U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
Commission File Number 0-22196
INNODATA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction
of incorporation)
Three University Plaza
Hackensack, NJ 07601
(Address of principal executive offices)
(201) 488-1200
(Issuer's telephone number)
13-3475943
(I.R.S. Employer
Identification No.)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes /x/
No / /
State the number of shares outstanding of each of the issuer's common equity, as
of the latest practicable date: As of April 30, 2001 there were approximately
21,110,000 shares of common stock outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
See pages 3-6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
See pages 7-10
Item 3. Quantitative and Qualitative Disclosures about Market Risk
See page 10
PART ll. OTHER INFORMATION
See page 11
INNODATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
March 31, December 31,
2001 2000
--------- ------------
Unaudited Derived from
audited
financial
statements
ASSETS
CURRENT ASSETS:
Cash and equivalents $10,239 $ 9,040
Accounts receivable-net 7,798 5,799
Prepaid expenses and other current assets 648 1,194
Deferred income taxes 700 839
------- -------
Total current assets 19,385 16,872
FIXED ASSETS - NET 10,059 9,464
OTHER ASSETS 1,834 1,610
-------- -------
TOTAL $31,278 $27,946
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 3,101 $ 3,196
Accrued salaries and wages 3,023 3,060
Income and other taxes 1,763 1,111
------- -------
Total current liabilities 7,887 7,367
------- -------
DEFERRED INCOME TAXES PAYABLE 1,243 1,263
------- -------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; authorized
75,000,000 shares; issued, 21,956,000 and
21,688,000 shares at March 31, 2001 and
December 31, 2000, respectively 220 217
Additional paid-in capital 12,385 12,239
Retained earnings 9,764 7,081
------- -------
22,369 19,537
Less: treasury stock - at cost; 577,000 shares (221) (221)
------- -------
Total stockholders' equity 22,148 19,316
------- -------
TOTAL $31,278 $27,946
======= =======
<FN>
See notes to unaudited condensed consolidated financial statements
INNODATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(In thousands, except per share amounts)
(Unaudited)
2001 2000
-------- --------
REVENUES $18,058 $ 8,839
-------- --------
OPERATING COSTS AND EXPENSES:
Direct operating expenses 11,923 6,941
Selling and administrative expenses 2,163 1,548
Interest income - net (93) (18)
------- -------
Total 13,993 8,471
------- -------
INCOME BEFORE PROVISION FOR INCOME TAXES 4,065 368
PROVISION FOR INCOME TAXES 1,382 110
------- -------
NET INCOME $ 2,683 $ 258
======= =======
BASIC INCOME PER SHARE $.13 $.01
==== ====
WEIGHTED AVERAGE SHARES OUTSTANDING 21,228 20,052
======= =======
DILUTED INCOME PER SHARE $.11 $.01
==== ====
ADJUSTED DILUTIVE SHARES OUTSTANDING 25,266 22,918
======= =======
<FN>
See notes to unaudited condensed consolidated financial statements
INNODATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(In thousands)
(Unaudited)
2001 2000
-------- --------
OPERATING ACTIVITIES:
Net income $ 2,683 $ 258
Adjustments to reconcile net
income to net cash provided
by (used in)operating activities:
Depreciation and amortization 1,094 625
Deferred income taxes 119 110
Changes in operating assets
and liabilities:
Accounts receivable (1,999) (541)
Prepaid expenses and other
current assets 546 (392)
Other assets (335) (45)
Accounts payable and accrued expenses (95) (432)
Accrued salaries and wages (37) 203
Income and other taxes 652 122
------- -------
Net cash provided by (used in)
operating activities 2,628 (92)
------- -------
INVESTING ACTIVITIES:
Capital expenditures (1,578) (1,455)
------- -------
FINANCING ACTIVITIES:
Proceeds from short term borrowings - 500
Proceeds from exercise of stock options 149 150
Payments of long-term debt - (7)
------- -------
Net cash provided by
financing activities 149 643
------- -------
INCREASE (DECREASE) IN CASH 1,199 (904)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 9,040 3,380
------- -------
CASH AND EQUIVALENTS, END OF PERIOD $10,239 $ 2,476
======= =======
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ - $ 10
======= =======
Income taxes $ 654 $ -
======= =======
<FN>
See notes to unaudited condensed consolidated financial statements
INNODATA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position as
of March 31, 2001, the results of operations for the three months ended March
31, 2001 and 2000, and of cash flows for the three months ended March 31, 2001
and 2000. The results of operations for the three months ended March 31, 2001
are not necessarily indicative of results that may be expected for any other
interim period or for the full year.
These financial statements should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 2000 included in
the Company's Annual Report on Form 10-K. The accounting policies used in
preparing these financial statements are the same as those described in the
December 31, 2000 financial statements.
2. In the three months ended March 31, 2001, the Company granted options to
purchase 1,193,000 shares of its common stock at $4.11 to $6.40 per share.
During the same period, options to purchase 268,030 shares were exercised.
3. Basic earnings per share is based on the weighted average number of
common shares outstanding without consideration of potential common stock.
Diluted earnings per share is based on the weighted average number of common and
potential common shares outstanding. The difference between weighted average
common shares outstanding and adjusted dilutive shares outstanding represents
the dilutive effect of outstanding options.
4. On February 28, 2001 the Company declared a 2 for 1 stock split in the
form of a stock dividend, which was paid on March 23, 2001. Prior periods have
been restated to reflect the stock split.
5. Subsequent to the balance sheet date, the Company purchased 270,000
shares of treasury stock for $1,640,000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company
Innodata Corporation ("Innodata" or the "Company") is a leading provider of
digital content outsourcing services. It provides a host of content conversion
and management solutions to online and Internet-based publishers, content
aggregators and syndicates, B2B and e-commerce firms and a growing number of
Internet portals as well as non-Internet firms. Through its XML Content
Factory, the Company provides large-scale XML content conversions and
enhancement services. The Company's outsourcing solutions typically draw upon
one or more of the following specific services: data conversion, content
architecture, content management, XML services, metadata creation, editorial
enhancement, software development, and consulting services. Through the
provision of these services, Innodata provides all the necessary steps to enable
its clients to create and distribute vast amounts of digital information via the
Internet, intranet, extranet, and other digital media.
Innodata's clients range from leading Global 1000 companies and new media
companies to some of the largest and most prestigious publishers of digital
content. Its clients are predominantly located in North America and Europe.
Innodata services these clients principally through a North American Solutions
Center located in New Jersey. In addition, Innodata operates production
facilities strategically located in Asia.
Results of Operations
Three Months Ended March 31, 2001 and 2000
Revenues increased 104% to $18,058,000 for the three months ended March 31,
2001 compared to $8,839,000 for the similar period in 2000, principally
resulting from a client which accounted for approximately 61% of the Company's
revenues in the current period, compared to 32% in the prior comparative period.
Revenues from this client are expected to decline significantly during the next
few quarters. No other client accounted for 10% or more of such revenues.
Further, in 2001 and 2000, export revenues, substantially all of which were
derived from European clients, accounted for 10% and 11%, respectively, of the
Company's revenues.
Direct operating expenses were $11,923,000 in the first quarter of 2001
and $6,941,000 in the first quarter of 2000, an increase of 72%. Direct
operating expenses as a percentage of revenues were 66% in 2001 and 79% in 2000.
The dollar increase in 2001 is principally due to costs incurred for the
increased revenues. Direct operating expenses as a percent of revenues
decreased by 13 percentage points in 2001, resulting primarily from a decline in
the value of the foreign currencies of countries in which the Company's
production facilities are located. Increased gross margin from the Company's
XML Content Factory, which was in its start-up phase in the First Quarter of
2000, was offset by an increase in costs as a percent of sales from the
Company's other facilities. Direct operating expenses include primarily direct
payroll, telecommunications, depreciation, equipment lease costs, computer
services, supplies and occupancy.
Selling and administrative expenses were $2,163,000 and $1,548,000 in the
first quarter of 2001 and 2000, respectively. Selling and administrative
expenses as a percentage of revenues decreased to 12% in the 2001 quarter from
18% in the 2000 quarter due primarily to an increase in revenues without a
corresponding increase in such expenses. Selling and administrative expenses
primarily include management and administrative salaries, sales and marketing
costs, and administrative overhead.
In 2001, the Company's effective income tax rate increased to 34% from 30%
for the three months ended March 31, 2000. The increase is primarily
attributable to an increase in taxable income in tax jurisdictions in which a
tax holiday is not available to the Company.
As a result of the aforementioned items, the Company realized net income of
$2,683,000 in 2001 and $258,000 in 2000.
Liquidity and Capital Resources
Selected measures of liquidity and capital resources are as follows:
March 31, 2001 December 31, 2000
--------------- ------------------
Cash and Cash Equivalents $10,239,000 $9,040,000
Working Capital $11,498,000 $9,505,000
Stockholders' Equity Per Common Share* $1.04 $.91
<FN>
*Represents total stockholders' equity divided by the actual number of common
shares outstanding (which excludes treasury stock).
Net Cash Provided By Operating Activities
During the three months ended March 31, 2001, net cash provided by
operating activities was $2,628,000 as compared to $92,000 used in operating
activities in the 2000 comparative period. The increase was primarily due to:
- - an increase in net income of $2,425,000;
- - an increase of approximately $478,000 in non-cash charges to net income,
resulting principally from an increase in depreciation and amortization;
- - a decrease in prepaid expenses and other current assets, primarily
resulting from the reduction of deferred production costs;
- - an increase in income and other taxes; primarily due to increased
provisions for income taxes and the timing of payments;
Partially offset by:
- - an increase in accounts receivable; primarily due to increased revenues
and the timing of collections.
Net Cash Used in Investing Activities
In the three months ended March 31, 2001, the Company spent approximately
$1,578,000 for capital expenditures, compared to approximately $1,455,000 in the
three months ended March 31, 2000. For the remainder of 2001, management
presently expects to make capital expenditures of between $6.5 million and $7.5
million. Such capital expenditures include anticipated costs to renovate,
re-engineer and expand two of the Company's facilities; costs of exercising the
option to purchase presently leased computer workstations; capital investment in
additional production technologies, including capital costs to create a new XML
Software Factory; and normal ongoing capital investments.
Net Cash Provided By Financing Activities
In the three months ended March 31, 2001, net cash provided by financing
activities totaled approximately $149,000 compared to $643,000 in the comparable
period in 2000. The change was primarily due to short term borrowings of
$500,000 in the 2000 period.
Availability of Funds
The Company has a line of credit with a bank in the amount of $3 million,
none of which was borrowed at April 30, 2001. The line is collateralized by
accounts receivable. Interest is charged at 1/2% above the bank's prime rate and
is due on demand.
Management believes that existing cash, internally generated funds and
short term bank borrowings will be sufficient for reasonably anticipated working
capital and capital expenditure requirements during the next 12 months. The
Company funds its foreign expenditures from its U.S. corporate headquarters on
an as-needed basis.
Inflation, Seasonality and Prevailing Economic Conditions
To date, inflation has not had a significant impact on the Company's
operations. The Company generally performs its work for its clients under
project-specific contracts, requirements-based contracts or long-term contracts.
Contracts are typically subject to numerous termination provisions. The
Company's revenues are not significantly affected by seasonality.
Disclosures in this Form 10-Q contain certain forward-looking statements,
including without limitation, statements concerning the Company's operations,
economic performance and financial condition. These forward-looking statements
are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The words "believe," "expect," "anticipate" and
other similar expressions generally identify forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of their dates. These forward-looking statements are based
largely on the Company's current expectations and are subject to a number of
risks and uncertainties, including without limitation, changes in external
market factors, the ability of the Company's customers to continue to execute
their business plans which give rise to increased requirements for digital
content services, changes in the Company's business or growth strategy or an
inability to execute its strategy due to changes in its industry or the economy
generally, the emergence of new or growing competitors, various other
competitive factors and other risks and uncertainties indicated from time to
time in the Company's filings with the Securities and Exchange Commission.
Actual results could differ materially from the results referred to in the
forward-looking statements. In light of these risks and uncertainties, there can
be no assurance that the results referred to in the forward-looking statements
contained in this Form 10-Q will in fact occur.
Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to interest rate change market risk with respect to
its credit facility with a financial institution which is priced based on the
prime rate of interest. At March 31, 2001, there were no borrowings under the
credit facility. To the extent the Company utilizes all or a portion of its line
of credit, changes in the prime interest rate during fiscal 2001 will have a
positive or negative effect on the Company's interest expense.
The Company has operations in foreign countries. While it is exposed to foreign
currency fluctuations, the Company presently has no financial instruments in
foreign currency and does not maintain funds in foreign currency beyond those
necessary for operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Not Applicable
Item 2. Changes in Securities. Not Applicable
Item 3. Defaults upon Senior Securities. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders. Not Applicable
Item 5. Other Information. Other Events.
On May 7, 2001, several changes were made to the Company's board of
directors and management as set forth below:
Jack Abuhoff, the Company's President and Chief Executive Officer and
a member of the Board, was appointed to the additional post of Chairman
of the Board;
Barry Hertz resigned as a director and Chairman of the Board;
Martin Kaye resigned as a director and also resigned his positions as
Executive Vice President, Chief Financial Officer and Secretary of the
Company; and
Dr. E. Bruce Fredrikson resigned as a director.
The press release attached as Exhibit 99.1 hereto provides additional
information concerning these changes.
Messrs. Hertz and Kaye have agreed to continue to serve as part-time
employees of the Company under the terms of the agreements filed as exhibits
hereto.
Item 6. (a) Exhibits.
10.1 Agreement dated May 7, 2001, between Innodata Corporation and Barry Hertz
10.2 Agreement dated May 7, 2001, between Innodata Corporation and Martin Kaye
99.1 Press release issued by Innodata Corporation on May 8, 2001
(b) Form 8-K Report. None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INNODATA CORPORATION
Date: May 14, 2001 /s/
------------ ---------------------
Jack Abuhoff
President
Chief Executive Officer
Date: May 14, 2001 /s/
------------ ---------------------
Stephen Agress
Vice President - Finance
Chief Accounting Officer
Exhibit 10.1
EMPLOYMENT AND NON-COMPETE AGREEMENT
AGREEMENT (the "Agreement") dated May 7, 2001 by and between INNODATA
CORPORATION, a Delaware corporation (the "Company"), and BARRY HERTZ ("Hertz").
Hertz has for many years served as chairman of the board of the Company, and the
Company has also compensated Hertz to provide services to the Company. Hertz has
also for many years served as chairman of the board and a major stockholder of
Track Data Corporation, a New York corporation ("Track"). Track was initially a
controlling stockholder of the Company, but Track's ownership in the Company has
been reduced to less than 10%. In light of Track's reduced ownership interest in
the Company, Hertz no longer wishes to serve as director of the Company, but is
willing to continue his employment with the Company on a part time basis. The
Company wishes to assure itself of access to continuing services by Hertz for an
extended period, and the Company also wishes to secure the agreement by Hertz
not to compete with the Company for the period provided hereinafter.
In consideration of the foregoing and for other good and valuable consideration,
the parties hereby agree as follows:
A G R E E M E N T
1. Continuation of Duties; Compensation.
(a) Hertz will during the Service Period (as hereinafter defined) accept a
part time employment position as a senior adviser for software development
activities at the Company's XML Software Factory. The Service Period means the
five-year period beginning on the date of this Agreement. Part-time employment
services shall be provided upon reasonable notice to Hertz.
(b) In consideration for the execution and delivery of this Agreement and
the faithful performance of the non-compete provisions contained in Section 3
hereof, the Company shall pay Hertz $400,000 contemporaneously with the
execution and delivery hereof. For all services to be rendered by Hertz during
the Service Period, the Company will pay a monthly salary of $2,000 (subject to
withholding taxes) beginning May, 2001 and ending April, 2006. Hertz shall
perform his services for the Company as an employee of the Company. Accordingly,
the manner in which he performs his services, and the times during which he
performs his services, shall be subject to the supervision and control of the
Company. No other compensation shall be due or owing.
2. Confidentiality
(a) During and at all times after the Service Period:
(i) Hertz will not disclose to any person or entity, without the Company's
prior consent, any confidential or secret information, whether prepared by him
or others.
(ii) Hertz will not directly or indirectly use any such information other
than as directed by the Company in writing.
(iii) Hertz will not, except in the furtherance of the business of the
Company, remove confidential or secret information from the premises of the
Company without the prior written consent of the Company.
(b) Upon termination of the Service Period, Hertz will promptly deliver to
the Company all originals and copies (whether in note, memo or other document
form or on video, audio or computer tapes or discs or otherwise) of confidential
or secret information that is in his possession, custody or control, whether
prepared by him or others.
(c) Confidential information includes, but is not limited to:
(i) the name of any company or business all or any substantial part of which
is or at any time was a candidate for potential acquisition by the Company,
together with all analyses and other information which the Company has
generated, compiled or otherwise obtained with respect to such candidate,
business or potential acquisition, or with respect to the potential effect of
such acquisition on the Company's business, assets, financial results or
prospects;
(ii) business, pricing and management methods;
(iii) finances, strategies, systems, research, surveys, plans, reports,
recommendations and conclusions;
(iv) names, arrangements with, or other information relating to, the
Company's customers, suppliers, equipment manufacturers, financiers, owners or
operators, representatives and other persons who have business relationships
with the Company or who are prospects for business relationships with the
Company;
(v) technical information, work products and know-how; and
(vi) cost, operating, and other management information systems, and other
software and programming.
3. Non-Compete Provisions.
(a) During the Service Period and for 12 months thereafter:
(i) Hertz will not anywhere in the world directly or indirectly be employed
or retained by any person or entity who or which then competes with the Company
to any extent, nor will Hertz directly or indirectly own any interest in any
such person or entity (except to the extent of no more than 5% ownership of a
publicly traded company) or render to it any consulting, brokerage, contracting,
financial or other services.
(ii) Hertz will not anywhere directly or indirectly (whether as an owner,
partner, employee, consultant, broker, contractor or otherwise, and whether
personally or through other persons):
(iii) solicit or accept the business of, or call upon, any person or entity
who or which is or was (i) a customer, supplier, manufacturer, finder, broker,
or other person who had a business relationship with the Company, or who was a
prospect for a business relationship with the Company, at any time during the
Service Period, or (ii) an affiliate of any such person;
(iv) approve, solicit or retain, or discuss the Service Period or retention
(whether as an employee, consultant or otherwise) of any person who was an
employee of the Company at any time during the one-year period preceding the
termination of the Service Period; or
(v) solicit or encourage any person to leave the employ of the Company; or
(vi) own any interest in or be employed by or provide any services to any
person or entity which engages in any conduct which is prohibited to Hertz under
this Section.
(b) All time periods in this Agreement shall be computed by excluding from
such computation any time during which Hertz is in violation of any provision of
this Agreement and any time during which there is pending in any court of
competent jurisdiction any action (including any appeal from any final judgment)
brought by any person, whether or not a party to this Agreement, in which action
the Company seeks to enforce the agreements and covenants in this Agreement or
in which any person contests the validity of such agreements and covenants or
their enforceability or seeks to avoid their performance or enforcement.
(c) Since monetary damages will be inadequate and the Company will be
irreparably damaged if the provisions of this Agreement are not specifically
enforced, the Company shall be entitled, among other remedies to an injunction
restraining any violation of this Agreement (without any bond or other security
being required) by Hertz and by any person or entity to whom Hertz provides or
proposes to provide any services in violation of this Agreement
(d) If any provision contained in this Agreement is determined to be void,
illegal or unenforceable, in whole or in part, then the other provisions
contained herein shall remain in full force and effect as if the provision which
was determined to be void, illegal, or unenforceable had not been contained
herein.
(e) The courts enforcing this Agreement shall be entitled to modify the
duration and scope of any restriction contained herein to the extent such
restriction would otherwise be unenforceable, and such restriction as modified
shall be enforced.
(f) Nothing in this Agreement shall limit Hertz's right in his capacity as
an officer and owner of Track to continue and to expand relationships with
persons and entities who currently do business with Track, or from doing
business with any person or entity engaged in a business in which Track is
engaged.
4. Return of Company Property. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property during
the term of the Service Period delivered to or compiled by Hertz by or on behalf
of the Company or the representatives, vendors or customers thereof which
pertain to the business of the Company shall be and remain the property of the
Company and he subject at all times to the discretion and control thereof.
Likewise, all correspondence, reports, records, charts, advertising materials
and other similar data pertaining to the business, activities or future plans of
the Company which is collected by Hertz shall be delivered promptly to the
Company without request by it upon termination of the Service Period.
5. Cooperation in Proceedings. During and after the termination of the
Service Period, Hertz will for reasonable compensation consistent with his
compensation from the Company cooperate fully and at reasonable times with the
Company and its subsidiaries in all litigations and regulatory proceedings on
which the Company or any subsidiary seeks Hertz's assistance and as to which
Hertz has any knowledge or involvement. Without limiting the generality of the
foregoing, Hertz will be available to testify at such litigations and other
proceedings, and will cooperate with counsel to the Company in preparing
materials and offering advice in such litigations and other proceedings. Except
as required by law and then only upon reasonable prior written notice to the
Company, Hertz will not in any way cooperate or assist any person or entity in
any matter which is adverse to the Company or to any person who was at any time
an officer or director of the Company.
6. No Derogation. Except as otherwise required by law (and then only upon 10
days' prior written notice to the Company), neither Hertz nor the Company will
from and after the date hereof, whether during the Service Period or at any time
thereafter, in any way or to any person, denigrate or derogate the other (or, in
the case of the Company, any of its subsidiaries or any person who was at any
time an officer or director of the Company or any products, services or
procedures provided by the Company), whether or not such denigrating or
derogatory statements shall be true and are based on acts or omissions which
were learned or are learned by the other heretofore or from and after the date
hereof or on acts or omissions which occurred at any time heretofore or which
occur at any time from and after the date hereof, or otherwise.
7. Miscellaneous.
(a) Complete Agreement. There are no oral representations, understandings
or agreements with the Company or any of its officers, directors or
representatives covering the same subject matter as this Agreement. This
written Agreement is the final, complete and exclusive statement and expression
of the agreement between the Company and Hertz, and cancels and supersedes all
prior agreements with respect to the subject matter hereof, and it cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
oral or written agreements. This written Agreement may not be later modified
except by a further writing signed by the Company and Hertz, and no term of this
Agreement may be waived except by writing signed by the party waiving the
benefit of such term.
(b) No Waiver. No waiver by the parties hereto of any default or breach of
any term, condition or covenant of this Agreement shall be deemed to be a waiver
of any subsequent default or breach of the same or any other term, condition or
covenant contained herein.
(c) Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties thereto and their respective heirs, successors and
assigns. Notwithstanding the foregoing, the Company may assign this Agreement
only to a person or entity who or which directly or indirectly succeeds to all
or any substantial part of the Company's assets or business.
(d) Notice. Whenever any notice is required hereunder, it shall be given in
writing addressed as follows:
To the Company: Attn: CEO
Innodata Corporation at its offices in Hackensack, New Jersey
To Hertz, at his offices at 95 Rockwell Place, Brooklyn New York
Notice shall be deemed given and effective (a) five business days after the
deposit in the U.S. mail of a writing addressed as above and sent first class
mail, certified, return receipt re-quested, (b) one (1) business day after
delivered to a nationally recognized air courier for next day delivery service,
or (c) upon personal delivery. Either party may change the address for notice
by notifying the other party of such change in accordance with this paragraph.
(e) Severability; Headings. If any portion of this agreement is held
invalid or inoperative, the other portions of this agreement shall be deemed
valid and operative, and so far as it is reasonable and possible, effect shall
be given to the intent manifested by the portion held invalid or inoperative.
The paragraph headings herein are for reference purposes only and are not
intended in any way to describe, interpret, define or limit the extent or intent
of this Agreement or any part hereof.
(f) Governing Law; Resolution of Disputes; Service of Process. This
Agreement shall in all respects be construed according to the laws of the State
of New York. All disputes relating to the interpretation and enforcement of the
provisions of this Agreement shall be resolved and determined exclusively by the
state or federal courts sitting in New York City, and such courts are hereby
granted exclusive jurisdiction for such purpose. Hertz waives trial by jury.
Service of process shall be effective when given in the manner provided for
notices hereunder.
INNODATA CORPORATION.
/s/
-------------------------
Jack Abuhoff
/s/
-------------------------
Barry Hertz
Exhibit 10.2
AGREEMENT
AGREEMENT (the "Agreement") dated May 7, 2001 by and between INNODATA
CORPORATION, a Delaware corporation (the "Company"), and Martin Kaye ("Kaye").
For good and valuable consideration, the parties hereby agree as follows:
A G R E E M E N T
8. Continuation of Duties.
(a) Kaye will during the Service Period (as hereinafter defined) continue to
perform for the Company certain of the duties he heretofore performed for the
Company and such other matters as the Company from time to time reasonably
assign to Kaye. The Service Period means the five-year period beginning on the
date of this Agreement.
(b) For all services to be rendered by Kaye during the Service Period, the
Company will pay $1,500 per month (subject to withholding taxes) payable on the
last business day of each calendar month beginning May, 2001 and ending April,
2006. Kaye shall perform his services for the Company as an employee of the
Company. Accordingly, the manner in which he performs his services, and the
times during which he performs his services, shall be subject to the supervision
and control of the Company. No other compensation shall be due or owing.
9. No Derogation. Except as otherwise required by law (and then only upon 10
days' prior written notice to the Company), neither Kaye nor the Company will
from and after the date hereof, whether during the Service Period or at any time
thereafter, in any way or to any person, denigrate or derogate the other (or, in
the case of the Company, any of its subsidiaries or any person who was at any
time an officer or director of the Company or any products, services or
procedures provided by the Company), whether or not such denigrating or
derogatory statements shall be true and are based on acts or omissions which
were learned or are learned by the other heretofore or from and after the date
hereof or on acts or omissions which occurred at any time heretofore or which
occur at any time from and after the date hereof, or otherwise.
10. Miscellaneous. This agreement may not be changed or terminated orally.
It sets forth all understandings of the parties.
INNODATA CORPORATION.
/s/
-------------------------
Jack Abuhoff
/s/
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Martin Kaye
Exhibit 99.1
INNODATA NAMES PRESIDENT AND CEO
JACK ABUHOFF CHAIRMAN OF THE BOARD
NEW YORK - MAY 8, 2001 - INNODATA CORPORATION (NASDAQ: INOD) today announced
that Jack Abuhoff, President and CEO of the Company, has been named to the
additional post of Chairman of the Board.
The Company also announced that Barry Hertz, Martin Kaye, and Dr. E. Bruce
Fredrikson have stepped down from the Board. The departing directors are all
directors of Track Data Corporation (Nasdaq: TRAC), which in the past owned a
substantial interest in the Company.
Commenting on the board changes, Mr. Abuhoff said, "We have accomplished much in
the past couple of years but there is a lot left to do in order to fully execute
our vision. We will seek to name to our board business leaders whose knowledge
and experience closely match the strategic challenges facing the Company, and
who have general management, technology, or media experience. Following the
recent board appointments of Charles Goldfarb, the inventor of the technology
behind XML, and Abe Biderman, a prominent voice in the financial sector, we now
have the opportunity to round out our efforts to assemble a strong group of
independent directors who will have a hand in the future of Innodata."
Barry Hertz, outgoing Chairman, stated, "Track's percentage ownership in
Innodata has declined as a result of market sales. Recognizing this, we believe
that now is an appropriate time to create greater independence on the Board.
We are very proud of all that Innodata has accomplished in the past couple of
years, and wish Jack and his team much continued success."