INNODATA CORPORATION
95 ROCKWELL PLACE
BROOKLYN, NEW YORK 11217
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 5, 1998
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, November 5, 1998, 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;
(2) To approve the 1998 Stock Option Plan authorizing the Company to issue
options to acquire up to 300,000 shares of Common Stock to officers, directors,
employees and consultants;
(3) To ratify the selection and appointment by the Company's Board of
Directors of Grant Thornton LLP, independent auditors, as auditors for the
Company for the year ended December 31, 1998; and
(4) 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, 1997 and the Financial Report for the
six months ended June 30, 1998 and 1997 are enclosed herewith. Only holders of
record of Common Stock of the Company at the close of business on October 1,
1998 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
October 5, 1998
<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, November 5, 1998 (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
October 5, 1998 to all stockholders of record on October 1, 1998 (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, FOR the 1998 Stock Option Plan and FOR the selection of Grant
Thornton LLP as independent auditors. The current members of the Board of
Directors presently hold voting authority for Common Stock representing an
aggregate of 410,863 votes, or approximately 27.9% 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 1,473,819 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 31, 1998 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
NAME AND ADDRESS OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
Track Data Corporation (2) 214,748 14.4%
Barry Hertz (3) 245,881 16.4%
Todd Solomon (4) 225,098 14.8%
Jack Abuhoff (5) 31,724 2.1%
Martin Kaye (6) 19,999 1.3%
Stephen Agress (7) 6,000 *
William Schieffelin (8) 10,499 *
Jurgen Tanpho (8) 3,082 *
Albert Drillick (9) 4,986 *
Dr. E. Bruce Fredrikson (10)
Syracuse University
School of Management
Syracuse, NY 13244 6,832 *
Morton Mackof (9) 4,986 *
Stanley Stern (9) 2,411 *
Heartland Advisors, Inc.
790 N. Milwaukee Street
Milwaukee, WI 53202 124,999 8.5%
All Officers and Directors
as a Group (11 persons)
(3)(4)(5)(6)(7)(8)(9)(10) 561,498 34.8%
______________________________
<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 1,473,819 shares outstanding.
2. Consists of 214,748 shares owned by Track Data Corporation, which is
Majority owned by Mr. Hertz.
3. Includes 214,748 shares owned by Track Data Corporation, which is
majority owned by Mr. Hertz, 2,800 shares held in a pension plan for the
benefit of Mr. Hertz and currently exercisable options to purchase 28,333
shares of Common Stock.
4. Includes currently exercisable options to purchase 45,116 shares of Common
Stock.
5. Includes currently exercisable options to purchase 22,724 shares of Common
Stock.
6. Includes currently exercisable options to purchase 16,666 shares of Common
Stock.
7. Includes currently exercisable options to purchase 5,000 shares of Common
Stock.
8. Consists of shares issuable upon exercise of currently exercisable
Options granted under the Company's Stock Option Plans.
9. Includes currently exercisable options to purchase 833 shares of Common
Stock and 4,153 shares for Messrs. Drillick and Mackof and 1,578 shares for Mr.
Stern held in the Track Data Phantom Unit Trust to be released upon
termination of association with the Company or Track Data Corporation, or
earlier with approval of the Board of Directors.
10. Includes currently exercisable options to purchase 3,333 shares of Common
Stock.
</TABLE>
<PAGE>
ITEM I. 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 48 Chairman of the Board of Directors
Todd Solomon 36 Vice Chairman of the Board of Directors and
Consultant
Jack Abuhoff 37 President, Chief Executive Officer and Director
Martin Kaye 51 Executive Vice President, Chief Financial Officer,
Secretary and Director
William Schieffelin 50 Vice President - Business Development
Stephen Agress 37 Vice President - Finance
Jurgen Tanpho 33 Vice President - Operations
Dr. Albert Drillick 52 Director
Dr. E. Bruce Fredrikson 60 Director
Morton Mackof 50 Director
Stanley Stern 48 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. 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 had 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 was
also a director of TDC until his resignation in December 1997.
JACK ABUHOFF was retained as President and CEO effective September 15,
1997. He has been a Director of the Company since its founding. From 1995 to
1997 he was Chief Operating Officer of CRC, an international systems integration
and outsourcing firm. 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 and was elected
Executive Vice President in March 1998. 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).
WILLIAM SCHIEFFELIN was elected Vice President - Business Development in
March 1998. He joined the Company in July 1996. Prior thereto, he was employed
by the Research Institute of America Group for seven years, serving most
recently as Vice President, Strategic Alliances. Mr. Schieffelin holds a B.A.
from Baylor University (1970) and a J.D. degree from the University of Texas
School of Law (1973).
STEPHEN AGRESS was elected Vice President - Finance in March 1998. He
served as Corporate Controller since joining the Company in August 1995. Mr.
Agress is a certified public accountant and had been a senior audit manager with
Deloitte & Touche for more than five years prior to his resignation in 1995. Mr.
Agress holds a B.S. in accounting from Yeshiva University (1982).
JURGEN TANPHO was elected Vice President - Operations in March 1998. He
served in various management capacities since joining the Company in 1991, most
recently in the position of Assistant to the President of Manila Operations. He
holds a B.S. degree in industrial engineering from the University of the
Philippines (1981).
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 is
President and CEO of Third Millennium Technology Inc., a company involved in
information technology consulting and software development. 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 was
chief operating officer of Track, and in predecessor positions, for more than
five years and since the Merger was Executive Vice President of TDC until his
resignation in December 1996. Mr. Stern holds a B.B.A. from Baruch College
(1973). He was also a director of TDC until his resignation in September 1997.
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, 1997. Each director attended at least 75% of all of the meetings of the
Board of Directors held during the period in 1997 such person served as
director.
Dr. Fredrikson and Mr. Stern served on the Company's Audit Committee. 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 1997. 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, 1997 through
December 31, 1997 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, 1997 to those executive officers whose aggregate cash and
cash equivalent compensation exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C>
ANNUAL COMPENSATION
---------------------- NUMBER OF
STOCK
NAME AND PRINCIPAL CALENDAR OPTIONS
POSITION YEAR SALARY BONUS AWARDED
Jack Abuhoff 1997 $ 37,500 $ - 114,500
President, CEO since
September 1997
Barry Hertz 1997 $ 50,000 $ - 13,333
Chairman 1996 50,000 - -
1995 - - 15,000
Todd Solomon 1997 $209,166 $ - 20,333
President, CEO through 1996 231,000 - 10,333
September 1997, Vice 1995 222,814 - 10,333
Chairman of the Board
and Consultant thereafter
</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.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<S> <C> <C> <C> <C>
NUMBER OF PERCENT OF TOTAL OPTIONS EXPIR-
OPTIONS GRANTED TO EMPLOYEES IN EXERCISE PRICE ATION
NAME GRANTED FISCAL YEAR PER SHARE DATE
Jack Abuhoff 114,500 61% * 9/2002
Barry Hertz 13,333 7% $3.00 12/2002
Todd Solomon 20,333 11% $3.00 10/2002
<FN>
* 11,166 @ $3.00; 16,666 @ $6.00; 23,333 @ $9.00; 30,000 @ $12.00; and
33,333 @ $21.00
</TABLE>
The options become exercisable the earlier of (i) ninety days before the
expiration of the five year term; (ii) the date the market price is at least
$7.50 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.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR;
FISCAL YEAR END OPTION VALUES
<BTB>
<S> <C> <C> <C>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
AQUIRED YEAR END AT FISCAL YEAR END
ON EXERCISABLE EXERCISABLE
NAME EXERCISE /UNEXERCISABLE /UNEXERCISABLE
Jack Abuhoff None 6,183/114,500 $-0-/$-0-
Barry Hertz None 32,000/18,333 $-0-/$-0-
Todd Solomon None 61,366/30,666 $-0-/$-0-
</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 The affirmative vote of a majority of
the votes cast at the Annual Meeting, assuming a quorum is present, is required
to elect directors, to approve the adoption of the 1998 Stock Option Plan and to
approve the selection of auditors. 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
410,863 votes, or approximately 27.9% 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 7, 1999 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
October 5, 1998
Martin Kaye, Secretary
<PAGE>
A-1
EXHIBIT A
---------
INNODATA CORPORATION
1998 STOCK OPTION PLAN
There is hereby established a 1998 Stock Option Plan (the "Plan"). The
Plan provides for the grant to certain employees and others who render services
to Innodata Corporation or its subsidiaries (the "Company") of options
("Options") to purchase shares of common stock of the Company ("Common Stock").
1. PURPOSE: The purpose of the Plan is to provide additional incentive to
the officers, employees, and others who render services to the Company, who are
responsible for the management and growth of the Company, or otherwise
contribute to the conduct and direction of its business, operations and affairs.
It is intended that Options granted under the Plan strengthen the desire of such
persons to join and remain in the employ of the Company and stimulate their
efforts on behalf of the Company.
2. THE STOCK: The aggregate number of shares of Common Stock which may be
subject to Options shall not exceed 300,000. Such shares may be either
authorized and unissued shares, or treasury shares. If any Option granted under
the Plan shall expire, terminate or be cancelled for any reason without having
been exercised in full, the corresponding number of unpurchased shares shall
again be available for the purposes of the Plan.
3. TYPES OF OPTIONS: Options granted under the Plan shall be in the form of
(i) incentive stock options ("ISO's"), as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") or (ii) non-statutory options
which do not qualify under such Section ("NSO's"), or both, in the discretion of
the Board of Directors or any committee appointed by the Board (each, the
"Committee"). The status of each Option shall be identified in the Option
Agreement.
4. ELIGIBILITY:
(a) ISO's may be granted to such employees (including officers and directors
who are employees) of the Company as the Committee shall select from time to
time.
(b) NSO's may be granted to such employees (including officers and
directors) of the Company, and to other persons who render services to the
Company, as the Committee shall select from time to time.
5. GENERAL TERMS OF OPTIONS:
(a) OPTION PRICE. The price or prices per share of Common Stock to be sold
pursuant to an Option (the "exercise price") shall be fixed by the Committee but
shall in any case not be less than:
(i) the fair market value per share for such Common Stock on the date
of grant in the case of ISOs other than to a 10% Stockholder,
(ii) 110% of the fair market value per share for such Common Stock on
the date of grant in the case of ISOs to a 10% Stockholder, and
(iii) the fair market value on the date of grant in the case of
NSO's.
A "10% Stockholder" means an individual who within the meaning of Section
422(b)(6) of the Code owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or of its parent or
any subsidiary corporation.
(b) PERIOD OF OPTION VESTING. The Committee shall determine for each Option
the period during which such Option shall be exercisable in whole or in part,
provided that no ISO to a 10% Stockholder shall be exercisable more than five
years after the date of grant.
(c) SPECIAL RULE FOR ISO'S. The aggregate fair market value (determined at
the time the ISO is granted) of the stock with respect to which ISOs are
exercisable for the first time by an Optionee during any calendar year (under
all such plans of the Company, its parent or subsidiary) shall not exceed
$100,000, and any excess shall be considered an NSO.
(d) EFFECT OF TERMINATION OF EMPLOYMENT.
(i) The Committee shall determine for each Option the extent, if any,
to which such Option shall be exercisable in the event of the termination of the
Optionee's employment with or rendering of other services to the Company.
(ii) However, any such Option which is an ISO shall in all events
lapse unless exercised by the Optionee:
(A) prior to the 60th day after the date on which employment
terminated, if termination was other than by reason of death; and
(B) within the twelve-month period next succeeding the death
of the Optionee, if termination is by reason of death.
(iii) The Committee shall have the right, at any time, and from time
to time, with the consent of the Optionee, to modify the lapse date of an Option
and to convert an ISO into an NSO to the extent that such modification in lapse
date increases the life of the ISO beyond the dates set forth above or beyond
dates otherwise permissible for an ISO.
(e) PAYMENT FOR SHARES OF COMMON STOCK. Upon exercise of an Option, the
Optionee shall make full payment of the Option Price:
(i) in cash, or,
(ii) with the consent of the Committee and to the extent permitted
by it:
(A) with Common Stock of the Company valued at fair market value
on date of exercise, but only if held by the Optionee for a period of time
sufficient to prevent a pyramid exercise that would create a charge to the
Company'searnings,
(B) with a full recourse interest bearing promissory note of the
Optionee, secured by a pledge of the shares of Common Stock received upon
exercise of such Option, and having such other terms and conditions as
determined by the Committee,
(C) by delivering a properly executed exercise notice together
with irrevocable instructions to a broker to sell shares acquired upon exercise
of the Option and promptly to deliver to the Company a portion of the proceeds
thereof equal to the exercise price,
(D) any combination of any of the foregoing.
(f) OPTION EXERCISES. Options shall be exercised by submitting to the
Company a signed copy of notice of exercise in a form to be supplied by the
Company. The exercise of an Option shall be effective on the date on which the
Company receives such notice at its principal corporate offices. The Company may
cancel such exercise in the event that payment is not effected in full, subject
to the terms of Section 5(e) above.
(g) NON-TRANSFERABILITY OF OPTION. No Option shall be transferable by the
Optionee or otherwise than by will or by the laws of descent and distribution.
During the Optionee's lifetime, such Option shall be exercisable only by such
Optionee. If an Optionee should die while in the employ of the Company, the
Option theretofore granted to the Optionee, to the extent then otherwise
exercisable, shall be exercisable only by the estate of the Optionee or by a
person who acquired the right to exercise such Option by bequest or inheritance
or otherwise by reason of the death of the Optionee. Notwithstanding the
foregoing, if so provided in an agreement between the Company and the Optionee,
an Optionee may transfer his or her Options to immediate family members or
trusts for their benefit or partnerships in which immediate family members are
the only partners, without consideration, and subject to the same terms and
conditions as were applicable to the Options immediately prior to their
transfer.
6. OTHER PLAN TERMS:
(a) Number of Options which may be Granted to, and Number of Shares of
Common Stock which may be Acquired by Employees.
(i) The Committee may grant more than one Option to an individual, and,
subject to the requirements of Section 422 of the Code, with respect to ISOs,
such Option may be in addition to, in tandem with, or in substitution for,
Options previously granted under the Plan or of another corporation and assumed
by the Company.
(ii)The Committee may permit the voluntary surrender of all or a portion
of any Option granted under the Plan or otherwise to be conditioned upon the
granting to the employee of a new Option for the same or a different number of
shares of Common Stock as the Option surrendered, or may require such voluntary
surrender as a condition precedent to a grant of a new Option to such employee.
Such new Option shall be exercisable at the price, during the period, and in
accordance with any other terms or conditions specified by the Committee at the
time the new Option is granted, all determined in accordance with the provisions
of the Plan without regard to the price, period of exercise, or any other terms
or conditions of the Option surrendered.
(b) PERIOD OF GRANT OF OPTIONS. Options may be granted at any time under
the Plan, provided that Options which are granted before the Plan has been
approved by the stockholders of the Company shall be exercisable only after the
Plan is approved by such stockholders. However, no Option shall be granted
under the Plan after July 9, 2008.
(c) EFFECT OF CHANGE IN COMMON STOCK. In the event of a reorganization,
recapitalization, liquidation, stock split, stock dividend, combination of
shares, merger or consolidation, or the sale, conveyance, lease or other
transfer by the Company of all or substantially all of its property, or any
change in the corporate structure or shares of Common Stock of the Company,
pursuant to any of which events the then outstanding shares of the common stock
are split up or combined or changed into, become exchangeable at the holder's
election for, or entitle the holder thereof to other shares of common stock, or
in the case of any other transaction described in Section 424(a) of the Code,
the Committee may change the number and kind of shares of Common Stock available
under the Plan and any outstanding Option (including substitution of shares of
common stock of another corporation) and the price of any Option and the fair
market value determined under this Plan in such manner as it shall deem
equitable in its sole discretion.
(d) OPTIONEES NOT STOCKHOLDERS. An Optionee or a legal representative
thereof shall have none of the rights of a stockholder with respect to shares of
Common Stock subject to Options until such shares shall be issued or transferred
upon exercise of the Option.
7. OPTION AGREEMENT: The Company shall effect the grant of Options under
the Plan, in accordance with determinations made by the Committee, by execution
of instruments in writing in a form approved by the Committee. Each Option
shall contain such terms and conditions (which need not be the same for all
Options, whether granted at the same time or at different times) as the
Committee shall deem to be appropriate and not inconsistent with the provisions
of the Plan, and such terms and conditions shall be agreed to in writing by the
Optionee.
8. CERTAIN DEFINITIONS:
(a) FAIR MARKET VALUE. As used in the Plan, the term "fair market value"
shall mean as of any date:
(i) if the Common Stock is not traded on any over-the-counter market or
on a national securities exchange, the value determined by the Committee using
the best available facts and circumstances
(ii) if the Common Stock is traded in the over-the-counter market, based
on most recent closing prices for the Common Stock on the date the calculation
thereof shall be made, or
(iii) if the Common Stock is listed on a national securities exchange,
based on the most recent closing prices for the Common Stock of the Company
on such exchange.
(b) SUBSIDIARY AND PARENT. The term "subsidiary" and "parent" as used in the
Plan shall have the respective meanings set forth in Sections 424(f) and (e) of
the Internal Revenue Code.
9. NOT AN EMPLOYMENT CONTRACT: Nothing in the Plan or in any Option or
stock option agreement shall confer on any Optionee any right to continue in the
service of the Company or any parent or subsidiary of the Company or interfere
with the right of the Company to terminate such Optionee's employment or other
services at any time.
10. WITHOLDING TAXES:
(a) Whenever the Company proposes or is required to issue or transfer shares
of Common Stock under the Plan, the Company shall have the right to require the
Optionee to remit to the Company an amount sufficient to satisfy any Federal,
state and/or local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares. Alternatively, the Company may, in
its sole discretion from time to time, issue or transfer such shares of Common
Stock net of the number of shares sufficient to satisfy the withholding tax
requirements. For withholding tax purposes, the shares of Common Stock shall be
valued on the date the withholding obligation is incurred.
(b) In the case of shares of Common Stock that an Optionee receives pursuant
to his exercise of an Option which is an ISO, if such Optionee disposes of such
shares of Common Stock within two years from the date of the granting of the ISO
or within one year after the transfer of such shares of Common Stock to him, the
Company shall have the right to withhold from any salary, wages, or other
compensation for services payable by the Company to such Optionee, amounts
sufficient to satisfy any withholding tax obligation attributable to such
disposition.
(c) In the case of a disposition described in Section (b), the Optionee
shall give written notice to the Company of such disposition within 30 days
following the disposition, which notice shall include such information as the
Company may reasonably request to effectuate the provisions hereof.
11. AGREEMENTS AND REPRESENTATIONS OF OPTIONEES:
As a condition to the exercise of an Option, unless counsel to the Company
opines that it is not necessary under the Securities Act of 1933, as amended,
and the pertinent rules thereunder, as the same are then in effect, the Optionee
shall represent in writing that the shares of Common Stock being purchased are
being purchased only for investment and without any present intent at the time
of the acquisition of such shares of Common Stock to sell or otherwise dispose
of the same.
12. ADMINISTRATION OF THE PLAN:
(a) The Plan shall be administered by the Board of Directors or a Committee
of the Board of Directors of the Company (the "Committee") consisting of not
less than two Directors.
(b) Subject to the express provisions of the Plan, the Committee shall have
authority, in its discretion, to determine the individuals to receive Options,
the times when they shall receive them and the number of shares of Common Stock
to be subject to each Option, and other terms relating to the grant of Options.
(c) Subject to the express provisions of the Plan, the Committee shall have
authority to construe the respective option agreements and the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective option agreements (which
need not be identical) and, as specified in this Plan, the fair market value of
the common stock, and to make all other determinations necessary or advisable
for administering the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any option agreement
in the manner and to the extent it shall deem expedient to carry it into effect,
and it shall be the sole and final judge of such expediency. The determinations
of the Committee on the matters referred to in this Section 12 shall be
conclusive.
(d) The Committee may, in its sole discretion, and subject to such terms and
conditions as it may adopt, accelerate the date or dates on which some or all
outstanding Options may be exercised.
(e) The Committee may require that any Option Shares issued be legended as
necessary to comply with applicable federal and state securities laws.
13. AMENDMENT AND DISCONTINUANCE OF THE PLAN:
(a) The Board of Directors of the Company may at any time alter, suspend or
terminate the Plan, but no change shall be made which will have a material
adverse effect upon any Option previously granted, unless the consent of the
Optionee is obtained; provided, however, that the Board of Directors may not
without further approval of the stockholders, (i) increase the maximum number of
shares of Common Stock for which Options may be granted under the Plan or which
may be purchased by an individual Optionee, (ii) decrease the minimum option
price provided in the Plan, or (iii) change the class of persons eligible to
receive Options.
(b) The Company intends that Options designated by the Committee as ISO's
shall constitute ISOs under Section 422 of the Code. Should any provision in
this Plan for ISO's not be necessary in order to so comply or should any
additional provisions be required, the Board of Directors of the Company may
amend the Plan accordingly without the necessity of obtaining the approval of
the stockholders of the Company.
14. OTHER CONDITIONS: If at any time counsel to the Company shall be of the
opinion that any sale or delivery of shares of Common Stock pursuant to an
Option granted under the Plan is or may in the circumstances be unlawful under
the statutes, rules or regulations of any applicable jurisdiction, the Company
shall have no obligation to make such sale or delivery, and the Company shall
not be required to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933 or otherwise with
respect to shares of Common Stock or Options under the Plan, and the right to
exercise any such Option may be suspended until, in the opinion of said
counsel, such sale or delivery shall be lawful.
At the time of any grant or exercise of any Option, the Company may, if it shall
deem it necessary or desirable for any reason connected with any law or
regulation of any governmental authority relative to the regulation of
securities, condition the grant and/or exercise of such Option upon the Optionee
making certain representations to the Company and the satisfaction of the
Company with the correctness of such representations.
15. APPROVAL; EFFECTIVE DATE; GOVERNING LAW: The Plan was adopted by the
Board of Directors on July 9, 1998 and is to be submitted to stockholders for
their approval at the first meeting of stockholders following such date. The
Plan shall terminate if not approved by stockholders. The Plan shall be
interpreted in accordance with the internal laws of the State of New York.
<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, November 5, 1998,
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.
1. 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
2. Approval of the 1998 Stock Option Plan:
/ / For / / Against / / Abstain
3. Ratification of the selection of Grant Thornton LLP as independent auditors:
/ / For / / Against / / Abstain
<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,
FOR APPROVAL OF THE 1998 STOCK OPTION PLAN, FOR SELECTION OF GRANT THORNTON LLP
AS INDEPENDENT AUDITORS, AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING AS THE PROXYHOLDERS DEEM ADVISABLE.
Dated: , 1998
-----------------
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.
