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
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
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OVID TECHNOLOGIES, INC.
(Name of Registrant as Specified in Its Charter)
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JERRY MCAULIFFE
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box)
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14A-6(i)(1),
or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14A-6(i)(3).
[ ] Fee computed on table below per exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule)-11: (1)
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(4) Proposed maximum aggregate value of transaction:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
OVID TECHNOLOGIES, INC.
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held on Wednesday, June 12, 1996 at 2:30 PM, Eastern
Standard Time, at the Company's executive offices at 333 Seventh Avenue,
Fourth Floor, New York, New York.
The formal Notice of Meeting and the accompanying Proxy Statement set forth
proposals for your consideration this year. You are being asked to elect
directors, approve an amendment to the Company's 1993 Stock Option Plan to
increase the number of shares which may be issued thereunder and to ratify the
appointment of Coopers & Lybrand L.L.P. as the independent accountants of the
Company.
At the meeting, the Board of Directors will also report on the affairs of
the Company, and a discussion period will be provided for questions and
comments of general interest to stockholders.
We look forward to greeting personally those of you who are able to be
present at the meeting. However, whether or not you are able to be with us at
the meeting, it is important that your shares be represented. Accordingly, you
are requested to sign, date and mail, at your earliest convenience, the
enclosed proxy in the envelope provided for your use.
Thank you for your cooperation.
Very truly yours,
/s/ Mark L. Nelson
MARK L. NELSON
President and Chief Executive
Officer
May 9, 1996
<PAGE>
OVID TECHNOLOGIES, INC.
333 SEVENTH AVENUE
NEW YORK, NEW YORK 10001
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 12, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Ovid
Technologies, Inc. (the "Company") will be held on Wednesday, June 12, 1996 at
2:30 PM, Eastern Standard Time, at the Company's executive offices at 333
Seventh Avenue, Fourth Floor, New York, New York, for the following purposes:
(1) To elect five directors to serve for the ensuing year;
(2) To consider and act upon a proposal to amend the Company's 1993
Stock Option Plan to increase the number of shares which may be issued
thereunder;
(3) To consider and act upon a proposal to ratify the appointment of
Coopers & Lybrand L.L.P. as the Company's independent accountants for the
fiscal year ending December 31, 1996; and
(4) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 22, 1996 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON, EACH STOCKHOLDER IS URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED FORM
OF PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. No postage is
required if the proxy is mailed in the United States. Stockholders who attend
the Annual Meeting may revoke their proxy and vote their shares in person.
By Order of the Board of Directors
CARLEEN E. NELSON
Secretary
New York, New York
May 9, 1996
<PAGE>
OVID TECHNOLOGIES, INC.
333 SEVENTH AVENUE
NEW YORK, NEW YORK 10001
PROXY STATEMENT
GENERAL INFORMATION
GENERAL
This Proxy Statement (first mailed to stockholders on or about May 9, 1996)
is furnished to the holders of Common Stock, par value $.01 per share (the
"Common Stock"), of Ovid Technologies, Inc. (the "Company") in connection with
the solicitation by the Board of Directors of the Company of proxies for use
at the Annual Meeting of Stockholders (the "Annual Meeting"), or at any
adjournment thereof, pursuant to the accompanying Notice of Annual Meeting of
Stockholders. The Annual Meeting will be held on Wednesday, June 12, 1996 at
2:30 PM, Eastern Standard Time, at the Company's executive offices at 333
Seventh Avenue, Fourth Floor, New York, New York.
It is proposed that at the Annual Meeting: (i) five directors will be
elected, (ii) the proposed amendment to the Company's 1993 Stock Option Plan
(the "Option Plan") to increase the number of shares which may be issued
thereunder will be approved and (iii) the appointment of Coopers & Lybrand
L.L.P. as the independent accountants of the Company for the fiscal year
ending December 31, 1996 will be ratified.
Management currently is not aware of any other matters which will come
before the Annual Meeting. If any other matters properly come before the
Annual Meeting, the persons designated as proxies intend to vote in accordance
with their best judgment on such matters.
Proxies for use at the Annual Meeting are being solicited by the Board of
Directors of the Company. Proxies will be solicited chiefly by mail; however,
certain officers, directors, employees and agents of the Company, none of whom
will receive additional compensation therefor, may solicit proxies by
telephone, telegram or other personal contact. The Company will bear the cost
of the solicitation of the proxies, including postage, printing and handling
and will reimburse the reasonable expenses of brokerage firms and others for
forwarding material to beneficial owners of shares of Common Stock.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting and a return envelope for the
proxy are enclosed. Unless otherwise indicated on the form of proxy, shares of
Common Stock represented by any proxy in the enclosed form, assuming the proxy
is properly executed and received by the Company prior to the Annual Meeting,
will be voted with respect to the following items on the agenda: (i) the
election of each of the nominees for director as shown on the form of proxy;
(ii) the proposed amendment to the Option Plan to increase the number of
shares which may be issued thereunder; and (iii) the appointment of Coopers &
Lybrand L.L.P. as the independent accountants of the Company.
1
<PAGE>
Stockholders may revoke the authority granted by their execution of a proxy
at any time prior to the effective exercise of the powers conferred by that
proxy, by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in
person at the meeting. Shares of Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the instructions specified
in such proxies. If no specifications are given, the proxies intend to vote
the shares represented thereby "for" the election of each of the nominees for
director as shown on the form of proxy, "for" approval of the proposed
amendment to the Option Plan to increase the number of shares which may be
issued thereunder and "for" the ratification of the appointment of Coopers &
Lybrand L.L.P. as the independent accountants of the Company, and in
accordance with their best judgment on any other matters which may properly
come before the meeting.
RECORD DATE AND VOTING RIGHTS
On April 22, 1996, there were 5,749,300 shares of Common Stock outstanding,
each of which shares is entitled to one vote upon each of the matters to be
presented at the Annual Meeting. Only stockholders of record at the close of
business on April 22, 1996 are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof. The holders of a majority of the
outstanding shares of Common Stock, present in person or by proxy and entitled
to vote, will constitute a quorum at the Annual Meeting. Abstentions and
broker non-votes will be counted for purposes of determining the presence or
absence of a quorum but will not be counted with respect to the specific
matter being voted upon. "Broker non-votes" are shares held by brokers or
nominees which are present in person or represented by proxy, but which are
not voted on a particular matter because instructions have not been received
from the beneficial owner.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by proxy and entitled to vote at the
Annual Meeting is required for the election of directors. The affirmative vote
of the holders of a majority of the shares of Common Stock present in person
or represented by proxy and entitled to vote at the Annual Meeting is required
for the approval of the proposed amendment to the Option Plan and for the
ratification of the appointment of Coopers & Lybrand L.L.P.
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<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK BY
CERTAIN STOCKHOLDERS AND MANAGEMENT
The following table sets forth information as of March 27, 1996 regarding
the beneficial ownership of the Company's Common Stock of: (i) each person
known by the Company to own beneficially more than five percent of the
outstanding Common Stock; (ii) each director and nominee for director of the
Company; (iii) each executive officer named in the Summary Compensation Table
(see "Executive Compensation" below); and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) COMMON STOCK(2) COMMON STOCK
- ---------------------------------------------------------- ----------------------- ---------------
<S> <C> <C>
Mark L. Nelson ............................................ 4,073,200(3) 70.9%
Martin F. Kahn ............................................ 495,000(4) 7.9%
Deborah M. Hull ........................................... 152,000(4) 2.6%
Harry A. Diakoff .......................................... 4,000(4)(5) *
John J. Hanley ............................................ 4,000(4) *
Carleen E. Nelson ......................................... 542,630(6) 8.7%
Lawrence C. Poleshuck ..................................... 16,000(7) *
All directors and executive officers as a group (7
persons) ................................................. 5,296,330(3)(8) 76.1%
</TABLE>
- -----------------
* Less than one percent.
(1) The address of each named individual is c/o Ovid Technologies, Inc.,
333 Seventh Avenue, New York, New York 10001.
(2) Except as otherwise indicated, each named beneficial owner has the sole
voting and investment power over the shares listed opposite such
beneficial owner's name.
(3) Includes 5,200 shares of Common Stock which may be acquired within 60
days upon the exercise of options held by Dana Johnson, Mr. Nelson's
wife. Mr. Nelson disclaims beneficial ownership of such shares.
(4) Represents shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(5) Does not include 10,000 shares of Common Stock underlying certain
options which, due to an insufficiency in the number of shares
authorized for issuance under the Option Plan, were authorized for
issuance to Mr. Diakoff, subject to stockholder approval of an increase
in the number of shares authorized for issuance under the Option Plan.
Subject to approval of Proposal No. 2 of this Proxy Statement, these
options will be granted to Mr. Diakoff at an exercise price equal to
the closing sale price per share on the date the options were
authorized for issuance.
(6) Includes 527,000 shares of Common Stock which may be acquired within 60
days upon the exercise of options.
(7) Includes 4,000 shares of Common Stock which may be acquired within 60
days upon the exercise of options. Mr. Poleshuck resigned as an officer
of the Company in November 1995 and maintains a consulting relationship
with the Company.
(8) Includes an aggregate of 1,212,200 shares of Common Stock which may be
acquired by directors and executive officers within 60 days upon the
exercise of options. Does not include an aggregate of 20,000 shares of
Common Stock underlying certain options which, due to an insufficiency
in the number of shares authorized for issuance under the Option Plan,
were authorized for issuance to an officer and a director of the
Company, subject to stockholder approval of an increase in the number
of shares authorized for issuance under the Option Plan. Subject to
approval of Proposal No. 2 of this Proxy Statement, these options will
be granted at an exercise price equal to the closing sale price per
share on the date the options were authorized for issuance.
3
<PAGE>
PROPOSAL NO. 1--ELECTION OF DIRECTORS
Five directors (constituting the entire Board) are to be elected at the
Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted
in favor of the persons named below (all of whom are currently directors of
the Company) to serve until the next annual meeting of stockholders and until
their respective successors shall have been duly elected and qualified. If any
of these nominees becomes unavailable for any reason, or if a vacancy should
occur before the election, the shares represented by the proxy will be voted
for the person, if any, who is designated by the Board of Directors to replace
the nominee or to fill the vacancy on the Board. All nominees have consented
to be named and have indicated their intent to serve if elected. The Board of
Directors has no reason to believe that any of the nominees will be unable to
serve or that any vacancy on the Board of Directors will occur.
The nominees, their respective ages, the year in which each first became a
director of the Company and their principal occupations or employment during
the past five years are as follows:
<TABLE>
<CAPTION>
YEAR FIRST
NOMINEE AGE BECAME DIRECTOR PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- ----------------- ----- --------------- -------------------------------------------------
<S> <C> <C> <C>
Mark L. Nelson .. 38 1985 President and Chief Executive Officer of the
Company. Served as President of the Company and
its predecessors since its inception in 1985.
Martin F. Kahn .. 46 1994 Chairman of the Company since January 1990.
Served as Chairman of OneSource Information
Services, Inc. since 1993, Chairman of VISTA
Environmental Information, Inc. since 1991 and as
Managing Director of Cadence Information
Associates, L.L.C. (or its predecessor) since
1990.
Deborah M. Hull . 51 1994 Chief Operating Officer of the Company since
November 1990.
Harry A. Diakoff 53 1994 Director of Research Services for Kaim Associates
Inc. from 1978 to 1995.
John J. Hanley .. 56 1994 Chairman and Chief Executive Officer of
Scientific American, Inc. and Chairman of the
Board of its subsidiary, W.H. Freeman and
Company, since March 1992. Managing Director of
Scientific American, Inc.'s parent company, the
Von Holtzbrinck Publishing Group since 1992.
Chairman of the Board of Worth Publishers and
director of Macmillan Ltd. since 1995. Served as
Chairman of the Board of Hanley & Belfus, Inc.
since 1992.
</TABLE>
Mark L. Nelson and Carleen E. Nelson, Vice President, Worldwide Sales of
the Company, are brother and sister.
The Board of Directors of the Company has an Audit Committee and a
Compensation Committee. During the year ended December 31, 1995, the Board of
Directors held four meetings. Each director in office during such year
attended each meeting of the Board of Directors and each meeting of committees
of the Board of Directors on which he or she served, except John J. Hanley,
who attended three of the four meetings of the Board of Directors.
The Audit Committee, composed of Martin F. Kahn, Harry A. Diakoff and John
J. Hanley, is charged with reviewing the Company's annual audit, the
Company's internal controls and financial management
4
<PAGE>
practices and meeting with the Company's independent accountants. The Audit
Committee met once during the year ended December 31, 1995, with all members
of the committee in attendance.
The Compensation Committee, composed of Mark L. Nelson, Harry A. Diakoff
and John J. Hanley, reviews the compensation levels of the Company's executive
officers and makes recommendations to the Board of Directors regarding
compensation. The Compensation Committee also administers the Company's stock
option plans and makes grants thereunder. The Compensation Committee met once
in the year ended December 31, 1995, with all members of the Committee in
attendance.
VOTE REQUIRED
The five nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote for them
shall be elected as directors. Only votes cast for a nominee will be counted,
except that the accompanying proxy will be voted for all nominees in the
absence of instructions to the contrary. Abstentions, broker non-votes and
instructions on the accompanying proxy card to withhold authority to vote for
one or more nominees will not be counted as a vote for any such nominee.
THE BOARD OF DIRECTORS DEEMS THE ELECTION AS DIRECTORS OF THE FIVE NOMINEES
LISTED ABOVE TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS
AND RECOMMENDS A VOTE "FOR" THEIR ELECTION.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the Company's chief executive
officer and to each other executive officer of the Company whose total annual
salary exceeded $100,000 for the fiscal year ended December 31, 1995.
Information is given for all years subsequent to the initial public offering
of the Company's Common Stock in June 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
------------------------ ---------------------------
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) ($)
- ------------------------------------ ------ ---------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
Mark L. Nelson -- President and
Chief 1995 $150,000 -- -- --
Executive Officer .................. 1994 102,000 -- -- --
Deborah M. Hull -- Chief Operating 1995 $150,000 --(2) -- --
Officer ............................ 1994 135,500 $50,000(2) -- $9,600(3)
Lawrence C. Poleshuck -- Vice
President, 1995 $135,125 -- -- --
Technology (4) ..................... 1994 103,000 $25,900 24,000 --
</TABLE>
- ------------
(1) Amounts reflected do not include perquisites and other personal
benefits received by any named executive, which, in all instances, were
less than the lesser of $50,000 or 10% of the total of annual salary
and bonus reported for the named executive.
(2) Bonus reflected for 1994 was earned in 1994 and paid in 1995.
(3) Represents rental payments made on behalf of Ms. Hull.
(4) Resigned as an officer of the Company effective as of November 22,
1995.
There were no option grants in the fiscal year ended December 31, 1995 to
the persons named in the Summary Compensation Table.
The following table sets forth information with respect to (i) stock
options exercised in the fiscal year ended December 31, 1995 by the persons
named in the Summary Compensation Table and (ii) unexercised stock options
held by such individuals at December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT FISCAL
HELD AT FISCAL YEAR END (#) YEAR END ($) (1)
------------------------------ --------------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------- ------------- ------------ ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Deborah M. Hull ....... 10,000 $107,400 152,000 -- $1,100,480(2) --
Lawrence Poleshuck (3) 8,000 $ 82,000 8,000 8,000 $ 38,000 $38,000
</TABLE>
- ------------
(1) Computed based upon the difference between the last sale price per
share of the Company's Common Stock of $7.25 on December 29, 1995 and
the exercise price.
(2) Computed assuming an exercise price of $.01 per share. Ms. Hull has
agreed to pay the Company $.01 per share acquired upon the exercise of
stock options, notwithstanding the option exercise price of $.0003 per
share.
(3) Resigned as an officer of the Company in November 1995 and maintains a
consulting relationship with the Company.
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<PAGE>
COMPENSATION OF DIRECTORS
Martin F. Kahn is presently being paid consulting fees of $6,250 per month.
Directors who are not employees or consultants of the Company currently
receive $1,500 for each meeting of the Board attended and $500 for each
meeting of each Committee of the Board attended, plus reimbursement of
reasonable out-of-pocket expenses incurred in connection with attendance at
Board of Directors' meetings. Directors who are employees or consultants of
the Company are not paid any additional compensation for serving as a
director.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General. The Compensation Committee, consisting of Mark L. Nelson, Harry A.
Diakoff and John J. Hanley, was established in January 1994. Prior to the
establishment of the Compensation Committee, the Board of Directors
administered the Company's executive compensation programs, monitored
corporate performance and its relationship to compensation of executive
officers, and made appropriate decisions concerning matters of executive
compensation. At the time of the formation of the Compensation Committee and
periodically since then, the compensation levels of the Company's executive
officers were reviewed and compared to officers of other publicly held
technology and information services companies.
One of the Company's strengths contributing to its success is a strong
management team. The Compensation Committee believes that low executive
turnover has been instrumental to the Company's success, and that the
Company's compensation program has played a major role in limiting executive
turnover. The compensation program is designed to enable the Company to
attract, retain and reward capable employees who can contribute to the
continued success of the Company. Equity participation and a strong alignment
to stockholders' interests are key elements of the Company's compensation
philosophy. The Company's executive compensation policies are intended to (i)
attract and retain the most highly qualified managerial and executive talent;
(ii) afford appropriate incentives to produce superior performance; (iii)
emphasize sustained performance by aligning rewards with stockholder
interests, especially through the use of the Company's stock option plans;
(iv) motivate executives and employees to achieve the Company's annual and
long-term business goals; and (v) reward executives for superior individual
contributions to the Company.
To implement these policies, the Board designed an executive compensation
program consisting, in general, of base salary, annual bonus plan and stock
options. The Compensation Committee intends to continue the implementation of
the existing Company compensation program.
Base Salary. Base salaries reflect individual responsibilities, experience,
leadership and contribution to the success of the Company. Annual salary
adjustments are determined by evaluating the performance of the executive and
any increased responsibilities assumed by the executive, the performance of
the Company and the competitive marketplace. Salary adjustments are determined
and normally made on an annual basis. During the fiscal year ended December
31, 1995, Mark L. Nelson earned $150,000, an increase of approximately $48,000
over the amount he earned in the previous fiscal year. The Compensation
Committee, based on a review of compensation levels of Chief Executive
Officers of other technology and information services companies and a review
of the Company's performance and results of operations over the fiscal year,
believes that the amount of Mr. Nelson's compensation is justified. Mr. Nelson
did not participate in deliberations and decisions of the Compensation
Committee with regard to his own compensation.
Annual Bonuses. The Company's executive officers are eligible to receive an
annual discretionary bonus which is awarded based on an evaluation of
individual performance, as well as overall Company earnings. The amount, if
any, of discretionary bonuses awarded to executive officers will be
recommended to the Compensation Committee by the President and must be
approved by the Compensation Committee. Any discretionary bonus awarded to Mr.
Nelson, as President and Chief Executive Officer, must be approved by the
disinterested members of the Board of Directors.
Stock Options. The Compensation Committee endorses the position that
equity ownership by management is beneficial in aligning management's and
stockholders' interests in the enhancement of
7
<PAGE>
stockholder value and, accordingly, endorses the stock option program
currently in place. The Company has adopted two option plans, the 1990 Stock
Option Plan and the Option Plan. Stock option awards have generally vested
ratably over a three-year period, providing a long-term view and incentives
tied to growth in stockholder values. The Committee strongly believes that the
compensation program should provide employees with an opportunity to increase
their ownership and potentially gain financially from Company stock price
increases. By this approach, the best interests of stockholders, executives
and employees will be closely aligned.
The Committee believes that the use of stock options as the basis for
long-term incentive compensation meets the Company's compensation strategy and
business needs of the Company by emphasizing increased value for stockholders
and retaining key employees. The Committee intends to work closely with the
Board of Directors to achieve these goals.
Compensation Committee
Mark L. Nelson
Harry A. Diakoff
John J. Hanley
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee, consisting of Messrs. Nelson, Diakoff and
Hanley, was established in January 1994, and assumed the responsibility for
decisions concerning executive compensation. Prior to the establishment of the
Compensation Committee, decisions relating to executive compensation were made
by the Board of Directors. Mr. Nelson was the sole stockholder of the Company
prior to its initial public offering in June 1994 and was the sole director of
the Company prior to January 1994. In such capacity and, in consultation with
executive officers of the Company and others, Mr. Nelson set the compensation
levels for all executive officers, including himself.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From its inception until its initial public offering in June 1994, the
Company had been operating as an S Corporation for tax purposes. As such,
corporate income was taxable directly to Mark L. Nelson, as the sole
stockholder, rather than the Company. The Company declared and made
distributions annually to Mr. Nelson in an amount which permitted him to pay
the taxes on the corporate income. In May 1995, a final distribution of
$275,000 was paid to Mr. Nelson.
The Company has entered into a tax indemnification agreement with Mark L.
Nelson which provides for: (i) an indemnification of Mr. Nelson by the Company
for any losses or liabilities with respect to additional taxes (including
interest, penalties and legal fees) resulting from the Company's operations
during the period in which it was an S Corporation and (ii) an indemnification
of the Company by Mr. Nelson for certain tax liabilities that result from any
final determination of an adjustment to Mr. Nelson's taxable income resulting
in a decrease in Mr. Nelson's taxable income during the period in which the
Company was an S Corporation, and a corresponding increase in the income tax
liability payable by the Company for any taxable year of the Company in which
it was a C Corporation.
During the year ended December 31, 1995, the Company paid consulting fees
aggregating approximately $81,250 to Martin F. Kahn, a director of the
Company, a portion of which was related to services rendered during 1994. In
addition, during the year ended December 31, 1995, the Company paid to Mr.
Kahn a bonus in the amount of $10,000 in connection with services rendered
during 1994.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
To the Company's knowledge, the Company's directors, executive officers and
beneficial owners of more than ten percent of the Company's Common Stock are
in compliance with the reporting requirements of Section 16(a) under the
Securities Exchange Act of 1934, as amended, except Lawrence C. Poleshuck, a
former executive officer of the Company, failed to timely report one
transaction on Form 4. The transaction was subsequently reported.
8
<PAGE>
COMPARATIVE PERFORMANCE BY THE COMPANY
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total stockholder return on its Common Stock
with the cumulative total stockholder return of (i) a broad equity market
index and (ii) a published industry index or peer group. Although the chart
would normally be for a five-year period, the Common Stock of the Company
began trading publicly on June 14, 1994 and, as a result, the following chart
commences as of such date. This chart compares the Common Stock with (i) the
Nasdaq Stock Market-United States Index and (ii) the Hambrecht & Quist
Technology Index, and assumes an investment of $100 on June 14, 1994 in each
of the Common Stock, the stocks comprising the Nasdaq Stock Market-United
States Index and the stocks comprising the Hambrecht & Quist Technology Index.
OVID TECHNOLOGIES, INC.
COMPARISON OF CUMULATIVE TOTAL RETURN
(JUNE 14, 1994 -- DECEMBER 31, 1995) COMPARISON GRAPH FOR OVID TECHNOLOGIES
NASDAQ COMPOSITE INDEX AND H&Q TECHNOLOGY
[graph omitted for EDGAR; data points of the graph follow]
6/14/94 12/31/94 12/31/95
------- -------- --------
(dollars)
Ovid Technologies 100 163 87
NASDAQ Composite Index 100 102 139
H&Q Technology 100 116 154
PROPOSAL NO. 2--APPROVAL OF AN AMENDMENT TO THE
COMPANY'S 1993 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES WHICH MAY BE ISSUED THEREUNDER
The Board of Directors of the Company (the "Board") has unanimously
adopted, subject to stockholder approval, an amendment to the Company's 1993
Stock Option Plan which would increase the aggregate number of shares of
Common Stock that may be issued thereunder from 450,000 shares to 750,000
shares. As of March 27, 1996, the number of shares available for future grants
under the Plan was 8,650.
The Plan was adopted by the Board for the purpose of securing for the
Company and its stockholders the benefits of common stock ownership of the
Company by key personnel of the Company and its subsidiaries. The Board
believes that the granting of options under the Plan will foster the Company's
ability to attract, retain and motivate those individuals who will be largely
responsible for the profitability and long-term future growth of the Company.
As of March 27, 1996, approximately 170 persons were eligible to participate
in the Plan. No award may be granted under the Plan after October 3, 2003.
The Plan is administered by the Board's Compensation Committee (the
"Committee") chosen by the Board. Subject to the provisions of the Plan, the
Committee, acting in its sole and absolute discretion, will
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has full power and authority to grant options under the Plan, to interpret the
provisions of the Plan, to fix and interpret the provisions of option
agreements made under the Plan, to supervise the administration of the Plan,
and to take such other action as may be necessary or desirable in order to
carry out the provisions of the Plan. The decision of the Committee as to any
disputed question, including questions of construction, interpretation and
administration, is final and conclusive on all persons. Each grant of options
is evidenced by a stock option agreement executed by the Company and the
optionee at the time of grant, in accordance with the terms and conditions of
the Plan.
Options may be granted under the Plan to present or future key employees of
the Company or a subsidiary of the Company (a "Subsidiary") within the meaning
of Section 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), and to directors of and consultants to the Company or a Subsidiary
who are not employees. Subject to the provisions of the Plan, the Committee
may from time to time select the persons to whom options will be granted, fix
the number of shares covered by each such option and establish the terms and
conditions thereof (including, without limitation, the exercise price,
restrictions on exercisability of the option and/or on the disposition of the
shares of Common Stock issued upon exercise thereof, and whether or not the
option is to be treated as an incentive stock option within the meaning of
Section 422 of the Code (an "Incentive Stock Option")).
In the case of an option which is not treated as an Incentive Stock Option
(a "Non-Qualified Stock Option"), the exercise price per share may not be less
than the par value of a share of Common Stock on the date the option is
granted; and, in the case of an Incentive Stock Option, the exercise price per
share may not be less than 100% of the fair market value of a share of Common
Stock on the date the option is granted (110% in the case of an optionee who,
at the time the option is granted, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or a
Subsidiary (a "ten percent shareholder")).
The period during which an option may be exercised will be fixed by the
Committee and will not exceed ten years from the date the option is granted
(five years in the case of an Incentive Stock Option granted to a ten percent
shareholder).
No option will become exercisable unless the person to whom the option is
granted remains in the continuous employ or service of the Company or a
Subsidiary for at least six months (or for such longer period as the Committee
may designate) from the date the option is granted.
Unless extended by the Committee, if an optionee ceases to be employed by
or to perform services for the Company or any Subsidiary for any reason other
than death or disability, then each outstanding option granted to him or her
under the Plan will terminate on the date three months after the date of such
termination of employment or service, provided, however, that, if the
optionee's employment or service is terminated by the Company for cause, then
the option will terminate upon the date of such termination of employment or
service. If an optionee's employment or service is terminated by reason of the
optionee's death or disability (or if the optionee's employment or service is
terminated by reason of his or her disability and the optionee dies within one
year after such termination of employment or service), then each outstanding
option granted to the optionee under the Plan will terminate on the date one
year after the date of such termination of employment or service (or one year
after the later death of a disabled optionee) or, if earlier, the date
specified in the option agreement.
If any event constituting a "Change in Control of the Company" shall occur,
all Options granted under the Plan which are outstanding at the time a Change
of Control of the Company shall occur shall immediately become exercisable. A
"Change in Control of the Company" shall be deemed to occur if (i) there shall
be consummated (x) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company's Common Stock would be converted into cash, securities
or other property, other than a merger of the Company in which the holders of
the Company's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, or (ii) the stockholders of
the Company shall approve any plan or proposal for liquidation or dissolution
of the Company, or (iii) any person (as such term is
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used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 40% or more of the Company's
outstanding Common Stock other than pursuant to a plan or arrangement entered
into by such person and the Company, or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at
the beginning of the period.
The Board may amend or terminate the Plan. Except as otherwise provided in
the Plan with respect to equity changes, any amendment which would increase
the aggregate number of shares of Common Stock as to which options may be
granted under the Plan, change the minimum option price for options,
materially increase the benefits under the Plan, or modify the class of
persons eligible to receive options under the Plan shall be subject to the
approval of the Company's stockholders. No amendment or termination may affect
adversely any outstanding option without the written consent of the optionee.
NEW PLAN BENEFITS
The table below indicates stock options which were authorized for issuance,
subject to stockholder approval of Proposal No. 2 of this Proxy Statement, to
(i) each person named in the Summary Compensation Table appearing earlier in
this Proxy Statement, (ii) all current executive officers of the Company as a
group, (iii) all current directors who are not executive officers as a group
and (iv) all employees of the Company, including all current officers of the
Company who are not executive officers of the Company, as a group:
1993 STOCK OPTION PLAN BENEFITS
<TABLE>
<CAPTION>
DOLLAR VALUE
NAME AND POSITION (1) NUMBER OF SHARES
- --------------------------------------------------------------- -------------- ----------------
<S> <C> <C>
Harry A. Diakoff -- Director and Consultant .................... $ 60,000 10,000
Deborah M. Hull -- Chief Operating Officer and Director ....... $ 42,000 7,000
Jerry P. McAuliffe -- Chief Financial Officer .................. $111,000 18,500
Carleen E. Nelson -- Vice President, Worldwide Sales .......... $ 51,000 8,500
Mark L. Nelson -- President, Chief Executive Officer and
Director ...................................................... $ 42,000 7,000
Executive Officers as a Group (4 persons) ...................... $246,000 41,000
Non-Executive Officer Director Group (1 person) ................ $ 60,000 10,000
Non-Executive Officer Employee Group ........................... $886,800 147,800
</TABLE>
- ------------
(1) Amounts are determined by multiplying the number of options granted by
the exercise price of the option which was $6.00, the market price of a
share of Common Stock on April 23, 1996, the grant date.
FEDERAL INCOME TAX CONSEQUENCES
An optionee will not realize taxable income upon the grant of an option. In
general, the holder of a Non-Qualified Stock Option will realize ordinary
income when the option is exercised equal to the excess of the value of the
stock over the exercise price (i.e., the option spread), and the Company
receives a corresponding deduction if applicable withholding requirements are
met. (If an option is exercised within six months after the date of grant and
if the optionee is subject to the six month restrictions on sale of Common
Stock under Section 16(b) of the Securities Exchange Act of 1934, as amended,
the optionee generally will recognize ordinary income on the date the
restrictions lapse, unless an early income recognition election is made.) Upon
a later sale of the stock, an optionee will realize capital gain or loss equal
to the difference between the selling price and the value of the stock at the
time the option was exercised.
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The holder of an Incentive Stock Option will not realize taxable income
upon the exercise of the option (although the option spread is an item of tax
preference income potentially subject to the alternative minimum tax). If the
stock acquired upon exercise of the Incentive Stock Option is sold or
otherwise disposed of within two years from the option grant date or within
one year from the exercise date, then, in general, gain realized on the sale
is treated as ordinary income to the extent of the option spread at the
exercise date, and the Company receives a corresponding deduction. Any
remaining gain is treated as capital gain. If the stock is held for at least
two years from the grant date and one year from the exercise date, then gain
or loss realized upon the sale will be capital gain or loss and the Company
will not be entitled to a deduction. A special basis adjustment applies to
reduce the gain for alternative minimum tax purposes.
THE AMENDMENT TO THE PLAN
As of March 27, 1996, the number of shares available for future grants
under the Plan was 8,650. The Board believes that approval of the amendment to
increase the aggregate number of shares which may be issued under the Plan
will serve the best interests of the Company and its stockholders by
permitting the Compensation Committee to exercise needed flexibility in the
administration of the Plan and the granting of options thereunder. In
addition, the Board believes that the ability to grant additional options will
help attract, motivate and retain key employees and directors who are in a
position to contribute to the successful conduct of the business and affairs
of the Company as well as stimulate in such individuals an increased desire to
render greater service to the Company.
Accordingly, the Board recommends that the stockholders approve the
following resolution:
RESOLVED, that the aggregate number of shares of the Corporation's Common
Stock which may be issued under the Corporation's 1993 Stock Option Plan
(the "Plan") shall be increased to 750,000 shares, and that the first
sentence of Section 2 of the Plan be amended to read in its entirety as
follows:
"The Company may issue and sell a total of 750,000 shares of its
common stock (the "Common Stock") pursuant to the Plan."
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company issued, outstanding and entitled to vote, present or
represented at the meeting, a quorum being present, is required for the
adoption of the amendment as set forth in Proposal No. 2. Broker non-votes
with respect to this matter will be treated as neither a vote "for" nor a vote
"against" the matter, although they will be counted in determining the number
of votes required to attain a majority of the shares present or represented at
the meeting and entitled to vote. Accordingly, an abstention from voting by a
stockholder present in person or by proxy at the meeting has the same legal
effect as a vote "against" the matter because it represents a share present or
represented at the meeting and entitled to vote, thereby increasing the number
of affirmative votes required to approve this proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL
THEREOF.
PROPOSAL NO. 3--RATIFICATION OF APPOINTMENT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The stockholders will be asked to ratify the appointment of Coopers &
Lybrand L.L.P. as the independent accountants of the Company for the fiscal
year ending December 31, 1996. Coopers & Lybrand L.L.P. audited the
consolidated financial statements of the Company for the year ended December
31, 1995. A representative of Coopers & Lybrand L.L.P. is expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
he or she desires to do so and is expected to be available to respond to
appropriate questions from stockholders.
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<PAGE>
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 3 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL
THEREOF.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the Annual
Meeting of Stockholders of the Company to be held in 1997 must be received by
the Company no later than December 29, 1996 for inclusion in the Board of
Directors' proxy statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the
Annual Meeting, it is the intention of the persons named in the enclosed proxy
to vote on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend
the Annual Meeting, please sign the proxy and return it in the enclosed
envelope.
By Order of the Board of Directors
CARLEEN E. NELSON
Secretary
Dated: May 9, 1996
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: OVID TECHNOLOGIES,
INC., ATTENTION: CORPORATE SECRETARY, 333 SEVENTH AVENUE, NEW YORK, NEW YORK
10001.
13
<PAGE>
OVID TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 12, 1996
The undersigned, a stockholder of Ovid Technologies, Inc. (the
"Corporation"), hereby constitutes and appoints Mark L. Nelson, Deborah M.
Hull and Jerry P. McAuliffe and each of them, the true and lawful proxies and
attorneys-in-fact of the undersigned, with full power of substitution in each
of them, to vote all shares of Common Stock of the Corporation which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Corporation to be held on Wednesday, June 12, 1996, and at any and all
adjournments or postponements thereof, as follows:
1) ELECTION OF DIRECTORS
[ ] FOR the nominees listed below [ ] WITHHOLDING AUTHORITY
(except as marked to the contrary below) to vote for all the nominees listed
below
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.)
Nominees: Mark L. Nelson, Deborah M. Hull, Martin F. Kahn, Harry A. Diakoff
and John J. Hanley
2) PROPOSAL TO AMEND THE CORPORATION'S 1993 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES WHICH MAY BE ISSUED THEREUNDER
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3) PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4) In their discretion, upon such other business as may properly come
before the meeting and any and all adjournments and postponements thereof.
(Continued on reverse side)
<PAGE>
(Continued)
Shares represented by this Proxy will be voted in accordance with the
instructions indicated in items 1, 2 and 3 above. IF NO INSTRUCTION IS
INDICATED, THIS PROXY WILL BE VOTED FOR ALL LISTED NOMINEES FOR DIRECTORS AND
FOR PROPOSALS 2 AND 3.
Any and all proxies heretofore given by the undersigned are hereby revoked.
Dated:
----------------------
----------------------------
----------------------------
Please sign exactly as your
name(s) appear hereon. If
shares are held by two or
more persons each should
sign. Trustees, executors and
other fiduciaries should
indicate their capacity.
Shares held by corporations,
partnerships, associations,
etc. should be signed by an
authorized person, giving
full title or authority.
PLEASE DATE, SIGN AND MAIL IN THE ENCLOSED REPLY ENVELOPE
