SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ / 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 Section240.14a-11(c) or
Section240.14a-12
INFORMATION HOLDINGS INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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and 0-11.
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INFORMATION HOLDINGS INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 2002
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The Annual Meeting of Stockholders (the "Annual Meeting") of Information
Holdings Inc., a Delaware corporation (the "Company"), will be held at the
offices of Warburg, Pincus & Co., 466 Lexington Avenue, New York, New York,
10017 on Monday, April 29, 2002, at 2:00 p.m., Eastern Standard Time, for the
purpose of considering and acting upon the following matters, which are
described more fully in the accompanying Proxy Statement:
(a) To elect six directors to serve until the 2003 annual meeting of
stockholders or until their respective successors are duly elected
and qualified;
(b) To approve a 500,000 share increase in the number of shares reserved
for issuance under the Company's 1998 Stock Option Plan;
(c) To ratify the appointment by the Board of Directors of Ernst & Young
LLP as the Company's independent auditors for the fiscal year ending
December 31, 2002; and
(d) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Holders of the Company's Common Stock of record at the close of business on
March 15, 2002 (the "Record Date") are entitled to vote at the Annual Meeting or
any adjournment or postponement thereof. A list of stockholders of the Company
as of the Record Date will be available for inspection during business hours
through April 26, 2002, at the Company's offices, 2777 Summer Street, Suite 209,
Stamford, Connecticut, and will also be available for inspection at the Annual
Meeting.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. HOWEVER, WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN
PERSON, YOU ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT AS SOON AS POSSIBLE IN THE ENCLOSED ENVELOPE WHICH HAS BEEN PROVIDED
FOR YOUR CONVENIENCE AND WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE PROMPT RETURN OF PROXY CARDS WILL ENSURE A QUORUM. IF YOU SEND IN
YOUR PROXY CARD AND THEN DECIDE TO ATTEND THE ANNUAL MEETING TO VOTE YOUR SHARES
IN PERSON, YOU MAY STILL DO SO. YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE
PROCEDURES SET FORTH IN THE PROXY STATEMENT.
By Order of the Board of Directors,
[LOGO]
Vincent A. Chippari
Secretary
March 27, 2002
INFORMATION HOLDINGS INC.
2777 SUMMER STREET, SUITE 209
STAMFORD, CT 06905
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Information Holdings Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held on Monday,
April 29, 2002, at 2:00 p.m., Eastern Standard Time, at the offices of Warburg,
Pincus & Co., 466 Lexington Avenue, New York, New York, 10017, or at any
adjournment or postponement thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. It is expected that the
Notice of Annual Meeting of Stockholders, this Proxy Statement and the enclosed
proxy card, together with the Company's Annual Report to stockholders for the
fiscal year ended December 31, 2001, will be mailed to stockholders entitled to
vote at the Annual Meeting commencing on or about April 1, 2002.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her to
participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting Information Holdings Inc., 2777
Summer Street, Suite 209, Stamford, Connecticut 06905. To provide the Company
sufficient time to arrange for reasonable assistance, please submit all requests
by April 15, 2002.
RECORD DATE AND VOTING SECURITIES
Stockholders can ensure that their shares are voted at the Annual Meeting by
attending the Annual Meeting or signing and returning the enclosed proxy card in
the envelope provided. The submission of a signed proxy will not affect a
stockholder's right to attend the Annual Meeting and vote in person.
Stockholders who execute proxies retain the right to revoke them at any time
before they are voted by filing with the Company's Secretary a written
revocation or a proxy bearing a later date. The presence at the Annual Meeting
of a stockholder who has signed a proxy does not itself revoke that proxy unless
the stockholder attending the Annual Meeting files written notice of revocation
of the proxy with the Company's Secretary at any time prior to the voting of the
proxy.
Proxies will be voted as specified by the stockholders. Where specific
choices are not indicated, proxies will be voted FOR the proposals submitted for
approval, and in accordance with the proxyholder's best judgment as to any other
business as may properly come before the Annual Meeting. The proxy card provides
space for a stockholder to withhold voting for any or all nominees to the Board
or to abstain from voting for any proposal if the stockholder chooses to do so.
Under Delaware law and the Company's Bylaws, the presence of a quorum is
required to transact business at the Annual Meeting. A quorum is defined as the
presence, either in person or by proxy, of a majority of the outstanding shares
entitled to vote. Proxies marked "abstain" will be included in determining a
quorum. On routine matters, brokers who hold customer shares in "street name"
but have not timely received voting instructions from such customers have
discretion to vote such shares. Since all of the matters to be voted upon at the
Annual Meeting are routine, the presence of such shares will be included in
determining a quorum.
Under Delaware law and the Company's Bylaws, proposals must be approved by
the affirmative vote of a majority, or, in the case of the election of
directors, a plurality, of the shares present, either in person or by proxy, at
the Annual Meeting and entitled to vote. Accordingly, abstentions have the
same effect as votes "against" a proposal, whereas instructions to withhold
voting on the election of any nominee for director have no effect on the outcome
of the vote.
The Board has fixed the close of business on March 15, 2002 as the record
date (the "Record Date") for the determination of the Company's stockholders who
are entitled to receive notice of and to vote at the Annual Meeting. At the
close of business on the Record Date, the Company had outstanding 21,760,174
shares of common stock, par value $0.01 per share (the "Common Stock"),
excluding treasury shares. The holders of Common Stock are entitled to one vote
for each share held on the Record Date.
PROXIES IN THE FORM ENCLOSED ARE BEING SOLICITED BY, OR ON BEHALF OF, THE
BOARD. THE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY HAVE BEEN DESIGNATED
AS PROXIES BY THE BOARD. Such persons designated as proxies are the Company's
officers. Any stockholder desiring to appoint another person to represent him or
her at the Annual Meeting may do so either by inserting such person's name in
the blank space provided on the accompanying form of proxy, or by completing
another form of proxy and, in either case, delivering an executed proxy to the
Company's Secretary at the address indicated above, before the time of the
Annual Meeting. It is the responsibility of the stockholder appointing such
other person to represent him or her to inform such person of this appointment.
The Company will bear the cost of solicitation of proxies. Further
solicitation may be made by the Company's directors, officers and employees
personally, by telephone or otherwise, but such persons will not be specifically
compensated for such services. The Company also intends to make, through
bankers, brokers or other persons, a solicitation of proxies of beneficial
holders of the Common Stock. Upon request, the Company will reimburse brokers,
dealers, banks or similar entities acting as nominees for reasonable expenses
incurred in forwarding copies of the proxy materials relating to the Annual
Meeting to the beneficial owners of Common Stock which such persons hold of
record.
The Company may send only one annual report and proxy statement to multiple
stockholders that share the same address. Upon written or oral request, the
Company will promptly supply such stockholders additional copies of the annual
report and proxy statement. Such requests should be made by contacting the
Company either by mail at the Company's offices at 2777 Summer Street, Suite
209, Stamford, Connecticut 06905 or by telephone at (203) 961-9106. If
stockholders sharing the same address are receiving multiple copies of the
annual report and proxy statement, such stockholders can request delivery of a
single copy of the annual report and proxy statement by contacting the Company
at the above address.
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PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
All of the Company's directors serve annual terms which expire on the date
of the Annual Meeting. At the Annual Meeting, the stockholders will elect six
directors to hold office, subject to the provisions of the Company's Certificate
of Incorporation and Bylaws, until the Annual Meeting of Stockholders in 2003
and until their respective successors shall have been duly elected and
qualified.
The Company has agreed to nominate and use its best efforts to elect and
cause to remain as directors (i) Mason P. Slaine, for so long as he beneficially
owns, within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), at least 5% of the outstanding shares of
Common Stock, unless the Company terminates his employment for "Just Cause" (as
defined in his employment agreement) and (ii) at least one or two nominees of
Warburg Pincus Ventures, L.P. ("Warburg Pincus"), for so long as Warburg Pincus
owns at least 10% or 20%, respectively, of the outstanding shares of Common
Stock.
Unless contrary instructions are given, the persons named in the enclosed
proxy or their substitutes will vote FOR the election of the six director
nominees named below. The Board believes that all of the nominees are willing to
serve as directors. However, if any nominee at the time of election is unable to
serve or is otherwise unavailable for election, and as a result other nominees
are designated by the Board, the persons named in the enclosed proxy or their
substitutes intend to vote for the election of such designated nominees.
The nominees for election as directors to serve until the Annual Meeting of
Stockholders in 2003, together with certain information about them, are set
forth below:
MICHAEL E. DANZIGER....... Michael E. Danziger, 43, has served as one of the Company's
directors since July 1998. Mr. Danziger is currently a
consultant in the information and publishing field. From
1991 to 1999, Mr. Danziger was Chairman of Thomson
Financial's Database Group, a division of Thomson Financial
which provides financial information, products and services.
Since 1993, he has also been a director of Rand Publishing
Company Inc., a small holding company that has made
investments in the publishing industry ("Rand"). Mr.
Danziger is also a director of two privately held companies
that are affiliates of Warburg, Pincus & Co. ("WP").
DAVID R. HAAS............. David R. Haas, 60, has served as one of the Company's
directors since July 1998. Mr. Haas has been a financial
consultant in the entertainment and communications
industries since 1995. From 1990 until 1994, he was Senior
Vice President and Controller of Time Warner, a leading
media and entertainment company.
SIDNEY LAPIDUS............ Sidney Lapidus, 64, has served as one of the Company's
directors since December 1996. Mr. Lapidus has been a
General Partner of WP and a Member and Managing Director of
Warburg Pincus LLC ("WP LLC") or its predecessors since
January 1982, where he has been employed since 1967. He is
currently a director of Radio Unica Communications Corp.,
Lennar Corporation, Knoll, Inc. and several privately held
companies.
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DAVID E. LIBOWITZ......... David E. Libowitz, 39, has served as one of the Company's
directors since December 1996. Mr. Libowitz is a General
Partner at WP and a Member and Managing Director of WP LLC,
where he has been employed since July 1991. He is currently
a director of Radio Unica Communications Corp. and several
privately held companies.
JOHN R. PURCELL........... John R. Purcell, 70, has served as one of the Company's
directors since May 2001. Mr. Purcell has been Chairman and
Chief Executive Officer of Grenadier Associates Ltd., a
venture banking firm, since 1989. From 1991 until 1996, Mr.
Purcell also served as Chairman of Donnelley Marketing,
Inc., a data-based direct marketing company. From 1987 until
1990, he served as Chairman of Mindscape, Inc., an
educational and entertainment computer software company.
From 1982 until 1986, Mr. Purcell was Chairman and President
of SFN Companies, Inc., a communications company. Mr.
Purcell is a director of Bausch & Lomb, Inc., Omnicom Group,
Inc., Journal Register Company and Technology Solutions
Company.
MASON P. SLAINE........... Mason P. Slaine, 48, has served as one of the Company's
directors since December 1996. Mr. Slaine has been President
and Chief Executive Officer since December 1996. Since 1993,
Mr. Slaine has been a director of Rand and had previously
served as its President. From 1994 to 1996, Mr. Slaine
served as President of Thomson Financial, a division of the
Thomson Corporation that provides financial information,
research, analysis and software products worldwide. From
1993 to 1994, he served as President of Thomson Financial
Publishing, a division of Thomson Financial.
RECOMMENDATIONS AND VOTE
The affirmative vote of a plurality of the shares of Common Stock present,
either in person or by proxy, at the Annual Meeting and entitled to vote is
required for the election of the directors.
THE BOARD RECOMMENDS A VOTE "FOR" ELECTION OF THE NOMINEES LISTED ABOVE.
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PROPOSAL NUMBER TWO
THE STOCK OPTION PLAN PROPOSAL
On July 15, 1998, the Board adopted the Company's 1998 Stock Option Plan
(the "Option Plan"), and reserved 866,886 shares of Common Stock for issuance
under the Option Plan. In the past two years, the stockholders authorized an
increase in the number of shares of Common Stock reserved for issuance by
1,100,000 to a total of 1,966,886. The Board has amended and restated the Option
Plan, subject to stockholder approval, to increase the number of shares of
Common Stock reserved for issuance thereunder by an additional 500,000 to a
total of 2,466,886 shares.
The Company is seeking stockholder approval of the Option Plan in order to
comply with the requirements of Sections 162(m) and 422 of the Internal Revenue
Code of 1986 (the "Code") and the requirements of the New York Stock Exchange
("NYSE"). The following summary of the Option Plan is qualified in its entirety
by express reference to the text of the Option Plan, a copy of which was filed
with the Commission as an appendix to this Proxy Statement. Under the Option
Plan, options to purchase shares of Common Stock may be granted which are
qualified as "incentive stock options" within the meaning of Section 422 of the
Code ("ISOs") and which are not so qualified ("NQSOs") (collectively or
individually, ISOs and NQSOs may be referred to as "Options").
PURPOSE AND ELIGIBILITY
The purpose of the Option Plan is to promote the Company's long-term
financial success by enhancing the Company's ability to attract, retain and
reward individuals who can and do contribute to such success and to further
align the interests of the Company's key personnel with its stockholders. The
full-time employees of the Company and its subsidiaries, and its directors, are
eligible to receive Options under, and participate in, the Option Plan. The
approximate number of individuals eligible to participate in the Option Plan is
470.
ADMINISTRATION
The Option Plan is generally administered by the full Board of Directors,
except that the Compensation Committee makes all determinations relating to the
Company's executive officers (for purposes of this Proposal, the entity
administering the Option Plan is hereafter referred to as the "Committee"). The
Committee, in its sole discretion, determines which individuals may participate
in the Option Plan and the type, extent and terms of the Option awards to be
granted. In addition, the Committee interprets the Option Plan and makes all
other determinations with respect to the administration of the Option Plan.
OPTIONS
The Option Plan allows for the discretionary grant of Options by the
Committee to eligible individuals. The terms and conditions of Options granted
under the Option Plan are set out from time to time in agreements between the
Company and the individuals receiving such Options.
The Committee may grant Options to any eligible person; provided, however,
that only employees of the Company and its subsidiaries may receive ISOs. The
exercise price of the Options will be determined by the Committee at the time of
grant and will be set forth in a Stock Option Agreement between the Company and
the participant ("Stock Option Agreement"); provided, however, that the exercise
price of an ISO will not be less than the fair market value of the Common Stock
on the date of grant. Options will vest and become exercisable within such
period or periods (not to exceed 10 years) as determined by the Committee and
set forth in the Stock Option Agreement. Options will have a 10-year term from
the date of grant, subject to earlier termination upon termination of a
participant's employment or service as a director, as applicable, as determined
by the Committee and
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as set forth in the Stock Option Agreement. Options that have become exercisable
may be exercised by delivery of written notice of exercise to the Committee
accompanied by full payment of the Option exercise price and any applicable
withholding. The Option exercise price may be paid in cash, by certified check,
bank draft or money order payable to the order of the Company or in accordance
with any cashless exercise procedures adopted by the Committee.
ADJUSTMENTS FOR RECAPITALIZATION, MERGER, ETC. OF THE COMPANY
The Option Plan and any outstanding Options shall be subject to adjustment,
as determined by the Committee, as to the maximum number of shares that may be
granted under the Option Plan, the maximum number of shares with respect to
which options may be granted to any single individual during any calendar year
under the Option Plan, the number of shares covered by each outstanding Option,
and/or the exercise price thereof in the event of certain changes in the
outstanding Common Stock by reason of stock splits or other subdivision or
consolidation of shares of Common Stock, or by reason of other capital
adjustments occurring after the date of grant of any such Option. In the event
of a sale, reorganization, consolidation or merger of the Company (a "Corporate
Event"), (i) an individual holding outstanding Options shall be entitled to
receive upon the exercise of an Option, the same number and kind of shares of
Common Stock or the same amount of property, cash or other securities as he or
she would have been entitled to receive upon the occurrence of such Corporate
Event as if he or she had been, immediately prior to such event or on the record
date relating to such event, the holder of the number of shares of Common Stock
covered by his or her Options, and (ii) if the Company is not the surviving
corporation as a result of such Corporate Event, the Company shall require the
successor corporation or its parent to assume such outstanding Options;
provided, however, that the Committee may, in its discretion and in lieu of
requiring such assumption, provide that all outstanding Options shall terminate
as of the consummation of such Corporate Event and accelerate the exercisability
of all outstanding Options to any date prior to the date of such Corporate
Event.
EFFECT OF CHANGE IN CONTROL
In the event of a Change in Control (as defined in the Option Plan),
notwithstanding any vesting schedule provided for by the Committee, all Options
shall become immediately exercisable with respect to 100 percent of the shares
subject to such Option.
SHARES SUBJECT TO THE OPTION PLAN
As noted above, the Option Plan has been amended, subject to stockholder
approval, to increase the maximum number of shares of Common Stock available for
issuance thereunder by 500,000 to a total of 2,466,886 shares; provided,
however, that options covering no more than 350,000 shares of Common Stock may
be issued to any one person during any one year.
MARKET VALUE
The closing price of the Common Stock on the NYSE on March 15, 2002 was
$27.89 per share.
AMENDMENT AND TERMINATION
The Board may from time to time, to the extent permitted by applicable law,
amend, suspend, or discontinue the Option Plan; provided, however, that the
Board may not take any action which would have a material adverse effect on
outstanding Options or any unexercised rights under outstanding Options without
the consent of participants whose Options would be adversely affected thereby.
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FEDERAL TAX CONSEQUENCES
The following is a brief discussion of the Federal income tax consequences
of transactions with respect to Options under the Option Plan based on the Code,
as in effect as of the date of this summary. This discussion is not intended to
be exhaustive and does not describe any state or local tax consequences.
ISOS. No taxable income is realized by the optionee upon the grant or
exercise of an ISO. If Common Stock is issued to an optionee pursuant to the
exercise of an ISO, and if no disqualifying disposition of such shares is made
by such optionee within two years after the date of grant or within one year
after the transfer of such shares to such optionee, then (1) upon the sale of
such shares, any amount realized in excess of the Option price will be taxed to
such optionee as a long-term capital gain and any loss sustained will be a
long-term capital loss, and (2) no deduction will be allowed to the Company for
Federal income tax purposes.
If the Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of either holding period described above, generally,
(1) the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of such shares at
exercise (or, if less, the amount realized on the disposition of such shares)
over the Option price paid for such shares and (2) the Company will be entitled
to deduct such amount for Federal income tax purposes if the amount represents
an ordinary and necessary business expense. Any further gain (or loss) realized
by the optionee upon the sale of the Common Stock will be taxed as short-term or
long-term capital gain (or loss), depending on how long the shares have been
held, and will not result in any deduction by the Company.
If an ISO is exercised more than three months following termination of
employment (subject to certain exceptions for disability or death), the exercise
of the Option will generally be taxed as the exercise of a NQSO, as described
below.
For purposes of determining whether an optionee is subject to an alternative
minimum tax liability, an optionee who exercises an ISO generally would be
required to increase his or her alternative minimum taxable income, and compute
the tax basis in the stock so acquired, in the same manner as if the optionee
had exercised a NQSO. Each optionee is potentially subject to the alternative
minimum tax. In substance, a taxpayer is required to pay the higher of his/her
alternative minimum tax liability or his/her "regular" income tax liability. As
a result, a taxpayer has to determine his/her potential liability under the
alternative minimum tax.
NQSOS. With respect to NQSOs: (1) no income is realized by the optionee at
the time the Option is granted; (2) generally, at exercise, ordinary income is
realized by the optionee in an amount equal to the excess, if any, of the fair
market value of the shares on such date over the exercise price, and the Company
is generally entitled to a tax deduction in the same amount, subject to
applicable tax withholding requirements; and (3) at sale, appreciation (or
depreciation) after the date of exercise is treated as either short-term or
long-term capital gain (or loss) depending on how long the shares have been
held.
SPECIAL RULES APPLICABLE TO CORPORATE INSIDERS
As a result of the rules under Section 16(b) of the Exchange Act
("Section 16(b)"), and depending upon the particular exemption from the
provisions of Section 16(b) utilized, the officers and directors and persons
owning more than 10 percent of the outstanding shares of stock ("Insiders") may
not receive the same tax treatment as set forth above with respect to the grant
and/or exercise of Options. Generally, Insiders will not be subject to taxation
until the expiration of any period during which they are subject to the
liability provisions of Section 16(b) with respect to any particular Option.
Insiders
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should check with their own tax advisers to ascertain the appropriate tax
treatment for any particular Option.
NEW PLAN BENEFITS
Because the grant of awards under the Option Plan is entirely within the
discretion of the Committee, the Company cannot forecast the extent or nature of
awards that will be granted in the future. Therefore, the Company has omitted
the tabular disclosure of the benefits or amounts allocated under the Option
Plan. Information with respect to compensation paid and other benefits,
including Options granted in respect of the 2001 fiscal year to the Named
Executive Officers is set forth in the Summary Compensation Table and the Stock
Option Grants in 2001 table contained herein.
RECOMMENDATION AND VOTE
Approval of the Option Plan Proposal requires the affirmative vote of a
majority of the shares of Common Stock present, in person or by proxy, at the
Annual Meeting, and entitled to vote thereon.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE OPTION PLAN PROPOSAL.
8
PROPOSAL NUMBER THREE
RATIFICATION OF INDEPENDENT AUDITORS
Subject to stockholder ratification, the Board, upon recommendation of the
Audit Committee, has appointed the firm of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2002. This firm has
examined the accounts of the Company since inception. If the stockholders do not
ratify this appointment, the Board will consider other independent auditors. One
or more members of Ernst & Young LLP is expected to be present at the Annual
Meeting and will have the opportunity to make a statement if they so desire and
will be available to respond to questions.
AUDIT FEES
Audit fees billed to the Company by Ernst & Young LLP during the Company's
2001 fiscal year for review of the Company's annual financial statements and
those financial statements included in the Company's quarterly reports on
Form 10-Q totaled $337,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage Ernst & Young LLP to provide advice to the
Company regarding financial information systems design and implementation during
the Company's 2001 fiscal year.
ALL OTHER FEES
Fees billed to the Company by Ernst & Young LLP during the Company's 2001
fiscal year for all other services rendered to the Company totaled $525,000,
including audit related services of $299,000 and non-audit services of $226,000.
RECOMMENDATION AND VOTE
The affirmative vote of a majority of the shares of Common Stock present,
either in person or by proxy, at the Annual Meeting and entitled to vote is
required for the ratification of the independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
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THE BOARD AND ITS COMMITTEES
The Board is responsible for the Company's management and direction and for
establishing broad corporate policies. The Board held six meetings during the
year ended December 31, 2001. All directors were present at five of the meetings
and five of six directors were present at the other meeting.
COMMITTEES OF THE BOARD
The Board has two standing committees: the Audit Committee and the
Compensation Committee. The Company does not have a standing committee on
nominations. The principal responsibilities of each committee are described
below.
AUDIT COMMITTEE. In 2001, the Audit Committee was comprised of Michael
Danziger, David Haas and John Purcell. The Audit Committee is responsible for
meeting with the Company's independent auditors regarding, among other issues,
audits and adequacy of the Company's accounting and control systems. The Audit
Committee also recommends a firm of certified independent auditors to serve as
the Company's independent auditors, authorizes all audit fees and other
professional services rendered by the accountants, reviews the independence of
the accountants and ensures the objectivity of the Company's financial
statements. It held five meetings in 2001. Additional information regarding the
Audit Committee and its functions and responsibilities is included in this Proxy
Statement under the caption "Report of the Audit Committee of the Board of
Directors."
COMPENSATION COMMITTEE. In 2001, the Compensation Committee was comprised
of David Haas and David Libowitz. The Compensation Committee has the authority
to determine all matters relating to the compensation of the Company's
employees. It held one meeting during 2001. The Board of Directors did not
reject any recommendations of the Compensation Committee in 2001.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company or its affiliates (each,
an "Independent Director"), receives a fee of $1,000 for each meeting of the
Board attended in person and $500 for each telephonic meeting of the Board
attended. The Chairman of each committee of the Board also receives an annual
fee of $1,000. On August 13, 2001, each Independent Director received a grant of
options to purchase 665 shares of Common Stock with an exercise price equal to
the then current market price of $22.55 per share. Subsequent to 2001, each
Independent Director will receive an annual grant of a number of options equal
to $15,000 divided by the fair market value of one share of Common Stock on the
date of grant, which options will be exercisable at a price per share equal to
the fair market value of the Common Stock on such date. All options granted to
Independent Directors will vest immediately. Directors who are not Independent
Directors will not receive fees for serving on the Board or any committee
thereof. In 2001, the Company had three Independent Directors
(Messrs. Danziger, Haas and Purcell) and three directors employed by the Company
or its affiliates. All directors are reimbursed for reasonable out-of-pocket
expenses incurred in attending meetings of the Board and any committee thereof.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Securities and Exchange Commission (the "Commission") requires issuers
to disclose the existence of any other company in which both (i) the Company's
executive officer serves on the board of directors and/or compensation committee
and (ii) any of the the Company's directors serve as an executive officer. There
are no relationships that are required to be disclosed hereunder.
10
EXECUTIVE OFFICERS
Executive officers are elected by the Board of Directors and hold office
until their successors have been duly elected and qualified or until their
earlier resignation or removal from office. A brief biography of each executive
officer of the Company as of March 15, 2002 is provided below (other than
Mr. Slaine, whose biography is set forth above).
Vincent A. Chippari, 41, has served as Executive Vice President and Chief
Financial Officer of the Company since January 1998. From 1990 to 1996,
Mr. Chippari was Chief Financial Officer of Thomson Business Information, which
serves the global scientific, medical, intellectual property, technical and
general reference markets. From 1996 to 1997, he was Executive Vice President,
Operations, of Thomson Intellectual Property/Automotive Group, as well as
General Manager of its Derwent Information North America unit, a patent and
scientific information business.
Mark Clinton, 42, has served as President of the Company's Master Data
Center unit ("MDC") since December 1995. The Company acquired MDC in
August 1999. Mr. Clinton has held senior management positions at MDC since
February 1991. Prior to joining MDC, Mr. Clinton was a consultant with Andersen
Consulting for eight years.
R. Richard Dool, 47, has served as President and Chief Executive Officer of
the Company's Liquent unit since it was acquired by the Company in
December 2001. Mr. Dool has been President and Chief Executive Officer of
Liquent since February 2000. From 1994 until February 2000, he was President and
Chief Executive Officer of Labvantage Solutions, a provider of laboratory
automation software.
Fenton Markevich, 46, has served as President of the Company's CRC Press
unit ("CRC") since August 2001. From August 1999 to August 2001, Mr. Markevich
was Senior Vice President and Chief Financial Officer of CRC. From June 1998 to
August 1999, Mr. Markevich was an independent consultant in the
telecommunications industry. From February 1997 to June 1998, he was Senior Vice
President and Chief Financial Officer of Continental Graphics Group. From
February 1989 to November 1996, he was Vice President and Chief Financial
Officer of PIP Printing.
Jay Nadler, 37, has served as President of the Company's Intellectual
Property Group since April 2001. He was President of the Company's
CorporateIntelligence.com unit from April 2000 to April 2001. From
February 1993 to March 2000, Mr. Nadler held senior management positions in
various units of Thomson Financial. From December 1999 to March 2000, he was
Chief Executive Officer of its Corporate Group; from January 1999 to
December 1999, he was Chief Executive Officer of the Investment Information
Group; from July 1996 to December 1998, he was Chief Operating Officer of CDA
Investment Technologies; and from February 1993 to April 1997, he was president
of its Weisenberger unit.
Aneel M. Pandey, 35, has served as Chief Executive Officer of the Company's
Transcender unit since it was acquired by the Company in November 2000. He also
served as President of Transcender from November 2000 until May 2001.
Mr. Pandey founded Transcender in 1992 and served as its Chief Executive Officer
through November 2000.
Steven Wolfson, 57, has served as President of the Company's MicroPatent
unit since July 1997. From 1996 to 1997, Mr. Wolfson was Vice President and
Chief Financial Officer of MicroPatent's predecessor. From 1994 to 1996, he was
Vice President and Chief Financial Officer of American Banker, a financial
information publishing company. From 1993 to 1994, Mr. Wolfson was an
independent consultant in the financial and administrative fields.
11
EMPLOYMENT AGREEMENTS
MASON P. SLAINE
The Company has an employment agreement, dated as of March 15, 2000, with
Mason P. Slaine which provides that Mr. Slaine will serve as President and Chief
Executive Officer of the Company until June 30, 2001, subject to automatic
one-year renewals unless either party provides notice of non-renewal.
Mr. Slaine's employment agreement provides for a base salary of $325,000 through
June 30, 2000, increasing to $700,000 through June 30, 2001 and $750,000 through
June 30, 2002. Thereafter Mr. Slaine's base salary will be subject to increases
at the discretion of the Board of Directors. In addition, Mr. Slaine is eligible
to receive an annual cash bonus, as determined by the Board of Directors. He is
also entitled to participate in health, insurance, pension, automobile and other
benefits provided to other senior executives of the Company.
In connection with the execution of the employment agreement, the Company
granted options to Mr. Slaine to purchase 200,000 shares of Common Stock at a
purchase price per share equal to the fair market value of one share of Common
Stock on the date of grant. These options were canceled by mutual agreement
between Mr. Slaine and the Company in February 2001. Under the terms of the
agreement, Mr. Slaine was entitled to a second option grant to purchase 200,000
shares of Common Stock at a purchase price per share equal to the fair market
value of one share of Common Stock on the date of grant. These options, which
were granted in August 2001, vest and become exercisable at the rate of 100,000
shares each on the first and second anniversaries of the date of grant;
provided, however, that the options shall become immediately vested and
exercisable upon the occurrence of a Change of Control (as defined in the
employment agreement), Mr. Slaine's death or his termination of employment on
account of disability.
In the event of (i) Mr. Slaine's death during his term of employment with
the Company or (ii) the termination of his employment by the Company without
"Just Cause" (as defined in the employment agreement) or (iii) his resignation
from employment for "Good Reason" (as defined in the employment agreement), the
Company is obligated to continue paying Mr. Slaine's base salary for a 12 month
period following the date of termination. In addition, the Company is required
to continue to provide health insurance benefits during such 12 month period. In
the event that Mr. Slaine resigns within 90 days following a Change of Control
or the Company terminates Mr. Slaine's employment without Just Cause following a
Change of Control, the Company is obligated to pay to Mr. Slaine a lump sum
amount equal to three times the sum of (i) his then current base salary and
(ii) the bonus he received in the prior fiscal year. In addition, the Company is
required to continue to provide health insurance benefits during the 12 month
period immediately following such termination. To the extent that any payment
under the employment agreement would be subject to an excise tax imposed by
Section 4999 of the Code, the Company is required to make gross-up payment (the
"Gross-up Payment") to Mr. Slaine to cover the excise tax and any taxes incurred
by Mr. Slaine upon the payment of the Gross-up Payment.
Mr. Slaine's employment agreement also contains a non-compete clause, which
applies until the second anniversary of the termination of Mr. Slaine's
employment, unless he is terminated by the Company without Just Cause or resigns
for Good Reason. The employment agreement also contains confidentiality and
non-solicitation provisions. In consideration for these non-compete,
non-solicitation and confidentiality covenants the Company has agreed to pay to
Mr. Slaine 50% of his then current base salary over the course of the two-year
period.
VINCENT A. CHIPPARI
The Company has an employment agreement, dated as of January 19, 1998, with
Vincent A. Chippari which provides that Mr. Chippari will serve as executive
Vice President and Chief Financial Officer of the Company until January 19,
2003, subject to automatic one-year renewals unless either
12
party provides notice of non-renewal. Mr. Chippari's employment agreement
provides for an initial base salary of $200,000 per year, increased annually to
the extent of any net increase in the Consumer Price Index. In addition,
Mr. Chippari is eligible to receive an annual cash bonus in an amount up to 50%
of his base salary based upon the meeting of certain objectives approved by the
Board of Directors. Mr. Chippari is also entitled to participate in health,
insurance, pension and other benefits provided to other senior executives of the
Company.
In the event that Mr. Chippari resigns or his employment terminates for
"Cause" (as defined in his employment agreement), Mr. Chippari will be entitled
to receive any accrued but unpaid base salary, unused vacation and unreimbursed
expenses. In the event the Company terminates his employment without Cause, in
addition to the amounts specified in the foregoing sentence, Mr. Chippari will
continue to receive his base salary and health and insurance benefits for a
period of 12 months following the date of such termination. Mr. Chippari's
employment agreement also contains a non-compete clause, which applies until the
first anniversary of the termination of Mr. Chippari's employment, and
confidentiality and non-solicitation provisions.
R. RICHARD DOOL
Concurrent with the acquisition of Liquent, Inc. in December 2001, the
Company assumed an employment agreement with R. Richard Dool which provides that
Mr. Dool will serve as President and Chief Executive Officer of Liquent through
November 26, 2002. Under the terms of the agreement, Mr. Dool is entitled to an
annual base salary of $236,000. In addition, he is entitled to receive an annual
cash bonus of up to $100,000 at the discretion of the Board of Directors.
Mr. Dool is also entitled to participate in health, insurance, pension,
automobile and other benefits provided to other senior executives of the
Company.
The agreement provides that Mr. Dool is entitled to severance benefits if
his employment is terminated without "Cause" (as that term is defined in the
agreement), if he resigns for "Good Reason" (as defined in the agreement), or in
the event of a change in control (the "Severance Benefits"). Severance Benefits
are (i) 12 months' salary; (ii) 50% of his target bonus, upon termination
without Cause or resignation with Good Reason; (iii) 12 months of continued
health coverage; and (iv) up to $20,000 for outplacement services. In addition
to the Severance Benefits, Mr. Dool is entitled to receive 100% option vesting
and payout of his full targeted bonus upon a change in control of the business.
A change in control event is not considered termination of employment under the
terms of the agreement.
Pursuant to the employment agreement, following the acquisition of Liquent
by the Company, Mr. Dool received change in control payments of $325,000.
JAY NADLER
The Company has an employment agreement, dated as of April 10, 2000, with
Jay Nadler which provides that Mr. Nadler will serve as President of the
Company's Intellectual Property Group until April 10, 2002, subject to automatic
one-year renewals unless either party provides notice of non-renewal.
Mr. Nadler's employment agreement provides for an initial base salary of
$250,000 per annum, increased annually to the extent of any increase in the
Consumer Price Index. In addition, Mr. Nadler is entitled to receive a cash
bonus in an amount up to 50% of his base salary based upon meeting objectives
determined by the Board of Directors. Mr. Nadler is also entitled to participate
in health, insurance, pension and other benefits provided to other senior
executives of the Company.
Mr. Nadler's employment agreement provided for the grant of options, dated
April 25, 2000, to purchase 100,000 shares of Common Stock at the then current
market price of $25.75 per share. Pursuant to a stock option agreement,
Mr. Nadler's options are exercisable for a period of ten years
13
from the date of grant. The options vest and become exercisable in four equal
annual installments from the date of grant.
In the event that Mr. Nadler's employment is terminated for "Cause" (as
defined in his employment agreement), he will be entitled to receive any accrued
but unpaid base salary, unused vacation and unreimbursed expenses. In the event
the Company terminates his employment without Cause, or if he resigns within
90 days following a change in control, in addition to the amounts specified in
the foregoing sentence, Mr. Nadler will continue to receive his base salary and
health and insurance benefits for a period equal to the greater of 6 months from
the date of termination or the remainder of the employment term. In the event
the Company does not renew the employment agreement, Mr. Nadler will continue to
receive his base salary and health and insurance benefits for a period of
4 months from the expiration date of the employment contract. Mr. Nadler's
employment agreement also contains a non-compete clause, which applies until the
first anniversary of the termination of Mr. Nadler's employment, and
confidentiality and non-solicitation provisions.
ANEEL M. PANDEY
The Company has an employment agreement, dated as of November 6, 2000 with
Aneel Pandey which provides that Mr. Pandey will serve as Chief Executive
Officer of Transcender until November 5, 2003, subject to automatic one-year
renewals unless either party provides notice of non-renewal. Mr. Pandey's
employment agreement provides for a base salary of $200,000 per annum through
November 5, 2001, increasing to $235,000 through November 5, 2002 and $260,000
through November 5, 2003. In addition, Mr. Pandey is entitled to receive a bonus
equal to 50% of his base salary based upon meeting objectives determined by the
Board of Directors. Mr. Pandey is also entitled to participate in health,
insurance, pension and other benefits provided to other senior executives of the
Company.
The Company also has a confidentiality and non-competition agreement, dated
November 6, 2000, which provides that for a period ending on the later of
(i) November 6, 2005 and (ii) the third anniversary of the termination of
Mr. Pandey's employment, Mr. Pandey will not, directly or indirectly, engage in
any business which competes with Transcender.
In the event that Mr. Pandey's employment is terminated for "Cause" (as
defined in his employment agreement), Mr. Pandey will be entitled to receive any
accrued but unpaid base salary, unused vacation and unreimbursed expenses. In
the event the Company terminates his employment without Cause, in addition to
the amounts specified in the foregoing sentence, Mr. Pandey will continue to
receive his base salary and health and insurance benefits for the remainder of
the employment term.
14
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE EXCHANGE ACT THAT MIGHT INCORPORATE FILINGS BY REFERENCE, INCLUDING THIS
PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT OF THE BOARD OF
DIRECTORS AND COMPENSATION COMMITTEE (THE "COMPENSATION COMMITTEE") ON EXECUTIVE
COMPENSATION AND THE PERFORMANCE GRAPHS SHALL NOT BE INCORPORATED BY REFERENCE
INTO ANY SUCH FILINGS.
REPORT OF THE BOARD OF DIRECTORS AND THE BOARD COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee's responsibilities include establishing the
Company's policies governing the compensation of its officers and other key
executives. The Compensation Committee approves all elements of compensation for
executive officers, including their equity compensation under the Company's 1998
Stock Option Plan (the "Option Plan"). The Board is responsible for overall
administration of the Option Plan.
EXECUTIVE COMPENSATION. The Company's compensation program consists of base
salary, annual incentive payments, stock options and employee benefits. The goal
of the Company's compensation program is to motivate and reward its executive
officers and other key employees to improve long-term stockholder value and to
attract and retain the highest quality executive and key employee talent
available. The Company's executive compensation program is designed to align
executive compensation practices with increasing the value of the Common Stock
and to foster adherence to, and promotion of, the Company's business mission,
values, strategic goals and annual objectives.
Except for equity compensation under the Option Plan to employees that are
not executive officers, the Compensation Committee has the authority to
determine all matters relating to compensation of the Company's employees. When
making compensation decisions, the Compensation Committee considers an
executive's scope of responsibilities, level of experience, individual
performance and attainment of pre-established goals as well as the Company's
business plan and general economic factors. The Compensation Committee also
considers input from the Company's Chief Executive Officer and Chief Financial
Officer.
BASE SALARY AND BONUS. The salary levels for executive officers are
determined by such officer's level of job responsibility and experience, job
performance and attainment of pre-established goals. Consideration is also given
to salaries for comparable positions within the industry and the Company's
ability to pay. The Compensation Committee considers all of these factors and
makes an informed decision with respect to any annual salary increases for the
executive officers. Bonus payouts to the Company's executive officers and other
key employees are based on the attainment of corporate earnings goals and
certain individual performance goals.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The salary paid and stock options
granted in fiscal 2001 to Mason Slaine, the Company's Chief Executive Officer,
were determined in accordance with specific provisions of his employment
agreement. Mr. Slaine did not receive a bonus in fiscal 2001.
OPTIONS. The Board believes that stock options are important to provide an
inducement to obtain and retain the services of the Company's employees and the
employees of its subsidiaries and to increase their proprietary interest in the
Company's success. Long-term incentives in the form of stock options provide a
vehicle to reward executive officers only if there is an increase in stockholder
value. Stock options are granted on a subjective and discretionary basis within
a guideline range that takes into account the position responsibilities of the
Company's executive officers and key employees whose contributions and skills
are important to the Company's long-term success.
During 2001, the Board approved the issuance of options to purchase a total
of 596,395 shares of common stock of the Company to various employees. Such
options were granted at exercise prices equal to the respective market prices of
the Common Stock on the various dates of grant.
15
POLICY REGARDING QUALIFYING COMPENSATION. Section 162(m) of the Internal
Revenue Code imposes a $1,000,000 limitation on tax-deductible remuneration paid
to any one of the five most highly compensated executive officers of a
publicly-held corporation, unless the compensation qualifies as
"performance-based compensation" or is otherwise exempt from the provisions of
Section 162(m). None of the compensation paid to executive officers exceeded the
limits of Section 162(m) for the fiscal year ended December 31, 2001.
BOARD OF DIRECTORS COMPENSATION COMMITTEE
MICHAEL E. DANZIGER DAVID R. HAAS
DAVID R. HAAS DAVID E. LIBOWITZ
SIDNEY LAPIDUS
DAVID E. LIBOWITZ
JOHN R. PURCELL
MASON P. SLAINE
16
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
FILINGS UNDER THE SECURITIES ACT OR THE EXCHANGE ACT THAT MIGHT INCORPORATE
FILINGS BY REFERENCE, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE
FOLLOWING REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee is responsible for overseeing the Company's financial
reporting process and for recommending to the Board of Directors, subject to
stockholder ratification, the selection of the Company's independent auditors.
Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls. The Audit
Committee is composed of independent directors of the Company, as defined by the
New York Stock Exchange listing standards, and acts pursuant to a written
charter adopted by the Board of Directors. In fulfilling its oversight
responsibilities, the Audit Committee reviewed the audited financial statements
in the Annual Report with management including a discussion of the quality, not
just the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards.
The Audit Committee has discussed with the independent auditors the matters
required to be discussed by the Statement on Auditing Standards No. 61,
Communications with Audit Committees, as amended, by the Auditing Standards
Board of the American Institute of Certified Public Accountants.
The independent auditors provided to the Audit Committee the written
disclosures and the letter from the independent auditors required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, as amended. The Audit Committee has reviewed and discussed with the
independent auditors the firm's independence and has considered the
compatibility of non-audit services with the auditor's independence.
The Audit Committee discussed with the independent auditors the overall
scope and plans for their audit. The Audit Committee meets with the independent
auditors, both with and without management present, to discuss the results of
their examinations, their evaluation of internal controls, and the overall
quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report on Form 10-K for the year ended
December 31, 2001.
AUDIT COMMITTEE
MICHAEL E. DANZIGER
DAVID R. HAAS
JOHN R. PURCELL
March 1, 2002
17
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation earned by
the Chief Executive Officer and the next four most highly compensated officers
(the "Named Executive Officers") during the fiscal years ended December 31,
2001, 2000 and 1999.
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS(#)
--------------------------- -------- ---------- --------- ------------
Mason Slaine ......................................... 2001 725,000 -- 200,000
President and Chief Executive Officer 2000 512,000 300,000 --
1999 325,000 -- --
Vincent A. Chippari .................................. 2001 225,000 50,000 25,000
Executive Vice President and Chief Financial Officer 2000 210,000 92,000 --
1999 203,000 94,000 --
Mark Clinton (1) ..................................... 2001 165,000 66,000 --
President, Master Data Center 2000 150,000 85,000 --
1999 63,000 10,000 10,997
Jay Nadler (2) ....................................... 2001 258,000 50,000 --
President, Intellectual Property Group 2000 180,000 25,000 100,000
Aneel M. Pandey (3) .................................. 2001 206,000 100,000 20,500
Chief Executive Officer, Transcender LLC 2000 30,000 -- 20,000
------------------------
(1) Mr. Clinton's compensation includes compensation from August 13, 1999, the
date of the Company's acquisition of Master Data Center.
(2) Mr. Nadler's employment commenced on April 10, 2000.
(3) Mr. Pandey's compensation includes compensation from November 6, 2000, the
date of the Company's acquisition of Transcender.
18
STOCK OPTION GRANTS IN 2001
The following table sets forth information concerning individual grants of
options to purchase Common Stock made to the Named Executive Officers during the
fiscal year ended December 31, 2001.
POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF
SECURITIES PERCENT OF STOCK PRICE APPRECIATION FOR
UNDERLYING TOTAL OPTIONS EXERCISE OR OPTION TERM(1)
OPTIONS GRANTED TO BASE PRICE EXPIRATION ------------------------------
NAME GRANTED (#) EMPLOYEES ($/SHARE) DATE 5% 10%
---- ----------- ------------- ----------- ---------- ------------ ------------
Mason P. Slaine............... 200,000(2) 33.5% $20.99 8/29/11 $2,640,000 $6,690,000
Vincent A. Chippari........... 25,000(3) 4.1% $27.19 1/23/11 $ 427,000 $1,083,000
Aneel M. Pandey............... 10,000(4) 1.7% $21.09 4/24/11 $ 133,000 $ 336,000
Aneel M. Pandey............... 10,500(5) 1.8% $25.10 12/18/11 $ 166,000 $ 420,000
------------------------
(1) Amounts reflect certain assumed rates of appreciation set forth in the
executive compensation disclosure rules of the Commission. Actual gains, if
any, on stock option exercises will depend on future performance of the
Common Stock. No assurance can be made that the amounts reflected in these
columns will be achieved.
(2) Options were granted on August 29, 2001 and vest and become exercisable in
two equal annual installments from the date of grant.
(3) Options were granted on January 23, 2001 and vest and become exercisable in
two equal annual installments from the date of grant.
(4) Options were granted on April 24, 2001 and vest and become exercisable in
full one year from the date of grant.
(5) Options were granted on December 18, 2001 and vest and become exercisable in
four equal annual installments from the date of grant.
AGGREGATED OPTION EXERCISES IN 2001 AND FISCAL
YEAR-END OPTION VALUES
The following table sets forth information concerning option exercises by
the Named Executive Officers during the fiscal year ended December 31, 2001 and
the fiscal year-end value of unexercised options.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FY-END (#) FY-END ($)
ACQUIRED ON VALUE ------------------------- --------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE*
---- ------------ ------------ ------------------------- --------------------------
Vincent A. Chippari......... 28,000 $392,000 70,967/25,000 1,157,000/28,000
Mason Slaine................ 0/200,000 0/1,464,000
Mark Clinton................ 5,498/5,499 56,000/56,000
Jay Nadler.................. 25,000/75,000 83,000/248,000
Aneel M. Pandey............. 20,000/20,500 0/107,000
------------------------
* Based on the closing price for the Common Stock of $28.31 on December 31,
2001.
19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 15, 2002,
regarding the beneficial ownership of Common Stock by (i) each stockholder who
the Company knows owns more than 5% of the outstanding shares of Common Stock,
(ii) each director, (iii) each executive officer named in the Summary
Compensation Table and (iv) all directors and executive officers as a group.
SHARES BENEFICIALLY OWNED
---------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT(1)
------------------------------------ ----------- ----------
Warburg, Pincus Ventures, L.P. (2)................... 7,803,866 35.9
466 Lexington Avenue
New York, New York 10017
Mason P. Slaine...................................... 1,800,000 8.3
2777 Summer Street, Suite 209
Stamford, Connecticut 06905
J.P. Morgan Chase & Co. (3).......................... 1,717,306 7.9
270 Park Avenue
New York, New York 10017
GeoCapital, LLC (3).................................. 1,715,183 7.9
825 Third Avenue
New York, New York 10022
Westfield Capital Management Co., LLC (3)............ 1,205,277 5.5
One Financial Center
Boston, MA 02111
Liberty Wanger Asset Management, L.P. (3)............ 1,115,300 5.1
227 West Monroe Street, Suite 3000
Chicago, IL 60606
Vincent A. Chippari (4).............................. 83,467 *
Mark Clinton (4)..................................... 5,498 *
Jay Nadler (5)....................................... 28,500 *
Aneel M. Pandey (4).................................. 20,000 *
Michael E. Danziger (6).............................. 85,073 *
David R. Haas (6).................................... 7,947 *
Sidney Lapidus (7)................................... 7,814,190 35.9
David E. Libowitz (7)................................ 7,803,866 35.9
John R. Purcell (8).................................. 1,665 *
All directors and executive officers, as a group
(thirteen persons)................................. 9,858,903 45.3
------------------------
* Less than 1%.
(1) Pursuant to the regulations of the Commission, shares are deemed to be
"beneficially owned" by a person if such person directly or indirectly has
or shares the power to vote or dispose of such shares, whether or not such
person has any pecuniary interest in such shares, or the right to acquire
the power to vote or dispose of such shares within 60 days, including any
right to acquire through the exercise of any option, warrant or right.
(2) The sole general partner of Warburg, Pincus Ventures, L.P. ("Warburg
Pincus") is Warburg, Pincus & Co., a New York general partnership ("WP").
Warburg Pincus LLC, a New York limited liability company ("WP LLC"), manages
Warburg Pincus. Lionel I. Pincus is the Managing Partner of WP and the
Managing Member of WP LLC and may be deemed to control both entities.
20
(3) As reported on SEC Form No.13G filed in February and March 2002.
(4) Represents shares issuable upon exercise of options that are vested and
exercisable.
(5) Includes 25,000 shares issuable upon exercise of options that are vested and
exercisable.
(6) Includes 3,467 shares issuable upon exercise of options that are vested and
exercisable.
(7) 7,803,866 of the shares indicated as beneficially owned by Mr. Lapidus and
Mr. Libowitz are owned by Warburg Pincus and are included because of their
affiliation with Warburg Pincus. Both of them are Members and Managing
Directors of WP LLC and General Partners of WP. Messrs. Lapidus and Libowitz
disclaim beneficial ownership of the shares owned by Warburg Pincus. The
mailing address for Messrs. Lapidus and Libowitz is c/o Warburg, Pincus &
Co., 466 Lexington Avenue, New York, New York 10017.
(8) Includes 665 shares issuable upon exercise of options that are vested and
exercisable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Warburg Pincus and Mr. Slaine (the "Initial Stockholders") are entitled to
certain registration rights with respect to their respective shares of Common
Stock. Pursuant to a registration rights agreement, the Initial Stockholders
have the right to request two registrations of their shares of Common Stock,
provided that the anticipated public offering price equals $15 million or more,
and unlimited registrations on Form S-3, provided that the anticipated aggregate
offering price exceeds $5 million. In addition, the Initial Stockholders are
entitled to have their shares included in an unlimited number of registrations
initiated by the Company, subject to certain customary restrictions. In general,
all fees, costs and expenses of such registration (other than underwriting
discounts and selling commissions) will be borne by the Company. The Company has
agreed to indemnify the Initial Stockholders from any liability arising out of
or relating to any untrue statement of a material fact or any omission of a
material fact in any registration statement or prospectus filed by the Company
pursuant to the registration rights agreement, subject to certain exceptions.
21
SHARE INVESTMENT PERFORMANCE
The following graph compares the cumulative total stockholder returns on the
Common Stock based on an investment of $100 after the close of the market on
(i) August 7, 1998, the effective date of the Company's initial public offering
and (ii) the close of the market on December 31, 2001 against the Russell 2000
Index ("Russell 2000") and an industry peer group consisting of McGraw-Hill
Companies, Thomson Corporation, Factset Research Systems and Reuters Group:
PERFORMANCE CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
8/7/98 12/31/98 12/31/99 12/31/00 12/31/01
Information Holdings 100 130.57 240.93 194.30 234.74
Russell 2000 100 101.48 121.39 116.29 117.48
Peer Group 100 124.23 180.52 194.51 169.72
22
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Common Stock to file initial reports of ownership and reports of changes in
ownership with the Commission and the NYSE. Executive officers, directors and
greater than 10% beneficial owners are required by Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms furnished
to the Company and written representations from the executive officers,
directors and greater than 10% beneficial owners, the Company believes that all
Section 16(a) filing requirements applicable to the Company's executive
officers, directors and greater than 10% owners were complied with during Fiscal
2001, except for stock option grants to Messrs. Danziger, Haas, Pandey, Purcell
and Wolfson that were not reported on Form 4. Such option grants were included
on Form 5's filed by the officers and directors listed above in March 2002.
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR 2003
Any proposals intended to be presented by stockholders at the Company's 2003
Annual Meeting of Stockholders must meet the requirements of Rule 14a-8 of the
Commission relating to stockholders' proposals. A stockholder proposal outside
of the processes of Rule 14a-8 will be considered untimely if received by the
Company after February 14, 2003.
OTHER BUSINESS
It is not anticipated that there will be presented to the Annual Meeting any
business other than the election of directors, the approval of the Option Plan
Amendment and the ratification of accountants, and the Board was not aware of
any other matters which might properly be presented for action at the Annual
Meeting. If any other business should come before the Annual Meeting, the
persons named on the enclosed proxy card will have discretionary authority to
vote all proxies in accordance with their best judgment.
Proxies in the form enclosed are solicited by or on behalf of the Board. The
cost of this solicitation will be borne by the Company. In addition to the
solicitation of the proxies by use of the mails, some of the Company's officers
and regular employees, without extra remuneration, may solicit proxies
personally, or by telephone or otherwise. In addition, arrangements will be made
with brokerage houses and other custodian, nominees and fiduciaries to forward
proxies and proxy material to their principals, and the Company will reimburse
them for their expenses in forwarding soliciting materials, which are not
expected to exceed $5,000.
It is important the proxies be returned promptly. Therefore, stockholders
are urged to sign, date and return the enclosed proxy card in the accompanying
stamped and addressed envelope.
By Order of the Board
[LOGO]
Vincent A. Chippari
Secretary
March 27, 2002
23
Appendix A
INFORMATION HOLDINGS INC.
1998 STOCK OPTION PLAN
(AMENDED AND RESTATED AS OF MARCH 26, 2002)
* * *
ARTICLE I
PURPOSE
This 1998 Stock Option Plan (the "Plan") is intended to
encourage stock ownership in Information Holdings Inc. (the "Company") by
employees and directors of the Company and its subsidiaries in order to
increase their proprietary interest in the Company's success and to encourage
such employees and directors to remain in the service of the Company and its
subsidiaries.
ARTICLE II
CERTAIN DEFINITIONS
(a) "AFFILIATE" of an entity shall mean any person or entity
controlling, controlled by or under common control with, such entity, where
"control" means the power to exercise a controlling influence over the
management or policies of such person or entity.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "CHANGE OF CONTROL" shall have the meaning set forth in
Article XI.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "COMMITTEE" shall mean (i) the Stock Option Committee of
the Board which, if and to the extent practicable, shall be comprised of at
least two persons who qualify as "non-employee directors" under Rule 16b-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and as "outside directors" under Section 162(m) of the
Code or (ii) if a Stock Option Committee has not been designated by the Board,
the Board.
(f) "COMMON STOCK" shall mean the voting common stock of the
Company, par value $0.01 per share.
(g) "ELIGIBLE EMPLOYEE" shall mean any person employed on a
full-time basis by the Company or any of its subsidiaries, or any director of
the Company.
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(h) "EXERCISE PRICE" shall have the meaning assigned to such
term in Article VI hereof.
(i) "ISO" shall mean an "incentive stock option" within the
meaning of Section 422 of the Code.
(j) "NON-QUALIFIED OPTION" shall mean an Option which is not
an ISO.
(k) "OPTION" shall mean any option granted under the Plan.
(l) "OPTIONEE" shall mean any holder of an Option.
(m) "OPTION AGREEMENT" shall mean the agreement between an
Optionee and the Company governing Options granted under the Plan, the forms of
which shall be consistent with the terms of the Plan but need not be identical.
(n) "WP VENTURES" shall mean Warburg, Pincus Ventures, L.P.,
any Affiliate thereof, or any successor thereto.
ARTICLE III
STOCK
(a) The stock to be issued upon the exercise of Options shall
be shares of authorized but unissued Common Stock or previously issued shares of
Common Stock reacquired by the Company. The aggregate number of shares of Common
Stock as to which Options may be granted under the Plan at any time shall not
exceed 2,466,886, subject to adjustment from time to time in accordance with the
provisions of Article X hereof. No more than 350,000 shares of Common Stock may
be issued to any one individual pursuant to awards of Options hereunder during
any calendar year.
(b) The number of shares of Common Stock available for grant
of Options at any time under the Plan shall be decreased by the sum of (i) the
number of shares with respect to which Options have been issued and have not
lapsed or been canceled, in each case, prior to such time and (ii) the number of
shares issued prior to such time upon exercise of Options. In the event that any
outstanding Option under the Plan lapses in accordance with Articles VII or VIII
hereof, prior to the end of the period during which Options may be granted, the
shares of Common Stock subject to the unexercised portion of such Option shall
again be available for the granting of Options under the Plan.
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ARTICLE IV
PARTICIPATION
Optionees shall be limited to Eligible Employees who have
received written notice of their selection to participate in the Plan and who
have entered into an Option Agreement. Each Option Agreement shall state the
total number of shares of Common Stock which are subject to the Option granted.
No Eligible Employee shall at any time have a right to be selected as a
participant.
ARTICLE V
ADMINISTRATION
The Plan shall be administered by the Committee which shall
have sole authority, in its absolute discretion: (a) to select which Eligible
Employees shall be granted Options; (b) to determine the number of Options to be
granted to such Eligible Employees and whether such Options shall be ISOs or
Non-Qualified Options; (c) to prescribe the form or forms of the Option
Agreements under the Plan; (d) to adopt, amend or rescind such rules and
regulations as, in its opinion, may be advisable for the administration of the
Plan; and (e) to construe and interpret the Plan, and all such rules and
regulations, and to make all other determinations deemed necessary or advisable
for the administration of the Plan. All decisions, determinations and
interpretations of the Committee made in good faith shall be final and binding
on all participants. Neither the Committee nor any member of the Committee shall
be liable for any act, omission, interpretation, construction or determination
made in connection with the Plan in good faith, and the members of the Committee
shall be entitled to indemnification and reimbursement by the Company in respect
of any claim, loss, damage or expense (including, without limitation, counsel
fees) arising therefrom to the full extent permitted by Delaware law and under
any directors' and officers' liability insurance coverage which may be in effect
from time to time.
ARTICLE VI
EXERCISE PRICE
The Exercise Price per share of Common Stock covered by
Options granted under the Plan shall be established on or prior to the date of
grant by the Committee and shall be set forth in the Optionee's Option
Agreement. Payment shall be made in full upon exercise of the Option by
delivering to the Company at its principal executive offices cash or a certified
check, bank draft or money order payable to the order of the Company in the
aggregate amount of the Exercise Price, or in accordance with any cashless
exercise procedures adopted by the Committee from time to time.
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ARTICLE VII
VESTING OF OPTIONS
All Options granted under the Plan shall vest and become
exercisable in accordance with Article XI hereof and vesting schedules
established by the Committee at the time of grant.
ARTICLE VIII
TERMINATION OF EMPLOYMENT
Each Option will have a ten-year term from the date of grant,
subject to earlier termination upon termination of the Optionee's employment, as
determined by the Committee.
ARTICLE IX
TRANSFERABILITY
Options and any Optionee's rights and interest under the Plan,
including amounts payable, may not be sold, assigned, donated, or transferred or
otherwise disposed of, mortgaged, pledged or encumbered except, in the event of
an Optionee's death, by will or the laws of descent and distribution; PROVIDED,
HOWEVER, the Committee may, in its sole discretion, allow for transfer of
Options other than ISOs to other persons or entities, subject to such conditions
or limitations as it may establish.
ARTICLE X
ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
(a) The aggregate number of shares of Common Stock which may
be purchased pursuant to Options granted hereunder, the maximum number of shares
of Stock with respect to which Options may be granted to any single Optionee
during any calendar year, the number of shares of Common Stock covered by each
outstanding Option and the price per share thereof shall be appropriately
adjusted for any increase or decrease in the number of outstanding shares of
Common Stock resulting from a stock split or other subdivision or consolidation
of shares of Common Stock, or for other capital adjustments or payments of stock
dividends or distributions or other increases or decreases in the outstanding
shares of Common Stock effected without receipt of consideration by the Company.
(b) If the Company shall be sold, reorganized, consolidated,
or merged with another corporation, or if all or substantially all of the assets
of the Company shall be sold or exchanged (a "Corporate Event"), (i) each
Optionee shall, at the time of such Corporate Event, be entitled to receive upon
the exercise of his Option the same number and kind of shares of
A-4
common stock or the same amount of property, cash or other securities as he
would have been entitled to receive upon the occurrence of such Corporate
Event as if he had been, immediately prior to such event or on the record
date relating to such event, the holder of the number of shares of Common
Stock covered by his Option, and (ii) if the Company is not the surviving
corporation in such Corporate Event, the Company shall require the successor
corporation or parent thereof to assume such outstanding Options; PROVIDED,
HOWEVER, that the Committee may, in its discretion and in lieu of requiring
such assumption, provide that all outstanding Options shall terminate as of
the consummation of such Corporate Event and accelerate the exercisability of
all outstanding Options to any date prior to the date of such Corporate Event.
(c) The foregoing adjustments and the manner of application of
the foregoing provisions shall be determined by the Committee in its sole
discretion. Any such adjustment may provide for the elimination of any
fractional share which might otherwise become subject to an Option.
ARTICLE XI
CHANGE OF CONTROL
In the event of a Change of Control, each outstanding Option
under the Plan shall vest and become immediately exercisable in full as of the
date immediately preceding the date of such Change of Control, or such other
date, not later than the date of such Change of Control, as shall be established
by the Committee in its discretion. For purposes of the Plan, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
more of either (i) the then outstanding shares of Common Stock (the "Outstanding
Company Stock") or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company, (iv) any
acquisition by WP Ventures, or (v) any acquisition by any corporation pursuant
to a transaction which complies with clauses (i), (ii), and (iii) of subsection
(c) of this Article XI;
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the effective date of the Plan whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be
A-5
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board; or
(c) Consummation of a Corporate Event, unless, following such
Corporate Event, (i) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company Stock
and Outstanding Company Voting Securities immediately prior to such Corporate
Event beneficially own, directly or indirectly, more than 50% of, respectively,
the then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors of the corporation resulting from such Corporate Event (including,
without limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) upon consummation of such Corporate Event in
substantially the same proportions as their ownership, immediately prior to such
Corporate Event, of the Outstanding Company Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person other than (1) WP Ventures, (2)
any corporation resulting from such Corporate Event, or (3) any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Corporate Event, beneficially owns, directly or indirectly, 50% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Corporate Event or the combined voting power of the then
outstanding voting securities of such corporation except to the extent that such
ownership existed prior to the Corporate Event, and (iii) at least a majority of
the members of the board of directors of the corporation resulting from such
Corporate Event were members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board, providing for such
Corporate Event; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
ARTICLE XII
RIGHTS AS A STOCKHOLDER
An Optionee or a transferee of an Option shall have no rights
as a stockholder with respect to any shares covered by his Option until he shall
have become the holder of record of such shares, and he shall not be entitled to
any dividends or distributions or other rights in respect of such shares for
which the record date is prior to the date on which he shall have become the
holder of record thereof.
A-6
ARTICLE XIII
EMPLOYMENT RIGHTS
Nothing in the Plan or in any Option Agreement entered into
hereunder shall confer on any Optionee who is an employee of the Company or any
of its subsidiaries any right to continue in the employ of the Company or any of
its subsidiaries or to interfere in any way with the right of the Company or any
of its subsidiaries to terminate the Optionee's employment at any time.
ARTICLE XIV
TRANSFER RESTRICTIONS
Appropriate legends shall be placed on the stock certificates
evidencing shares issued upon exercise of Options to reflect any relevant
transfer restrictions.
ARTICLE XV
AMENDMENT OR DISCONTINUANCE OF PLAN
The Board may from time to time, to the extent permitted by
applicable law, amend, suspend, or discontinue the Plan; provided, however, that
the Board may not take any action which would have a material adverse effect on
outstanding Options or any unexercised rights under outstanding Options without
the consent of the Optionee whose options would be adversely affected thereby.
ARTICLE XVI
CANCELLATION OF OPTIONS
The Committee, in its discretion, may, with the express
written consent of the Optionee to be affected, cancel any Option held by such
consenting Optionee hereunder.
ARTICLE XVII
MISCELLANEOUS
(a) Notwithstanding any other provision of the Plan, the
Company or a subsidiary, as appropriate, shall have the right to deduct from all
Option exercises Common Stock, valued at fair market value on the date of
payment, in an amount necessary to satisfy all Federal, state or local taxes as
required by law to be withheld with respect to such Options. In the alternative,
in the sole discretion of the Company, the Optionee or other person receiving
such Common Stock may be required to pay to the Company or a subsidiary, as
appropriate,
A-7
prior to delivery of such Common Stock, the amount of any such taxes which
the Company or subsidiary is required to withhold, if any, with respect to
such Common Stock. Subject in particular cases to the disapproval of the
Committee, the Company may accept shares of Stock of equivalent fair market
value in payment of such withholding tax obligations if the Optionee elects
to make payment in such manner.
(b) The obligation of the Company to make payment of Option
exercises in shares of Common Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. Notwithstanding any terms or conditions of any
Option to the contrary, the Company shall be under no obligation to offer to
sell or to sell and shall be prohibited from offering to sell or selling any
shares of Common Stock pursuant to an Option unless such shares have been
properly registered for sale pursuant to the Securities Act of 1933 with the
Securities and Exchange Commission or unless the Company has received advice of
counsel, satisfactory to the Company, that such shares may be offered or sold
without such registration pursuant to an available exemption therefrom and the
terms and conditions of such exemption have been fully complied with. The
Company shall be under no obligation to register for sale under the Securities
Act of 1933 any of the shares of Common Stock to be offered or sold under the
Plan. If the shares of Stock offered for sale or sold under the Plan are offered
or sold pursuant to an exemption from registration under the Securities Act of
1933, the Company may restrict the transfer of such shares and may legend the
Stock certificates representing such shares in such manner as it deems advisable
to ensure the availability of any such exemption.
(c) The Plan shall be governed by and construed in accordance
with the laws of the State of Delaware without reference to the principles of
conflicts of law thereof.
(d) No provision of the Plan shall require the Company, for
the purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Company maintain separate bank
accounts, books, records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes.
(e) Except as otherwise specifically provided in the relevant
plan document, no payment under the Plan or other amount required to be reported
as income for Federal income tax purposes shall be taken into account in
determining any benefits under any pension, retirement, profit sharing, group
insurance or other benefit plan of the Company.
(f) The expenses of administering the Plan shall be borne by
the Company. The proceeds received by the Company from the exercise of any
Options pursuant to the Plan will be used for general corporate purposes.
(g) Masculine pronouns and other words of masculine gender
shall refer to both men and women.
A-8
(h) The titles and headings of the sections in the Plan are
for convenience of reference only, and in the event of any conflict, the text of
the Plan, rather than such titles or headings, shall control.
(i) Except as otherwise specifically provided in the Plan, no
person shall be entitled to the privileges of ownership in respect of shares of
Common Stock which are subject to Options hereunder until such shares have been
issued to that person.
ARTICLE XVIII
SPECIAL PROVISIONS FOR ISOS
(a) ISOs must be granted within ten years from the date the
Plan is adopted, or the date the Plan is approved by the stockholders of the
Company, whichever is earlier.
(b) ISOs may not be exercised after the expiration of ten
years from the date such ISOs are granted.
(c) The Exercise Price of ISOs may not be less than the fair
market value of a share of Common Stock at the time such ISOs are granted, as
determined by the Committee. In such case, fair market value shall be determined
in a manner consistent with the rules and regulations under Section 422 of the
Code.
(d) ISOs may not be granted to a person who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any "subsidiary corporation" of the Company within the
meaning of Section 424(f) of the Code.
(e) To the extent the aggregate fair market value of the
Common Stock with respect to which ISOs are exercisable for the first time by
any Optionee during a calendar year (under all plans of the Company and all
"subsidiary corporations" of the Company within the meaning of Section 424(f) of
the Code) exceeds $100,000, such ISOs shall be treated as Non-Qualified Options.
For purposes of the preceding sentence, the fair market value of the Common
Stock shall be determined by the Committee at the time the ISO covering such
stock is granted.
(f) No ISOs may be granted under the Plan unless the Plan has
been approved by the stockholders of the Company within 12 months before or
after the date of the Plan's adoption by the Board.
* * *
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IMHCM-PS-02
DETACH HERE
PROXY
INFORMATION HOLDINGS INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 29, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
AND SHOULD BE RETURNED AS SOON AS POSSIBLE IN THE PRE-PAID
ENVELOPE PROVIDED FOR YOUR MAILING CONVENIENCE.
The undersigned, having received notice of the meeting and proxy statement
therefor, and revoking all prior proxies, hereby appoint(s) Mason P. Slaine and
Vincent A. Chippari, and each of their attorneys or attorney of the undersigned
(with full power of substitution in them and each of them) for and in the
name(s) of the undersigned to attend the Annual Meeting of Stockholders of
INFORMATION HOLDINGS INC. (the "Company") to be held at the offices of Warburg,
Pincus & Co., 466 Lexington Avenue, New York, New York on Monday, April 29, 2002
at 2:00 p.m., Eastern Standard Time, and any adjourned sessions thereof, and
there to vote and act upon the following matters in respect of all shares of
stock of the Company which the undersigned will be entitled to vote or act
upon, with all the powers the undersigned would possess if personally present.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DESCRIBED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH
RESPECT TO ANY PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL.
Attendance of the undersigned at the meeting or at any adjournment thereof
will not be deemed to revoke this proxy unless the undersigned shall revoke
this proxy in writing.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE.
--------------- ---------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
--------------- ---------------
INFORMATION HOLDINGS INC.
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
DETACH HERE
|X| Please mark
votes as in
this example.
1. Election of Directors.
Nominees: (01) Michael E. Danziger, (02) David R. Haas,
(03) Sidney Lapidus, (04) David E. Libowitz,
(05) John R. Purcell, (06) Mason P. Slaine
FOR |_| |_| WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
|_|
---------------------------------------
For all nominees except as noted above
2. To ratify and approve the amendment to the 1998 Stock Option Plan.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. To ratify and approve the selection by the Board of Directors of Ernst &
Young LLP as independent public accountants for the Company for the current
fiscal year ending December 31, 2002.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
MARK HERE |_| MARK HERE |_|
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
Please sign exactly as your name appears hereon. When shares are held by joint
owners both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Signature: Date: Signature: Date:
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