<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
OVID TECHNOLOGIES, INC.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------------
<PAGE>
OVID TECHNOLOGIES, INC.
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held on Wednesday, June 11, 1997 at 2:00 PM, Eastern 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,
MARK L. NELSON
President and Chief Executive Officer
May 9, 1997
<PAGE>
OVID TECHNOLOGIES, INC.
333 SEVENTH AVENUE
NEW YORK, NEW YORK 10001
------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 11, 1997
------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of Ovid Technologies, Inc. (the "Company") will be held on
Wednesday, June 11, 1997 at 2:00 PM, Eastern 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, 1997; 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 28,
1997 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, 1997
<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,
1997) 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 11, 1997 at
2:00 PM, Eastern 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, 1997 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
<PAGE>
of shares which may be issued thereunder; and (iii) the appointment of Coopers
& Lybrand L.L.P. as the independent accountants of the Company.
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 28, 1997, there were 5,964,898 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 28, 1997 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.
-2-
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK BY
CERTAIN STOCKHOLDERS AND MANAGEMENT
The following table sets forth information as of April 28, 1997
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 Percentage of
Name and Address of Beneficial Owner(1) Ownership of Common Stock(2) Common Stock
- --------------------------------------- ---------------------------- ------------
<S> <C> <C>
Mark L. Nelson .................................. 4,089,150 (3) 68.5%
Martin F. Kahn .................................. 340,000 (4) 5.4%
Deborah M. Hull ................................. 149,166 (4) 2.4%
Harry A. Diakoff ................................ 9,333 (4) *
John J. Hanley .................................. 6,000 (4) *
Carleen E. Nelson ............................... 529,833 (4) 8.2%
Jerry P. McAuliffe .............................. 26,499 (4) *
All directors and executive officers as a 5,161,914 (3)(5) 73.3%
group (8 persons)..............................
</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. Also
includes 2,333 shares of Common Stock which may be acquired within 60
days upon the exercise of an option.
(4) Represents shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(5) Includes an aggregate of 1,075,097 shares of Common Stock which may
be acquired by directors and executive officers within 60 days upon
the exercise of options.
-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 Principal Occupation
Nominee Age Became Director During the Past Five Years
- ------- --- --------------- --------------------------
<S> <C> <C> <C>
Mark L. Nelson....... 39 1985 President and Chief Executive Officer of
the Company (and its predecessors) since
its inception in 1985.
Martin F. Kahn....... 47 1994 Chairman of the Company since January
1990. Chairman of OneSource
Information Services, Inc. since 1993,
Chairman of VISTA Environmental
Information, Inc. since 1991, and
Managing Director of Cadence
Information Associates, L.L.C. (or its
predecessor) since 1990.
Deborah M. Hull...... 52 1994 Chief Operating Officer of the Company
since November 1990.
Harry A. Diakoff..... 54 1994 Director of Research Services for Kaim
Associates Inc. from 1978 to 1995.
Product Development Consultant to the
Company since 1995.
John J. Hanley....... 57 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 Nelson and Carleen 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, 1996, the Board of
Directors held four
-4-
<PAGE>
meetings. Each director in office during such year attended each meeting of
the Board of Directors.
The Audit Committee, composed of Martin Kahn, Harry Diakoff and John
Hanley, is charged with reviewing the Company's annual audit, the Company's
internal controls and financial management practices and meeting with the
Company's independent accountants. The Audit Committee met once during the
year ended December 31, 1996, with all members of the committee in attendance.
The Compensation Committee, composed of Mark Nelson, Harry Diakoff
and John 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, 1996, 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" THE ELECTION OF EACH OF THESE
NOMINEES.
-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 $100,000 for the fiscal year ended December 31,
1996. Information is given for all years subsequent to the initial public
offering of the Company's Common Stock in June 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
------------------------ --------------------------------
COMMON
STOCK
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)
- --------------------------- ---- ---------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Mark L. Nelson-- President and Chief 1996 $159,000 -- 7,000 --
Executive Officer..................... 1995 150,000 -- -- --
1994 102,000 -- -- --
Deborah M. Hull-- Chief Operating 1996 $159,000 $ 8,000(2) 14,000 --
Officer............................... 1995 150,000 --(3) -- --
1994 135,500 50,000(3) -- $9,600(4)
Jerry P. McAuliffe-- Chief Financial 1996 $108,000 $5,400(2) 18,500 --
Officer................................. 1995 90,000 -- 7,000 --
1994 85,500 -- -- --
</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 $50,000 or 10% of the total of annual
salary and bonus reported for the named executive.
(2) Bonus reflected for 1996 was earned in 1996 and paid in 1997.
(3) Bonus reflected for 1994 was earned in 1994 and paid in 1995.
(4) Represents rental payments made on behalf of Ms. Hull.
The following table provides information related to options granted
to the named executive officers during the fiscal year ended December 31,
1996.
-6-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
- --------------------------------------------------------------------------------------------- ------------------------
% OF TOTAL
OPTIONS
GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#)(2) YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ---- ------- ------ --------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Nelson 7,000 1.8% $6.00 4/23/2006 $ 57,770 $116,866
Deborah M. Hull 14,000 3.6 6.00 4/23/2006 115,539 233,732
Jerry P. McAuliffe 18,500 4.7 6.00 4/23/2006 152,679 308,861
</TABLE>
- ---------------
(1) The potential realizable value portion of the foregoing table
illustrates value that might be received upon exercise of the options
immediately prior to the expiration of their term, assuming the
specified compounded rates of appreciation on the Company's Common
Stock over the term of the options. These numbers do not take into
account provisions of certain options providing for termination of
the option following termination of employment.
(2) Options to acquire shares of Common Stock.
The following table sets forth information with respect to (i) stock
options exercised in the fiscal year ended December 31, 1996 by the persons
named in the Summary Compensation Table and (ii) unexercised stock options
held by such individuals at December 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS HELD AT FISCAL THE-MONEY OPTIONS AT FISCAL
YEAR END (#) YEAR END ($) (1)
---------------------------- -------------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Nelson........... 0 $0 2,333 4,667 $ 6,415.75 $12,834.25
Deborah M. Hull.......... 0 0 149,166 9,334 1,095,761.50(2) 25,668.50(2)
Jerry P. McAuliffe....... 0 0 26,499 17,001 141,456.50 33,918.50
</TABLE>
- ---------------
(1) Computed based upon the difference between the last sale price per
share of the Company's Common Stock of $8.75 on December 31, 1996 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.
-7-
<PAGE>
COMPENSATION OF DIRECTORS
Mr. Kahn is presently being paid consulting fees of $3,125 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 Diakoff and John J. Hanley, was established in January 1994. 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, 1996, Mark Nelson earned $159,000, an increase of
approximately $9,000 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
-8-
<PAGE>
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 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.
During the year ended December 31, 1996, the Compensation Committee
determined to reprice options to purchase an aggregate of 76,800 shares of
Common Stock previously authorized for issuance, including options to purchase
an aggregate of 20,000 shares of Common Stock previously authorized for
issuance to two individuals, an officer and a director, respectively, of the
Company. Due to an insufficiency in the number of shares authorized for
issuance under the Option Plan, these options were initially authorized for
issuance subject to stockholder approval of an increase in the number of
shares authorized for issuance under the Option Plan. Subsequently, the
Compensation Committee determined to reprice these options at the then current
market price of the Common Stock.
10-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL OPTION
SECURITIES MARKET PRICE OF EXERCISE PRICE TERM REMAINING
UNDERLYING STOCK AT TIME OF AT TIME OF NEW AT DATE OF
OPTIONS REPRICED REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE OR AMENDED (#) AMENDMENT ($) AMENDMENT ($) PRICE ($) AMENDMENT
- ---- ---- -------------- ------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Jerry P. McAuliffe....... 4/23/96 10,000 $6.00 $8.00 $6.00 9.5 years
</TABLE>
Compensation Committee
Mark L. Nelson
Harry Diakoff
John J. Hanley
-9-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1996, the Compensation Committee consisted
of Mark Nelson, Harry Diakoff and John Hanley.
During the year ended December 31, 1996, the Company paid consulting
fees aggregating approximately $95,760.00 to Harry Diakoff, a director of the
Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who beneficially own more than ten percent of the Company's Common
Stock, to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission (the "SEC"). Executive
officers, directors and greater than ten percent beneficial owners are
required by the SEC to furnish the Company with copies of all Section 16(a)
forms they file.
Based upon a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during fiscal 1996 all Section 16(a)
filing requirements applicable to its executive officers, directors and
greater than ten percent beneficial owners were complied with on a timely
basis.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Tax Indemnification Agreement. The Company has entered into a tax
indemnification agreement with Mark 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 (prior to the initial public offering of the Company's
Common Stock in June 1994) 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, 1996, the Company paid consulting
fees aggregating approximately $68,750 to Martin Kahn, a director of the
Company, a portion of which was related to services rendered during 1995.
During the year ended December 31, 1996, the Company paid consulting
fees aggregating approximately $95,760.00 to Harry Diakoff, a director of the
Company.
-10-
<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, 1996)
1996 DATA
Hambrecht &
NASDAQ Quist Ovid
Composite Technology Technologies
Date Index Index Stock Price
- ---- --------- ---------- ------------
base 100 base 100 base 100
--------- ---------- ------------
6/14/94 1.00 1.00 1.000
6/30/94 1.00 1.00 1.042
7/31/94 1.02 0.95 1.125
8/31/94 1.08 1.05 1.500
9/30/94 1.08 1.13 1.417
10/31/94 1.10 1.24 1.563
11/30/94 1.06 1.23 1.625
12/31/94 1.06 1.26 1.458
1/31/95 1.07 1.24 1.500
2/28/95 1.12 1.35 1.625
3/31/95 1.15 1.41 1.500
4/30/95 1.19 1.52 1.458
5/30/95 1.22 1.57 1.563
6/30/95 1.32 1.76 1.813
7/31/95 1.41 1.92 2.333
8/31/95 1.44 1.94 2.292
9/30/95 1.47 1.99 2.208
10/31/95 1.46 2.01 1.500
11/30/95 1.50 1.99 1.271
12/31/95 1.49 1.88 1.208
1/30/96 1.50 1.91 1.333
2/28/96 1.55 2.00 1.333
3/31/96 1.56 1.92 1.292
4/30/96 1.68 2.18 1.292
5/30/96 1.76 2.21 1.479
6/30/96 1.67 2.05 1.854
7/31/96 1.53 1.84 1.667
8/31/96 1.61 1.95 1.542
9/30/96 1.73 2.18 1.708
10/31/96 1.73 2.14 1.563
11/30/96 1.83 2.04 1.500
12/31/96 1.82 2.33 1.458
-11-
<PAGE>
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 750,000 shares to 1,500,000
shares. As of April 28, 1997, there were no shares available for future grants
under the Option Plan.
The Option 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 Option 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 April 28, 1997, approximately 170 persons were eligible to
participate in the Option Plan. No award may be granted under the Option Plan
after October 3, 2003.
The Option Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors. Subject to the provisions of the
Option Plan, the Committee, acting in its sole and absolute discretion, has
full power and authority to grant options under the Option Plan, 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")), interpret the provisions of the Option Plan, fix
and interpret the provisions of option agreements made under the Option Plan,
supervise the administration of the Option Plan, and take such other action as
may be necessary or desirable in order to carry out the provisions of the
Option 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 Option Plan.
Options may be granted under the Option 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 Option
Plan, the Committee may from time to time
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")).
-12-
<PAGE>
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 Option 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 Option 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"
occurs, all Options granted under the Option Plan which are outstanding at the
time such Change in Control of the Company occurs will immediately become
exercisable. A "Change in Control of the Company" shall be deemed to occur if
(i) there is 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 used in Section 13(d) and
14(d)(2) of 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 Option Plan. Except as otherwise
provided in the Option 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 Option Plan, change the minimum option
price for options, materially increase the benefits under the Option Plan, or
modify the class of persons eligible to receive options under the Option Plan
shall be subject to the approval of the Company's stockholders. No amendment
-13-
<PAGE>
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
Name and Position Dollar Value (1) Number of Shares
- ----------------- ---------------- ----------------
Harry A. Diakoff - Director and $ 63,000 9,000
Consultant
John J. Hanley - Director 63,000 9,000
Deborah M. Hull - Chief Operating
Officer and Director 35,000 5,000
Executive Officers as a Group
(1 person)(2) 35,000 5,000
Non-Executive Officer Director Group
(2 persons) 126,000 18,000
Non-Executive Officer Employee Group 797,517 113,931
- ----------
(1) Amounts are determined by multiplying the number of options granted
by the exercise price of the option which was $7.00, the market price
of a share of Common Stock on April 23, 1997, the grant date.
(2) Does not include options to purchase 5,000 shares of Common Stock
issued to Dana Johnson, the wife of Mark L. Nelson, President and
Chief Executive Officer of the Company.
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 Exchange Act, 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.
-14-
<PAGE>
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 OPTION PLAN
As of April 28, 1997, there were no shares available for future
grants under the Option Plan. The Board believes that approval of the
amendment to increase the aggregate number of shares which may be issued under
the Option Plan will serve the best interests of the Company and its
stockholders by permitting the Committee to exercise needed flexibility in the
administration of the Option 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 1,500,000 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 1,500,000 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.
-15-
<PAGE>
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, 1997. Coopers & Lybrand L.L.P. audited the
consolidated financial statements of the Company for the year ended December
31, 1996. 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.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of
Common Stock of the Company present or represented and entitled to vote is
required for the ratification of the appointment of Coopers & Lybrand L.L.P.
as the independent accountants of the Company. Abstentions and broker
non-votes have the same legal effect as votes cast against this proposal.
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 1998 must be
received by the Company no later than January 9, 1998 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, 1997
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.
-16-
<PAGE>
OVID TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON JUNE 11, 1997
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 11, 1997, 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 to vote for all the
contrary below) 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)
-17-
<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
-18-
