Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(X) Filed by registrant
( ) 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 Materials Pursuant
to Rule 14a-11(c) or Rule 14a-12
-------------------------------------------------------------------------
INNODATA CORPORATION
-------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
-------------------------------------------------------------------------
<PAGE>
[INNODATA LOGO]
INNODATA CORPORATION
95 ROCKWELL PLACE
BROOKLYN, NEW YORK 11217
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 18, 1997
TO THE STOCKHOLDERS OF INNODATA CORPORATION:
The Annual Meeting of Stockholders of Innodata Corporation (the
"Company") will be held at 95 Rockwell Place, Brooklyn, New York 11217, Fifth
Floor Conference Room, at 11:00 A.M. on Thursday, December 18, 1997, for the
following purposes:
(1) To elect eight Directors of the Company to hold office until the next
Annual Meeting of Stockholders and until their successors have
been duly elected and qualified; and
(2) To consider and transact such other business as may properly come
before the meeting or any adjournments thereof.
A Proxy Statement, form of Proxy, the Annual Report to Stockholders of
the Company for the year ended December 31, 1996 and the Financial Report for
the six months ended June 30, 1997 and 1996 are enclosed herewith. Only
holders of record of Common Stock of the Company at the close of business on
November 7, 1997 will be entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof. A complete list of the stockholders
entitled to vote will be available for inspection by any stockholder during
the meeting; in addition, the list will be open for examination by any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting at the office of
the Secretary of the Company, located at 95 Rockwell Place, Brooklyn, New York
11217.
By Order of the Board of Directors,
Martin Kaye
Secretary
Brooklyn, New York
November 12, 1997
<PAGE>
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO
NOT EXPECT TO BE PRESENT, PLEASE SIGN AND DATE THE ENCLOSED FORM OF PROXY AND
RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES. ANY PERSON GIVING A PROXY HAS THE POWER TO
REVOKE IT AT ANY TIME PRIOR TO ITS EXERCISE AND IF PRESENT AT THE MEETING MAY
WITHDRAW IT AND VOTE IN PERSON. ATTENDANCE AT THE MEETING IS LIMITED TO
STOCKHOLDERS, THEIR PROXIES AND INVITED GUESTS OF THE COMPANY.
<PAGE>
INNODATA CORPORATION
95 ROCKWELL PLACE
BROOKLYN, NEW YORK 11217
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Innodata Corporation (the "Company") of proxies in
the form enclosed. Such Proxies will be voted at the Annual Meeting of
Stockholders of the Company to be held at 95 Rockwell Place, Brooklyn, New
York 11217, Fifth Floor Conference Room, at 11:00 A.M. on Thursday, December
18, 1997 (the "Meeting") and at any adjournments thereof for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders.
This Proxy Statement and accompanying Proxy are being mailed on or about
November 12, 1997 to all stockholders of record on November 7, 1997 (the
"Record Date").
Any stockholder giving a Proxy has the power to revoke the same at any
time before it is voted. The cost of soliciting Proxies will be borne by the
Company. The Company has no contract or arrangement with any party in
connection with the solicitation of proxies. Following the mailing of the
Proxy materials, solicitation of Proxies may be made by officers and employees
of the Company by mail, telephone, telegram or personal interview. Properly
executed Proxies will be voted in accordance with instructions given by
stockholders at the places provided for such purpose in the accompanying
Proxy. Unless contrary instructions are given by stockholders, it is intended
to vote the shares represented by such Proxies FOR the election of the eight
nominees for director named herein. The current members of the Board of
Directors presently hold voting authority for Common Stock representing an
aggregate of 1,812,591 votes, or approximately 40.4% of the total number of
votes eligible to be cast at the Annual Meeting. The members of the Board of
Directors have indicated their intention to vote affirmatively on all of the
proposals.
VOTING SECURITIES
Stockholders of record as of the close of business on the Record Date
will be entitled to notice of, and to vote at, the Meeting or any adjournments
thereof. On the Record Date there were 4,486,010 outstanding shares of common
stock, par value $.01 per share (the "Common Stock"). Each holder of Common
Stock is entitled to one vote for each share held by such holder. The
presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Meeting. Proxies submitted which contain abstentions or broker non-votes will
be deemed present at the Meeting in determining the presence of a quorum.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 30, 1997 information
regarding the beneficial ownership of the Company's Common Stock based upon
the most recent information available to the Company for (i) each person known
by the Company to own beneficially more than five (5%) percent of the
Company's outstanding Common Stock, (ii) each of the Company's officers and
directors, and (iii) all officers and directors of the Company as a group.
Unless otherwise indicated, each stockholder's address is c/o Company, 95
Rockwell Place, Brooklyn, NY 11217.
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES OWNED BENEFICIALLY (1)
--------------------------------
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP CLASS
Track Data Corporation (2) 1,244,244 27.7%
Barry Hertz (3) 1,333,644 29.1%
Todd Solomon (4) 724,047 15.5%
Martin Kaye (5) 50,500 1.1%
Jack Abuhoff (7) 18,550 *
Albert Drillick (7) 6,575 *
Dr. E. Bruce Fredrikson (6)
Syracuse University
School of Management
Syracuse, NY 13244 34,500 *
Morton Mackof (7) 6,575 *
Stanley Stern (7) 6,575 *
All Officers and Directors
as a Group (8 persons)
(2)(3)(4)(5)(6)(7) 2,180,966 44.8%
<FN>
______________________________
* Less than 1%.
1. Except as noted otherwise, all shares are owned beneficially and of
record. Includes shares pursuant to options presently exercisable or
which are exercisable within 60 days. Based on 4,496,010 shares
outstanding.
2. Consists of 1,244,244 shares owned by Track Data Corporation, which is
majority owned by Mr. Hertz.
3. Includes 1,244,244 shares owned by Track Data Corporation, which is
majority owned by Mr. Hertz, 8,400 shares held in a pension plan for
the benefit of Mr. Hertz and currently exercisable options to purchase
81,000 shares of Common Stock.
4. Includes currently exercisable options to purchase 184,100 shares of Common
Stock.
5. Includes currently exercisable options to purchase 40,500 shares of Common
Stock.
6. Includes currently exercisable options to purchase 24,500 shares of Common
Stock.
7. Consists of shares issuable upon exercise of currently exercisable options
granted under the Company's Stock Option Plans.
</TABLE>
ELECTION OF DIRECTORS
It is the intention of the persons named in the enclosed form of Proxy,
unless such form of Proxy specifies otherwise, to nominate and to vote the
shares represented by such Proxy FOR the election of Barry Hertz, Todd
Solomon, Jack Abuhoff, Albert Drillick, Dr. E. Bruce Fredrikson, Martin Kaye,
Morton Mackof and Stanley Stern to hold office until the next Annual Meeting
of Stockholders or until their respective successors shall have been duly
elected and qualified. All of the nominees are presently directors of the
Company. The Company has no reason to believe that any of the nominees will
become unavailable to serve as directors for any reason before the Annual
Meeting. However, in the event that any of them shall become unavailable, the
person designated as proxy reserves the right to substitute another person of
his choice when voting at the Annual Meeting.
OFFICERS AND DIRECTORS
The officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
NAME AGE POSITION
- ----------------------- --- -----------------------------------
Barry Hertz 47 Chairman of the Board of Directors
Todd Solomon 35 Vice Chairman of the Board of
Directors and Consultant
Jack Abuhoff 36 President, Chief Executive Officer
and Director
Martin Kaye 50 Vice President - Finance, Secretary
and Director
Dr. Albert Drillick 51 Director
Dr. E. Bruce Fredrikson 59 Director
Morton Mackof 50 Director
Stanley Stern 47 Director
</TABLE>
BARRY HERTZ has been Chairman since 1988 and Chief Executive Officer of
the Company until August 1995. He founded Track Data Corporation ("Track") in
1981. He was Track's sole stockholder and Chief Executive Officer until its
merger (the "Merger") on March 31, 1996 with Global Market Information, Inc.
("Global"), a public company co-founded by Mr. Hertz, who was its Chairman and
Chief Executive Officer. Track was a principal stockholder of Global, a
company engaged in the financial information services market. Upon
consummation of the Merger, Global changed its name to Track Data Corporation
("TDC"). Mr. Hertz holds a B.S. degree in mathematics from Brooklyn College
(1971) and an M.S. degree in computer science from New York University (1973).
TODD SOLOMON has been Vice Chairman and consultant to the Company since
his resignation as President and CEO on September 15, 1997. He served as
President and a Director of the Company since its founding by him in 1988. He
has been Chief Executive Officer since August 1995. Mr. Solomon was President
of Ruck Associates, an executive recruiting firm from 1986 until 1987. Mr.
Solomon holds an A.B. in history and physics from Columbia University (1986).
He is also a director of TDC.
JACK ABUHOFF was retained as President and CEO effective September 15,
1997. He has been a Director of the Company since its founding. In 1995, he
joined CRC, an international systems integration and outsourcing firm, where
he was Chief Operating Officer. From 1992 to 1994, he was employed by
Chadbourne & Parke, engaged in Sino-American technology joint ventures. He
practiced international corporate law with White & Case from 1986 to 1992. He
holds an A.B. degree from Columbia College (1983) and a J.D. degree from
Harvard Law School (1986).
MARTIN KAYE has been Chief Financial Officer of the Company since October
1993 and was elected Vice President - Finance in August 1995. He has been a
Director since March 1995. He is a certified public accountant and serves as
Vice President of Finance and a Director of TDC. Mr. Kaye had been an audit
partner with Deloitte & Touche for more than five years until his resignation
in 1993. Mr. Kaye holds a B.B.A. in accounting from Baruch College (1970).
DR. ALBERT DRILLICK has been a Director of the Company since 1990. He
has served as a director of applications and senior systems analyst for TDC
for more than the past five years. He holds a Ph.D. degree in mathematics
from New York University Courant Institute (1971).
DR. E. BRUCE FREDRIKSON has been a Director of the Company since August
1993. He is currently a professor of finance at Syracuse University School of
Management where he has taught since 1966 and has previously served as
chairman of the finance department. Dr. Fredrikson has a B.A. in economics
from Princeton University and a M.B.A. and a Ph.D. in finance from Columbia
University. He is a director of Eagle Finance Corp., a company which acquires
and services non-prime automobile installment sales contracts. He is also an
independent general partner of Fiduciary Capital Partners, L.P. and Fiduciary
Capital Pension Partners, L.P. He is also a director of TDC.
MORTON MACKOF has been a Director of the Company since April 1993. He
had been executive vice president of Track since February 1991 and was elected
its President in December 1994, and since the Merger served as President of
TDC. He resigned as President in November 1996. From 1986 to 1991, he was
president of Medical Leasing of America, Inc. From 1981 to 1986 he was vice
president of sales with Fonar Corp. He holds a B.S. degree in electrical
engineering from Rensselaer Polytechnic Institute (1970) and did graduate work
in computer science. He is also a director of TDC.
STANLEY STERN has been a Director of the Company since August 1988. He
has served as chief operating officer of Track, and in predecessor positions,
for more than five years and since the Merger served as Executive Vice
President of TDC. He resigned as Executive Vice President in December 1996.
Mr. Stern holds a B.B.A. from Baruch College (1973). He is also a director of
TDC.
There are no family relationships between or among any directors or
officers of the Company. A.S. Goldmen & Co., Inc., the underwriter of the
Company's initial public offering of its common stock, is entitled to
designate one member of the Board of Directors until August 9, 1998. No such
member has been elected to date. Directors are elected to serve until the
next annual meeting of stockholders and until their successors are elected and
qualified. Officers serve at the discretion of the Board.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during the year ended December
31, 1996. Each director attended at least 75% of all of the meetings of the
Board of Directors held during the period in 1996 such person served as
director.
Dr. Fredrikson and Mr. Abuhoff served on the Company's Audit Committee.
Mr. Abuhoff will be replaced by Mr. Stern. The function of the Audit
Committee is to make recommendations concerning the selection each year of
independent auditors of the Company, to review the effectiveness of the
Company's internal accounting methods and procedures, and to determine through
discussions with the independent auditors whether any instructions or
limitations have been placed upon them in connection with the scope of their
audit or its implementation. The Audit Committee did not meet separately
during 1996. The Board of Directors does not have a Compensation or
Nominating Committee. The Board of Directors has designated Messrs. Stern and
Fredrikson to serve as administrators of the Company's 1994 and 1995 Stock
Option Plans.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company believes that during the period from January 1, 1996 through
December 31, 1996 all officers, directors and greater than ten-percent
beneficial owners complied with Section 16(a) filing requirements.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation
paid by the Company for services to the Company during the three fiscal years
ended December 31, 1996 to those executive officers whose aggregate cash and
cash equivalent compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ANNUAL NUMBER OF
COMPENSATION STOCK
NAME AND PRINCIPAL CALENDAR --------------- OPTIONS
POSITION YEAR SALARY BONUS AWARDED
Barry Hertz 1996 $ 50,000 $ - -
Chairman 1995 - - 45,000
1994 - - 45,000
21,000(A)
Todd Solomon 1996 $231,000 $ - 31,000
President, CEO 1995 222,814 - 31,000
1994 175,000 - 74,350
78,750(A)
<FN>
(A) Options granted 1993 and repriced in 1994.
</TABLE>
The above compensation does not include certain insurance and other personal
benefits, the total value of which does not exceed as to any named officer,
the lesser of $50,000 or 10% of such person's cash compensation. The Company
has not granted any stock appreciation rights nor does it have any "long-term
incentive plans," other than its stock option plans.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERCENT OF TOTAL
NUMBER OPTIONS
OF GRANTED TO EXERCISE EXPIR-
OPTIONS EMPLOYEES IN PRICE ATION
NAME GRANTED FISCAL YEAR PER SHARE DATE
Todd Solomon 31,000 35% $ 2.313 10/2001
</TABLE>
The options become exercisable one-third on each of the first three
anniversary dates.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR;
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR END AT FISCAL YEAR END
ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE UNEXERCISABLE UNEXERCISABLE
Barry Hertz None 66,000/45,000 $-/$-
Todd Solomon None 138,649/76,451 $-/$-
</TABLE>
DIRECTORS COMPENSATION
Dr. E. Bruce Fredrikson and Jack Abuhoff were compensated at the rate of
$1,250 and $833 per month, respectively, plus out-of-pocket expenses for each
meeting attended. No other director is compensated for his services as
director. Further, Messrs. Fredrikson and Abuhoff received options to
purchase 7,000 and 3,500 shares, respectively, in 1996.
EMPLOYMENT AGREEMENTS
The Company entered into a three-year employment agreement with Jack
Abuhoff on August 19, 1997 pursuant to which Mr. Abuhoff serves as President
and CEO of the Company commencing September 15, 1997. Mr. Abuhoff will be
paid at the rate of $200,000 per annum with any bonuses and future increases
at the discretion of the Board of Directors. In addition, each December 31
during the term of the agreement Mr. Abuhoff will receive 31,000 options to
purchase common stock of the Company at then prevailing market prices. Mr.
Abuhoff will also receive other benefits accorded executives of the Company.
In consideration of the signing of the agreement Mr. Abuhoff was granted five
year options as follows: 30,000 options at $1.00 per share; 50,000 at $2.00;
70,000 at $3.00; 90,000 at $4.00; and 100,000 at $7.00. The options are
exercisable upon the earliest to occur of (i) ninety days before the
expiration of the five year term; (ii) the date the market price is at least
$2.50 for ten consecutive trading days; or (iii) in the event of a sale of the
Company where a third party acquires more than 50% of the Company.
The Company had an employment agreement with Todd Solomon to serve as its
President and CEO. The agreement was to expire on September 30, 1999. Mr.
Solomon's annual compensation consists of $231,000 plus a bonus of up to an
additional 15% based on performance criteria established by the Board of
Directors. Further, he is to receive options to purchase 31,000 shares in
each year and is eligible to receive up to an additional 30,000 shares in each
year based on performance, as determined by the Board of Directors. This
agreement was replaced by a three-year employment agreement with the Company
expiring September 30, 2000 that provides for a salary of $100,000 for the
year ended September 30, 1998 and $75,000 per annum thereafter. Mr. Solomon
will serve as Vice Chairman of the Board and in executive capacities,
initially as Chief Operating Officer, as designated by the CEO or the Board of
Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the Company's fiscal year ended December 31, 1996, Messrs. Hertz,
Solomon and Kaye were officers of the Company and were members of the Board of
Directors (there is no compensation committee). Mr. Hertz is Chairman and CEO
of Track Data Corporation and Mr. Kaye is Chief Financial Officer and a
director of Track Data Corporation. Messrs. Solomon, Mackof and Stern are
also directors of Track Data Corporation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no material related party transactions during the fiscal year
ended December 31, 1996.
INDEPENDENT AUDITORS
Margolin, Winer & Evens LLP served as the Company's auditors for the
fiscal years ended December 31, 1996, 1995 and 1994. It is not expected that a
representative of Margolin, Winer & Evens LLP will be present at the Annual
Meeting.
VOTE REQUIRED
The affirmative vote of a majority of the votes cast at the Annual
Meeting, assuming a quorum is present, is required to elect directors.
Abstentions will not be counted as affirmative votes. The current members of
the Board of Directors presently hold voting authority for Common Stock
representing an aggregate of approximately 1,812,591 votes, or approximately
40.4% of the total number of votes eligible to be cast at the Annual Meeting.
The members of the Board of Directors have indicated their intention to vote
affirmatively on all of the proposals.
EXPENSE OF SOLICITATION
The cost of soliciting proxies, which also includes the preparation,
printing and mailing of the Proxy Statement, will be borne by the Company.
Solicitation will be made by the Company primarily through the mail, but
regular employees of the Company may solicit proxies personally, by telephone
or telegram. The Company will request brokers and nominees to obtain voting
instructions of beneficial owners of the stock registered in their names and
will reimburse them for any expenses incurred in connection therewith.
PROPOSALS OF STOCKHOLDERS
Stockholders of the Company who intend to present a proposal for action
at the next Annual Meeting of Stockholders of the Company must notify the
Company's management of such intention by notice in writing received at the
Company's principal executive offices on or before June 6, 1998 in order for
such proposal to be included in the Company's Proxy Statement and form of
proxy relating to such Meeting. Stockholders who wish to present a proposal
for action at the next Annual Meeting are advised to contact the Company as
soon as possible in order to permit the inclusion of any proposal in the
Company's proxy statement.
OTHER MATTERS
The Company knows of no items of business that are expected to be
presented for consideration at the Annual Meeting which are not enumerated
herein. However, if other matters properly come before the Meeting, it is
intended that the person named in the accompanying Proxy will vote thereon in
accordance with his best judgement.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE
IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT
WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
Brooklyn, New York By Order of the Board of Directors
November 12, 1997
Martin Kaye, Secretary
<PAGE>
- ------
[FORM OF PROXY]
INNODATA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned Stockholder of Common Stock of Innodata Corporation (the
"Company") hereby revokes all previous proxies, acknowledges receipt of the
Notice of the Meeting of Stockholders to be held on Thursday, December 18,
1997, and hereby appoints Barry Hertz and Martin Kaye, and each of them, as
proxies of the undersigned, with full power of substitution, to vote and
otherwise represent all of the shares of the undersigned in the Company at
said meeting and at any adjournments thereof with the same effect as if the
undersigned were present and voting the shares. The shares represented by
this proxy shall be voted on the following matters and, in their discretion,
upon any other business which may properly come before said meeting.
Election of Directors:
[ ] For all nominees listed below [ ] Withhold authority
(except as indicated) to vote for all
nominees listed below
To withhold authority for any individual nominee, strike through that
nominee's name in the list below.
Barry Hertz Todd Solomon Morton Mackof
Jack Abuhoff Martin Kaye Stanley Stern
Albert Drillick E. Bruce Fredrikson
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY, DULY EXECUTED, WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE. IF NO SPECIFICATION IS MADE, THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN FAVOR OF EACH OF THE ABOVE
NOMINEES AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING
AS THE PROXYHOLDERS DEEM ADVISABLE.
Dated:_________________________,1997
------------------------------------
Signature(s) of Stockholder
------------------------------------
(Title, if appropriate)
This proxy should be signed by the Stockholder(s) exactly as his or her name
appears hereon. Persons signing in a fiduciary capacity should so indicate.
If shares are held by joint tenants or as community property, each owner
should sign. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN
AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
