SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e) (2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Infocrossing, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement no.:
3) Filing Party:
4) Date Filed:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 24, 2003
--------------------------
The Annual Meeting of Stockholders will be held at 9:00 A.M. on Tuesday, June
24, 2003, at the offices of the Company at 2 Christie Heights Street, Leonia, NJ
07605, for the following purposes:
1. To elect three Directors of the Company for a three-year term; and
2. To transact such other business as may properly come before the Annual
Meeting.
Only stockholders of record at the close of business on May 8, 2003 will be
entitled to vote at the Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE YOUR PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU DO ATTEND THE ANNUAL MEETING AND WISH TO VOTE IN PERSON,
YOUR PROXY WILL NOT BE USED.
By order of the Board of Directors,
Nicholas J. Letizia
Secretary
May 9, 2003
INFOCROSSING, INC.
2 CHRISTIE HEIGHTS STREET
LEONIA, NEW JERSEY 07605
(201) 840-4700
----------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 24, 2003
--------------------------------
GENERAL INFORMATION
The enclosed Proxy is solicited on behalf of the Board of Directors of
Infocrossing, Inc. (the "Company") for use at the Annual Meeting of Stockholders
of the Company (the "Meeting") to be held at 9:00 A.M. on Tuesday, June 24, 2003
(the "Meeting Date"), at the offices of the Company at 2 Christie Heights
Street, Leonia, NJ 07605.
The authority granted by an executed Proxy may be revoked at any time before its
use by (a) filing a written revocation with the Secretary of the Company, (b)
submitting a new, duly-executed Proxy bearing a later date, or (c) voting in
person at the Meeting. Shares represented by valid Proxies will be voted at the
Meeting in accordance with the specifications in the Proxies.
If no specifications are made in otherwise properly executed Proxies, they will
be voted FOR the election of the Directors nominated by the Board.
Only stockholders of record at the close of business on May 8, 2003 (the "Record
Date") will be entitled to vote at the Meeting, either in person or by Proxy. On
the Record Date, the Company had outstanding 5,378,516 shares of common stock,
$0.01 par value, each entitled to one vote. In addition, the Company had
outstanding 157,115 shares of Redeemable 8% Series A Cumulative Convertible
Participating Preferred Stock (the "Preferred Stock"). Each share of Preferred
Stock is entitled to 14.01 votes, which is the number of common shares into
which each share of the Preferred Stock is entitled to be converted on the
Record Date. The common stock and the Preferred Stock are the Company's only
classes of voting stock currently outstanding. A majority in interest of the
outstanding voting stock, represented at the Meeting either in person or by
Proxy, constitutes a quorum for the transaction of business.
The Company will bear the cost of the solicitation of Proxies including, upon
request, reimbursement of brokerage companies and other nominees for their
reasonable expenses in forwarding solicitation materials to beneficial owners of
common stock. In addition to the use of the mails, employees of the Company may
devote part of their time to the solicitation of Proxies by telephone,
telegraph, or in person, but no additional compensation will be paid to them.
The approximate date on which this Proxy Statement and accompanying Proxy are
first being sent or given to stockholders is May 9, 2003.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of April 30, 2003 by (a) all current
Directors of the Company, (b) the Chief Executive Officer and the four most
highly compensated executive officers of the Company whose salary exceeded
$100,000 in the most recent year (the "Named Executives"), (c) all current
directors and executive officers as a group, and (d) any other person known by
the Company to be the beneficial owner of more than 5% of its common stock.
Beneficial ownership includes shares that the beneficial owner has the right to
acquire within sixty days of the above date from conversion of preferred stock
(including accrued dividends thereon) and the exercise of options, warrants, or
similar obligations. If no address is shown, the address of the beneficial owner
is in care of the Company.
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
- ------------------------------------------------------------------------
Number of Shares Percentage
Name and Address of Beneficial Owner Beneficially Owned of Class
- ------------------------------------- ------------------ ----------
Zach Lonstein (1) 1,587,925 28.6%
- ------------------------------------- ------------------ ----------
Robert B. Wallach (2) 526,475 9.0%
- ------------------------------------- ------------------ ----------
Nicholas J. Letizia (3) 22,845 *
- ------------------------------------- ------------------ ----------
Thomas Laudati (4) 27,213 *
- ------------------------------------- ------------------ ----------
Roger A. Barrios (5) 31,114 *
- ------------------------------------- ------------------ ----------
Tyler T. Zachem
MidOcean US Advisor, LLC
345 Park Avenue - 16th Floor
New York, NY 10154 (6) - -
- ------------------------------------- ------------------ ----------
Timothy W. Billings
MidOcean US Advisor, LLC
345 Park Avenue- 16th Floor
New York, NY 10154 (6) - -
- ------------------------------------- ------------------ ----------
Richard A. Keller
Sandler Capital Management
767 Fifth Avenue - 45th Floor
New York, NY 10153 (7) 2,840,861 34.6%
- ------------------------------------- ------------------ ----------
Samantha McCuen
Sandler Capital Management
767 Fifth Avenue - 45th Floor
New York, NY 10153 (7) 2,840,861 34.6%
- ------------------------------------- ------------------ ----------
Kathleen A. Perone
22 Ocean Drive Avenue
Monmouth Beach, NJ 07750 (8) 37,500 *
- ------------------------------------- ------------------ ----------
Michael B. Targoff
1330 Avenue of the Americas
New York, NY 10019 (9) 33,750 *
- ------------------------------------- ------------------ ----------
Peter J. DaPuzzo
378 Taconic Road
Greenwich, CT 06831 (10) 48,500 *
- ------------------------------------- ------------------ ----------
All current Directors and executive officers
as a group (15 persons) (11) 4,802,430 55.1%
- ------------------------------------- ------------------ ----------
Continued on next page.
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK (CONTINUED)
- ------------------------------------------------------------------------
Number of Shares Percentage
Name and Address of Beneficial Owner Beneficially Owned of Class
- ------------------------------------- ------------------ ----------
MidOcean Capital Investors, L.P.
345 Park Avenue - 16th Floor
New York, NY 10154 (6) 2,859,927 34.7%
- ------------------------------------- ------------------ ----------
Sandler Capital Management
767 Fifth Avenue
New York, NY 10153 (7) 2,840,861 34.6%
- ------------------------------------- ------------------ ----------
Sandler Capital Partners V, L.P.
767 Fifth Avenue
New York, NY 10153 (12) 1,846,177 25.6%
- ------------------------------------- ------------------ ----------
Sandler Capital Partners V FTE, L.P.
767 Fifth Avenue
New York, NY 10153 (13) 756,356 12.3%
- ------------------------------------- ------------------ ----------
Camden Partners
One South Street - Suite 2150
Baltimore, MD 21202 (14) 1,319,435 19.7%
- ------------------------------------- ------------------ ----------
Kern Capital Management, LLC
114 West 47th Street
New York, NY 10036 317,600 5.9%
- ------------------------------------- ------------------ ----------
Jack Silver
660 Madison Avenue
New York, NY 10021 405,000 7.5%
- ------------------------------------- ------------------ ----------
* Less than 1% of Class
(1) Includes 175,500 shares of common stock issuable upon exercise of vested
options held by Mr. Lonstein. Also includes 750,000 shares, held by Mr.
Lonstein, that are subject to options held by MidOcean Capital Investors,
L.P., Sandler Capital Management, and other parties to a private placement
of securities (see "Certain Relationships and Related Party Transactions"
below).
(2) Includes 477,050 shares of common stock issuable upon exercise of vested
options held by Mr. Wallach.
(3) Includes 22,845 shares of common stock issuable upon exercise of vested
options held by Mr. Letizia.
(4) Includes 27,213 shares of common stock issuable upon exercise of vested
options held by Mr. Laudati.
(5) Includes 31,114 shares of common stock issuable upon exercise of vested
options held by Mr. Barrios.
(6) Includes 1,102,440 common shares issuable upon conversion of 78,688.5
shares of Preferred Stock, including accrued dividends thereon, 1,382,487
common shares issuable upon exercise of warrants, and 375,000 common shares
which may be purchased from Mr. Lonstein pursuant to an option, all of
which are held by MidOcean Capital Investors, L.P. (formerly DB Capital
Investors, L.P.). Ultramar Capital, Ltd., MidOcean Capital Partners, L.P,
Existing Fund GP, Ltd., MidOcean Partners, LP and MidOcean Associates, SPC
may all be deemed to be beneficial owners of the shares as a result of
their direct or indirect control relationship with MidOcean Capital
Investors, L.P. MidOcean Capital Partners, L.P. is the general partner of
MidOcean Capital Investors, L.P. Existing Fund GP, Ltd. is the general
partner of MidOcean Capital Partners, L.P. MidOcean Partners, LP is the
sole owner of Existing Fund GP, Ltd. and MidOcean Associates, SPC is the
general partner of MidOcean Partners, LP. J. Edward Virtue may be deemed
the beneficial owner of the shares because he indirectly controls the
securities, but disclaims beneficial ownership except to the extent of his
pecuniary interest therein. The address for MidOcean Capital Investors,
L.P., MidOcean Capital Partners, L.P., Existing Fund GP, Ltd., MidOcean
Partners, LP and MidOcean Associates, SPC is 345 Park Avenue, 16th Floor,
New York, New York 10154. MidOcean Capital Investors, L.P. owns 50.1% of
the outstanding shares of Preferred Stock.
(7) Includes 1,095,090 common shares issuable upon conversion of 78,164 shares
of Preferred Stock, including accrued dividends thereon, 1,373,271 common
shares issuable upon exercise of warrants, and 372,500 common shares which
may be purchased from Mr. Lonstein subject to options. Ms. McCuen and Mr.
Keller are Managing Directors of Sandler Capital Management, which is the
general partner of Sandler Investment Partners, L.P., which in turn is the
general partner of five funds that collectively own the Preferred Stock,
warrants, and options noted above. Ms. McCuen and Mr. Keller have shared
voting and dispositive power over such Preferred Stock, warrants, and
options. The five funds collectively own 49.7% of the outstanding shares of
Preferred Stock.
(8) Includes 37,500 shares of common stock issuable upon exercise of
non-qualified options held by Ms. Perone.
(9) Includes 33,750 shares of common stock issuable upon exercise of vested
options held by Mr. Targoff.
(10) Includes 42,500 shares of common stock issuable upon exercise of vested
options held by Mr. DaPuzzo.
(11) Includes 1,095,090 common shares issuable upon conversion of 78,164 shares
of Preferred Stock and 1,373,271 common shares issuable upon exercise of
warrants. Also includes 866,219 shares of common stock issuable upon
exercise of options collectively held by the fifteen directors and
executive officers of the Company.
(12) Includes 711,661 common shares issuable upon conversion of 50,796 shares of
the Preferred Stock, including accrued dividends thereon, 892,441 common
shares issuable upon exercise of warrants, and 242,075 common shares which
may be purchased from Mr. Lonstein subject to an option.
(13) Includes 291,559 common shares issuable upon conversion of 20,810 shares of
Preferred Stock, including accrued dividends thereon, 365,622 common shares
issuable upon exercise of warrants, and 99,175 common shares which may be
purchased from Mr. Lonstein subject to an option.
(14) Includes 8,571 common shares issuable upon exercise of warrants received in
connection with a prior loan to the Company, and 875,000 vested warrants
received in connection with a Securities Purchase Agreement (See "Certain
Relationships and Related Party Transactions", below). Includes securities
held by Camden Partners Strategic Fund II-A, L.P.; Camden Partners
Strategic Fund II-B, L.P.; the Cahill, Warnock Strategic Partners Fund,
L.P.; and Strategic Associates, L.P., (the "Camden Entities"). Along with
Cahill, Warnock Strategic Partners, L.P., each fund has shared voting and
dispositive power over the total number of shares owned by the Camden
Entities. Each of the Camden Entities disclaims beneficial ownership over
any shares not held of record by it.
PROPOSAL I - ELECTION OF DIRECTORS
The Board consists of nine Directors divided into three classes.
The persons named in the table below are the Class A directors nominated by the
Board for election at the Meeting, each to serve a three-year term or until
their respective successors are duly elected and qualified. Each has consented
to being named a nominee in this Proxy Statement and has agreed to serve as a
Director if elected at the Meeting. Unless otherwise indicated, the persons
named in the Proxy intend to vote their shares for the election of these
nominees. Pursuant to a Stockholders' Agreement, MidOcean Capital Investors,
L.P. (formerly DB Capital Investors, L.P.); Sandler Capital Management; Camden
Partners; and the Management and Non-Management Stockholders as therein defined
have agreed that each party will vote shares over which they have voting power
(approximately 54% of the total voting shares) to elect the slate of Directors
nominated by the Board. If any nominee becomes unable to serve prior to the
Meeting, Proxies will be voted for such other candidates as may be nominated by
the Board of Directors.
Directors will be elected by a plurality of the votes properly cast at the
meeting. Abstentions and broker non-votes will not be treated as votes cast for
this purpose, but will be treated as shares present for the purpose of
determining whether a quorum is present.
DIRECTOR
NAME POSITIONS WITH THE COMPANY AGE SINCE
- ------------------- -------------------------- ------ --------------
Peter J. DaPuzzo * Director 62 2001
Richard A. Keller Director 38 2001
Tyler T. Zachem Director 37 2000
* Mr. DaPuzzo previously served on the Company's Board from July 1999 through
May 2000.
The name, principal occupation with the Company, and certain information
concerning each of the Directors and executive officers of the Company as of
April 30, 2003 are set forth in the table below. Also set forth following the
table is certain additional information regarding each individual's business
experience.
DIRECTOR TERM
NAME POSITIONS WITH THE COMPANY AGE SINCE EXPIRES
- ------------------- ------------------------------------ ----- -------- -------
Zach Lonstein Chief Executive Officer & Chairman
of the Board of Directors 59 1984 2005
Robert B. Wallach President, Chief Operating
Officer & Director 64 2001 2005
Roger A. Barrios Senior Vice President of the Company
and President of a subsidiary 52 - -
William J. McHale Senior Vice President, Finance 48 - -
Thomas Laudati Senior Vice President,
Enterprise Engineering 45 - -
Garry Lazarewicz Senior Vice President, Research
& Development 54 - -
Nicholas J. Letizia Senior Vice President, General
Counsel, Treasurer & Secretary 51 - -
Michael Wilczak Senior Vice President -
Corporate Development 32 - -
Timothy W. Billings Director 30 2002 2004
Peter J. DaPuzzo Director 62 2001 2003
Richard A. Keller Director 38 2001 2003
Samantha McCuen Director 34 2000 2005
Kathleen A. Perone Director 49 2000 2004
Michael B. Targoff Director 58 2001 2004
Tyler T. Zachem Director 37 2000 2003
ZACH LONSTEIN has been the Company's Chairman of the Board since he organized
the Company in 1984, Chief Executive Officer from 1984 through June 2000 and
from November 2001 to the present, and President from 1984 to May 1996. From
1981 to 1984, Mr. Lonstein was Vice President and General Manager of the
Commercial On-Line division of Informatics General Corporation ("Informatics"
subsequently renamed Sterling Federal Systems, Inc.), a computer software and
services company listed on the New York Stock Exchange. In 1970, Mr. Lonstein
was a founder and President of Transportation Computing Services Corp. ("TCS").
In 1981, TCS was sold to Informatics. The Company purchased the Commercial
On-Line division of Informatics in 1984.
ROBERT B. WALLACH joined the Company in June 1995, was President from May 1996
until June 2000 and from November 2001 to the present, and a Director of the
Company from 1992 until May 2000. In August 2001, he was reelected to the Board
of Directors. From June 2000 through April 2001, he was President of the
Company's Managed Services Division. In April 2001, he was named Chief Operating
Officer of the Company. Prior to June 1995, he was sole proprietor of Horizons
Associates, a consulting firm he founded in 1985. Mr. Wallach has more than 20
years of operating experience including senior management positions with Boeing
Computer Services, Informatics, and the Financial Information Services
Group/Strategic Information division of Ziff Communications.
ROGER A. BARRIOS has served as President of AmQUEST, Inc. ("AmQUEST") since its
inception in 1995 and continues in this position subsequent to the acquisition
of AmQUEST by the Company in February 2002 (See "Certain Relationships and
Related Transactions"). Mr. Barrios also serves as a Senior Vice President of
the Company. Prior to joining AmQUEST, Mr. Barrios served in several positions
between 1980 and 1995 within American Software, Inc., the prior parent of
AmQUEST.
WILLIAM J. MCHALE was named Senior Vice President, Finance of the Company in
September 2002. Prior to joining Infocrossing, from 1990 through 2001, Mr.
McHale was Chief Financial Officer and Executive Vice President at Eden LLC, a
regional importer and distributor. He assisted with that company's sale of its
brand and licensing rights to Learning Curve International. Eden LLC filed for
bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code on June 15,
2001. Prior to Eden, Mr. McHale held senior operations and finance positions
with Amerada Hess Corporation and several private companies. Mr. McHale, a
Certified Public Accountant also spent six years with Arthur Andersen & Co..
THOMAS LAUDATI has been Senior Vice President, Technical Services, of the
Company since 1997 and a Vice President of the Company since 1995, when the
Company purchased MCC Corp. Mr. Laudati joined MCC Corp in 1988 as a senior
analyst, and was promoted to Vice President of Technical Services in April 1991.
Prior to joining MCC Corp., Mr. Laudati held positions in the programming
departments of Horizons Bancorp and Colonial Life Insurance Company.
GARRY LAZAREWICZ has been Senior Vice President, Research & Development, of the
Company since August 1, 1999, and Vice President since June 1995, when the
Company purchased MCC Corp. Mr. Lazarewicz, who oversees all corporate research
and development, joined MCC Corp. in 1979, and was promoted to Vice President in
1985. From 1971 through 1979, he was employed at Global Terminal and Computer
Services, where his last position was Director of MIS.
NICHOLAS J. LETIZIA joined the Company as Chief Financial Officer and Secretary
in November 1998. In April 2001, Mr. Letizia ceased being the Company's Chief
Financial Officer and was named to the new position of Senior Vice President and
General Counsel. In June 2002, he was named to the additional position of
Treasurer. Prior to joining Infocrossing, he was Chief Financial Officer of
InterEquity Capital Corporation, the general partner of a Small Business
Investment Company. Before joining InterEquity in November 1997, he was Vice
President of, and later a consultant to, Helmstar Group, Inc. from 1987 until
November 1997. His employment experience also includes professional positions
with Arthur Andersen & Co. and Donaldson, Lufkin & Jenrette. Mr. Letizia is a
Certified Public Accountant (Inactive Status) and a member of the New Jersey
Bar.
MICHAEL WILCZAK joined the Company as Senior Vice President of Corporate
Development on March 1, 2001. Prior to joining Infocrossing, Mr. Wilczak was
Director of e-Infrastructure Outsourcing for Cabletron Systems and its spin-off,
Global Network Technology Services. From October 1998 through October 1999, when
he joined Cabletron, Mr. Wilczak was Marketing Development Manager for Qwest
Communications, and from June 1993 until leaving to join Qwest, he held several
positions with AT&T, the last being Client Business Manager.
TIMOTHY W. BILLINGS was elected to the Board of Directors in April 2002. Mr.
Billings is a Vice President of MidOcean US Advisor, LLC, an affiliate of
MidOcean Capital Investors, L.P. (formerly DB Capital Investors, L.P.). From May
2000 through February 2003, Mr. Billings was a Senior Associate at DB Capital
Partners, Inc., an affiliate of DB Capital Investors, L.P. Prior to April 2000,
Mr. Billings held various investment banking positions at UBS Warburg from April
1996 to April 2000 and Chase Manhattan Bank from July 1995 to March 1996.
PETER J. DAPUZZO was reelected to the Board of Directors on November 27, 2001.
He had previously served on the Company's Board from July 1999 through May 2000.
Prior to 2002, Mr. DaPuzzo was the Co-President and CEO of Cantor Fitzgerald and
Company, the equity institutional sales and trading division of Cantor
Fitzgerald LP. Mr. DaPuzzo is also a Senior Managing Director of Cantor
Fitzgerald LP. Mr. DaPuzzo joined Cantor Fitzgerald in 1993. Mr. DaPuzzo is
President of the National Organization of Investment Professionals, a
professional group of institutional and broker dealer senior managers, a member
the Presidential Advisory Committee to the President of Security Traders
Association of New York, and a member and the immediate past Chairman of the
Securities Industry Association - Institutional Traders Committee.
RICHARD A. KELLER was elected to the Board of Directors in April 2001. Mr.
Keller has been Managing Director of Sandler Capital Management since June 2000.
From February 1996 until March 2000, Mr. Keller was a partner of Chartwell
Investments, a private equity investment firm. Mr. Keller's prior professional
experience includes positions as an investment banker with Merrill Lynch & Co.
and as an attorney with the firm of Davis Polk & Wardwell.
SAMANTHA MCCUEN was elected to the Board of Directors in May 2000. Ms. McCuen
joined Sandler Capital Management in January 1996, and has been Managing
Director since January 2000. Prior to January 1996, Ms. McCuen held both equity
research and investment banking positions at Morgan Stanley Dean Witter, an
investment banking firm. Ms. McCuen is also a member of the board of
Register.com.
KATHLEEN A. PERONE was elected to the Board of Directors in September 2000. In
June 2002, Ms. Perone became President and Chief Executive Officer of Focal
Communications, Inc., headquartered in Chicago, IL. Beginning in April 2000, Ms.
Perone was Managing Director of Acappella Ventures LLC, a Delaware limited
liability corporation, which invested in early stage telecommunications and
technology enterprises. From August 2001 to February 2002, she was Chairman and
Chief Executive Officer of Lightrade, Inc., a private corporation that filed in
March 2001 for bankruptcy protection under Chapter 7 of the U.S. Bankruptcy
Code. From January 1998 through March 2000, Ms. Perone was employed by
Denver-based Level(3) Communications, LLC as President - North American
Operations. Prior to 1998, Ms. Perone held various positions with MFS
Communications (now WorldCom), including President - Global Services Division
and President - Telecom East. Ms. Perone is also a member of the boards of
directors of Focal Communications Corp and Tellium, Inc.
MICHAEL B. TARGOFF was elected to the Board of Directors in May 2001. Mr.
Targoff is the owner of Michael B. Targoff & Co., a company he founded in
January 1998 that seeks active or controlling investments in telecommunications
and related industry early stage companies. From January 1996 through January
1998 Mr. Targoff was president and chief operating officer of Loral Space and
Communications Ltd. Mr. Targoff had been senior vice president of Loral
Corporation prior to the combination of Loral's defense electronics and systems
integration businesses with Lockheed Martin in 1996. Mr. Targoff is a director
and chairman of the audit committee for both Globalstar Telecommunications
Limited and Leap Wireless International, Inc., and a director of ViaSat, Inc.
TYLER T. ZACHEM was elected to the Board of Directors in May 2000. Mr. Zachem is
a Managing Director of MidOcean US Advisor, LLC, an affiliate of MidOcean
Capital Investors, L.P. (formerly DB Capital Investors, L.P.). From June 1999
through February 2003, Mr. Zachem was Managing Director of DB Capital Partners,
Inc., an affiliate of DB Capital Investors, L.P. From July 1993 through June
1999, Mr. Zachem was a partner in the firm of McCown, DeLeeuw & Company, a
private equity firm.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held seven meetings during 2002 and took one action by
unanimous written consent. The Company has standing Audit and Options and
Compensation Committees of the Board of Directors. The Company does not have a
nominating committee. During 2002 (or for such shorter period during which they
served) all Directors attended at least 75% of the meetings of the Board of
Directors and the meetings of the committees on which they served.
AUDIT COMMITTEE
The Audit Committee consists of Directors who are not employees of the Company.
During 2002, the Audit Committee consisted of Ms. Perone (Chairperson) and
Messrs. Targoff, and DaPuzzo. The Audit Committee met five times in 2002, and
took one action by unanimous written consent. Each of the members of the Audit
Committee meets the requirements for being members as prescribed by the listing
standards of the Nasdaq Stock Market. Each of the members of the Audit Committee
is independent as independence is defined by the listing standards of the Nasdaq
Stock Market.
In June 2000, the Board of Directors adopted an Audit Committee Charter pursuant
to requirements of the Securities and Exchange Commission. The Charter was
amended in August 2001. The Audit Committee meets periodically with management
and the Company's independent certified public accountants to discuss their
evaluation of internal accounting controls, the quality of financial reporting,
and related matters. The independent auditors have free access to members of the
Audit Committee without the presence of management, if necessary, to discuss the
results of their audits. The Company requires that all services provided by the
independent auditors be pre-approved by the Audit Committee. The report of the
Audit Committee appears on page 17.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2002, the Options and Compensation Committee consisted of Messrs. Zachem
(Chairman) and Lonstein, Ms. McCuen, and Ms. Perone. Ms. McCuen and Mr. Zachem
are non-employee directors who are also Managing Directors of affiliates of
organizations that have an investment in the Company (See "Certain Relationships
and Related Party Transactions" below). Mr. Lonstein is an executive officer of
the Company. Ms. Perone is a non-employee director.
OPTIONS AND COMPENSATION COMMITTEE
The Options and Compensation Committee of the Board of Directors of the Company
is responsible for, among other matters, establishing policies applicable to the
compensation of the Company's executive officers and reporting on such policies
to the Board of Directors and stockholders; determining the salaries, incentive
compensation and other remuneration of executive officers of the Company who are
directors; and reviewing salaries, compensation and remuneration for all other
officers of the Company. The Committee regularly reviews the effectiveness of
the Company's executive compensation practices and revises them as appropriate.
The Board may also delegate the authority to the Options and Compensation
Committee to negotiate contracts with certain employees. The Options and
Compensation Committee met twice during 2002, and took four actions by unanimous
written consent. A report on the compensation philosophy of the Committee and
its executive compensation activities during 2002 appears on page 13.
EXECUTIVE COMMITTEE
The Executive Committee of the Board of Directors may act with the authority of
the Board except that it may not (i) submit any matter to a vote of the
stockholders, (ii) fill any Board vacancies, (iii) set any compensation for
Board members, and (iv) amend or repeal the By-Laws or any Board resolution
which by its terms may not be so amended or repealed. The Executive Committee
consisted of Messrs. Lonstein (Chairman), Keller, Targoff, Wallach, and Zachem.
The Executive Committee neither met nor took any action in 2002.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The Summary Compensation Table below includes, for each of the years ended
December 31, 2002, 2001, and 2000, individual compensation for services to the
Company and its subsidiaries as paid to the Named Executives.
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
------------------------------------ ---------------------------
Awards
---------------------------
Other Securities
Name and Principal Annual Restricted Underlying All Other
Position at Salary Bonus Compensation Stock Options/SARS Compensation
December 2002 Year ($) ($) ($) Awards (#) (#) ($)
- -------------------- --------- --------- ------------ ------------- ------------ -------------- -------------
Zach Lonstein 2002 413,437 195,000(a) - - (e) -
Chief Executive 2001 397,031 225,000(c) - - - -
Officer & Chairman 2000 386,979 175,000(d) - - 300 -
- -------------------- --------- --------- ------------ ------------- ------------ -------------- -------------
Robert Wallach 2002 413,437 195,000(a) - - (e) -
President & Chief 2001 397,031 225,000(c) - - - -
Operating Officer 2000 394,792 50,000(d) - - 50 -
- -------------------- --------- --------- ------------ ------------- ------------ -------------- -------------
Roger A. Barrios * 2002 209,274 20,000(b) - - 70,000 -
Sr. VP & President 2001 - - - - - -
of AmQUEST, Inc. 2000 - - - - - -
- -------------------- --------- --------- ------------ ------------- ------------ -------------- -------------
Nicholas J. Letizia 2002 183,750 10,000(b) - - 10,000 -
Sr. VP & General 2001 176,667 15,000(c) - - - -
Counsel 2000 170,000 35,000(d) - - - -
- -------------------- --------- --------- ------------ ------------- ------------ -------------- -------------
Thomas Laudati 2002 180,000 75,000(b) - - 2,500 -
Sr. VP 2001 157,500 55,000(c) - - - -
2000 150,000 35,000(d) - - - -
- -------------------- --------- --------- ------------ ------------- ------------ -------------- -------------
* On February 5, 2002, the Company purchased AmQUEST, Inc., and Mr. Barrios was
made President of this subsidiary and Senior Vice President of the Company on
that date.
(a) Bonus earned in 2002. $95,000 has been paid through April 30, 2003.
Additionally, in 2003 Messrs. Lonstein and Wallach were each granted
options to purchase 10,000 shares of the Company's common stock.
(b) Bonus earned in 2002, paid in April 2003. (c) Bonus earned in 2001, paid in
January 2002. (d) Bonus earned in 2000, paid in January 2001.
The Named Executives may participate in certain group life, health, and other
non-cash benefit plans, which are generally available to all Company employees.
The Company also maintains a 401(k) Savings Plan (the "Plan") covering all
eligible employees who have attained the age of 21 years and worked at least
1,000 hours in a one-year period. The Company may make matching contributions at
the discretion of the Board of Directors. For the twelve-month periods ended
December 31, 2002, 2001, and 2000, the Company did not make any matching
contributions.
OPTION GRANT TABLE
The following table gives information concerning grants of options made to the
Named Executives during 2002:
OPTION GRANTS DURING THE LAST FISCAL YEAR
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ------------------------------
GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE 5% ($) 10% ($)
- ------------------- -------------- --------------- -------------- --------------- -------------- ---------------
Zach Lonstein - - - - - -
Robert Wallach - - - - - -
Roger A. Barrios 70,000 (a) 27.8% $6.3050 02/04/12 $277,563 $703,398
Nicholas J.
Letizia 10,000 (b) 4.0% $6.2685 02/03/12 $39,422 $99,904
Thomas Laudati 2,500 (b) 1.0% $6.2685 02/03/12 $9,856 $24,976
(a) This option becomes exercisable as to one-third of the shares on February
4, 2004, and as to one thirty-sixth of the shares each month thereafter for
24 months.
(b) These options become exercisable as to one-third of the shares on February
3, 2004, and as to one thirty-sixth of the shares each month thereafter for
24 months.
The Company did not award any stock appreciation rights or reprice any stock
options during the twelve months ended December 31, 2002.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table contains information concerning the stock options held by
the Named Executives during the year ended December 31, 2002. No stock
appreciation rights have been granted by the Company.
AGGREGATED OPTION EXERCISES DURING THE TWELVE MONTHS ENDED
DECEMBER 31, 2002 AND YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------------------------------------
Securities Received
from Exercise of Number of Securities Value of Unexercised
Options during the Underlying Unexercised In-the-Money Options at
Twelve Months ended Options at December 31, December 31, 2002
December 31, 2002 2002 (#) ($) (2)
------------------------- -------------------------- --------------------------
Net Value
Number Received Un- Un-
Name of Shares ($)(1) Exercisable Exercisable Exercisable Exercisable
- -------------------- ---------- ----------- ----------- ----------- ----------- -----------
Zach Lonstein 8,633 $49,850 (3) 195,500 5,000 - -
Robert Wallach - - 477,050 - $439,868 -
Roger A. Barrios - - - 70,000 - -
Nicholas J. Letizia - - 18,400 19,600 - $315
Thomas Laudati - - 26,100 3,500 41,006 79
(1) The amount shown represents the aggregate excess of the market value of the
shares of common stock as of the date of the exercise over the exercise
price paid.
(2) The amounts shown represent the aggregate excess of the market value of
shares of common stock underlying in-the-money options at December 31, 2002
over the exercise price of those options.
(3) This option for 25,000 shares was exercised through the surrender of 16,367
shares. The market price on the date of exercise approximated the exercise
amount of the option. The difference was paid in cash to the Company.
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are not full-time employees of the Company
are granted non-qualified options to purchase 1,250 shares of the Company's
common stock for each meeting attended. Subject to approval by the Board of
Directors, members of the Audit Committee each receive an annual grant of a
non-qualified option to purchase 2,500 shares of the Company's common stock.
Employees of the Company who are also Directors, and Directors who are also
affiliates of the funds that have invested in the Company, do not receive
compensation for their service as Directors.
Upon their election to the Board of Directors, Ms. Perone and Messrs. Targoff
and DaPuzzo each were granted a non-qualified option to purchase 25,000 shares
of the Company's common stock.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
Effective as of November 1, 1999, Mr. Lonstein and the Company entered into an
employment agreement with a three-year term. This agreement provided for an
annual salary of $375,000 with increases in the second and third years of at
least 5% per annum. The Options and Compensation Committee of the Board of
Directors had the right, which was not exercised, to provide for a greater
annual increase and also the responsibility to set the parameters for the bonus
calculation. The agreement also provided for a grant of a nonqualified option to
purchase 150,000 shares of the Company's common stock at an exercise price equal
to the market value of the stock on November 10, 1999, in accordance with the
Plan. In addition, the agreement required that the Company provide Mr. Lonstein
a current model automobile and purchase a health club membership. The agreement
also provided that the Company shall nominate Mr. Lonstein to serve as the
Chairman of the Company's Board of Directors.
Effective as of November 1, 1999, Mr. Wallach and the Company entered into an
employment agreement with a three-year term. This agreement provided for an
annual salary of $375,000 with increases in the second and third years of at
least 5% per annum. The Options and Compensation Committee of the Board of
Directors had the right, which was not exercised, to provide for a greater
annual increase and also the responsibility to set the parameters for the bonus
calculation. The agreement also provided for a grant of a non-qualified option
to purchase 150,000 shares of the Company's common stock at an exercise price
equal to the market value of the stock on November 10, 1999, in accordance with
the Plan. In addition, the agreement required that the Company provide Mr.
Wallach a current model automobile and purchase a health club membership.
The stated term of each of the foregoing employment agreements was to expire on
October 31, 2002. At the end of the stated term, each agreement provides that
will continue in full force until either the executive or the Company provides
one year notice of termination.
In connection with the acquisition of AmQUEST, Inc. described below in "Certain
Relationships and Related Party Transactions" on February 5, 2002, AmQUEST and
Mr. Barrios entered into an employment agreement with a one year term with
automatic three-month extensions. This agreement provides for an annual salary
of $210,000, a vehicle allowance of $500 per month, an annual bonus of up to 30%
of his salary to be determined by the Board of Directors of AmQUEST, and a
one-time bonus of up to $32,000 based on certain operations as determined by the
Chief Executive Officer of AmQUEST. The agreement also provides for a grant of a
non-qualified option to purchase 70,000 shares of the Company's common stock at
an exercise price equal to the market value of the stock on February 5, 2002, in
accordance with the Plan.
REPORT ON EXECUTIVE COMPENSATION
The Options and Compensation Committee of the Board of Directors administers the
compensation of the executive officers of the Company. During 2002, the Options
and Compensation Committee was composed of four directors, three of whom were
not employed by the Company. The following report is submitted by the Options
and Compensation Committee regarding compensation paid during 2002.
The Company's compensation policies are designed to attract, motivate, and
retain superior talent to enable the Company to achieve its business objectives
and to align the financial interest of the executive officers with the
stockholders of the Company.
The compensation of executive officers consists of base compensation,
participation in benefit plans generally available to employees, and in some
instances, bonuses and/or options. In setting compensation, the Options and
Compensation Committee strives to maintain base compensation for the Company's
executive officers at levels which the Committee, based on its experience,
believes are competitive with the compensation of comparable executive officers
in similarly situated companies while relying on stock options and the bonus
plan to provide significant performance incentives.
Executive officers are eligible to participate in a bonus plan. Awards under the
bonus plan are determined by the Options and Compensation Committee. The Options
and Compensation Committee relies significantly on the recommendation of the
Chief Executive Officer with respect to the bonus to be awarded to the other
executive officers. The executive officers, as well as other key employees, may
receive discretionary bonuses based on a subjective evaluation of the
performance of the Company and their contributions to the Company.
Each of the executive officers and certain key employees are eligible to receive
awards under the Amended and Restated 2002 Stock Option and Stock Appreciation
Rights Plan (the "2002 Plan"). Prior to the adoption of the 2002 Plan in June
2002, executive officers and certain key employees were eligible to receive
awards under the Amended and Restated 1992 Stock Option and Stock Appreciation
Rights Plan (the "1992 Plan"). With the adoption of the 2002 Plan, awards will
no longer be made under the 1992 Plan. The purpose of each of the foregoing
plans is to align a portion of the officers' compensation with the stockholders'
interest and the long-term success of the Company. In determining the number of
options to be granted to each executive officer, the Options and Compensation
Committee reviews the recommendations provided by the Chief Executive Officer
with respect to the executive officers other than the Chief Executive Officer
and makes a subjective determination regarding those recommendations. Grants of
options must be approved by a majority of the non-employee members of the
Options and Compensation Committee.
In determining executive compensation for 2002, the Options and Compensation
Committee reviewed the relative contributions of each executive officer during
2002; the Company's performance for 2002; and in the case of Messrs. Lonstein,
Wallach, and Barrios, the employment agreements between the Company and each of
them. Messrs. Laudati and Letizia do not have employment agreements with the
Company. Based on the individual experience of its members, the Options and
Compensation Committee believes the compensation for each Named Executive
Officer for 2002 was reasonable based on each executive officer's experience,
level of responsibility, and the contributions made and expected to be made by
each to the Company. See "Employment Agreements" for a description of the
employment agreements between the Company and each of Messrs. Lonstein, Wallach,
and Barrios.
Options and Compensation Committee
Zach Lonstein
Samantha McCuen
Kathleen A. Perone
Tyler T. Zachem
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In May 2000, the Company issued 157,377 shares of redeemable 8% Series A
Cumulative Convertible Participating Preferred Stock (the "Series A Preferred
Stock") and warrants to purchase 2,531,926 shares of the Company's common stock.
The Company received $58,430,596 after payment of issuance costs and related
legal fees. The two holders of substantially all (156,852 shares) of the shares
of the Series A Preferred Stock are each entitled to name two of the Company's
Directors. On April 30, 2003, these individuals are Messrs. Zachem, Billings,
Keller, and Ms. McCuen.
As of March 31, 2003, Mr. Lonstein was indebted to the Company in the amount of
$85,745. This indebtedness is payable on demand and bears interest at the prime
rate of interest plus 1% per annum.
As of March 31, 2003, Mr. Wallach was indebted to the Company in the amount of
$96,117. This indebtedness is payable on demand and bears interest at the prime
rate.
In 2003, the Options and Compensation Committee agreed that, subject to a
schedule to be determined, the Company would forgive the loans (and accrued
interest thereon) payable to the Company by Messrs. Lonstein and Wallach.
As of March 31, 2003, Mr. Laudati is indebted to the Company in the amount of
$36,153. This indebtedness is payable on demand and bears interest at the prime
rate.
No advances have been made to the above individuals, other than accrued interest
on outstanding balances, since July 30, 2002.
On February 5, 2002, the Company entered into a Stock Purchase Agreement with
American Software, Inc., a Georgia corporation ("ASI") whereby the Company
purchased all of the outstanding capital stock of AmQUEST, Inc., a Georgia
corporation ("AmQUEST"), from its former parent company ASI (the "AmQUEST
Acquisition"). As consideration for the purchase of AmQUEST's shares, the
Company paid ASI $19,634,000 in cash, after certain post closing adjustments.
The Company financed the AmQUEST Acquisition through (i) the application of the
proceeds of the financing described below and (ii) cash held by the Company.
AmQUEST, a managed services provider that delivers technology infrastructure
management services to enterprise clients, will continue to operate its business
as a wholly-owned subsidiary of the Company. Roger A. Barrios, a Senior Vice
President of the Company, has served as President of AmQUEST since its inception
in 1995 and has continued in this position subsequent to the AmQUEST
Acquisition.
On February 1, 2002, in anticipation of the consummation of the AmQUEST
Acquisition described above, the Company entered into a Securities Purchase
Agreement (the "SPA") with Cahill, Warnock Strategic Partners Fund, L.P.;
Strategic Associates, L.P.; Camden Partners Strategic Fund II-A, L.P.; and
Camden Partners Strategic Fund II-B, L.P. (collectively known as "Camden")
whereby the Company issued Senior Subordinated Debentures (the "Debentures") and
warrants (the "Initial Warrant") to purchase, initially, 2,000,000 shares of the
common stock of the Company (subject to adjustments as provided in the SPA) in
exchange for an investment of $10,000,000 from Camden. Pursuant to the SPA, the
proceeds of the sale of the Debentures to Camden were used to partially fund the
acquisition.
Pursuant to the rules of the Nasdaq National Market, the issuance of shares of
Common Stock representing more than 19.999% of the outstanding Common Stock upon
the exercise of any warrants requires the approval of the stockholders of the
Company. On June 25, 2002, the stockholders approved a resolution authorizing
this transaction.
Pursuant to the terms of a Stockholders' Agreement, as long as any indebtedness
under the Camden Debentures remains outstanding, the Camden Entities shall have
the right to designate an observer to attend and participate, but not vote, at
meetings of the Board of Directors and receive materials provided to the
Directors. As of April 30, 2003, indebtedness of approximately $11,236,000 plus
accrued interest remained outstanding.
STOCK PERFORMANCE GRAPH
The accompanying graph compares cumulative total stockholder return on the
Company's common stock with the NASDAQ Domestic Stock Index and the NASDAQ
Computer and Data Processing Services Index (SIC Code 737). The graph assumes
that $100 was invested in the Company's common stock and each index on December
31, 1997.
[GRAPH APPEARS HERE]
STOCKHOLDER RETURN
AS OF DECEMBER 31,
--------------------------------------------------
1997 1998 1999 2000 2001 2002
Company Common Stock $100 $109 $253 $61 $61 $63
NASDAQ Domestic Index 100 141 262 158 125 87
NASDAQ Computer and
Data Processing
Services Index 100 178 392 181 145 100
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the executive
officers and Directors of the Company, and persons who beneficially own more
than ten percent of the Company's Common Stock, to file reports of ownership of
Company securities and changes of ownership with the Securities and Exchange
Commission. Copies of those reports must also be furnished to the Company.
Based solely on a review of the copies of reports furnished to the Company or
representations of the Company's Directors and executive officers that no
additional reports were required, the Company believes that during the twelve
months ended December 31, 2002 the executive officers, Directors, and other
persons beneficially owning more than ten percent of the Company's Common Stock
complied with all applicable Section 16(a) filing requirements on a timely
basis, except as to a Form 3 which was not filed in a timely manner for Mr.
Billings.
INFORMATION CONCERNING INDEPENDENT AUDITORS
FEES BILLED BY ERNST & YOUNG, LP, THE COMPANY'S INDEPENDENT AUDITORS
FOR THE YEARS ENDED DECEMBER 31,
2002 2001
----------------- -----------------
AUDIT FEES $ 248,000 $ 198,250
AUDIT-RELATED FEES - PRIMARILY FOR DUE
DILIGENCE RELATED TO THE AMQUEST
ACQUISITION AND BENEFIT PLAN AUDITS 44,795 64,280
TAX FEES - PRIMARILY FOR
PREPARATION AND
TAX AUDIT SUPPORT 86,135 145,815
-------------- -------------
$ 378,930 $ 408,345
============== =============
REPRESENTATION AT THE MEETING
A representative of Ernst & Young, LLP is expected to be present at the Meeting.
Such representative will have an opportunity to make a statement, if he or she
desires to do so, and will be available to respond to appropriate questions.
Ernst & Young, LLP, has been selected to audit the Company's financial
statements for the year ending December 31, 2003.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors, and appoints the Company's independent auditors.
Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls. In fulfilling its
oversight responsibilities, the Audit Committee reviewed the audited financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002 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 accounting principles generally accepted in the United States,
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 auditing standards generally accepted in the
United States. In addition, the Audit Committee has discussed with the
independent auditors the auditors' independence from management and the Company
including the matters in the written disclosures required by the Independence
Standards Board and considered the compatibility of non-audit services with the
auditors' independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their audits. The Audit Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
Audit Committee held five meetings during the year ended December 31, 2002 and
two meetings so far in 2003. The Audit Committee also took action by written
consent once during 2002.
The independent auditors also provided the Audit Committee with the written
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent auditors that firm's independence with respect to the
Company and its management. The Committee has also reviewed the Sarbanes-Oxley
Act of 2002, and the rules of the Securities and Exchange Commission promulgated
thereunder, with respect to auditor independence and has defined the amount and
scope of services that may be performed by the independent auditors consistent
with maintaining the auditors' independence. The Audit Committee requires that
all services of the independent auditors be pre-approved by the Audit Committee.
The Audit Committee has considered whether the independent auditors provision of
non-audit services to the Company and the audit and non-audit fees paid to the
independent auditors, are compatible with maintaining the independent auditors'
independence. On the basis of its review, the Audit Committee determined that
the independent auditors have the requisite independence.
Based on the Audit Committee's discussions with management and the independent
auditors, the Audit Committee's review of the audited financial statements, the
representations of management regarding the audited financial statements, and
the report of the independent auditors to the Audit Committee, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2002 for filing with the Securities and Exchange Commission.
Audit Committee
Kathleen A. Perone, Chairperson
Peter J. DaPuzzo
Michael B. Targoff
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
In order for a stockholder proposal to be considered for inclusion in the
Company's Proxy Materials for the 2004 Annual Meeting, it must be received by
the Company's Secretary at 2 Christie Heights Street, Leonia, NJ 07605, no later
than January 13, 2004.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Meeting other than the matters described in this Proxy Statement. If other
business is properly presented for consideration at the Meeting, or any
adjournment thereof, the enclosed Proxy shall be deemed to confer discretionary
authority on the persons named therein to vote the shares represented by such
Proxy as to such other business.
The Board of Directors would appreciate the prompt return of the enclosed Proxy,
signed and dated.
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2002 WILL BE PROVIDED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY AT 2 CHRISTIE HEIGHTS STREET, LEONIA, NJ 07605.
FORM OF PROXY
[FRONT]
INFOCROSSING, INC.
PROXY FOR THE ANNUAL MEETING ON JUNE 24, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Zach Lonstein and Robert B. Wallach proxies,
each with the power to appoint his substitute and with authority in each to act
in the absence of the other, to represent and to vote all shares of stock of
Infocrossing, Inc. (the "Company"), which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of the Company to be held at the offices of
the Company, 2 Christie Heights Street, Leonia, New Jersey, on Tuesday, June 24,
2003 at 9:00AM local time, and at any adjournments thereof, (the "Meeting") as
indicated on the proposals described in the Proxy Statement and all other
matters properly coming before the Meeting.
DATED: ______________________________, 2003
Signature: ________________________________
Signature: ________________________________
Please sign exactly as your name or names
appear to the left. For joint accounts, both
owners must sign. When signing as executor,
administrator, attorney, trustee or
guardian, etc., please give your full title.
[BACK]
A VOTE FOR THE ELECTION OF THE NOMINEES LISTED BELOW
IS RECOMMENDED BY THE BOARD OF DIRECTORS
1. ELECTION OF DIRECTORS: |_| FOR all nominees listed below
(except as marked to the contrary)
PETER J. DAPUZZO; RICHARD A. KELLER;
AND TYLER T. ZACHEM
|_| WITHHOLD AUTHORITY to vote for ALL nominees
INSTRUCTION: To withhold authority to vote for an individual nominee, write that
nominee's name in the following space:
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF NO
CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR THE --- ELECTION OF
DIRECTORS.
IMPORTANT - THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE