation will be borne by the Company. The
Company may also agree to pay banks, brokers, nominees and other fiduciaries
their reasonable charges and expenses incurred in forwarding the proxy material
to their principles.
A form of proxy is enclosed for use at the meeting. The issuance of a
proxy by a shareholder will not affect his right to vote his shares if he
attends the meeting and desires to vote in person. A proxy may be revoked at
any time prior to the voting thereof, but a revocation will not be effective
unless notice thereof is received, in writing, by the Secretary of the Company
prior to such voting. All such shares represented by effective proxies on the
enclosed form received by the Company will be voted at the meeting or any
adjourned session thereof in accordance with the terms of such proxies. If no
direction is indicated, all shares represented by valid proxies received
pursuant to this solicitation will be voted FOR all directors and the proposal
contained therein. Proxies marked "abstain" will be treated as present for the
purpose of determining a quorum but will not be voted with respect to any
proposal marked "abstain".
VOTING SECURITIES OUTSTANDING AND PRINCIPAL SHAREHOLDERS
Shares of common stock, of which 5,462,127 shares were issued and
outstanding as of April 29, 1997, are the only voting securities of the
Company. Each share is entitled to one vote and a vote of a majority of the
shares present, or represented, and entitled to vote at the meeting is required
to approve each proposal to be acted upon at the meeting. Only holders of
shares of Common Stock of the Company of record on its books at the close of
business on May 30, 1997 will be entitled to notice of, and to vote at the
meeting. Any such shareholder may vote his shares either in person or by his
duly authorized proxy.
The following table sets forth as of April 29, 1997 certain
information as to persons known to the Company who may be deemed to be
beneficial owners of more than five percent of the outstanding shares of the
Company's Common Stock, each director of the Company and all executive officers
and directors of the Company as a group.
1
<PAGE> 4
<TABLE>
<CAPTION>
Number of shares
Name (and Address of 5% owners) beneficially owned (1) Percent
- ------------------------------- ---------------------- -------
<S> <C> <C>
Anthony A. Caputo (2) 604,900 11.1%
8029 Corporate Drive
Baltimore, MD
Bruce R. Thaw (3) 243,000 4.4%
Douglas E. Kozlay (2) 144,800 2.7%
Jill Leukhardt (2) 60,386 1.1%
Ira A. Hunt, Jr. (2) 18,000 (4)
All Executive Officers and Directors as a Group 1,292,232 23.7%
(8 persons) (2)
</TABLE>
- -------------
(1) Unless otherwise noted, the Company believes that all persons named in
the table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them. A person is deemed
to be the beneficial owner of securities that can be acquired by such
person within 60 days from the date hereof upon the exercise of
warrants or options. Each beneficial owner's percentage ownership is
determined by assuming that options or warrants held by such person
(but not those held by any other person) and which are exercisable
within 60 days have been exercised.
(2) Includes shares issuable pursuant to outstanding stock options that
may be exercised within 60 days as follows: 5,000 shares for Mr.
Caputo; 9,000 for Mr. Kozlay; 17,600 shares for Ms. Leukhardt; 15,000
shares for Mr. Hunt; and 67,200 shares for all officers and directors
as a group.
(3) Includes 15,000 shares issuable pursuant to outstanding stock options
with the Company that may be exercised within 60 days and 8,000 shares
owned by Mr. Thaw's spouse, as to which Mr. Thaw disclaims beneficial
ownership.
(4) Represents less than 1% of the outstanding shares of Common Stock.
Section 16 of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Based solely
on a review of the copies of such reports furnished to the Company and written
representations from the executive officers and directors, the Company is
unaware of any instances of noncompliance or late compliance with such filings
during the fiscal year ended December 31, 1996 by its executive officers and
directors.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid by the Company during each of the Company's last three fiscal
years to the Company's Chief Executive Officer and to each of the executive
officers who received salary and bonus payments in excess of $100,000 during
fiscal year 1996:
2
<PAGE> 5
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------------------- ------------------
Other Annual
Name and Principal Salary Bonus Compensation Options
Position Year ($) ($) ($) (1) (Shares)
- ----------------------- ------ ------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
Anthony A. Caputo, 1996 225,000 0 0 0
Chairman, Chief 1995 150,486 135,000 0 5,000
Executive Officer 1994 135,000 0 0 0
and President
Michael M. Kaplan, 1996 131,827 138,291(3) 0 50,000
Senior Vice President,
Technology
Jill Leukhardt, 1996 157,938 0 0 0
Senior Vice President, 1995 170,026 0 0 40,000
Marketing, Director 1994 106,733 0 0 14,000
Charles D. Brown, 1996 115,384 37,692 0 20,000
Senior Vice President, 1995 100,000 29,355 0 20,000
Sales (2) 1994 21,822 50,000 0 0
</TABLE>
- -------------------------------
(1) Perquisites and other personal benefits to the named executive
officers were less than either $50,000 or 10% of the total annual
Salary and Bonus reported for the named executive officers, and
therefore, information has not been included.
(1) In connection with the acquisition of Connective Strategies, Inc.
(CSI) in October 1994, Mr. Brown, then the Chief Executive Officer of
CSI, was appointed a Senior Vice President.
(3) Includes a one-time sign on bonus of $125,000.
INCENTIVE STOCK OPTION PLAN
Under the Company's Incentive Stock Option Plan (the "Plan") options
to purchase a maximum of 996,000 shares of Common Stock of the Company (subject
to adjustment in the event of stock splits, stock dividends, recapitilaztions
and other capital adjustments) may be granted to employees, officers and
directors of the Company and other persons who provide services to the Company.
Currently, there are 818,400 such options granted and outstanding, 46,100
options have been exercised and 131,500 options are available for future grants
The options to be granted under the Plan are designated as incentive stock
options or non-incentive stock options by the Board of Directors, which also
has discretion as to the persons to be granted options, the number of shares
subject to the options and terms of the option agreements. Only employees,
including officers and part-time employees of the Company may be granted
incentive stock options. The options are intended to receive incentive stock
option tax treatment pursuant to Section 422A of the Internal Revenue Code of
1986, as amended.
The Plan provides that options granted thereunder shall be exercisable
during a period of no more than ten years (five years in the case of 10%
shareholders) from the date of grant, depending upon the specific stock option
agreement, and that, with respect to incentive stock options, the option
exercise price shall be at least equal to 100% of the fair market value of the
Common Stock at the time of grant (110% in the case of 10% shareholders).
Pursuant to the provisions of the Plan, the aggregate fair market value
(determined on the date of grant) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by an employee
during any calendar year shall not exceed $100,000.
3
<PAGE> 6
401(k) PENSION PLAN
The Company established a defined contribution pension plan effective
January 1, 1991 (the "Plan") for employees who have completed three months of
service with the Company. The Plan is administered by the Company and permits
pre-tax contributions to the Plan by participants pursuant to Section 401(k) of
the Internal Revenue Code (the "Code") of 3% to 10% of base compensation up to
the maximum allowable contribution as determined by the Code. The Company
matches participants' contributions on a discretionary basis. The Company may
also make additional discretionary contributions. To date, the Company has made
no matching contributions to the Plan.
OPTION GRANTS IN LAST FISCAL YEAR (1)
During 1996, the Company granted stock options for 393,000 shares to
sixty employees. The following table provides information related to the number
of stock options granted to the named executive officers.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term (2)
- -------------------------------------------------------------------------------------------- -------------------------
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ------------------------ ---------------- ---------------- ------------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Michael M. Kaplan 50,000 12.7 20.625 1/15/03 419,822 978,365
Charles D. Brown 20,000 5.1 13.625 10/24/03 100,965 258,525
</TABLE>
- ------------------
(1) No Stock Appreciation Rights were granted by the Company in 1996.
(2) The potential realizable value has been calculated in conformity with
Securities and Exchange Commission proxy statement disclosure rules and
is not intended to forecast possible future appreciation of the Common
Stock. No gain to the options is possible without stock price
appreciation, which will benefit all stockholders. A zero percent gain
in stock price appreciation will result in zero dollars for the
optionee.
On January 26, 1997, in order to stimulate employee efforts in
promoting the growth, efficiency and profitability of the Company, it offered
58 employees who had received stock options during 1995 and 1996, the
opportunity to exchange their options for a new option for the same number of
shares and option term, but with a new vesting schedule and a per share
exercise price of $9.375, the last reported sale price on that date. The offer
was accepted by 56 employees who held options aggregating 331,000 shares at per
share exercise prices ranging from $13.50 to $28.625. The executive officers
who are also directors of the Company were not eligible to participate in this
offering. Mr. Kaplan exchanged the option granted to him on January 15, 1996
while Mr. Brown declined participation in the offering.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES (1)
The following table provides information with respect to options
exercised during 1996 and options held at fiscal year-end by the named
executive officers:
4
<PAGE> 7
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
December 31, 1996 (#) December 31, 1996 ($) (2)
---------------------------------- -------------------------------
Shares
Acquired
on Value
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------- ----------- --------- --------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Anthony A.
Caputo 0 0 5,000 0 0 0
Michael M.
Kaplan 0 0 0 50,000 0 0
Jill L.
Leukhardt 6,000 82,500 17,600 36,400 25,200 37,800
Charles D.
Brown 0 0 4,000 36,000 0 0
</TABLE>
- -------------------
(1) No Stock Appreciation Rights (SARs) were exercised by any Company
employee in 1996, and there are no outstanding SARs held by any
employee, executive officer or director of the Company.
(2) The value of unexercised stock options at December 31, 1996 is based
on the last reported sale price of $9.00 for the Common Stock as
reported by the NASDAQ National Market on that date.
COMPENSATION OF DIRECTORS
The Company has not paid and does not presently propose to pay cash
compensation to any director for acting in such capacity, except for
reimbursement for reasonable expenses in attending those meetings. On April 10,
1997, the Board approved the grant of a stock option for 10,000 shares at a per
share price of $8.50 to each of the directors who are not employees of the
company (Messrs. Hunt and Thaw). The options have a three year term and are
fully vested. In addition, a director who is not an employee of the Company
will receive an annual stock option grant for a minimum of 5,000 shares which
will be priced at the last reported sale price on the date of the grant.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
In March 1997, the Company and Mr. Caputo entered into a five year
employment agreement. Pursuant to the terms of the agreement, Mr. Caputo is to
receive an annual salary of $250,000 adjusted annually based on a review by the
Compensation Committee with a minimum annual increase of ten percent. Mr.
Caputo is also entitled to incentive compensation of up to one-half his base
salary upon attainment of the Company's business objectives as set forth in the
Company's annual business plan. As further compensation, Mr. Caputo was issued
on March 27, 1997, a five year stock option to purchase 50,000 shares of the
Company's Common Stock at a per share price of $8.25 which was 110% of the last
reported sales price on that date. The option vests at 20% per full year of
service.
In November 1986, the Company and Mr. Kozlay entered into a five year
employment agreement, which was renewable and has been renewed for successive
one year periods. Mr. Kozlay's current annual compensation pursuant to the
agreement is $90,000.
In October 1994, concurrent with the Company's acquisition of CSI, the
Company entered into a five year employment agreement with Mr. Brown, then the
Chief Executive Officer of CSI. Pursuant to the terms of the agreement, Mr.
Brown is to receive an annual salary of $100,000 adjusted annually based upon
an applicable consumer price index. Mr. Brown is also entitled to incentive
compensation of up to one-half his base salary upon attainment of business
goals specified by the Company's Chief Executive Officer. Mr. Brown's current
annual salary pursuant to the agreement is $120,000.
5
<PAGE> 8
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee for fiscal year 1996 consisted of
Anthony A. Caputo, the Company's Chairman, Chief Executive Officer and
President and Directors Ira A. Hunt, Jr. and Bruce R. Thaw. The Compensation
Committee is responsible for reviewing and approving the compensation of the
Chairman, other officers of the Company and administering and/or interpreting
the Company's stock option plan. Bruce R. Thaw is general counsel to the
Company. See "Certain Relationships and Related Transactions".
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
In making compensation recommendations for the Company's executive
officers for the fiscal year ended December 31, 1996, the Committee took into
account that the computer security industry is highly specialized and
competition for qualified personnel is intense. The recommended compensation
levels are intended to retain individuals of exceptional skill upon whom, in
large measure, the Company's sustained progress, growth and ultimate
profitability depend.
The Committee based its compensation recommendations for 1996
primarily upon the operating results for 1995. The Committee approved an annual
salary for Mr. Caputo of $225,000 for 1996 and a bonus plan that could pay up
to a maximum of 100% of that annual salary at the discretion of the Committee.
In determining the total bonus to be paid to Mr. Caputo, quantitative criteria
included business strategy, growth of the Company, both internally and through
acquisition, productivity improvement, customer satisfaction and financial
performance. In making compensation decisions based on the quantitative
criteria set forth above, the Committee believes that the compensation paid to
Mr. Caputo is closely tied to the performance of the Company. Since the Company
did not achieve its annual financial objectives in 1996, the Company did not
pay a bonus to Mr. Caputo in 1996.
The Committee believes that the executive compensation aligns the
interests of Management with that of shareholders and focus the Management's
attention on the long-term successful operation of the Company. The named
executive officers and the directors have received stock options to purchase
shares of Common Stock. In addition, Mr. Caputo is a significant shareholder of
the Company. Consequently, a significant portion of their compensation is at
risk based on the Common Stock price performance and maintenance of value in
the marketplace.
ADVISORY BOARD
In January 1997, the Company announced the formation of an advisory
board aimed at assisting the Company in building shareholder value by
facilitating growth. Established as part of an overall strategy to manage and
maintain Company expansion, the advisory board will work as an integral part of
the Company's planning team in conjunction with the Company's executive
officers and directors. The advisory board is chaired by former United States
Treasury Secretary William E. Simon. Other members are Dr. Vinton G. Cerf,
MCI's Senior Vice President of Internet Architecture and Daniel L. Mosley, a
partner in the law firm of Cravath, Swaine & Moore. The Company expects to add
additional high-caliber executives to the advisory board. While no member
receives cash compensation for acting in such capacity, the members are
eligible to receive stock options which are usually priced at the last reported
sale price on date of issue and vest in three equal annual installments. Mr.
Simon has received an option for 50,000 shares at a share price of $9.25 and an
option for 50,000 shares at a per share price of $20.00. Mr. Mosley has
received an option for 25,000 shares at a per share price of $9.375.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Bruce R. Thaw, a director of the Company, serves as general counsel to
the Company and billed the Company $222,229 for legal fees for representing the
Company in connection with legal and regulatory matters in 1996. Mr. Thaw
continues to represent the Company for which he will be paid customary legal
fees.
STOCK PERFORMANCE GRAPH
The graph below compares the total return (change in year end stock
price plus reinvested dividends) of the Company's Common Stock, the Total
Return Index for the Nasdaq Stock Market (U.S.) and the Nasdaq Computer and
Data Processing Services Stock Index. The graph assumes that $100 was invested
in the Company's Common Stock and in each of the foregoing indices. The graph
also assumes that all dividends were reinvested.
6
<PAGE> 9
There can be no assurance as to the future trends in the total return
of the Company's Common Stock or of the foregoing indices. The Company does not
make nor does it endorse any predictions as to future stock price performance.
<TABLE>
<CAPTION>
Measurement Information Resource Total Return Index for Nasdaq Nasdaq Computer and Data
Period Engineering, Inc. Stock Market (U.S.) Processing Services Stock Index
Year Covered ($) ($) ($)
- ---------------- ------------------------ ------------------------------- -----------------------------------
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 414.55 116.38 107.59
1993 500.00 133.60 113.87
1994 551.12 130.58 138.24
1995 2,250.00 184.67 210.53
1996 818.18 227.16 260.00
</TABLE>
PROPOSAL NO. 1 - NOMINATION AND ELECTION OF DIRECTORS
At the annual meeting, five directors are to be elected by the holders
of the Common Stock to serve until the next annual meeting of shareholders and
until their successors have been elected and qualify. Certain information
concerning the nominees for election at the annual meeting, each of whom is
presently a director, is set forth below. While the Board of Directors has no
reason to believe that any of those named will not be available as a candidate,
should such a situation arise, the proxy may be voted for the election of the
other nominees in the discretion of the persons acting pursuant to the proxy.
The following information is submitted concerning the nominees for
election as directors based upon information received by the Company from such
persons:
<TABLE>
<CAPTION>
NOMINEE AGE Office Director Since
- ------- --- ------ --------------
<S> <C> <C> <C>
Anthony A. Caputo 55 Chairman, Chief Executive Officer 1986
and President
Jill Leukhardt 41 Senior Vice President, Director 1990
Ira A. Hunt, Jr. 72 Director 1990
Douglas E. Kozlay 57 Director 1983
Bruce R. Thaw 43 Director 1990
</TABLE>
Anthony A. Caputo, the Chairman, Chief Executive Officer and President
of the Company, invested in the Company in 1986, and became a director in
November 1986. In 1982, Mr. Caputo founded another computer security firm, TACT
Technology, as a division of a public company, and after securing outside
funding through a $3.0 million limited partnership in 1984, managed TACT as a
separate company. Mr. Caputo resigned from TACT Technology in November 1986 to
join the Company. Mr. Caputo has over 20 years' experience in the computer
industry, in marketing and management capacities. In June 1993, Mr. Caputo was
named Maryland's High Tech Entrepreneur of the Year, an annual award sponsored
by organizations including Inc. Magazine, Ernst and Young LLP and Merrill
Lynch. He has served as an officer of several publicly traded companies
including International Mobile Machines Inc., and Comshare, Inc., as well as
Value Software, now part of Computer Associates, Inc. Currently, Mr. Caputo is
also a director of Egan Systems, Inc., a publicly traded computer software
firm.
Jill Leukhardt has been a Senior Vice President, Marketing of the
Company since June 1995. She served as the Vice President of Sales and
Marketing of the Company from 1989 to 1995. She was appointed a director of the
Company in December, 1990. Ms. Leukhardt possesses a graduate level degree in
Electrical Engineering. From 1980 to 1986, Ms. Leukhardt was a Marketing
Manager at Intel Corporation where she managed several projects including the
planning, specification and initial marketing of the 80386 microprocessor.
Prior to joining the Company, from 1986 to 1989, she
7
<PAGE> 10
served as Vice President-Marketing for Micro Wholesalers, Inc., a microcomputer
distributor. She has also served as a Trustee of Johns Hopkins University since
July 1992.
Douglas E. Kozlay is the co-founder, and was President, of the Company
from 1983 until March 1993. Mr. Kozlay's principal responsibilities include
serving as the Company's chief technical officer providing guidance and advice
on product architecture to the Chief Executive Officer and performing
engineering functions as required. Mr. Kozlay has been a director of the
Company since its inception. From 1979 to 1982 Mr. Kozlay served as President
of EMAX, Inc., a company which designed and marketed data acquisition and
control systems. Previously, Mr. Kozlay has served as a manager of a research
and development laboratory for the U.S. National Security Agency and design
engineer for IBM Corporation. In 1982 Mr. Kozlay was Director of Industrial
Automation for EMC Controls. He currently teaches graduate level courses in
robotics at Loyola College of Baltimore.
Ira A. Hunt, Jr. has been a director of the Company since December
1990. He is currently President of BIOSAT, a small technology firm which
utilizes satellite data to monitor the status of agricultural crops worldwide.
Mr. Hunt is a graduate of the U.S. Military Academy, West Point, New York. He
served 33 years in various command and staff positions in the U.S. Army,
retiring from active military service as a Major General in 1978. Subsequently
he was President of Pacific Architects and Engineers in Los Angeles, California
and a Vice President of Frank E. Basil, Inc. in Washington, D.C. Mr. Hunt has a
Masters of Science degree in civil engineering from the Massachusetts Institute
of Technology; an MBA from the University of Detroit; a Doctor of the
University degree from the University of Grenoble, France; and a Doctor of
Business Administration degree from George Washington University.
Bruce R. Thaw has been a director of the Company since December 1990.
From 1987 to the present, Mr. Thaw has served as general counsel to the
Company. Mr. Thaw was admitted to the bar of the State of New York in 1978 and
the California State Bar in 1983. Mr. Thaw is also a director of Amtech
Systems, Inc., a publicly traded company engaged in the semiconductor industry.
The Company's Board of Directors has established an Audit Committee,
which is comprised of Ira A. Hunt, Jr. and Bruce R. Thaw. The purpose of this
Committee is to review with the Company's independent auditor KPMG Peat Marwick
LLP, and the Chief Financial Officer of the Company, the financial controls and
practices of the Company and the plans for and results of the audit engagement.
The Company does not have a nomination or similar committee. The total
number of board meetings held during the fiscal year ended December 31, 1996
was three. Each director attended all meetings of the Board and any committee
of which he/she was a member in the past fiscal year.
PROPOSAL 2 - AMENDMENT TO THE STOCK OPTION PLAN TO INCREASE
THE SHARES ISSUABLE UNDER THE PLAN
Under the Company's Stock Option Plan (the "Plan") options to purchase
a maximum of 996,000 shares of Common Stock of the Company (subject to
adjustment in the event of stock splits, stock dividends, recapitalizations and
other capital adjustments) may be granted to employees, officers and directors
of the Company and other persons who provide services to the Company.
Currently, there are 818,400 such options granted and outstanding, 46,100
options have been exercised and 131,500 options are available for future
grants. The options to be granted under the Plan are designated as incentive
stock options or non-incentive stock options by the Board of Directors which
also has discretion as to the persons to be granted options, the number of
shares subject to the options and the terms of the option agreements. Only
employees, including officers and part-time employees of the Company may be
granted incentive stock options. The options are intended to receive incentive
stock option tax treatment pursuant to Section 422A of the Internal Revenue
Code of 1986, as amended.
The Plan provides that options granted thereunder shall be exercisable
during a period of no more than ten years (five years in the case of 10%
shareholders) from the date of grant, depending upon the specific stock option
agreement, and that, with respect to incentive stock options, the option
exercise price shall be at least equal to 100% of the fair market value of the
Common Stock at the time of grant (110% in the case of 10% shareholders).
Pursuant to the provisions of the Plan, the aggregate fair market value
(determined on the date of grant) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by an employee
during any calendar year shall not exceed $100,000.
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Submitted for ratification by shareholders is an amendment to the
Plan, allowing for the maximum number of shares issuable under the Plan to be
increased by an additional 500,000 shares, so that the total number of shares
potentially issuable upon the exercise of all options will be increased to
1,496,000 shares.
The Board of Directors and Management believe that the market for
secure remote dial-in access to computer systems is continuing to increase.
This growth opportunity requires the Company to increase its investment in
research, development and marketing activities, including retaining key
personnel and augmenting its staff where necessary, to allow the Company to
take advantage of this opportunity. The purpose of the Plan is to increase the
ability of the Company to attract and retain individuals of exceptional skill
upon whom, in large measure, its sustained progress, growth and ultimate
profitability depend. In addition, the Plan is intended to advance the
interests of the Company by enabling its directors, officers and employees to
acquire a financial interest in the Company through grants of options to
acquire the Company's Common Stock. The Plan is intended to provide an
increased incentive to these individuals, thereby providing such persons with
an added incentive to continue in the employ or service of the Company and to
stimulate their efforts in promoting the growth, efficiency and profitability
of the Company.
The affirmative vote by a majority of the outstanding stock entitled
to vote at the annual meeting is required to ratify the amendment to the Plan.
The Board of Directors unanimously recommends a vote FOR approval of
this Proposal No. 2 and proxies solicited by the Board of Directors will be so
voted unless stockholders specify on their proxy card a contrary choice.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company's Board of Directors has selected KPMG Peat Marwick LLP as
independent public accountants for the Company for the year ending December 31,
1997. KPMG Peat Marwick LLP has served the Company in the capacity of
independent public accountants since the Company's initial public offering in
1989. A representative of KPMG Peat Marwick LLP is expected to be present at
the Annual Meeting to respond to appropriate questions, and will be afforded
the opportunity to make a statement if requested.
SHAREHOLDER PROPOSALS
Shareholders who wish to present proposals for action at the next
Annual Meeting of Shareholders should submit their proposals in writing to the
Secretary of the Company at the address of the Company set forth on the first
page of this Proxy Statement. Proposals must be received by the Secretary on or
before February 6, 1997 in order to be considered for inclusion in next year's
proxy materials.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report of the Company for the year ended December 31, 1996,
including audited financial statements, has been mailed to the shareholders
concurrently herewith, but such report is not incorporated in this Proxy
Statement and is not deemed to be part of the proxy solicitation material.
OTHER MATTERS
The Board of Directors of the Company does not know of any other
matters that are to be presented for action at the Annual Meeting of
Shareholders. If any other matters are properly brought before the meeting or
any adjournments thereof, the persons named in the enclosed proxy will have the
discretionary authority to vote all proxies received with respect to such
matters in accordance with their best judgment.
By order of the Board of Directors,
David A. Skalitzky
Secretary
April 30, 1997
Baltimore, Maryland
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INFORMATION RESOURCE ENGINEERING, INC.
8029 CORPORATE DRIVE
BALTIMORE, MD 21236
PROXY CARD, SOLICITED BY MANAGEMENT OF THE COMPANY
The undersigned hereby constitutes and appoints Anthony A. Caputo or
Bruce R. Thaw, or either one of them acting in the absence of the other, with
full power of substitution, to be the true and lawful attorney's and proxies
for the undersigned to vote at the Annual Meeting of Stockholders of
Information Resource Engineering, Inc. (the "Company") to be held at the
Company's offices located at 8029 Corporate Drive, Baltimore, Maryland 21236 on
July 17, 1997 at 10:30 A.M. or at any adjournment thereof. Notice of which
meeting together with a Proxy Statement has been received.
Said proxies are directed to vote the shares the undersigned would be
entitle to vote if personally present upon the following matters, all more
fully described in the Proxy Statement.
The Directors favor a vote FOR the following proposals:
1. The election of Directors
[ ] FOR all nominees, except as noted [ ] WITHHOLD AUTHORITY to
vote for all nominees
Nominees: Anthony A. Caputo, Ira A. Hunt, Jr., Douglas E. Kozlay,
Jill Leukhardt and Bruce R. Thaw
Instructions: To withhold your vote from an individual nominee,
write that nominee's name on the space provided below.
IF YOU DO NOT WITHHOLD AUTHORITY TO VOTE FOR THE ELECTION OF ANY NOMINEE AS
PROVIDED HEREIN, YOU SHALL BE DEEMED TO HAVE GRANTED SUCH AUTHORITY.
2. Amendment to the Stock Option Plan to increase the number of
shares issuable under the Plan.
[ ] For [ ] Against [ ] Abstain
3. In accordance with their best judgment with respect to any
other business that may properly come before the meeting.
The shares represented by this Proxy will be voted and in the event
instructions are given in the space provided, they will be voted in accordance
therewith; if instructions are not given, they will be voted as recommended by
the Directors with regard to the proposals.
The undersigned hereby acknowledges receipt of a copy of the accompanying
Notice of Meeting and Proxy Statement.
DATED:
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SIGNATURE (must correspond with name as
printed in the space beside)
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