-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bx1FkR+UkmvQxrwSQHvI+GHpnePW2UFShjSAc9ItOnqA6NTR2gXnRvK6cUgNY2Ce FHSSlyEpsTUULwVKR4B2tg== /in/edgar/work/20000811/0000950137-00-003624/0000950137-00-003624.txt : 20000921 0000950137-00-003624.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950137-00-003624 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFORMATION RESOURCES INC CENTRAL INDEX KEY: 0000714278 STANDARD INDUSTRIAL CLASSIFICATION: [8700 ] IRS NUMBER: 521287752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11428 FILM NUMBER: 693221 BUSINESS ADDRESS: STREET 1: 150 N CLINTON ST CITY: CHICAGO STATE: IL ZIP: 60661-1416 BUSINESS PHONE: 3127261221 MAIL ADDRESS: STREET 1: 150 N CLINTON ST CITY: CHICAGO STATE: IL ZIP: 60661-1416 10-Q 1 e10-q.txt QUARTERLY REPORT 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X Quarterly Report Pursuant to Section 13 or 15(d) of The Securities - --- Exchange Act of 1934. For the quarterly period ended June 30, 2000 Transition report pursuant to Section 13 or 15(d) of the Securities - --- Exchange Act of 1934. Commission file number 0-11428 INFORMATION RESOURCES, INC. --------------------------- (Exact name of registrant as specified in its charter) Delaware 36-2947987 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 150 North Clinton Street, Chicago, Illinois 60661 ------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (312) 726-1221 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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 ----- ----- The number of shares of the registrant's common stock, $.01 par value per share outstanding, as of July 31, 2000 was 29,072,773. 2 INFORMATION RESOURCES, INC. AND SUBSIDIARIES INDEX ----- PAGE NUMBER ------ PART I. FINANCIAL INFORMATION - ---------------------------------- Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Operations 4 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 13 PART II. OTHER INFORMATION - -------------------------- Item 1 - Legal Proceedings 20 Item 4 - Submission of Matters to a 20 Vote of Security Holders Item 6 - Exhibits and Reports Form 8-K 21 Signatures 22 2 3 INFORMATION RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) ASSETS JUNE 30, 2000 DECEMBER 31, 1999 - ------ ------------- ----------------- (UNAUDITED) CURRENT ASSETS Cash and cash equivalents $ 4,948 $ 8,077 Accounts receivable, net 104,615 94,125 Prepaid expenses and other 9,714 8,569 ------------- ------------ Total Current Assets 119,277 110,771 ------------- ------------ Property and equipment, at cost 216,501 204,535 Accumulated depreciation (137,749) (123,550) ------------- ------------ Net property and equipment 78,752 80,985 Investments 9,669 9,624 Other assets 167,594 167,100 ------------- ------------ $ 375,292 $ 368,480 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES Current maturities of capitalized leases $ 1,668 $ 55 Accounts payable 51,076 49,616 Accrued compensation and benefits 12,642 23,838 Accrued property, payroll and other taxes 1,822 4,813 Accrued expenses 8,146 11,475 Accrued restructuring costs 8,144 8,885 Deferred revenue 36,918 23,163 ------------- ------------ Total Current Liabilities 120,416 121,845 ------------- ------------ Long-term debt 29,713 10,764 Deferred income taxes, net -- 2,269 Other liabilities 8,257 8,627 STOCKHOLDERS' EQUITY Preferred stock-authorized, 1,000,000 shares, $.01 par value; none issued -- -- Common stock - authorized 60,000,000 shares, $.01 par value, 29,072,773 and 29,068,657 shares issued and outstanding, respectively 291 291 Additional paid-in capital 199,122 198,863 Retained earnings 26,849 31,390 Accumulated other comprehensive loss (9,356) (5,569) ------------- ------------ Total Stockholders' Equity 216,906 224,975 ------------- ------------ $ 375,292 $ 368,480 ============= ============ The accompanying notes are an integral part of these statements. 3 4 INFORMATION RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED SIX MONTHS ENDED ------------------- ---------------- JUNE 30, JUNE 30, -------- -------- 2000 1999 2000 1999 ---- ---- ---- ---- Information services revenues $ 133,931 $ 137,847 $ 263,072 $ 269,592 Costs and expenses: Information services sold (119,216) (124,318) (238,822) (245,049) Selling, general and administrative expenses (14,304) (13,135) (27,242) (25,923) Restructuring and other charges (2,082) - (5,639) - --------- --------- --------- --------- (135,602) (137,453) (271,703) (270,972) --------- --------- --------- --------- Operating profit (loss) (1,671) 394 (8,631) (1,380) Interest expense and other, net (697) (424) (1,511) (590) Equity in earnings (losses) of affiliated companies 157 (98) 270 96 Minority interests benefit 642 1,100 1,849 2,285 --------- --------- --------- --------- Earnings (loss) before income taxes (1,569) 972 (8,023) 411 Income tax (expense) benefit 582 (504) 3,482 (194) --------- --------- --------- --------- Net earnings (loss) $ (987) $ 468 $ (4,541) $ 217 ========= ========= ========= ========= Net earnings (loss) per common share - basic $ (.03) $ .02 $ (.16) $ .01 ========= ========= ========= ========= Net earnings (loss) per common and common equivalent share - diluted $ (.03) $ .02 $ (.16) $ .01 ========= ========= ========= ========= Weighted average common shares - basic 29,071 28,080 29,070 27,973 ========= ========= ========= ========= Weighted average common and common equivalent shares - diluted 29,071 28,098 29,070 27,990 ========= ========= ========= ========= The accompanying notes are an integral part of these statements. 4 5 INFORMATION RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) SIX MONTHS ENDED ---------------- JUNE 30, -------- 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings (loss) $ (4,541) $ 217 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Amortization of deferred data procurement costs 60,170 59,193 Depreciation 14,791 13,014 Amortization of capitalized software costs and intangibles 2,854 3,225 Restructuring and other charges, net of cash payments (1,015) -- Deferred income tax (benefit) expense (3,482) 194 Equity in earnings of affiliated companies and minority interests (2,115) (2,381) Other 129 (857) Change in assets and liabilities: Accounts receivable (10,030) (8,405) Other current assets (1,145) (2,552) Accounts payable and accrued liabilities (16,819) (851) Deferred revenue 13,755 11,300 Other, net 1,041 1,847 --------- --------- Net cash provided by operating activities 53,593 73,944 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Deferred data procurement costs (63,717) (64,476) Purchase of property, equipment and software (7,810) (15,053) Capitalized software costs (1,233) (3,454) Other, net 311 2,890 --------- --------- Net cash used in investing activities (72,449) (80,093) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings 15,373 7,961 Purchases of Common Stock -- (95) Proceeds from exercise of stock options and other -- (92) --------- --------- Net cash provided by financing activities 15,373 7,774 --------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 354 (1,212) --------- --------- Net increase (decrease) in cash and cash equivalents (3,129) 413 Cash and cash equivalents at beginning of period 8,077 11,149 --------- --------- Cash and cash equivalents at end of period $ 4,948 $ 11,562 ========= ========= The accompanying notes are an integral part of these statements. 5 6 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION Principles of consolidation: The condensed consolidated financial statements include the accounts of Information Resources, Inc. and all wholly or majority owned subsidiaries and affiliates (collectively "the Company"). Minority interests reflect the non-Company owned stockholder interests in international operations. The equity method of accounting is used for investments in which the Company has a 20% to 50% ownership interest because it exercises significant influence over operating and financial policies. All significant intercompany accounts and transactions have been eliminated in consolidation. Interim financial statements: The interim financial statements are unaudited, but include all adjustments (consisting of normal recurring adjustments) necessary, in the opinion of management, for a fair statement of financial position and results of operations for the period presented. The preparation of interim financial statements necessarily relies on estimates, requiring the use of caution in estimating results for the full year based on interim results of operations. Reclassifications: Certain amounts in the 1999 condensed consolidated financial statements have been reclassified to conform to the 2000 presentation. Earnings (Loss) per Common and Common Equivalent Share: Net earnings (loss) per share is based upon the weighted average number of shares of common stock outstanding during each period. Net earnings (loss) per common and common equivalent share-diluted is based upon the weighted average number of shares of common stock and common stock equivalents, entirely comprised of stock options, outstanding during each period. In 2000, common stock equivalents were excluded from the weighted average shares outstanding calculation because they were anti-dilutive. NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION Cash paid (received) for interest and income taxes during the period was as follows (in thousands): SIX MONTHS ENDED ---------------- JUNE 30, --------- 2000 1999 ---- ---- Interest $ 1,376 $ 622 Income taxes (356) 229 Non-cash investing and financing activities are excluded from the consolidated statement of cash flows. During the six months ended June 30, 2000, the Company acquired mainframe computer equipment in exchange for a capital lease obligation recorded at $5.6 million. The Company repaid a portion of the capital lease obligation during the second quarter of 2000. 6 7 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D. (UNAUDITED) NOTE 3 - ACCOUNTS RECEIVABLE Accounts receivable were as follows (in thousands): JUNE 30, 2000 DECEMBER 31, 1999 ------------- ----------------- Billed $ 82,494 $ 73,605 Unbilled 25,857 24,294 --------- --------- 108,351 97,899 Reserve for accounts receivable (3,736) (3,774) --------- --------- $ 104,615 $ 94,125 ========= ========= NOTE 4 - OTHER ASSETS Other assets were as follows (in thousands): JUNE 30, 2000 DECEMBER 31, 1999 ------------- ---------------- Deferred data procurement costs - net of accumulated amortization of of $139,099 in 2000 and $141,531 in 1999 $ 139,913 $ 140,285 Intangible assets, including goodwill - net of accumulated amortization of $11,390 in 2000 and $15,050 in 1999 10,117 11,659 Capitalized software costs - net of accumulated amortization of $4,760 in 2000 and $3,149 in 1999 7,275 7,799 Other 10,289 7,357 --------- --------- $ 167,594 $ 167,100 ========= ========= 7 8 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D. (UNAUDITED) NOTE 5 - LONG TERM DEBT Long-term debt was as follows (in thousands): JUNE 30, 2000 DECEMBER 31, 1999 ------------- ----------------- Bank borrowings $ 27,600 $ 10,000 Capitalized leases and other 3,781 819 --------- --------- 31,381 10,819 Less current maturities (1,668) (55) --------- --------- $ 29,713 $ 10,764 ========= ========= The financial covenants in the bank credit agreement, as well as in the lease agreement for the Company's Chicago headquarters, require the Company to maintain a minimum tangible net worth and to meet certain cash flow coverage and leverage ratios. The agreements also limit the Company's ability to declare dividends or make distributions to holders of capital stock, or redeem or otherwise acquire shares of the Company. Approximately $8.4 million is currently available for such distributions under the most restrictive of these covenants. The bank credit agreement contains covenants which restrict the Company's ability to incur additional indebtedness. NOTE 6 - COMPREHENSIVE LOSS The comprehensive loss summary shown below sets forth certain items that affect stockholders' equity but are excluded from the presentation of net earnings. The components of comprehensive loss were as follows (in thousands): THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- JUNE 30, JUNE 30, -------- -------- 2000 1999 2000 1999 -------- ----- -------- -------- Net earnings (loss) $ (987) $ 468 $ (4,541) $ 217 Foreign currency translation Adjustment (1,688) (909) (3,787) (4,185) -------- ----- -------- -------- Comprehensive loss $ (2,675) $(441) $ (8,328) $ (3,968) ======== ===== ========= ======== 8 9 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D. (UNAUDITED) NOTE 7 - COMMITMENTS, CONTINGENCIES AND LITIGATION On July 29, 1996, IRI filed an action against The Dun & Bradstreet Corp., The A.C. Nielsen Company (now a subsidiary of ACNielsen) and IMS International, Inc. (collectively, "the Defendants") in the United States District Court for the Southern District of New York entitled Information Resources, Inc. v. The Dun & Bradstreet Corp., et. al. No. 96 CIV. 5716 (the "Action"). IRI alleged that, among other things, the Defendants violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. Sections 1 and 2, by engaging in a series of anti-competitive practices aimed at excluding the Company from various export markets for retail tracking services and regaining monopoly power in the United States market for such services. By the Action, the Company seeks to enjoin the Defendants' anti-competitive practices and to recover damages in excess of $350.0 million, prior to trebling. The Action is more particularly described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. On July 13, 2000, the District Court in a procedural ruling held that IRI lacked standing to assert claims for injury suffered from Defendants' activities in foreign markets where IRI operates through subsidiaries or companies owned by joint ventures and dismissed such claims. The District Court left open the issue of whether those subsidiaries and joint ventures could sue in the United States for injury suffered from Defendants' activities in the foreign markets where they operate. NOTE 8 - SEGMENT INFORMATION The Company's business information services are conducted almost exclusively in the United States and Europe. The Company's operations in other markets account for approximately 1% of consolidated revenues. The executive management of the Company considers revenues from third parties and the aggregation of operating profit (loss), equity earnings (losses) and minority interests, ("Operating Results"), on a geographic basis to be the most meaningful measure of the operating performance of each respective geographic segment and of the Company as a whole. 9 10 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D. (UNAUDITED) The following table presents certain information regarding the operations of the Company by geographic segments (in thousands): THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- JUNE 30, JUNE 30, -------- -------- 2000 1999 2000 1999 ---- ---- ---- ---- Revenues: U.S. Services $ 101,392 $ 105,629 $ 199,780 $ 207,953 International Services 32,539 32,218 63,292 61,639 --------- --------- --------- --------- Total Revenue $ 133,931 $ 137,847 $ 263,072 $ 269,592 ========= ========= ========= ========= Operating Results: U.S. Services $ 5,751 $ 7,021 $ 8,560 $ 12,243 International Services: Operating loss (1,399) (4,169) (4,958) (9,211) Equity in earnings (losses) of affiliated companies 157 (98) 270 96 Minority interest benefit 642 1,100 1,849 2,285 --------- --------- --------- --------- International Services (600) (3,167) (2,839) (6,830) Corporate and other expenses (3,941) (2,458) (6,594) (4,412) Restructuring and other charges (a) (2,082) - (5,639) - --------- --------- --------- --------- Operating Results (872) 1,396 (6,512) 1,001 Interest expense and other, net (697) (424) (1,511) (590) --------- --------- --------- --------- Earnings loss before income taxes $ (1,569) $ 972 $ (8,023) $ 411 ========= ========= ========= ========= (a) Restructuring and other charges for the U.S. Services, International and Corporate were $1.7 million, $1.3 million and $(.9) million, respectively, for the three months ended June 30, 2000 and $4.2 million, $2.3 million and $(.9) million, respectively, for the six months ended June 30, 2000. 10 11 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D. (UNAUDITED) NOTE 9 - RESTRUCTURING AND OTHER CHARGES RESTRUCTURING In the third quarter of 1999, the Company initiated a comprehensive cost reduction program named Project Delta. The first phase of Project Delta included the identification and assessment of potential operating efficiencies in the Company's various U.S. functional areas and was completed in the fourth quarter of 1999. The cost reduction program implementation began in the first quarter of 2000, with cost savings of approximately $6.0 million to $8.0 million achieved year to date. Certain restructuring costs were not eligible for accrual in 1999 and were recorded in the first two quarters of 2000. For the quarter and year to date June 30, 2000, the restructuring charges included in Restructuring and Other Charges in the Statement of Operations consist of the following (in thousands): THREE MONTHS SIX MONTHS ENDED ENDED JUNE 30, 2000 JUNE 30, 2000 ------------- ------------- Termination benefits $1,417 $2,676 Disposition of excess office space 198 750 Transition of German production to U.S. facility 1,243 2,199 Other costs of project 131 921 ------ ------ $2,989 $6,546 ====== ====== A restructuring reserve was established in the fourth quarter of 1999 to reflect the outstanding obligations related to the fourth quarter 1999 restructuring charges. The following table reflects the additional restructuring charges incurred in the first half of 2000 and all cash payments made to date (in thousands): 11 12 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D. (UNAUDITED)
2000 ACTIVITY ----------------------- LIABILITY AT LIABILITY AT DECEMBER 31, 1999 PROVISION CASH JUNE 30, 2000 ----------------- --------- ---- ------------- Termination benefits $8,391 $2,676 $(4,105) $6,962 Disposition of excess office space 494 117 (117) 494 Transition of German production to U.S. facility - 2,199 (1,584) 615 Other costs of project - 921 (848) 73 ------ ------ ------- ------ 8,885 5,913 (6,654) 8,144 Non-cash provision - 633 - - ------ ------ ------- ------ $8,885 $6,546 $(6,654) $8,144 ====== ====== ======= ======
Termination Benefits: In the fourth quarter of 1999, the Company expected to terminate 325 full-time positions during 2000 impacting virtually all areas of the U.S. business, including operations, client services, technology and marketing, as well as Corporate headquarters. As of June 30, 2000, $4.1 million of accrued termination benefits have been disbursed and 152 employees have been terminated under various Project Delta initiatives. Additional provisions have been made throughout the year to cover retention and relocation incentive costs that were not eligible for accrual at December 31, 1999. Disposition of Excess Office Space: As a result of planned headcount reductions and space not currently utilized, the Company has decided to vacate certain facilities. The Company recorded $.6 million of charges relating to accelerated depreciation on leasehold improvements and furniture and fixtures and $.2 million in lease buyouts associated with these facilities in the first half of 2000. Transition of German Production to U.S. Facility: The Company made a decision in the fourth quarter of 1999 to transfer production services for IRI/GfK Retail Services GmbH from an external vendor in Germany to the Company's U.S. headquarter facility in order to enhance its InfoScan offering in Germany and to reduce future production costs. In the first half of 2000, charges of approximately $2.2 million were recorded related to this transition. Other Restructuring Costs: Other restructuring costs relate primarily to the final fees paid to the Boston Consulting Group for assistance in the identification and execution of the Project Delta objectives. OTHER CHARGES In the fourth quarter of 1999, Restructuring and Other Charges included a $.9 million charge for a non-current receivables reserve. This reserve was reversed in the second quarter of 2000 pursuant to a settlement agreement reached with the other party. 12 13 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following narrative discusses the results of operations, liquidity and capital resources for the Company on a consolidated basis. This section should be read in conjunction with IRI's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein. RESULTS OF OPERATIONS The Company's consolidated net loss was $1.0 million or $.03 per diluted share for the second quarter of 2000 compared to consolidated net income of $.5 million or $.02 per diluted share for the corresponding 1999 quarter. The Company's consolidated net loss was $4.5 million or $.16 per diluted share for the six months ended June 30, 2000 compared to consolidated net income of $.2 million or $.01 per diluted share for the corresponding 1999 period. Excluding restructuring and other charges, net income (loss) for the quarter and year to date 2000 was $.3 million and ($1.2) million, respectively, or $.01 and ($.04) per diluted share. Second Quarter Versus Prior Year Consolidated revenues for the quarter ended June 30, 2000 were $133.9 million, a decrease of 3% over the corresponding quarter in 1999. U.S revenues were $101.4 million, a decrease of 4% compared to the prior year due to the delayed financial impact of client losses experienced in 1999. International revenues increased 1% to $32.5 million. Excluding foreign exchange effects, European revenues for the second quarter increased 13% over the prior year reflecting continued strong revenue growth in each of the major European businesses. Consolidated costs of information services sold decreased 4% to $119.2 million for the three months ended June 30, 2000 compared to costs of $124.3 million for the second quarter of 1999. The decline in expenses resulted primarily from the Company's cost reduction initiative, Project Delta, and the continued strengthening of the U.S. dollar against European currencies. These savings were offset slightly by increased costs related to the investment in the Company's CPGNetwork internet-based delivery service and other strategic opportunities. Consolidated selling, general and administrative expenses increased 9% to $14.3 million for the three months ended June 30, 2000 compared to $13.1 million for the second quarter of 1999. The increase was primarily due to costs incurred during 2000 to pursue new strategic opportunities for the Company, including internet-based business initiatives. 13 14 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. Operating income, before restructuring and other charges of $2.1 million, was $1.2 million for the second quarter of 2000 compared to $1.4 million in the prior year. Improvements in the performance of the international operations and reduced U.S. expenses offset the decline in U.S. revenues resulting from 1999 client losses. Restructuring and other charges are discussed below. Interest and other expenses were $.7 million for the second quarter of 2000 compared to $.4 million in the prior year due to higher bank borrowings during 2000. First Half Versus Prior Year Consolidated revenues were $263.1 million for the six months ended June 30, 2000, a decrease of 2% over the corresponding period of 1999. U.S. business revenues decreased 4% to $199.8 million for the first half of 2000 compared to the prior year. The decline was due to the delayed financial impact on the current period's revenues of 1999 client losses. International revenues were up 3% to $63.3 million over the first half of 1999. Excluding the impact of foreign exchange rates, European revenues for the first half of 2000 increased 14% over the prior year. Consolidated costs of information services sold decreased 3% to $238.8 million for the six months ended June 30, 2000 compared to costs of $245.0 million for the first half of 1999. Expenses declined primarily due to savings achieved through the Project Delta cost reduction initiative and the continued strengthening of the U.S. dollar against European currencies. These savings were offset slightly by increased costs related to the investment in the Company's CPGNetwork internet-based delivery service and other strategic opportunities. Consolidated selling, general and administrative expenses increased 5% to $27.2 million for the six months ended June 30, 2000 compared to $25.9 million for the first half of 1999. The increase is primarily attributable to the costs incurred during 2000 to pursue new strategic opportunities for the Company, including internet-based business initiatives. For the first half of 2000, the Company's operating loss, before restructuring and other charges of $5.6 million, was $.9 million compared to operating income of $1.0 million in the prior year. Results were below prior year because of the delayed financial impact of 1999 U.S. client losses on revenues partially offset by improved international performance and reduced U.S. expenses resulting from the Company's Project Delta cost reduction initiatives. 14 15 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. Restructuring and other charges are discussed below. Interest and other expenses were $1.5 million for the six months ended June 30, 2000 compared to $.6 million in the prior year due to higher bank borrowings during the first half of 2000. The Company's effective income tax rate is greater than the U.S. Federal statutory rate due to certain unbenefited foreign losses, goodwill amortization and other nondeductible expenses. LIQUIDITY AND CAPITAL RESOURCES The Company's current cash resources include its $4.9 million consolidated cash balance and $31.3 million available under the Company's bank revolving credit facility. The Company anticipates that it will have sufficient funds from these sources and internally generated funds from its U.S. operations to satisfy its cash needs for the foreseeable future. Financings The financial covenants in the bank credit agreement, as well as in the lease agreement for the Company's Chicago headquarters, require the Company to maintain a minimum tangible net worth and to meet certain cash flow coverage and leverage ratios. The agreements also limit the Company's ability to declare dividends or make distributions to holders of capital stock, or redeem or otherwise acquire shares of the Company. Approximately $8.4 million is currently available for such distributions under the most restrictive of these covenants. The bank credit agreement also contains covenants that restrict the Company's ability to incur additional indebtedness. Cash Flow Consolidated net cash provided by operating activities was $53.6 million for the six months ended June 30, 2000 compared to $73.9 million for the same period in 1999. This reduction was primarily attributable to lower earnings resulting from restructuring charges and timing of payments of accounts payable and accrued liabilities. Consolidated cash flow used in net investing activities was $72.4 million in 2000 compared to $80.1 million for the same period in 1999. Net cash used before financing activities was $18.8 million for the six months ended June 30, 2000 compared to $6.2 million for the same period in 1999. Consolidated cash flow provided by financing activities reflects borrowings of $17.6 million under its revolving line of credit in 2000 compared to $8.8 million in the prior year. 15 16 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. Other Deferred Costs and Capital Expenditures Consolidated deferred data procurement expenditures were $63.7 million for the six months ended June 30, 2000 and $64.5 million for the same period in 1999. These expenditures are amortized over a period of 28 months and include payments and services to retailers for point-of-sale data and other costs related to collecting, reviewing and verifying panel, causal and other data which are an essential part of the Company's database. Such expenditures were $36.6 million and $40.2 million for the periods ended June 30, 2000 and 1999, respectively, for the Company's U.S. services business and $27.1 million and $24.3 million, respectively, for the Company's International services business. Consolidated capital expenditures were $7.8 million and $15.1 million for the six months ended June 30, 2000 and 1999, respectively. Capital expenditures for the Company's U.S. services business were $5.5 million and $13.0 million, while depreciation expense was $12.5 million and $10.7 million for the six months ended June 30, 2000 and 1999, respectively. During the first half of 2000, the Company acquired mainframe computer equipment in exchange for a capital lease obligation recorded at $5.6 million. The Company's International services business capital expenditures were $2.3 million and $2.1 million for the six months ended June 30, 2000 and 1999, respectively, while depreciation expense was $2.3 million for the first half of both 2000 and 1999. Consolidated capitalized software development costs, primarily in the U.S., were $1.2 million and $3.5 million for the six months ended June 30, 2000 and 1999, respectively. Impact of Inflation Inflation has slowed in recent years and is currently not an important determinant of the Company's results of operations. To the extent permitted by competitive conditions, the Company passes increased costs on to customers by adjusting sales prices and, in the case of multi-year contracts, through consumer price index provisions in such agreements. RESTRUCTURING CHARGES In the third quarter of 1999, the Company initiated a comprehensive program named Project Delta, with the objective to improve productivity and operating efficiencies to reduce the Company's on-going cost structure in its U.S. operations. The first phase of Project Delta included the identification and assessment of potential operating efficiencies in the Company's various U.S. functional areas and was completed in the fourth quarter of 1999. The cost reduction program implementation began in the first quarter of 2000, with cost savings of approximately $6.0 million to $8.0 million achieved year to date. The Company expects that annualized cost savings in certain expenses of at least $15.0 million will be achievable in the U.S. operations by the end of 2000. 16 17 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. Certain costs were not eligible for accrual in 1999 and were recorded during the first six months of 2000. For the quarter and year to date June 30, 2000, the components of the restructuring charges included in Restructuring and Other Charges in the Statement of Operations consist of the following (in thousands): THREE MONTHS SIX MONTHS ENDED ENDED JUNE 30, 2000 JUNE 30, 2000 ------------- ------------- Termination benefits $1,417 $2,676 Disposition of excess office space 198 750 Transition of German production to U.S. facility 1,243 2,199 Other costs of project 131 921 ------ ------ $2,989 $6,546 ====== ====== Changes in the restructuring reserve, including cash payments, for the six months ended June 30, 2000 are as follows (in thousands):
2000 ACTIVITY -------------------------- LIABILITY AT LIABILITY AT DECEMBER 31, 1999 PROVISION CASH JUNE 30, 2000 ----------------- --------- ---- ------------- Termination benefits $8,391 $2,676 $(4,105) $6,962 Disposition of excess office space 494 117 (117) 494 Transition of German production to U.S. facility - 2,199 (1,584) 615 Other costs of project - 921 (848) 73 ------ ------ ------- ------ 8,885 5,913 (6,654) 8,144 Non-cash provision - 633 - - ------ ------ ------- ------ $8,885 $6,546 $(6,654) $8,144 ====== ====== ======= ======
Termination Benefits: In the fourth quarter of 1999, the Company expected to terminate 325 full-time positions during 2000 impacting virtually all areas of the U.S. business, including operations, client services, technology and marketing, as well as Corporate headquarters. As of June 30, 2000, $4.1 million of accrued termination benefits have been disbursed and 152 employees have been terminated under various Project Delta initiatives. Additional provisions have been made throughout the year to cover retention and relocation incentive costs that were not eligible for accrual at December 31, 1999. 17 18 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. Disposition of Excess Office Space: As a result of planned headcount reductions and space not currently utilized, the Company has decided to vacate certain facilities. The Company recorded $.6 million of charges relating to accelerated depreciation on leasehold improvements and furniture and fixtures and $.2 million in lease buyouts associated with these facilities in the first half of 2000. Transition of German Production to U.S. Facility: The company made a decision in the fourth quarter of 1999 to transfer production of IRI/GfK Retail Services GmbH from an external vendor in Germany to the U.S. headquarter facility in order to enhance its InfoScan offering in Germany and to reduce future production costs. In the first half of 2000, charges of approximately $2.2 million were recorded related to this transition. The transition is expected to be completed during the fourth quarter of 2000, with estimated future costs that cannot currently be accrued of approximately $2.2 million. Other Restructuring Costs: Other restructuring costs primarily relate to final fees paid to the Boston Consulting Group for assistance in the identification and execution of the Project Delta objectives. Future Restructuring Charges: The Company believes that it is solidly progressing on its previously announced restructuring activities, and that the restructuring provisions recorded will be adequate to cover the estimated restructuring costs. The Company anticipates that it will continue to incur restructuring charges in 2000 for items that do not meet the criteria for accrual and for future restructurings. The Company expects to incur additional costs of $8.0 million to $10.0 million relating to the first phase of Project Delta which could not be accrued as of June 30, 2000. In addition, the Company has begun the initial stages of reviewing its International and information technology operations to assess potential restructuring costs and benefits. The Company cannot yet estimate the costs for these future restructuring programs. OTHER CHARGES In the fourth quarter of 1999, Restructuring and Other Charges included a $.9 million charge for a non-current receivables reserve. This reserve was reversed in the second quarter of 2000 pursuant to a settlement agreement reached with the other party. EUROPEAN CURRENCY CONVERSION ISSUES In accordance with the 1992 treaty of the European Union, on January 1, 1999, a new single European currency, the Euro, became legal tender. The Euro will replace the sovereign currencies ("legacy currencies") of the eleven initial members of the European Union ("participating countries"). On this date, fixed conversion rates between the Euro and the legacy currencies in those particular countries were established. 18 19 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. As the Company has operations in several of the participating countries, it will be affected by issues relating to the introduction of and transition to the Euro. The Company's European Executive Committee is charged with formulating and executing all aspects of the Company's plan concerning the conversion to the Euro. The Company does not expect the cost of any system modifications to be material or result in any material increase in transaction costs. The Company will continue to evaluate the impact of the Euro, however, based on currently available information, management does not believe the introduction of the Euro will have a material adverse impact on the Company's financial condition or overall trends in results of operations. FORWARD LOOKING INFORMATION All statements other than statements of historical fact made in this Quarterly Report on Form 10-Q are forward looking. In particular, statements regarding industry prospects, our future results of operations or financial position, and statements preceded by, followed by or that include the words "intends," "estimates," "believes," "expects," "anticipates," "should," "could," or similar expressions, are forward-looking statements and reflect our current expectations and are inherently uncertain. The Company's actual results may differ significantly from our expectations for a number of reasons, including risks and uncertainties relating to customer renewals of service contracts, the timing of significant new customer engagements, the success of implementing Project Delta, competitive conditions, the potential for future client losses, changes in client spending for the non-contractual services the Company offers, the release of chain-specific data by European retailers, foreign currency exchange rates, European currency conversion issues and other factors beyond the Company's control. These risks and uncertainties are described herein and in reports and other documents filed by the Company with the Securities and Exchange Commission. 19 20 INFORMATION RESOURCES, INC. AND SUBSIDIARIES PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On July 29, 1996, IRI filed an action against The Dun & Bradstreet Corp., The A.C. Nielsen Company (now a subsidiary of ACNielsen) and IMS International, Inc. (collectively, "the Defendants") in the United States District Court for the Southern District of New York entitled Information Resources, Inc. v. The Dun & Bradstreet Corp., et. al. No. 96 CIV. 5716 (the "Action"). IRI alleged that, among other things, the Defendants violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. Sections 1 and 2, by engaging in a series of anti-competitive practices aimed at excluding the Company from various export markets for retail tracking services and regaining monopoly power in the United States market for such services. By the Action, the Company seeks to enjoin the Defendants' anti-competitive practices and to recover damages in excess of $350.0 million, prior to trebling. The Action is more particularly described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. See "Legal Proceedings" contained therein. On July 13, 2000, the District Court in a procedural ruling held that IRI lacked standing to assert claims for injury suffered from Defendants' activities in foreign markets where IRI operates through subsidiaries or companies owned by joint ventures and dismissed such claims. The District Court left open the issue of whether those subsidiaries and joint ventures could sue in the United States for injury suffered from Defendants' activities in the foreign markets where they operate. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Annual Meeting. On May 19, 2000, Information Resources held its annual meeting of shareholders. As of that date, shareholders of the Company's common shares outstanding were entitled to 29,068,657 votes. At the meeting, the Company's shareholders voted on the following matters: (1) election of three directors, for three year terms; (2) approval of the Information Resources, Inc. Employee Stock Purchase Plan. 20 21 INFORMATION RESOURCES, INC. AND SUBSIDIARIES, CONT'D PART II OTHER INFORMATION Each matter was approved by the shareholders. The votes cast for, against and abstentions as to each such matter were as follows: Votes For Votes Against Abstention --------- ------------- ---------- Election of Directors: Joseph P. Durrett 20,899,992 -- 3,903,961 Bruce A. Gescheider 24,640,544 -- 163,409 John D.C. Little, Ph.D. 24,584,973 -- 218,980 Approval of the Information Resources, Inc. Employee Stock Purchase Plan 21,470,832 3,296,426 36,695 A more detailed description of the matters voted on by shareholders of the Company at this meeting is included in the definitive Proxy Statement dated April 19, 2000 and incorporated herein by reference. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits Exhibit No. Description of Exhibit Page ----------- ---------------------- ---- 10(kk) Amendment to employment letter agreement dated EF June 16, 2000 between the Company and Edward Kuehnle. 10(ll) Amended and Restated 1992 Stock Option Plan, EF as amended effective June 29, 2000. 10(mm) 1992 Executive Stock Option Plan, as amended EF effective June 29, 2000. 10(nn) Employee Nonqualified Stock Option Plan, as EF amended effective June 29, 2000. 10(oo) Employment letter agreement dated May 19, 2000 EF between the Company and Mary K. Sinclair. 27 Financial Data Schedule (filed herewith). EF b. Reports on Form 8-K. None. 21 22 INFORMATION RESOURCES, INC. AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INFORMATION RESOURCES, INC. --------------------------- (Registrant) /s/ ANDREW G. BALBIRER ----------------------------------- Andrew G. Balbirer Executive Vice President and Chief Financial Officer (Authorized Officer of Registrant) /s/ MARY K. SINCLAIR ----------------------------------- Mary K. Sinclair Controller (Principal Accounting Officer) August 11, 2000 22 EX-10.(KK) 2 ex10-kk.txt AMENDMENT TO EMPLOYEE LETTER AGREEMENT 1 June 16, 2000 Mr. Edward Kuehnle 17 Devonshire Land Mendham, NJ 07945 Dear Ed: In connection with your relocation to Chicago, I confirm that we have agreed that IRI will provide you with the following: 1. We will reimburse your mortgage differential for three (3) years between your current mortgage and your new mortgage on a home of comparable size to your current home. If you refinance your mortgage, this differential will decrease. The reimbursement will be grossed up for taxes. Your relocation will also be grossed up for taxes in accordance with IRI's standard relocation policy. You will be reimbursed each year on the anniversary of your move to Chicago and you will need to submit the appropriate documentation. 2. If your employment with IRI is terminated by IRI without cause, your responsibilities are significantly reduced without cause or you cease to report directly to the Chief Executive Officer of IRI without cause (in any case other than in the event of a change in control) prior to the first anniversary of the date of your relocation to Chicago (the "First Post-Move Year"), you will be entitled to receive as severance benefits under the terms of your employment agreement: (a) severance pay equal to 140% of your base salary (reflecting base salary and bonus) for the next twenty-four months, paid over the term of this severance period; and (b) continuation of benefits in accordance with IRI's standard severance policy for the severance period. You will not be entitled to receive a separate bonus for the year in which your employment with IRI terminates as your severance amount is calculated to include your target bonus amount for the year of termination. These severance benefits shall be in lieu of, and not in addition to, those severance benefits specified in Paragraph 2 on Page 2 of your employment letter. 3. If your employment with IRI is terminated by IRI without cause, your responsibilities are significantly reduced without cause or you cease to report directly to the Chief Executive Officer of IRI without cause (in any case other than in the event of a change in control) between the first and second anniversaries of the date of your relocation to Chicago (the "Second Post-Move Year"), you will be entitled to receive as severance benefits under the terms of your employment agreement: (a) severance pay equal to 140% of your base salary (reflecting base salary and bonus) for the number of months equal to 24 months less one month for each month or portion of a month during the Second Post-Move Year that occurred prior to the effective date of employment termination or reduction of responsibilities, such severance pay to be paid over the term of this severance period; and (b) continuation of benefits in accordance with IRI's standard severance policy for the severance period. You will not be entitled to receive a separate bonus for the year in which your employment with IRI terminates as your severance amount is calculated to include your target bonus amount for the year of termination. These severance benefits shall be in lieu of, and not in addition to, those severance benefits specified in Paragraph 2 on Page 2 of your employment letter. 2 4. If your employment is terminated under Paragraphs 2 or 3 above, any stock options that would otherwise vest in the succeeding 18 month period following such termination will vest immediately and shall be exercisable in accordance with the terms of the applicable stock option plan under which they were granted. 5. If, after your relocation to Chicago, your employment with IRI is terminated by IRI without cause, your responsibilities are significantly reduced without cause or you cease to report directly to the Chief Executive Officer without cause (in any case other than in the event of a change in control), IRI will reimburse you for your relocation to another location in the U.S. in accordance with IRI's standard relocation policy. Such relocation must take place within one year after your employment with IRI terminates. The relocation expense will be capped at $100,000 and will not be grossed up. IRI will provide reimbursement upon presentment of appropriate documentation. 6. We will allow you to defer receipt of your severance pay and relocation reimbursement payment into the calendar year following the effective date of your termination of employment if you choose to do so for tax reasons. 7. We will reimburse you up to $1,500 for tax preparation for your 2000 tax return upon presentment of appropriate documentation. This amount will not be grossed up. Finally, regarding your request for modified change in control language, we are in the process of implementing agreements for all executive officers including you which will contain uniform change in control language. Once finalized and executed by you, this agreement will take the place of any change in control language currently included in your employment agreement. A form agreement will be provided to you within the next few weeks. Sincerely, Gary S. Newman Executive Vice President, Human Resources cc: Joe Durrett EX-10.(LL) 3 ex10-ll.txt AMENDED AND RESTATED 1992 STOCK OPTION PLAN 1 INFORMATION RESOURCES, INC. AMENDED AND RESTATED 1992 STOCK OPTION PLAN (AS AMENDED EFFECTIVE JUNE 29, 2000) SECTION 1. PURPOSE OF THE PLAN. This Amended and Restated 1992 Stock Option Plan (which amends and restates the 1992 Incentive Stock Option Plan) (the "Plan") for INFORMATION RESOURCES, INC. (the "Company") is intended to advance the interests of the Company by providing key employees who have substantial responsibility for the direction and management of the Company with additional incentive for them to promote the success of the business, to increase their proprietary interest in the success of the Company, and to encourage them to remain in its employ. The above aims will be effectuated through the granting of certain stock options. It is intended that options issued under the Plan will be either non-qualified stock options or, if designated by the Committee under Section 3(b), will qualify as Incentive Stock Options ("ISOs") under Section 422 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") and the terms of the Plan shall be interpreted in accordance with this intention. SECTION 2. ADMINISTRATION OF THE PLAN. The Board of Directors of the Company (the "Board") shall designate the Executive Committee of the Board to act as the Stock Option Plan Committee (the "Committee"). Subject to the provisions of the Plan, the Committee shall have plenary authority, in its discretion: (a) to determine the employees of the Company and its subsidiaries (from among the class of employees eligible under Section 3 to receive options under the Plan) to whom options shall be granted (provided, however, that options granted to any member of the Committee shall not be deemed to be effective until approved by the Board); (b) to determine the time or times at which options shall be granted; (c) to determine the option price of the shares subject to each option, which price shall not be less than the minimum specified in Section 6; (d) to determine (subject to Section 8) the time or times when each option shall become exercisable and the duration of the exercise period; and (e) to interpret the Plan and to prescribe, amend and rescind rules and regulations relating to it. All action of the Committee shall be taken by unanimous vote of its members. Any action may be taken by a written instrument signed by all the members of the Committee. The Committee may appoint a secretary to keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable. SECTION 3. ELIGIBILITY AND LIMITATIONS ON OPTIONS GRANTED UNDER THE PLAN. (a) Options will be granted only to persons who are key employees of the Company or a subsidiary corporation of the Company, excluding, however, executive officers and directors of the Company. The term "subsidiary corporation" shall, for the purposes of this Plan be defined in the same manner as such term is defined in Section 424(f) of the Internal Revenue Code. 2 (b) At the time of the grant of each option under this Plan, the Committee shall determine whether such option is to be designated as an ISO. No option granted to any employee, who at the time of such grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary or parent corporation of the Company (as measured for purposes of Section 422(b)(6) of the Internal Revenue Code), may be designated as an ISO, unless at the time of such grant, (i) the option price is fixed at not less than 110% of the fair market value of the stock subject to the option, and (ii) the exercise of such option is prohibited by its terms after the expiration of five years from the date such option is granted. (c) The aggregate fair market value of the stock for which any employee may be granted options designated as ISOs and exercisable for the first time in any calendar year (under this or any other incentive stock option plan established by the Company or a subsidiary corporation of the Company) shall not exceed $100,000. For purposes of this annual limitation, the fair market value of such stock shall be determined as of the date the option with respect to such stock was granted. SECTION 4. SHARES OF STOCK SUBJECT TO THE PLAN. There will be reserved for use upon the exercise of options to be granted from time to time under the Plan (subject to the provisions of Section 12) an aggregate of 2,000,000 shares of the common stock (the "Common Stock") of the Company, which shares may be in whole or in part, as the Board shall from time to time determine, authorized but unissued shares of the Common Stock or issued shares of the Common Stock which shall have been reacquired by the Company. Any shares subject to an option under the Plan, which option for any reason expires or is terminated unexercised as to such shares, may again be subject to an option under the Plan. SECTION 5. LISTING AND REGISTRATION OF SHARES. Each option shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration, or qualification of the shares covered thereby upon any securities exchange or under any state or federal law or the consent or approval of any governmental regulatory body, or obtaining an investment intent representation or other undertaking from the option holder, is necessary or desirable as a condition of, or in connection with, the granting of such option or the issue or purchase of shares thereunder, such option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent, approval, representation, or undertaking shall have been effected or obtained free of any conditions not acceptable to the Committee. SECTION 6. OPTION PRICE. (a) Subject to Section 3(b), the purchase price under each option issued shall be determined by the Committee at the time the option is granted, but in no event shall such purchase price be less than 100% of the fair market value of the Company's Common Stock on the date of the grant. (b) If the stock is traded in the over-the-counter market, such fair market value shall be 2 3 deemed to be the mean between the asked and the bid prices on such day as reported by National Association of Securities Dealers Automated Quotation System (NASDAQ), but if there are no sales on such date, on the last previous date on which a share was so traded; or if the foregoing is not applicable, the average of the high and low prices at which one share is traded on a stock exchange in which the Common Stock generally has the greatest trading volume, but if there are no sales on such date, on the last previous date on which a share was so traded; or if neither of the above is applicable, the value of a share as established by the Committee for such date using any reasonable method of valuation consistent with Section 422(c)(7) of the Internal Revenue Code. SECTION 7. ADJUSTMENTS. The Committee shall make appropriate adjustment in the price of the shares and the number allotted or subject to allotment, and the number of shares subject to issuance under the Plan shall be adjusted, if there are any changes in the Common Stock of the Company by reason of stock dividends, stock splits, reverse stock splits, recapitalization, mergers or consolidations. No fractional shares shall be issued, and any fractional shares resulting from the computations pursuant to this Section 7 shall be eliminated from the respective option. No adjustment shall be made for cash dividends or the issuance to shareholders of rights to subscribe for additional Common Stock or other securities. SECTION 8. PERIOD OF OPTION AND CERTAIN LIMITATIONS ON RIGHT TO EXERCISE. (a) Subject to Section 3(b), all options issued under the Plan shall be for such period as the Committee shall determine, but for not more than 10 years from the date of grant thereof. (b) The period of the option, once it is granted, may be reduced only as provided for in Section 10 in connection with the termination of employment or death of the option holder or in Section 8(c) in the case of less than satisfactory performance. (c) Subject to the foregoing, the Committee in its discretion shall determine to what extent from time to time an option granted hereunder shall be exercisable. Following the grant of any option, the Committee may, in its sole discretion, if it determines that the option holder is not performing satisfactorily the duties to which he or she was assigned on the date the option was granted or duties of at least equal responsibility (i) prescribe longer time periods and additional requirements with respect to the exercise of an option and (ii) terminate in whole or in part such portion of any option as has not yet become exercisable at the time of termination. Subject to the provisions of Section 10, no option may be exercised unless the option holder is at the time of such exercise in the employ of the Company or of a subsidiary corporation of the Company and shall have been continuously so employed since the grant of his or her option. Absence or leave approved by the management of the Company shall not be considered an interruption of employment for any purpose under the Plan unless such absence or leave would be treated as an interruption of employment for purposes of Section 422 of the Internal Revenue Code. (d) Options issued under this Plan designated by the Committee as ISOs may be exercised while there are outstanding previously granted but unexercised options. 3 4 (e) Subject to the alternative settlement methods set forth in Section 8(h) hereof, the exercise of any option shall also be contingent upon receipt by the Company of cash or certified bank check to its order, shares of the Company's Common Stock, or any combination of the foregoing in an amount equal to the full option price of the shares being purchased. For purposes of this paragraph, shares of the Company's Common Stock that are delivered in payment of the option price shall be valued at their fair market value determined under the method set forth in Section 6 of this Plan applied as of the date of the exercise of the option. (f) No option holder or his or her legal representative, legatees, or distributees, as the case may be, ("Successors") will be, or will be deemed to be, a holder of any shares subject to an option unless and until certificates for such shares are issued under the terms of the Plan. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. (g) In no event may an option be exercised after the expiration of its term. (h) As an alternative to payment in full by the option holder for the number of shares of Common Stock in respect of which an option is exercised, the Committee may provide an alternative settlement method as follows: (i) If so authorized by the Committee, the option holder may elect to pay the purchase price for shares in respect of which he or she exercises the option, in the following manner: [a] An initial payment, on the date of the exercise of the option, of 10% of the option price (but not less than the par value of each such share) of the shares then purchased; and [b] The balance of the purchase price, together with interest thereon, compounded semi-annually, at the "Section 483 Rate" two years after the date of the exercise of the option. The "Section 483 Rate" shall be that rate of interest that is equal to the greater of (i) the rate prescribed by the Secretary of the Treasury, as of the date of the exercise of the option, pursuant to the provisions of Section 483(b) (or any successor provision) of the Internal Revenue Code or (ii) the minimum rate sufficient to avoid having the payment or any portion of the balance of the purchase price (i.e., excluding stated interest) be treated as a payment of interest for state or federal income tax purposes. The obligation to pay such balance shall be evidence by a promissory note satisfactory in form to the Committee and signed by the option holder. The option holder, however, shall have the right to prepay the whole or any portion of the option price at any time. (ii) Upon payment by the option holder of the initial installment of the option price, all of the shares as to which the option is being exercised shall be deemed acquired by such option holder and shall be lawfully issued and validly outstanding and such option holder shall 4 5 be vested with full and complete title to such shares (subject to the provisions of subparagraph (h)(iii) below). (iii) By election to pay the option price in installments, the option holder agrees to endorse in blank and deliver to the Company as security for payment in full of the option price the certificate or certificates representing the shares with respect to which an option has been exercised and representing share dividends in such shares and further agrees that all dividends (other than share dividends) on or distributions in respect of such shares will be applied to the payment of the unpaid balance and that certificates representing share dividends shall be held by the Company as additional security for payment in full of the option price. At termination of an option holder's employment, the option holder or his or her Successors shall pay the amount owing pursuant to subparagraph (i) of this paragraph as follows: if such termination results from retirement at the option holder's Retirement Date, from disability, or from death, then such payment may be made by the option holder or his or her Successors as specified in the note required by subparagraph (i) of this paragraph; if such termination results from a cause other than as specified in the preceding clause of this sentence, then the option holder shall pay such amount within 90 days after such termination. For the purpose of this plan, "Retirement Date" means: the effective date, which follows at least four years of continuous employment with the Company or a subsidiary corporation of the Company, of the option holder's retirement from the Company or a subsidiary corporation of the Company upon reaching the age of 60 years or, if applicable, his or her retirement upon such earlier date as shall be permitted under the Company's or a subsidiary corporation's retirement plan, as the case may be. (iv) As soon as practicable after receipt by the Company of payment of the amount prescribed in subparagraph (i)[a] of this paragraph, a certificate or certificates representing the shares with respect to which an option has been exercised shall be registered in the name or names specified by the option holder in the written notice of exercise. Such certificates shall then be endorsed by the registered owner or owners and shall be held by the Company pursuant to the provisions of subparagraph (iii) of this paragraph. (v) Upon default in the payment of any amount on the date it becomes due, whether by acceleration as provided above in subparagraph (iii) of this paragraph, or otherwise, the Company may elect to [a] sell all shares then held by the Company as security for the payment of the option price and remit to the option holder or his or her Successors any excess of the net proceeds of such sale over the amount so owing at the time of such default; or [b] purchase such number of shares then held by the Company as security for the payment of the option price at the then fair market value thereof, as are necessary to pay the amount then due and to deliver any remaining shares to the option holder or his or her Successors. (vi) As soon as practicable after receipt by the Company of payment of the balance, and any interest, due and owing pursuant to the provisions of this paragraph, the Company shall deliver to the option holder or his or her Successors the certificate or certificates representing the shares with respect to which payment in full of the option price has been received and representing share dividends on such shares. 5 6 (vii) Exercise of an option in any manner, including an exercise involving an election of an alternative settlement method with respect to an option, shall result in a decrease in the number of shares of Common Stock which thereafter may be available under the Plan by the number of shares as to which the option is exercised. (i) The partial exercise of an option or a combination of such options shall in no event be for less than 100 shares of Common Stock, unless a purchase of fewer shares would entirely exhaust the options held by the option holder. SECTION 9. ASSIGNABILITY. Each option granted under this Plan shall be transferable only by will or the laws of descent and distribution and shall be exercisable, during his or her lifetime, only by the employee to whom the option is granted or, except as prohibited under Code Section 422 with respect to an option designated as an ISO, by his or her legal representative. Except as permitted by the preceding sentence, no option granted under the Plan or any of the rights and privileges thereby conferred shall be transferred, assigned, pledged, or hypothecated in any way (whether by operation of law or otherwise), and no such option, right, or privilege shall be subject to execution, attachment, or similar process. Upon any attempt so to transfer, assign, pledge, hypothecate or otherwise dispose of the option, or of any right or privilege conferred thereby, contrary to the provisions hereof, or upon the levy of any attachment or similar process upon such option, right or privilege, the option and such rights and privileges shall immediately become null and void. SECTION 10. EFFECT OF TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY. (a) In the event of the termination of employment of any option holder (otherwise than by reason of death, disability or retirement of the option holder at his or her Retirement Date), any option or options granted to him or her under the Plan to the extent not thereto exercised shall be deemed cancelled and terminated forthwith, except that such option holder, or his or her Successors, may exercise any options theretofore granted to him or her, which have not then expired and which are otherwise exercisable within the provisions of Section 8(c) hereof. within 30 days after such termination. (b) If the employment of an option holder shall be terminated by reason of the option holder's retirement at his or her Retirement Date, the option holder shall have the right to exercise such option or options held by him or her to the extent that such options have not expired and are otherwise exercisable at his or her Retirement Date, at any time within three years after such retirement or, if the option holder shall die within three years after retirement at his or her Retirement Date, his or her Successors may exercise such options within one year after the death of the option holder. The transfer of an option holder from the employ of the Company to a subsidiary corporation of the Company or vice versa, or from one subsidiary corporation of the Company to another, shall not be deemed to constitute a termination of employment for purposes of this Plan. (c) In the event that an option holder shall die while employed by the Company or by any 6 7 subsidiary corporation of the Company, any option or options granted to him or her under this Plan and not theretofore exercised by him or her or expired shall become immediately exercisable in full, notwithstanding Section 8(c), and may be exercised by his or her Successors at any time within one year after the death of the option holder. (d) In the event of the termination of employment of an option holder by reason of the option holder's disability, all options held by him or her shall become immediately exercisable in full notwithstanding the provisions of Section 8(c) hereof, to the extent that such options have not previously expired or been exercised, and may be exercised by such option holder at any time within one year after such termination. For the purposes of this Plan, "disability" shall be defined in the same manner as such term is defined in Section 22(e)(3) of the Internal Revenue Code. SECTION 11. EXPIRATION AND TERMINATION OF THE PLAN. Options may be granted under the Plan at any time or from time to time as long as the total number of shares optioned or purchased under this Plan does not exceed 2,000,000 shares of Common Stock. The Plan may be abandoned or terminated at any time by the Board except with respect to any options then outstanding under the Plan. No option shall be granted pursuant to the Plan after 10 years from the effective date of the Plan. SECTION 12. AMENDMENT OF PLAN. The Board may at any time and from time to time modify and amend the Plan in any respect; provided, however, that no such amendment shall: (a) without shareholder approval, increase (except in accordance with Section 7) the maximum number of shares for which options may be granted under the Plan either in the aggregate or to any individual employee; or (b) reduce (except in accordance with Section 7) the minimum option prices which may be established under the Plan; or (c) extend the period or periods during which options may be granted or exercised; or (d) without shareholder approval, change the provisions relating to the determination of employees to whom options shall be granted and the number of shares to be covered by such options. The termination or any modification or amendment of the Plan shall not, without the consent of an option holder, affect his or her rights under an option theretofore granted to him or her. SECTION 13. APPLICABILITY OF PLAN TO OUTSTANDING STOCK OPTIONS. This Plan shall not affect the terms and conditions of any non-qualified stock options or ISOs heretofore granted to any employee of the Company or a subsidiary corporation of the Company or any other individual under any other plan relating to such stock options; nor shall it 7 8 affect any of the rights of any such employee or individual to whom such stock options were granted. SECTION 14. EFFECTIVE DATE OF PLAN. This Plan shall become effective on the later of the date of its adoption by the Board or the Executive Committee of the Board or its approval by the vote of the holders of a majority of the outstanding shares of the Company's Common Stock. This Plan shall not become effective unless such shareholder approval shall be obtained within 12 months before or after the adoption of the Plan by the Board or the Executive Committee. INFORMATION RESOURCES, INC. By: /s/ Joseph P. Durrett ------------------------------- Joseph P. Durrett, Chairman 8 EX-10.(MM) 4 ex10-mm.txt 1992 EXECUTIVE STOCK OPTION PLAN 1 INFORMATION RESOURCES, INC. 1992 EXECUTIVE STOCK OPTION PLAN (AS AMENDED EFFECTIVE JUNE 29, 2000) 1. Introduction and Purpose. The purpose of this Stock Option Plan is to advance the interests of Information Resources, Inc. by encouraging and enabling the acquisition of a larger personal proprietary interest in the Corporation by Eligible Executives upon whose judgment and keen interest the Corporation and its Subsidiaries are largely dependent for the successful conduct of their service and operations. It is anticipated that the acquisition of such proprietary interest in the Corporation will stimulate the efforts of such Eligible Executives, on behalf of the Corporation and its Subsidiaries, and strengthen their desire to remain with the Corporation and its Subsidiaries. It is also expected that the opportunity to acquire such a proprietary interest will enable the Corporation and its Subsidiaries to attract desirable candidates for the Corporation's Board of Directors and executive management. 2. Definitions. When used in this Plan, unless the context otherwise requires: (a) "Board of Directors" or "Board" shall mean the Board of Directors of Information Resources, Inc. as constituted at any time. (b) "Committee" shall mean the Stock Option Committee, as described in Section 3 hereof, appointed by the Board to administer this Plan. (c) "Common Stock" means the common stock of the Corporation at a par value of $.01, including outstanding shares, treasury shares and authorized but unissued shares, or any equity security of the Corporation issued in substitution, exchange or lieu of such common stock. (d) "Corporation" shall mean Information Resources, Inc. (e) "Eligible Executives" shall mean the directors and executive officers of the Corporation or its Subsidiaries who are potential recipients of Options pursuant to this Plan, as provided in Section 4 herein. (f) "Fair Market Value" on a specified date shall mean (i) the average of the bid and asked prices at which one Share is traded on the over-the-counter market, as reported on the National Association of Securities Dealers Automated Quotation System, but if there are no sales on such date, then on the last previous date on which a Share was so traded; or (ii) if the foregoing is not applicable, the average of the high and low prices at which one Share is traded on the stock exchange on which the Common Stock generally has the greatest trading volume, but if there are no sales on such date, then on the last previous date on which a Share was so traded; or (iii) if neither of the above is applicable, the value of a Share as 2 established by the Committee for such date using any reasonable method of valuation consistent with Section 422(c)(7) of the Internal Revenue Code. (g) "Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as amended, or any successor thereto. (h) "Options" shall mean the stock options issued pursuant to this Plan. (i) "Plan" shall mean this Information Resources, Inc. 1992 Executive Stock Option Plan, effective as of the date set forth in Section 23 hereof, 1992, and as amended from time to time. (j) "Plan Year" means the calendar year. (k) "Retirement Date" shall mean, the effective date, which follows at least four years of continuous employment with the Corporation or a subsidiary corporation of the Corporation, of the option holder's retirement from the Corporation or a subsidiary corporation of the Corporation upon reaching the age of 60 years or, if applicable, his or her retirement upon such earlier date as shall be permitted under the Corporation's or a subsidiary corporation's retirement plan, as the case may be. (l) "Rule 16b-3" means Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto. (m) "Securities Act of 1933" shall mean the Securities Act of 1933, as amended from time to time, or any successor thereto. (n) "Securities Exchange Act of 1934" shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto. (o) "Share" shall mean a share of Common Stock of the Corporation at a par value of $.01. (p) "Subsidiary" shall mean any "subsidiary corporation", as such term is defined in Section 424(f) of the Internal Revenue Code. (q) "Voting Power," as of any date, means the total combined voting power of all classes of stock of the Corporation or its parent, if any, or Subsidiary, as measured for purposes of Section 422(b)(6) of the Internal Revenue Code. 2 3 3. Administration of the Plan. (a) The Committee shall be appointed by the Board of Directors and shall consist of at least two members of the Board of Directors, who shall each be a "disinterested person" within the meaning of Rule 16b-3. The Committee shall have the authority, subject to the provisions of this Plan, to (i) determine which Eligible Executives shall receive Options and the number of Options each Eligible Executive shall receive, (ii) grant the Options, (iii) determine the terms and conditions of the Options, including, but not limited to, exercise dates, limitations on exercise and the price and payment terms, (iv) determine the limitation, if any, on the number of Shares acquired under an Option which may be sold by the Option holder in any year; (v) prescribe the form or forms of the instruments evidencing any Options granted under the Plan and of any other instruments required under the Plan and to change such forms from time to time, and (vi) administer the Plan as provided herein and, in exercising this authority, shall establish such rules and procedures as are necessary or advisable to administer the Plan. (b) Each member of the Committee shall hold his or her position on the Committee until the next regular annual meeting of the Board of Directors following his or her designation and until his or her successor is designated as a member of the Committee; provided, however, that (i) any member of the Committee may be removed at any time, with or without cause, by resolution adopted by a majority of the Board of Directors and (ii) a member of the Committee may resign from the Committee at any time by giving written notice to the President, Secretary or Assistant Secretary of the Corporation in person or by certified or registered mail, return receipt requested, sent to 150 North Clinton Street, Chicago, Illinois 60661, and, unless otherwise specified therein, such resignation shall take effect upon receipt of such written notice. The acceptance of such resignation by the President, Secretary or Assistant Secretary of the Corporation shall not be necessary for such resignation to be effective. Any vacancy in the Committee may be filled by a resolution adopted by a majority of the Board of Directors. (c) Each member of the Committee shall receive, annually, Options to purchase 2,500 shares of Common Stock. Such Options shall be issued on June 15 of each year, beginning in 1992, and, except as otherwise provided in this Plan, the exercise price per share of Common Stock thereunder shall be equal to the Fair Market Value of one Share as of the date of Option issuance. Except as provided in this Section 3(c), no Options shall be granted to Committee members under this Plan. The provisions of this Section 3(c) may not be amended more than once every six months, other than to comport with the changes in the Internal Revenue Code, the Employee Retirement Income Security Act of 1974, as amended, and the rules or regulations under such statutes. 4. Plan Participants. Except as hereinafter provided, the class of individuals who are potential recipients of Options to be granted under this Plan ("Eligible Executives") consists of those individuals who are executive officers or directors of the Corporation or any of its Subsidiaries and are subject to Section 16 of the Exchange Act. Directors who, at the time of such Option grants, are 3 4 not also executive officers or employees of the Corporation or its Subsidiaries shall be Eligible Executives; provided that only Options which the Committee has designated as non-qualified stock options may be granted to such directors. 5. Shares of Stock Subject to the Plan. The Committee may, but shall not be required to, grant Options under the Plan to purchase an aggregate of up to 2,500,000 Shares, which may be either treasury Shares or authorized but unissued Shares. The exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available under this Plan, and the amount of such decrease shall be the number of Shares as to which the Option is exercised. If any such Option expires or is terminated for any reason, without being exercised in full, the Shares covered by the unexercised portion of such Option may again be made subject to Options under the Plan. 6. Listing and Registration of Shares. Each Option shall be subject to the requirement that, if at any time the Committee shall determine, in its sole and exclusive discretion, (i) the listing, registration, or qualification of the Shares covered thereby upon any securities exchange or over-the-counter market or under any state, federal or foreign law, (ii) the consent or approval of any government regulatory body or (iii) obtaining an investment intent representation or other undertaking from the Option holder, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issue or purchase of Shares thereunder, such Option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent, approval, representation, or undertaking shall have been effected or obtained free of any conditions not acceptable to the Committee. 7. Requirements of Law. (a) In the event the Shares issuable upon the exercise of an Option are not registered under the Securities Act of 1933, the Corporation shall imprint on the certificate representing such Shares the following legend or any other legend which counsel for the Corporation considers necessary or advisable to comply with the Securities Act of 1933: The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any State and may not be sold or transferred except upon such registration or upon receipt by the Corporation of an opinion of counsel in form and substance satisfactory to the Corporation that registration is not required for such sale or transfer. (b) The Corporation may, but in no event shall be obligated to, register any securities covered hereby pursuant to the Securities Act of 1933, as now in effect or as hereafter amended, and, in the event any Shares are so registered, the Corporation may remove any legend on certificates representing such Shares. The Corporation shall make reasonable efforts to cause the exercise of an Option or the issuance of Shares pursuant thereto to comply with any law or regulation of any governmental authority. 4 5 (c) Notwithstanding any other provision of this Plan, no Option may be granted or exercised pursuant to the provisions of this Plan when such Option, or the granting or exercise thereof, may result in the violation of any federal or state law, order or regulation. (d) Notwithstanding any other provision of this Plan, any provision included herein which is inconsistent with Rule 16b-3 shall be inoperative and shall not affect the validity of the Plan. 8. Grant of Options. (a) Options granted under this Plan may be either non-qualified stock options or incentive stock options within the meaning of Section 422 of the Internal Revenue Code. Options which are not designated as incentive stock options shall not be treated as incentive stock options for purposes of this Plan or the Internal Revenue Code. (b) Subject to the provisions of this Plan, the Committee may, from time to time prior to the termination of the Plan, grant Options to Eligible Executives to purchase the number of Shares authorized by the Committee, subject to such terms and conditions as the Committee may determine in accordance with the provisions herein; provided that, if such Option is designated as an incentive stock option, then such terms and conditions shall not be inconsistent with Section 422 of the Internal Revenue Code. The day on which the Committee approves the granting of an Option shall be considered the date on which such Option is granted unless the Committee designates a subsequent date as the effective date of the grant. (c) The terms and conditions of the Option shall be set forth in writing in a certificate or agreement (the "Option Agreement") signed by the Option holder and on behalf of the Corporation by the President, any Vice President or the Treasurer of the Corporation. The Option Agreement shall designate the Option as either an incentive stock option or a non-qualified stock option. (d) In no event may an Eligible Executive be granted an Option under the Plan in any year in excess of that person's Individual Limit. For purposes hereof, the "Individual Limit" is 700,000 shares. 9. Price. Except with respect to an Option described in Section 3(c) herein, the exercise price per Share to be purchased pursuant to any Option shall be fixed by the Committee at the time an Option is granted and may be less than, equal to, or greater than the Fair Market Value of one Share on the date such Option is granted; and provided that, if the Option is designated as an incentive stock option, in no event shall the price be less than the greater of (i) the Fair Market Value of a Share on the day on which the Option is granted or (in) if the Option holder owns stock possessing more than 10% of the Voting Power, the price specified in Section 14 herein. 5 6 10. Duration of Options. The duration of any Option granted under this Plan shall be for a period fixed by the Committee, in its sole and exclusive discretion, but not longer than (i) 10 years from the date upon which the Option is granted or (ii) in the case of an Option designated as an incentive stock option where the Option holder owns stock possessing more than 10% of the Voting Power, the duration specified in Section 14 herein. The period of the Option, once it is granted, may be reduced only as provided for in Section 17 herein, in connection with the termination of employment or death of the Option holder, or in Section 13(a) herein, in the case of less than satisfactory performance. 11. Amount Exercisable. Except as otherwise provided in this Plan, an Option granted in accordance with Section 8 herein shall be exercisable by the Option holder at such rate and times as may be fixed by the Committee at the time the Option is granted. The partial exercise of an Option or a combination of such Options shall in no event be for less than 100 Shares, unless a purchase of fewer Shares would entirely exhaust the Options held by the Option holder; provided however, that no Option may be exercised in part or in full prior to the approval of the Plan by a majority vote of the stockholders of the Corporation, as provided in Section 23 herein. 12. Method of Exercising Options. (a) An Option shall be exercised by the delivery of a written notice duly signed by the Option holder (or the transferee of the Option, as permitted herein), together with the Option Agreement and either (i) cash, (ii) a certified check payable to the order of the Corporation, (iii) outstanding Shares duly endorsed over to the Corporation (which Shares shall be valued at their Fair Market Value as of the date preceding the day of such exercise) or (iv) any combination of such methods of payment which together amount to the full exercise price of the Shares purchased pursuant to the exercise of the Option. Such payment shall be delivered to the Treasurer, Secretary or Assistant Secretary of the Corporation who has been designated for the purpose of receiving the same. (b) Within a reasonable time after the exercise of an Option, the Corporation shall cause to be delivered to the person entitled thereto a certificate for the Shares purchased pursuant to the exercise of the Option. If the Option shall have been exercised with respect to less than all of the Shares subject to the Option, the Corporation shall (i) cause to be delivered to the person entitled thereto a new Option Agreement in replacement of the Option Agreement surrendered at the time of the exercise of the Option, indicating the number of Shares with respect to which the Option remains available for exercise or (ii) endorse the original Option Agreement to give effect to the partial exercise thereof. 6 7 13. Limitations on Exercise of Options. (a) Following the grant of an Option, the Committee may, in its sole and exclusive discretion, if it determines that the Option holder is not satisfactorily performing the duties to which he or she was assigned on the date the Option was granted or duties of at least equal responsibility, (i) prescribe longer time periods and additional requirements with respect to the exercise of an Option which has not yet become exercisable and (ii) terminate in whole or in part any portion of an Option which has not yet become exercisable. With the exception of those Eligible Executives described in Section 4 herein who are directors of the Corporation but who are not also executive officers of the Corporation or a Subsidiary and, subject to the provisions of this Section 13 and Section 17 herein, no Option may be exercised unless the Option holder is at the time of such exercise in the employ of the Corporation or of a Subsidiary and shall have been continuously so employed since the grant of the Option. (b) In no event may an Option be exercised after the expiration of its term or after its termination. (c) Notwithstanding any other provision of this Plan, any Option granted under this Plan which is designated as an incentive stock option shall not be exercisable to the extent that (i) the Fair Market Value of the Shares (determined as of the date of Option grant), with respect to which such Option (and any other incentive stock option granted to the Option holder under this Plan or any other stock option plan maintained by the Corporation or any Subsidiary or parent corporation) first becomes exercisable in any calendar year, exceeds $100,000; and (ii) Section 422(d) of the Internal Revenue Code would otherwise preclude such Option from being treated as an incentive stock option. (d) No Option designated as an incentive stock option shall be exercised by an Eligible Executive until such individual has been in the employ of the Corporation for a period of at least three months following the date such Option is granted. 14. Limitations Regarding Ten Percent Stockholders. No Option which is designated as an incentive stock option may be granted under this Plan to any Eligible Executive who, at the time the Option is granted, owns, or is considered to own, within the meaning of Section 422 of the Internal Revenue Code, Shares possessing more than 10% of the Voting Power, unless (i) the exercise price under such Option is at least 110% of the Fair Market Value of a Share on the date such Option is granted and (ii) the duration of such Option is no more than five years. 15. Option Holder Not a Stockholder. An Option holder, or his or her legal representative, legatees or distributees, as the case may be ("Successor"), shall not be deemed to be the holder of Common Stock or to have any of the rights of a stockholder with respect to any Shares subject to such Option, unless and until (i) the Option shall have been exercised pursuant to the terms thereof, (ii) the Corporation shall have issued and delivered stock certificates for such Shares to the Option holder or his or her Successor, and (iii) the Option holder's or his or her Successor's name shall have been entered as a stockholder of record on the books of the Corporation. Thereupon, the 7 8 Option holder or his or her Successor shall have full voting, dividend and other ownership rights with respect to such Shares; provided, however, that, except as otherwise provided in Section 19 herein, no adjustment for dividends or otherwise shall be made if the Corporation's record date is prior to the issuance of such stock certificate. 16. Non-Transferability of Options. Options and all rights thereunder shall be non-transferable and non-assignable by the Option holder thereof otherwise than by will or the laws of descent and distribution and, during the Option holder's lifetime, shall be exercisable only by the Option holder or, except as prohibited under Internal Revenue Code Section 422 with respect to an Option designated as an incentive stock option, by his or her legal representative. Except as permitted by the preceding sentence, no Option granted under the Plan or any of the rights and privileges thereby conferred shall be transferred, assigned, pledged, or hypothecated in any way, whether by operation of law or otherwise, and no such Option, right, or privilege shall be subject to execution, attachment or similar process. Upon any attempt so to transfer, assign, pledge, hypothecate, or otherwise dispose of the Option, or of any right or privilege conferred thereby, contrary to the provisions hereof, or upon the levy of any attachment or similar process upon such Option, right or privilege, the Option and such rights and privileges shall immediately become null and void. 17. Effect of Termination of Employment, Death, Disability or Retirement of Option Holder. (a) Except as otherwise provided herein or except as otherwise set forth in an agreement authorized by the Committee or the Board of Directors, all Options granted hereunder shall terminate upon the earlier of the date of the expiration of such Options or the date one year after termination of the employment or directorship relationship between the Corporation or a Subsidiary and the Option holder, provided that the stock Option Agreement may provide for a shorter time period in cases other than termination of employment or directorship due to death or disability, and, to the extent such Options are otherwise exercisable within the provisions of this Plan or of the Option Agreement, may be exercised in whole or in part during such one year period, subject to the terms and conditions of the Plan and of the Option Agreement; provided, however, that in the event of the termination of employment of an Option holder by reason of the Option holder's retirement at his or her Retirement Date, all Options granted hereunder to the Option holder shall terminate upon the earlier of the date of expiration of such Options or the date three years after such retirement and those Options which have vested at his or her Retirement Date may be exercised in whole or in part during such three year period, subject to the terms and conditions of the Plan and of the Option Agreement. In the event of the termination of employment or directorship of an Option holder by reason of the Option holder's death or disability, but not in the event of other termination of employment or directorship, all Options held by the Option holder shall become immediately exercisable in full. For purposes of this Plan, "disability" shall be defined in the same manner as such term is defined in Section 22(e)(3) of the Internal Revenue Code. (b) The Committee, in its sole discretion, shall determine whether the Option holder's authorized leave of absence from his or her employment from the Corporation or a 8 9 Subsidiary or absence on military or government service shall constitute termination, severance or interruption of employment by the Option holder, for purpose of this Section 17, except that, in the case of an Option designated as an incentive stock option, the determination by the Committee shall not be inconsistent with the characterization of such leave of absence as being (or not being) an interruption of employment for purposes of Internal Revenue Code Section 422. The transfer of an Option holder from the employment of the Corporation to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment for purposes of this Plan. 18. Disposition of Shares. No Option or the Shares issued pursuant to the exercise of an Option shall be disposed of, within the meaning of Rule 16b-3, until six months after the date such Option was granted. 19. Adjustment of Shares. In the event of a capital adjustment resulting from a stock dividend, stock split, reorganization, merger, consolidation, or a combination or exchange of Shares, the number of Shares subject to issuance under the Plan and subject to issuance upon the exercise of Options granted or to be granted under the Plan shall be adjusted in a manner consistent with such capital adjustment. In addition, the price of any Shares under the Options shall be adjusted so that there will be no change in the aggregate purchase price payable upon the exercise of any such Option. The Corporation shall not be required to issue fractional Shares pursuant to this Plan. Any fractional Shares resulting from appropriate adjustments made by the Committee in accordance with this Section 19 shall be eliminated from the respective Options, and no adjustments shall be made for cash, dividends or the issuance to the stockholder of rights to subscribe for additional Common Stock or other equity securities of the Corporation. 20. Amendment of the Plan. Except as hereinafter provided, the Board of Directors may, at any time and from time to time, modify or amend the Plan; provided, however, that no such modification or amendment shall (i) increase or decrease the number of Shares issuable under the Plan or under any Option or the exercise price associated with such Option, with the exception of an increase or decrease resulting from a stock split, stock dividend or any other increase or decrease as provided in Section 19 herein, (ii) change the class of individuals to whom Options may be granted, or (iii) extend the period or periods during which Options may be granted or exercised, without the approval of the stockholders of the Corporation within 12 months of such modification or amendment. In no event shall such modification or amendment of the Plan affect an Option holder's rights with respect to an Option granted to the Option holder without his or her consent. 21. Employment Obligation. Nothing contained herein or in the Option Agreement shall be construed to confer on any Eligible Executive any right to continue in the employ of the Corporation or its Subsidiaries or derogate from any right of the Corporation or its Subsidiaries to request, in its sole and exclusive discretion, the retirement, resignation or discharge of such Eligible Executive, at any time, with or without cause. 22. Applicability of Plan to Outstanding Stock Options. This Plan shall not affect the terms and conditions of any stock options heretofore granted to any employee of the Corporation or 9 10 its Subsidiaries pursuant to any other plan of the Corporation or its Subsidiary, including, without limitation, the Corporation's 1982 or 1992 Incentive Stock Option Plan and Non-qualified Stock Option Plan, nor shall it affect any of the rights of any employee of the Corporation or its Subsidiaries to whom such stock options were granted. 23. Effective Date of the Plan. This Plan is conditioned upon its approval by the stockholders of the Corporation on or before June 30, 1992, pursuant to the affirmative vote of the holders of a majority of the outstanding Shares of the Corporation's voting stock, either in person, by proxy or by consent; except that, prior to or following such approval of the Plan by the stockholders of the Corporation, this Plan shall be adopted and approved by the Board of Directors or the Executive Committee of the Board of Directors to permit the grant of Options. Notwithstanding any other provision of this Plan, in the event that this Plan is not approved by the stockholders of the Corporation as aforesaid, this Plan and any Options granted hereunder shall be void and of no force or effect. 24. Expiration and Termination of the Plan. The Plan shall remain in full force and effect until the close of business on May 27, 2002, at which time the right to grant Options under the Plan shall automatically terminate. Any Options granted before the termination of the right to grant Options under the Plan shall continue to be governed thereafter by the terms of the Plan. No Option shall be granted pursuant to the Plan after 10 years from the effective date of the Plan. 25. Severability. If any provision herein shall be held unlawful or otherwise invalid or unenforceable in whole or in part, such unlawfulness, invalidity or unenforceability shall not affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any payment or issuance required under the Plan shall be held unlawful or otherwise invalid or unenforceable, such unlawfulness, invalidity or unenforceability shall not prevent any other payment or issuance from being made under the Plan, and if the making of any such payment or issuance in full, as required under the Plan, would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity or unenforceability shall not prevent such payment or issuance from being made in part, to the extent that it would not be unlawful, invalid, or unenforceable, and the maximum payment or issuance that would not be unlawful, invalid or unenforceable shall be made under the Plan. 10 11 26. Governing Law. The Plan and all determinations made and actions taken hereunder, to the extent not otherwise governed by the Code or the laws of the United States of America, shall be governed by the laws of the State of Illinois and construed accordingly. INFORMATION RESOURCES, INC. By: /s/ JOSEPH P. DURRETT ------------------------------- Joseph P. Durrett, Chairman 11 EX-10.(NN) 5 ex10-nn.txt EMPLOYEE NONQUALIFIED STOCK OPTION PLAN 1 INFORMATION RESOURCES, INC. EMPLOYEE NONQUALIFIED STOCK OPTION PLAN (AS AMENDED EFFECTIVE JUNE 29, 2000) 1. Introduction and Purpose. The purpose of this Employee Nonqualified Stock Option Plan is to advance the interests of Information Resources, Inc. by encouraging and enabling the acquisition of a personal proprietary interest in the Corporation by Eligible Employees upon whose efforts and interest the Corporation and its Subsidiaries are largely dependent for the successful conduct of its operations. It is anticipated that the acquisition of such proprietary interest in the Corporation will stimulate the efforts of such Eligible Employees, on behalf of the Corporation and its Subsidiaries, and strengthen their desire to remain with the Corporation and its Subsidiaries. It is also expected that the opportunity to acquire such a proprietary interest will enable the Corporation and its Subsidiaries to attract key personnel of outstanding abilities. This plan replaces the Information Resources, Inc. Nonqualified Stock Option Plan adopted effective January 1, 1984. 2. Definitions. When used in this Plan, unless the context otherwise requires: a. "Board of Directors" or "Board" shall mean the Board of Directors of Information Resources, Inc. as constituted at any time. b. "Committee" shall mean the Executive Committee of the Board, as constituted at any time, acting as the Stock Option Plan Committee, under this Plan. c. "Common Stock" means the common stock of the Corporation at a par value of $.01, including outstanding shares, treasury shares and authorized but unissued shares, or any equity security of the Corporation issued in substitution, exchange or lieu of such common stock. d. "Corporation" shall mean Information Resources, Inc. e. "Eligible Employees" shall mean the employees of and consultants to the Corporation or its Subsidiaries who are potential recipients of Options pursuant to this Plan, as provided in Section 4 herein. f. "Fair Market Value" on a specified date shall mean (i) the closing price at which one Share is traded on the over-the-counter market, as reported on the National Association of Securities Dealers Automated Quotation System, but if there are no sales on such date, then on the last previous date on which a Share was so traded; or (ii) if the foregoing is not applicable, the average of the high and low prices at which one Share is traded on the stock exchange on which the Common Stock generally has the greatest trading volume, but if there are no sales on such date, then on the last previous date on which a Share was so traded; or (iii) if neither of the above is applicable, the value of a Share as established by the Committee for such date using any reasonable method of valuation. 2 g. "Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as amended, or any successor thereto. h. "Options" shall mean the stock options issued pursuant to this Plan. i. "Plan" shall mean this Information Resources, Inc. Employee Nonqualified Stock Option Plan, effective as of the date set forth in Section 21 hereof and as amended from time to time. j. "Retirement Date" shall mean, the effective date, which follows at least four years of continuous employment with the Corporation or a subsidiary corporation of the Corporation, of the option holder's retirement from the Corporation or a subsidiary corporation of the Corporation upon reaching the age of 60 years or, if applicable, his or her retirement upon such earlier date as shall be permitted under the Corporation's or a subsidiary corporation's retirement plan, as the case may be. k. "Securities Act of 1933" shall mean the Securities Act of 1933, as amended from time to time, or any successor thereto. l. "Securities Exchange Act of 1934" shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto. m. "Share" shall mean a share of Common Stock of the Corporation at a par value of $.01. n. "Subsidiary" shall mean any subsidiary corporation of the Corporation or any other entity in which the Corporation holds an ownership interest. 3. Administration of the Plan. a. The Plan shall be administered by the Stock Option Plan Committee, which shall be the Executive Committee of the Board constituted as such. The Committee shall have the authority, subject to the provisions of this Plan, to (i) grant Options under the Plan, (ii) determine which Eligible Employees shall receive Options and the number of Options each Eligible Employee shall receive, (iii) determine the terms and conditions of the Options, including, but not limited to, exercise dates, limitations on exercise and the price and payment terms, (iv) determine the limitation, if any, on the number of Shares acquired under an Option which may be sold by the Option holder in any year, (v) prescribe the form or forms of the instruments evidencing any Options granted under the Plan and of any other instruments required under the Plan and to change such forms from time to time, and (vi) administer the Plan as provided herein and, in exercising this authority, establish such rules and procedures as are necessary or advisable to administer the Plan. 2 3 4. Plan Participants. Except as hereinafter provided, the class of individuals who are potential recipients of Options to be granted under this Plan ("Eligible Employees") consists of those individuals who are (i) employees of or consultants to the Corporation or any of its Subsidiaries and (ii) who are not subject to Section 16 of the Securities Exchange Act of 1934. 5. Shares of Stock Subject to the Plan. The Committee may, but shall not be required to, grant Options under the Plan to purchase an aggregate of up to 3,000,000 Shares, which may be either treasury Shares or authorized but unissued Shares. The exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available under this Plan, and the amount of such decrease shall be the number of Shares as to which the Option is exercised. If any such Option expires or is terminated for any reason, without being exercised in full, the Shares covered by the unexercised portion of such Option may again be made subject to Options under the Plan. 6. Listing and Registration of Shares. Each Option shall be subject to the requirement that, if at any time the Committee shall determine, in its sole and exclusive discretion, (i) the listing, registration, or qualification of the Shares covered thereby upon any securities exchange or over-the-counter market or under any state, federal or foreign law, (ii) the consent or approval of any government regulatory body or (iii) obtaining an investment intent representation or other undertaking from the Option holder, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issue or purchase of Shares thereunder, such Option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent, approval, representation, or undertaking shall have been effected or obtained free of any conditions not acceptable to the Committee. 7. Requirements of Law. a. In the event the Shares issuable upon the exercise of an Option are not registered under the Securities Act of 1933, the Corporation shall imprint on the certificate representing such Shares the following legend or any other legend which counsel for the Corporation considers necessary or advisable to comply with the Securities Act of 1933: The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any State and may not be sold or transferred except upon such registration or upon receipt by the Corporation of an opinion of counsel in form and substance satisfactory to the Corporation that registration is not required for such sale or transfer. b. The Corporation may, but in no event shall be obligated to, register any securities covered hereby pursuant to the Securities Act of 1933, as now in effect or as hereafter amended, and, in the event any Shares are so registered, the Corporation may remove any legend on certificates representing such Shares. The Corporation shall make reasonable efforts to cause the 3 4 exercise of an Option or the issuance of Shares pursuant thereto to comply with any law or regulation of any governmental authority. c. Notwithstanding any other provision of this Plan, no Option may be granted or exercised pursuant to the provisions of this Plan when such Option, or the granting or exercise thereof, may result in the violation of any federal or state law, order or regulation. 8. Grant of Options. a. Subject to the provisions of this Plan, the Committee may, from time to time prior to the termination of the Plan, grant Options to those Eligible Employees whose efforts may materially affect the profitability and growth of the Corporation, to purchase the number of Shares authorized by the Committee, subject to such terms and conditions as the Committee may determine in accordance with the provisions herein. The day on which the Committee approves the granting of an Option shall be considered the date on which such Option is granted unless the Committee designates a subsequent date as the effective date of the grant. b. The terms and conditions of the Option shall be set forth in writing in a certificate or agreement (the "Option Agreement") signed by the Option holder and on behalf of the Corporation by the Chief Executive Officer, President, any Vice President or the Treasurer of the Corporation. 9. Price. The exercise price per Share to be purchased pursuant to any Option shall be fixed by the Committee at the time an Option is granted and may be less than, equal to, or greater than the Fair Market Value of one Share on the date such Option is granted. 10. Duration of Options. The duration of any Option granted under this Plan shall be for a period fixed by the Committee, in its sole and exclusive discretion, but not longer than ten (10) years from the date upon which the Option is granted. The period of the Option, once it is granted, may be reduced only as provided for in Section 16 herein, in connection with the termination of employment or death of the Option holder, or in Section 13(a) herein, in the case of less than satisfactory performance. 11. Amount Exercisable. Except as otherwise provided in this Plan, an Option granted in accordance with Section 8 herein shall be exercisable by the Option holder at such rate and times as may be fixed by the Committee at the time the Option is granted. The partial exercise of an Option or a combination of such Options shall in no event be for less than one hundred (100) Shares, unless a purchase of fewer Shares would entirely exhaust the Options held by the Option holder. 12. Method of Exercising Options. a. An Option shall be exercised by the delivery of a written notice duly signed by the Option holder (or the transferee of the Option, as permitted herein), together with the Option Agreement, and either (i) cash, (ii) a certified check payable to the order of the Corporation, (iii) 4 5 outstanding Shares duly endorsed over to the Corporation which have been previously owned by the Option holder for a period of at least six months (such Shares shall be valued at their Fair Market Value as of the date preceding the day of such exercise), (iv) any combination of such methods of payment which together amount to the full exercise price of the Shares purchased pursuant to the exercise of the Option, (v) delivery of a properly executed exercise notice with irrevocable instructions to the broker to promptly pay to the Corporation the amount of proceeds from the sale of Shares acquired upon exercise necessary to satisfy the exercise price, or (vi) any other method of payment provided for in the Option Agreement. Such payment shall be delivered to the Treasurer, Secretary, Assistant Secretary or any other officer or employee of the Corporation who has been designated by the Committee for the purpose of receiving the same. b. Within a reasonable time after the exercise of an Option, the Corporation shall cause to be delivered to the person entitled thereto a certificate for the Shares purchased pursuant to the exercise of the Option. If the Option shall have been exercised with respect to less than all of the Shares subject to the Option, the Option holder may request the Corporation to (i) cause a new Option Agreement to be issued in replacement of the Option Agreement surrendered at the time of the exercise of the Option, indicating the number of Shares with respect to which the Option remains available for exercise or (ii) endorse the original Option Agreement to give effect to the partial exercise thereof; provided, however, that if no such request is made, then the number of Shares available for exercise shall be determined by the Committee in its sole and exclusive discretion. 13. Limitations on Exercise of Options. a. Following the grant of an Option, the Committee may, in its sole and exclusive discretion, if it determines that the Option holder is not satisfactorily performing the duties to which he or she is currently assigned (or the consulting services currently contracted for) or duties of at least equal responsibility, (i) prescribe longer time periods and additional requirements with respect to the exercise of an Option which has not yet become exercisable and/or (ii) terminate in whole or in part any portion of an Option which has not yet become exercisable. Subject to the provisions of this Section 13 and Section 16 herein, no Option granted to an Eligible Employee may be exercised unless the Option holder is at the time of such exercise in the employ of the Corporation or of a Subsidiary as an employee or consultant thereof and shall have been continuously so employed since the grant of the Option. b. In no event may an Option be exercised after the expiration of its term or after its termination. 14. Option Holder Not a Stockholder. An Option holder, or his or her legal representative, legatees or distributees, as the case may be ("Successor"), shall not be deemed to be the holder of Common Stock or to have any of the rights of a stockholder with respect to any Shares subject to such Option, unless and until (i) the Option shall have been exercised pursuant to the terms thereof, (ii) the Corporation shall have issued and delivered stock certificates for such Shares to the Option holder or his or her Successor, and (iii) the Option holder's or his or her Successor's name shall have been entered as a stockholder of record on the books of the Corporation. Thereupon, the 5 6 Option holder or his or her Successor shall have full voting, dividend and other ownership rights with respect to such Shares; provided, however, that, except as otherwise provided in Section 19 herein, no adjustment for dividends or otherwise shall be made if the Corporation's record date is prior to the issuance of such stock certificate. 15. Non-Transferability of Options. Options and all rights thereunder shall be non-transferable and non-assignable by the Option holder thereof otherwise than by will or the laws of descent and distribution and, during the Option holder's lifetime, shall be exercisable only by the Option holder or by his or her legal representative. Except as permitted by the preceding sentence, no Option granted under the Plan or any of the rights and privileges thereby conferred shall be transferred, assigned, pledged, or hypothecated in any way, whether by operation of law or otherwise, and no such Option, right, or privilege shall be subject to execution, attachment or similar process. Upon any attempt so to transfer, assign, pledge, hypothecate, or otherwise dispose of the Option, or of any right or privilege conferred thereby, contrary to the provisions hereof, or upon the levy of any attachment or similar process upon such Option, right or privilege, the Option shall terminate and such rights and privileges shall immediately become null and void. 16. Effect of Termination of Employment, Death, Disability or Retirement of Option Holder. a. Except as otherwise provided herein or in the Option Agreement or except as otherwise provided by the Committee, all Options granted hereunder shall terminate upon the earlier of the date of (i) the expiration of such Options or (ii) 30 days after termination of the employment or consulting relationship (for any reason other than the Option holder's death, disability or retirement) between the Corporation or a Subsidiary and the Option holder. In the event of termination of the employment or consulting relationship due to death or disability, Options may be exercised until the earlier of (i) the date of the expiration of the Option Term or (ii) one year after such termination. In the event of termination of the employment or consulting relationship due to retirement, Options may be exercised until the earlier of (i) the date of the expiration of the Option Term or (ii) three years after the Option holder's Retirement Date; provided, however, that in the event of an Option holder's death within three years after his or her Retirement Date, Options may be exercised within one year of the date of such death. For purposes of this Plan, "disability" shall be defined in the same manner as such term is defined in Section 22(e)(3) of the Internal Revenue Code. b. Subject to the terms and conditions of the Plan and of the Option Agreement, in the event of the termination of the employment or consulting relationship between and Corporation or a Subsidiary and an Option holder by reason of the Option holder's death or disability from the Corporation or a Subsidiary, all Options held by the Option holder shall become immediately exercisable in full. c. Subject to applicable federal and state law, the Committee, in its sole and exclusive discretion, shall determine whether the Option holder's authorized leave of absence from his or her employment with or consulting obligations to the Corporation or a Subsidiary or absence 6 7 on military or government service shall constitute termination, severance or interruption of such employment or consulting obligations by the Option holder for purpose of this Section 16. The transfer of an Option holder from the employment with or consulting obligations to the Corporation to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment or consulting obligations for purposes of this Plan. 17. Adjustment of Shares. In the event of a capital adjustment resulting from a stock dividend, stock split, reorganization, merger, consolidation, or a combination or exchange of Shares, the number of Shares subject to issuance under the Plan and subject to issuance upon the exercise of Options granted or to be granted under the Plan shall be adjusted in a manner consistent with such capital adjustment. In addition, the price of any Shares under the Options shall be adjusted so that there will be no change in the aggregate purchase price payable upon the exercise of any such Option. The Corporation shall not be required to issue fractional Shares pursuant to this Plan. Any fractional Shares resulting from appropriate adjustments made by the Committee in accordance with this Section 17 shall be eliminated from the respective Options, and no adjustments shall be made for cash, dividends or the issuance to the stockholder of rights to subscribe for additional Common Stock or other equity securities of the Corporation. 18. Amendment of the Plan. Except as hereinafter provided, the Board of Directors may terminate the Plan at any time or from time to time may modify or amend the Plan. In no event shall such termination, modification or amendment of the Plan adversely affect an Option holder's rights with respect to an Option which is exercisable as of the date of such termination, modification or amendment without the Option holder's consent. 19. Employment Obligation. Nothing contained herein or in the Option Agreement shall be construed to confer on any Eligible Executive any right to continue in the employ of the Corporation or its Subsidiaries as an employee or consultant thereof, or derogate from any right of the Corporation or its Subsidiaries to request, in its sole and exclusive discretion, the retirement, resignation or discharge of such Eligible Executive, at any time, with or without cause. 20. Applicability of Plan to Outstanding Stock Options. This Plan shall govern stock options issued under the former Information Resources, Inc. Non-Qualified Stock Option Plan (the "Old Non-qualified Plan") to the extent the terms of this Plan do not adversely affect the terms and conditions of any stock options granted to any employee of or consultant to the Corporation or its Subsidiaries pursuant to the Old Non-qualified Plan. Except as provided in the foregoing sentence, this Plan shall not affect the terms and conditions of any stock options heretofore or hereafter granted to any employee of or consultant to the Corporation or its Subsidiaries pursuant to any other plan of the Corporation or its Subsidiary, including, without limitation, the Corporation's 1982 or 1992 Incentive Stock Option Plans and the 1992 Executive Stock Option Plan, nor shall it affect any of the rights of any employee of or consultant to the Corporation or its Subsidiaries to whom such stock options were granted. 7 8 21. Effective Date of the Plan. This Plan shall become effective as of January 1, 1994, upon the adoption and approval by the Board of Directors or the Executive Committee of the Board of Directors of the Plan. 22. Expiration and Termination of the Plan. The Plan shall remain in full force and effect until the close of business on December 31, 2003, at which time the right to grant Options under the Plan shall automatically terminate. Any Options granted before the termination of the right to grant Options under the Plan shall continue to be governed thereafter by the terms of the Plan. No Option shall be granted pursuant to the Plan after ten (10) years from the effective date of the Plan. 23. Income Tax Withholding. If the Corporation or its Subsidiaries shall be required to withhold any amounts by reason of federal, state, local or foreign tax laws, rules or regulations in respect of the grant of an Option or the issuance of Shares pursuant to the exercise of an Option, the Option holder shall, at the request of the Corporation, be required to promptly pay to or to make available to the Corporation or its Subsidiaries sufficient funds to satisfy such withholding obligations or, if Shares issued pursuant to the exercise of an Option are immediately sold through a broker in a cash-less exercise, the Option holder shall deliver to the Corporation a properly executed exercise notice with irrevocable instructions to the broker to promptly pay to the Corporation the amount of sales proceeds from the sale of such Shares necessary to satisfy the withholding requirement. If the Option holder fails to satisfy such requirement, the Corporation or the affected Subsidiaries shall be entitled to deduct and withhold cash in the amount of such withholding obligation from any funds due or to become due from the Corporation or its Subsidiaries to the Option holder, including but not limited to salary and bonus payments, reimbursement of expenses advanced and payments for consulting services. The Corporation and its Subsidiaries shall be entitled to take and authorize such steps as it may deem advisable in order to assure its receipt of such funds from the Option holder or from funds or property due or payable to or to become due or payable to the Option holder from any person. 24. Severability. If any provision herein shall be held unlawful or otherwise invalid or unenforceable in whole or in part, such unlawfulness, invalidity or unenforceability shall not affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any payment or issuance required under the Plan shall be held unlawful or otherwise invalid or unenforceable, such unlawfulness, invalidity or unenforceability shall not prevent any other payment or issuance from being made under the Plan, and if the making of any such payment or issuance in full, as required under the Plan, would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity or unenforceability shall not prevent such payment or issuance from being made in part, to the extent that it would not be unlawful, invalid, or unenforceable, and the maximum payment or issuance that would not be unlawful, invalid or unenforceable shall be made under the Plan. 25. Governing Law. The Plan and all determinations made and actions taken hereunder, to the extent not otherwise governed by the Internal Revenue Code or the laws of the United States of America, shall be governed by the laws of the State of Illinois and construed accordingly. 8 9 INFORMATION RESOURCES, INC. By: /s/ Joseph P. Durrett ----------------------------------- Joseph P. Durrett, Chairman EX-10.(OO) 6 ex10-oo.txt EMPLOYMENT LETTER AGREEMENT DATED 5/19/00 1 May 19, 2000 Ms. Mary K. Sinclair 1045 West Belden Avenue Chicago, Illinois 60614 Dear Mary: This letter will amend our May 16, 2000 employment offer to you. I am very pleased to confirm our offer of employment as Executive Vice President, Corporate Controller, reporting to me. In this role you will be a member of the Senior Management team and will work closely with Joe and me on managing and establishing financial strategies for IRI. Your initial salary will be at the rate of $180,000 annualized $6,923.08 bi-weekly (Band A). At IRI, we review all performance at one time each year with performance increases, if earned, effective May 1. Your first performance increase will be effective May 1, 2001 and will be prorated to your start date. Consistent with our Management Incentive Plan (MIP), you will be eligible to participate in the MIP effective on your first day of employment. Under the plan guidelines established annually you will have a 28 percent bonus target. Your final bonus will be based on Company performance and your personal performance. For 2000 we will guarantee you 50 percent of your bonus which will equal $25,200. Enclosed is a copy of the plan document. As a senior executive of IRI you will be eligible to participate in our Executive Deferred Compensation Program (EDCP). Specific details about the program and enrollment materials will be sent to you on your one month anniversary with IRI. Attached is an executive summary of the plan. You will be granted 30,000 options of IRI stock with an exercise price no higher than the closing price on the day you start work. These options have a vesting schedule of one-third vested after two years and an additional third vested per year for two years thereafter. To receive your stock options, you are required to sign the attached non-competition and forfeiture agreement. Effective upon your first day of full-time employment you will be eligible for coverage under IRI's medical, dental and prescription drug plan. You will be eligible to participate in our 401(k) plan on the first of the month following the month you start. You will be entitled to three weeks vacation, pro-rated for 2000 based on your start date. Finally, if you are terminated for any reason other than cause, we will provide you with six months severance and outplacement services. Employment with Information Resources, Inc. is contingent upon verification of work eligibility. This request is in compliance with the current Immigration law. On your first day, please bring a valid driver's license and social security card or birth certificate. Also, please understand that we 2 Ms. Mary K. Sinclair May 19, 2000 Page 2 are legally obligated to tell you that this letter is not to be construed as an employment contract. Your status with IRI will be as an employee at will. Mary, Joe and I are extremely enthusiastic about the opportunity to work with you. I am sure you will find this new opportunity to be exciting, challenging and rewarding. Please confirm your acceptance of this offer by signing and returning one copy of this letter and the non-competition and forfeiture agreement in the enclosed envelope. Retain the other copy of the offer letter for your files. Sincerely, Andrew G. Balbirer Chief Financial Officer cc: Gary Newman Enclosures ................................................................................ Accepted this ___ day of _______________, 2000 - ------------------------ ----------------- Mary K. Sinclair Start Date EX-27 7 ex27.txt FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-2000 JUN-30-2000 4,948 0 108,351 3,736 0 119,277 216,501 137,749 375,292 120,416 0 0 0 291 216,615 375,292 0 263,072 0 271,703 0 0 1,511 (8,023) (3,482) (4,541) 0 0 0 (4,541) (.16) (.16)
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