SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
/ / Preliminary Proxy Statement
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BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule
240.14a-12
I-MANY, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
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I-MANY, INC.
537 CONGRESS STREET
5TH FLOOR
PORTLAND, MAINE 04101
April 26, 2001
To the Stockholders of I-many, Inc.:
We cordially invite you to attend the 2001 Annual Meeting of Stockholders of
I-many, Inc. to be held on June 7, 2001 at the offices of I-many, Inc., 537
Congress Street, 5th Floor, Portland, Maine. The meeting will begin promptly at
10:00 a.m., local time. We hope that it will be possible for you to attend.
The items of business are listed in the following Notice of Annual Meeting
and are more fully addressed in the attached Proxy Statement.
Please date, sign and return your proxy card in the enclosed envelope as
soon as possible to assure that your shares will be represented and voted at the
Annual Meeting even if you cannot attend. If you attend the Annual Meeting, you
may vote your shares in person even though you have previously signed and
returned your proxy.
On behalf of your board of directors, thank you for your continued support
and interest in I-many, Inc.
Sincerely,
A. Leigh Powell
President and Chief Executive Officer
I-MANY, INC.
537 CONGRESS STREET
5TH FLOOR
PORTLAND, MAINE 04101
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 7, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
I-many, Inc. will be held on Thursday, June 7, 2001 at 10:00 a.m., local time,
at the offices of I-many, Inc., 537 Congress Street, 5th Floor, Portland, Maine,
for the following purposes:
1. To elect six directors to hold office until the 2002 Annual Meeting of
Stockholders;
2. To approve the 2001 Stock Incentive Plan;
3. To ratify the selection by the board of directors for the year ending
December 31, 2001 of Arthur Andersen LLP as independent auditors for
I-many, Inc.; and
4. To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
Only the holders of record of common stock of I-many, Inc. at the close of
business on April 16, 2001 are entitled to notice of and to vote at the Annual
Meeting of Stockholders and any adjournment thereof. A list of stockholders as
of the close of business on April 16, 2001 will be available, during ordinary
business hours, for 10 days prior to the meeting date for examination by any
stockholder, his or her agent, or his or her attorney.
Your attention is directed to the Proxy Statement provided with this Notice.
By Order of the Board of Directors,
A. Leigh Powell
President and Chief Executive Officer
April 26, 2001
Portland, Maine
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING. NO POSTAGE NEED BE AFFIXED
IF MAILED IN THE UNITED STATES.
I-MANY, INC.
537 CONGRESS STREET
5TH FLOOR
PORTLAND, MAINE 04101
PROXY STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD JUNE 7, 2001
The 2001 Annual Meeting of Stockholders of I-many, Inc. will be held on
June 7, 2001 at the offices of I-many, Inc., 537 Congress Street, 5th Floor,
Portland, Maine, beginning promptly at 10:00 a.m., local time. The enclosed form
of proxy is solicited by our board of directors. It is anticipated that this
Proxy Statement and the accompanying proxy will first be mailed to holders of
our common stock on or about April 26, 2001.
ABOUT THE MEETING
WHY AM I RECEIVING THIS PROXY STATEMENT AND PROXY CARD?
You are receiving a proxy statement and proxy card because you own shares of
common stock in I-many, Inc. This proxy statement describes issues on which we
would like you, as a stockholder, to vote. It also gives you information on
these issues so that you can make an informed decision.
When you sign the proxy card, you appoint A. Leigh Powell, Philip St.
Germain and Edward Lawrence, Esq. as your representatives at the meeting.
Messrs. Powell, St. Germain and Lawrence will vote your shares at the meeting as
you have instructed them on the proxy card. This way, your shares will be voted
whether or not you attend the annual meeting. Even if you plan to attend the
meeting, it is a good idea to complete, sign and return your proxy card in
advance of the meeting in case your plans change.
If an issue comes up for vote at the meeting that is not on the proxy card,
Messrs. Powell, St. Germain and Lawrence will vote your shares in accordance
with their best judgment.
WHAT AM I VOTING ON?
You are being asked to vote on (1) the election of six directors, (2) the
approval of the 2001 Stock Incentive Plan, and (3) the ratification of the
appointment of Arthur Andersen LLP as our independent certified public
accountants. No cumulative voting rights are authorized, and dissenters' rights
are not applicable to these matters.
WHO IS ENTITLED TO VOTE?
Only stockholders as of the close of business on April 16, 2001 are entitled
to vote. This is referred to as the "Record Date." Each share of common stock is
entitled to one vote.
HOW DO I VOTE?
You may vote by mail. You do this by signing your proxy card and mailing it
in the enclosed prepaid and addressed envelope. If you mark your voting
instructions on the proxy card, your shares will be voted as you instruct. If
you return a signed card but do not provide voting instructions, your shares
will be voted for the named nominees for directors, for the approval of the 2001
Stock Incentive Plan, and for the ratification of the appointment of the
independent certified public accountants.
You may vote in person at the meeting. Written ballots will be given to
anyone who wants to vote at the meeting. If you hold your shares in "street
name" (through a broker or other nominee), you must request a legal proxy from
your stockbroker in order to vote at the meeting.
HOW MANY VOTES DO YOU NEED TO HOLD THE MEETING?
Shares are counted as present at the meeting if the holder of those shares
either is present and votes in person at the meeting or has properly submitted a
proxy card.
As of April 16, 2001, 34,042,906 shares of our common stock were issued and
outstanding. A majority of our outstanding shares as of the Record Date, equal
to 17,021,454 shares, must be present at the meeting either in person or by
proxy in order to hold the meeting and conduct business. This is called a
quorum.
Shares of common stock represented in person or by proxy (including "broker
non-votes" and shares that abstain or do not vote with respect to one or more of
the matters to be voted upon) will be counted for the purpose of determining
whether a quorum exists. "Broker non-votes" are shares that are held in "street
name" by a bank or brokerage firm that indicates on its proxy that it does not
have discretionary authority to vote on a particular matter.
If a quorum is not present, the meeting will be adjourned until a quorum is
obtained.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
It means that you have multiple accounts at the transfer agent and/or with
brokers. Please sign and return all proxy cards to ensure that all your shares
are voted.
WHAT IF I CHANGE MY MIND AFTER I RETURN MY PROXY?
You may revoke your proxy and change your vote at any time before the polls
close at the meeting. You may do this by:
- sending written notice to our Corporate Secretary at 537 Congress Street,
5th Floor, Portland, Maine 04101 stating that you want to revoke your
proxy;
- signing another proxy with a later date; or
- voting in person at the meeting.
WILL MY SHARES BE VOTED IF I DO NOT SIGN AND RETURN MY PROXY CARD?
If your shares are held in street name, your brokerage firm may vote your
shares under certain circumstances. These circumstances include certain
"routine" matters, such as the election of directors. Therefore, if you do not
vote your proxy, your brokerage firm may either vote your shares on routine
matters or leave your shares unvoted. When a brokerage firm votes its customers'
unvoted shares on routine matters, these shares are counted for purposes of
establishing a quorum to conduct business at the meeting.
A brokerage firm cannot vote customers' shares on non-routine matters.
Therefore, if your shares are held in street name and you do not vote your
proxy, your shares will not be voted on non-routine matters and will not be
counted in determining the number of shares necessary for approval. Shares
represented by such "broker non-votes" will, however, be counted in determining
whether there is a quorum.
HOW MANY VOTES MUST THE NOMINEES FOR ELECTION AS DIRECTORS RECEIVE TO BE
ELECTED?
The six nominees receiving the highest number of affirmative votes will each
be elected as a director. This number is called a plurality. If a nominee is
unable to stand for election, the board of directors may, by resolution, provide
for a lesser number of directors or designate a substitute nominee. In the
latter event, shares represented by proxies may be voted for a substitute
nominee. Proxies cannot be voted for more than six nominees.
2
HOW MANY VOTES MUST THE APPROVAL OF THE 2001 STOCK INCENTIVE PLAN AND THE
RATIFICATION OF THE SELECTION OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
RECEIVE TO PASS?
The approval of the 2001 Stock Incentive Plan and the ratification of the
selection of the independent certified public accountants each require the
affirmative vote of a majority of shares present in person or represented by
proxy at the meeting and voting on the matter.
HOW WILL VOTES BE COUNTED?
ELECTION OF DIRECTORS. You may vote "FOR" or you may "WITHHOLD AUTHORITY"
to vote for the nominees. A properly executed proxy marked "WITHHOLD AUTHORITY"
will not be voted, although it will be counted for purposes of determining
whether there is a quorum. If you just sign your proxy card with no further
instructions, your shares will be counted as a vote "FOR" each of the nominees
for director. You may withhold authority to vote for a particular nominee by
marking the "FOR" box and striking a line through the name of the nominee. Your
shares will be voted for the remaining nominees.
APPROVAL OF THE 2001 STOCK INCENTIVE PLAN. You may vote "FOR" or "AGAINST"
the 2001 Stock Incentive Plan, or you may "ABSTAIN" from voting on this issue.
Abstentions are counted for purposes of establishing a quorum. Because approval
of the 2001 Stock Incentive Plan requires a vote "FOR" such approval by a
majority of shares voting, abstentions and broker non-votes will have no effect
on the outcome of voting on such matter. If you sign your proxy card with no
further instructions, your shares will be counted as a vote "FOR" the approval
of the 2001 Stock Incentive Plan.
RATIFICATION OF THE SELECTION OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS. You may vote "FOR" or "AGAINST" the ratification of the selection
of the independent certified public accountants, or you may "ABSTAIN" from
voting on this issue. Abstentions are counted for purposes of establishing a
quorum. Because ratification of the selection of the independent certified
public accountants requires a vote "FOR" such ratification by a majority of
shares voting, abstentions and broker non-votes will have no effect on the
outcome of voting on such matter. If you sign your proxy card with no further
instructions, your shares will be counted as a vote "FOR" the ratification of
the selection of the independent certified public accountants.
All votes will be tabulated by the inspector of elections appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes.
IS MY VOTE CONFIDENTIAL?
Yes. Only the inspector of elections and certain employees will have access
to your proxy card. They will tabulate and certify the vote. All comments will
remain confidential, unless you ask that your name be disclosed.
WHERE DO I FIND THE VOTING RESULTS OF THE MEETING?
We will announce preliminary voting results at the meeting and will publish
the final results in our quarterly report on Form 10-Q for the second quarter of
2001. That report is filed with the Securities and Exchange Commission, and you
can get a copy by contacting our Corporate Secretary at (207) 774-3244, the
Securities and Exchange Commission at (800) SEC-0330 for the location of the
nearest public reference room, or through the SEC's EDGAR system at www.sec.gov.
3
PROPOSAL 1
ELECTION OF DIRECTORS
The board of directors has nominated six directors to stand for re-election
as directors at the Annual Meeting. Each director elected at the Annual Meeting
will serve a one-year term until his or her successor is elected and qualified
at the 2002 annual meeting of stockholders.
Except as otherwise provided herein, the proxy cannot be voted for the
election of a person to fill a directorship for which no nominee is named in
this Proxy Statement. The board of directors has no reason to believe that any
of the nominees for the office of director will be unavailable for election as a
director. However, if at the time of the annual meeting any of the nominees
should be unable to serve or, for good cause, will not serve, the persons named
in the proxy will vote as recommended by the board of directors to elect
substitute nominees recommended by the board of directors. In no event can a
proxy be voted to elect more than six directors.
The following list sets forth the names of the nominees and also contains,
as to each nominee, certain biographical information, a brief description of
principal occupation and business experience, and certain other information.
This information has been furnished by the respective individuals.
A. LEIGH POWELL, age 39, has served as our president and chief executive
officer since July 1999 and has been a director since February 2000. In
April 2001, Mr. Powell was elected as chairman of the board of directors. From
February 1998 to July 1999, Mr. Powell served as our vice president of marketing
and as our chief operating officer. From January 1997 to February 1998, he
served as vice president of business alliances for Think Systems/I2
Technologies, a supply-chain software company. From January 1996 to
January 1997, Mr. Powell worked as a vice president for American Software, a
supply-chain software company. From March 1985 to December 1995, Mr. Powell
worked as a business consultant for Andersen Consulting, a management consulting
firm. Mr. Powell received his M.B.A. and B.S. from Virginia Polytechnic
Institute and State University.
WILLIAM F. DOYLE, age 38, has served as a director since December 1999 and
as chairman of our board from December 1999 until April 2001. In April 2001,
Mr. Doyle was elected as vice-chairman of our board of directors. He has been a
partner of Insight Capital Partners, a venture capital firm, since June 1999.
From November 1995 to November 1999, Mr. Doyle was vice president, licensing and
acquisition and a member of the Consumer Pharmaceutical and Professional Group
Operating Committee of Johnson & Johnson. From June 1996 to November 1999,
Mr. Doyle served as a director of Johnson & Johnson Development Corporation,
Johnson & Johnson's venture capital subsidiary. From 1992 to 1995, Mr. Doyle was
a manager at McKinsey & Co., a management consulting firm. Mr. Doyle holds an
M.B.A. from Harvard Business School and a S.B. from the Massachusetts Institute
of Technology.
PHILIP M. ST. GERMAIN, age 64, has served as our chief financial officer
since September 1997, and as a director since October 1998. From 1986 until
joining I-many, Mr. St. Germain worked as an independent consultant for, and
provided financial management services to, early stage high technology
companies. Mr. St. Germain received a J.D. from Boston College Law School and a
B.A. from Boston College.
JEFFREY HORING, age 37, has served as a director since September 1997. Since
January 1995, Mr. Horing has been a partner at Insight Capital Partners. From
February 1990 to August 1994, Mr. Horing served as a senior investment
professional at E. M. Warburg Pincus funds. Mr. Horing received an M.B.A. from
the Sloan School of Management at the Massachusetts Institute of Technology, and
a B.S./B.S.E. from the Wharton School and School of Engineering at the
University of Pennsylvania. Mr. Horing serves on the board of directors of
SLMsoft.com, a maker of electronic commerce software for financial institutions,
and on the board of directors of several privately-held companies.
4
E. DAVID HETZ, age 42, has served as a director since October 2000. In
December 1999, Mr. Hetz, a private investor, retired as managing director and
head of Mergers and Acquisitions at Robertson Stephens, Inc., where he had
worked in various capacities since 1987. Mr. Hetz received his M.B.A. from
Harvard Business School and a B.A. from Claremont McKenna College. He also
serves as a director for Vital Signs, Inc., a publicly traded company that makes
anesthesia products.
MURRAY B. LOW, age 48, has served as a director since October 2000.
Professor Low has been a professor at Columbia Business School since 1990.
Professor Low also has been Associate Professor and Executive Director of the
Eugene M. Lang Center for Entrepreneurship at Columbia Business School since
July 2000 when it was established. Since January 1996, he also has been
president of Low & Associates, a consulting firm. Professor Low received a Ph.D.
in Entrepreneurial Management from the University of Pennsylvania.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NAMED NOMINEE.
MEETINGS OF THE BOARD OF DIRECTORS
During 2000, the board of directors held four regular meetings. Each of the
directors attended all of the board meetings in 2000, other than Messrs. Hetz
and Low, who attended all of the board meetings subsequent to their appointment
as directors in October 2000. Each director who served on one or more of the
committees of the board in 2000 attended all meetings held by the committee(s)
on which he served.
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE. I-many has an Audit committee, consisting of
Messrs. Horing, Doyle, Hetz and Low, each of whom is independent as defined by
the applicable listing standards of the National Association of Securities
Dealers. The principal functions of the Audit Committee are to make
recommendations to the Board of Directors regarding the engagement of our
independent auditors, to review and approve any major accounting policy changes
affecting our operating results, to review the arrangements for and scope of the
independent audit and the results of the audit, to review the scope of non-audit
activities performed by the independent auditors and to assure that the auditors
are in fact independent, and to establish and monitor policies to prohibit
unethical, questionable or illegal activities of the employees of I-many. The
Audit Committee held four meetings during the fiscal year ended December 31,
2000. In March 2000, the Board of Directors adopted a written charter for the
Audit Committee, a copy of which is attached as Annex A to this proxy statement.
COMPENSATION COMMITTEE. The board of directors has established a
Compensation Committee consisting of Messrs. Doyle and Powell and, as of
April 2001, Mr. Horing. The Compensation Committee did not hold any meetings in
2000; however, it did take action by unanimous written consent of the committee
members one time during 2000. The Compensation Committee is responsible for:
- reviewing and recommending salaries, bonuses and other compensation for
I-many's executive officers;
- administering I-many's stock option plans with respect to employees other
than executive officers and other key employees; and
- establishing the terms and conditions of stock options granted under these
plans.
5
STOCK PLAN SUBCOMMITTEE. The board of directors has established a stock
plan subcommittee consisting of Mr. Doyle and, as of April 2001, Mr. Horing. The
stock plan subcommittee did not hold any meetings in 2000. The stock plan
subcommittee is responsible for administering I-many's stock option plans with
respect to I-many's executive officers and other key employees, and for making
recommendations with respect to Mr. Powell's compensation.
I-many does not have a standing nominating committee.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the directors,
executive officers and the holders of more than 10% of the Common Stock of the
Company to file with the SEC initial reports of ownership of the Company's
Common Stock and other equity securities on a Form 3 and reports of changes in
such ownership on a Form 4 or Form 5. Officers, directors and 10% stockholders
are required by SEC regulations to furnish us with copies of all Section 16(a)
forms that they file. Based solely on its review of copies of reports filed by
reporting persons of the Company or written representations from certain
reporting persons that no Form 5 filing was required for such person, the
Company believes that during fiscal 2000 all filings required to be made by its
reporting persons were timely made in accordance with the requirements of the
Exchange Act, except that certain Form 3s were filed on the day following the
effectiveness of the Company's registration statement on Form S-1 relating to
its initial public offering rather than on the day of effectiveness, and
Mr. Guerin filed a Form 3 more than 10 days after he was initially hired as
corporate controller.
COMPENSATION OF DIRECTORS
We compensate our independent directors through the 2000 Non-Employee
Director Stock Option Plan, adopted by our directors in March 2000 and approved
by our stockholders in May 2000. The directors' stock option plan provides to
each director who is not an employee of I-many or its subsidiaries or an
affiliate of an institutional investor that owns shares of our common stock, at
the time he is first appointed or elected to the board of directors, an option
to purchase 62,500 shares of common stock. On the date of each annual meeting of
stockholders, each such director receives an option to purchase 25,000 shares of
common stock. All options granted under the directors' stock option plan vest in
three equal annual installments beginning on the first anniversary of the option
grant date. Generally, no option is transferable by the optionee other than by
will or the laws of descent and distribution, and each option is exercisable
only by the optionee during his or her lifetime. The exercise price of all
options will be the fair market value of the shares of common stock on the date
of grant, and the term of each option may not exceed ten years. Unless
terminated sooner by the board of directors, the directors' stock option plan
will continue in effect for a period of ten years or until all options
outstanding thereunder have expired or been exercised. As of December 31, 2000,
there were 437,500 shares of common stock remaining available for issuance under
the directors' stock option plan. As of April 16, 2001, options to acquire
125,000 shares of common stock had been granted pursuant to the directors' stock
option plan at a weighted average exercise price of $15.25 per share.
In addition to the foregoing, the Company pays $2,000 to each of
Messrs. Hetz and Low for each meeting attended, plus expenses.
During the year ended December 31, 2000, options to acquire an aggregate of
187,500 shares of common stock were granted to a total of three directors who
were affiliates of institutional investors that own shares of our common stock.
The weighted average exercise price of these options was $13.17 per share.
6
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning beneficial
ownership of our outstanding common stock as of March 31, 2001 by:
- each shareholder that we know is the beneficial owner of more than 5% of
our common stock;
- each of our directors;
- each executive officer named in the Summary Compensation Table; and
- all directors and executive officers as a group.
Information with respect to "beneficial ownership" shown in the table below
is based on information supplied by the respective beneficial owners. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. For purposes of calculating the percentage beneficially
owned by a particular beneficial owner, the shares of common stock deemed
outstanding include 33,352,906 shares outstanding as of March 31, 2001 plus all
common stock issuable on exercise of options within 60 days of March 31, 2001
held by the particular beneficial owner ("Presently Exercisable Options").
Presently Exercisable Options are deemed to be outstanding and to be
beneficially owned by the person holding such options for the purpose of
computing the percentage ownership of such person but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person. Unless otherwise indicated, the mailing address of each beneficial owner
is c/o I-many, Inc., 537 Congress Street, 5th Floor, Portland, Maine 04101.
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED OWNED
- ------------------------ ------------ ------------
Chilton Investments (1)..................................... 2,500,000 7.5%
Alan Hyman (2).............................................. 2,300,858 6.9%
A. George Gitter Trust (3).................................. 1,878,062 5.6%
Jeffrey Horing (4).......................................... 1,053,850 3.2%
Philip M. St. Germain (5)................................... 556,325 1.7%
A. Leigh Powell (6)......................................... 420,137 1.3%
William F. Doyle (7)........................................ 272,505 *
Steven I. Hirschfeld (8).................................... 231,589 *
Thomas Mucher (9)........................................... 95,084 *
Terrence M. Nicholson (10).................................. 21,078 *
Murray B. Low............................................... -- --
E. David Hetz............................................... -- --
All Executive Officers and Directors as a Group (11 people)
(11)...................................................... 2,471,669 7.2%
- ------------------------
* Indicates less than one percent.
(1) The address of Chilton Investments is 320 Park Avenue, 22nd Floor, New York,
NY 10022.
(2) The address of Alan Hyman is 5 Hackmatack Drive, Scarborough, ME 04074.
(3) The address of the A. George Gitter Trust is c/o Archelon Partners Inc., 411
South Wells Avenue, Suite 1200, Chicago, IL 60607.
(4) Includes 745,398 shares held by Insight Capital Partners II, L.P., 82,822
shares held by Insight Capital Partners (Cayman) II, L.P., 143,918 shares
held by Insight Capital Partners III, L.P., 25,228 shares held by Insight
Capital Partners III--Coinvestors, L.P. and 35,650 shares held by Insight
Capital Partners (Cayman) III, L.P. Mr. Horing is a member of the general
partners of these funds.
7
Mr. Horing disclaims beneficial ownership of all such shares except to the
extent of his pecuniary interest in such shares. Also includes 20,834 shares
issuable upon exercise of Presently Exercisable Options.
(5) Includes 65,211 shares held by Toni St. Germain, Mr. St. Germain's spouse.
Also includes 111,719 shares issuable upon exercise of Presently Exercisable
Options.
(6) Consists of 420,137 shares issuable upon exercise of Presently Exercisable
Options.
(7) Includes 143,918 shares held by Insight Capital Partners III, L.P., 25,228
shares held by Insight Capital Partners III--Coinvestors, L.P. and 35,650
shares held by Insight Capital Partners (Cayman) III, L.P. Mr. Doyle is a
member of the general partner of these entities. Mr. Doyle disclaims
beneficial ownership of all such shares except to the extent of his
pecuniary interest in such shares. Also includes 67,709 shares issuable upon
exercise of Presently Exercisable Options.
(8) Consists of 231,589 shares issuable upon exercise of Presently Exercisable
Options.
(9) Consists of 95,084 shares issuable upon exercise of Presently Exercisable
Options.
(10) Consists of 21,078 shares issuable upon exercise of Presently Exercisable
Options.
(11) Includes 994,047 shares issuable upon exercise of Presently Exercisable
Options.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table sets forth the total compensation paid by I-many for
services rendered by our Chief Executive Officer during the fiscal years ended
December 31, 2000 and 1999, as well as our four other most highly compensated
executive officers (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION (1) SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION
- --------------------------- -------- -------- -------- ------------ ------------
A. Leigh Powell......................... 2000 $220,000 $169,475 221,250 --
Chief Executive Officer (2) 1999 182,692 152,873 841,375 $ 8,505(3)
Philip M. St. Germain................... 2000 185,000 75,247 -- --
Chief Financial Officer 1999 172,885 73,419 234,375 13,408(3)
Terrence M. Nicholson................... 2000 165,000 82,867 175,000 --
Chief Operating Officer 1999 55,385 34,968 128,500 --
Steven I. Hirschfeld.................... 2000 180,000 138,782 -- 6,000(4)
Vice President, Sales 1999 173,077 93,128 500,000 5,769(4)
Thomas Mucher........................... 2000 165,000 44,741 -- --
Vice President, Professional Services 1999 158,769 29,838 41,750 7,565(3)
- ------------------------
(1) Excludes certain perquisites and other benefits, the amount of which did not
exceed either $50,000 or 10% of the employees' total salary and bonus.
(2) Mr. Powell became our Chief Executive Officer in July 1999.
(3) Consists of compensation for unused vacation time.
(4) Consists of car allowance.
8
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to stock
options granted during the fiscal year ended December 31, 2000 to each of the
executive officers named in the Summary Compensation Table above, including the
potential realizable value over the ten-year term of the options, based on
assumed rates of stock appreciation from date of grant of 5% and 10%, compounded
annually. These assumed rates of appreciation comply with the rules of the
Securities and Exchange Commission and do not represent our estimate of our
future stock price. Actual gain, if any, on stock options that are exercised
will depend on the future performance of our common stock.
We granted the options listed below at an exercise price equal to the fair
market value of our common stock, as determined by our board of directors, on
the date of grant. The options become exercisable as to 25% of the underlying
shares upon the first anniversary of the date of grant and an additional 25% per
year thereafter. The options generally expire on the earlier of 10 years from
the date of grant or three months after termination of employment.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------- VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF
SECURITIES % OF TOTAL EXERCISE STOCK PRICE APPRECIATION
UNDERLYING OPTIONS PRICE PER FOR OPTION TERM
OPTIONS GRANTED TO SHARE EXPIRATION ------------------------
NAME GRANTED (#) EMPLOYEES (1) ($/SH) DATE 5% ($) 10% ($)
- ---- ----------- ------------- ---------- ---------- ---------- -----------
A. Leigh Powell................. 221,250 14.0% $4.20 1/14/10 $ 584,400 $1,480,985
Philip M. St. Germain........... -- -- -- -- -- --
Terrence M. Nicholson........... 175,000 11.1% 11.75 7/24/10 1,293,165 3,277,133
Steven I. Hirschfeld............ -- -- -- -- -- --
Thomas Mucher................... -- -- -- -- -- --
- ------------------------
(1) The percentage of total options granted to employees during the fiscal year
ended December 31, 2000 is based upon options to purchase an aggregate of
1,576,777 shares of common stock granted under our option plans.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table provides information concerning the exercise of options
to purchase common stock by our named executive officers during fiscal 2000 and
the number and value of unexercised stock options held by these executive
officers as of December 31, 2000. The value of unexercised in-the-money options
is based on a per share market value of $12.4375, the closing price of our stock
at December 31, 2000 as reported by the Nasdaq National Market, less the
applicable per share exercise price, multiplied by the number of shares issuable
upon exercise of the option.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 2000 (#) AT DECEMBER 31, 2000 ($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
A. Leigh Powell................ -- -- 247,844 964,781 $2,406,528 $9,042,121
Philip M. St. Germain.......... 142,049 $112,652 89,844 238,281 879,153 2,286,277
Terrence M. Nicholson.......... -- -- 32,125 271,375 293,180 999,852
Steven I. Hirschfeld........... -- -- 125,000 375,000 1,365,188 4,095,563
Thomas Mucher.................. -- -- 70,438 121,312 772,759 1,306,882
9
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
A. LEIGH POWELL. Under an employment letter agreement dated July 27, 1999,
Mr. Powell received a base annual salary of $200,000, and was entitled to a
bonus of not less than $100,000 based on achieving certain minimum performance
goals. In October 2000, we entered into a new employment agreement with
Mr. Powell, under which his base annual salary was increased to $250,000. During
the term of his employment, Mr. Powell will participate in a discretionary,
performance-based bonus program, the terms of which shall be determined by the
board of directors. On January 1, 2002 and 2003, Mr. Powell is entitled to
receive direct stock grants of 100,000 shares of our company stock if our stock
price reaches certain defined minimums. In addition, Mr. Powell is entitled to
receive a direct stock grant of 100,000 shares provided he is employed in good
standing by us on January 1, 2003, or if he is terminated other than for cause
at any time prior to January 1, 2003. Mr. Powell is entitled to severance pay
equal to nine months of his base salary if he is terminated other than for
cause. Upon a sale of I-many or substantially all of its assets, or a merger or
change of control of I-many, 100% of his then unvested options will vest at that
time, provided that the board of directors may prevent such acceleration in
certain circumstances.
PHILIP M. ST. GERMAIN. In December 1997, we entered into an employment
agreement with Mr. St. Germain, our chief financial officer. Under the
agreement, Mr. St. Germain received a base salary of $185,000 for fiscal year
2000. The term of the employment agreement was three years and expired in
December 2000. Pursuant to certain provisions of the employment agreement which
survive the agreement's expiration, Mr. St. Germain is prohibited from working
for any other company that competes, directly or indirectly, with us for a
period of one year from termination of his employment with us.
TERRENCE NICHOLSON. Under an employment agreement dated July 23, 1999,
Mr. Nicholson received a base annual salary of $165,000 in 2000 and a
non-guaranteed bonus of 35% of his base salary, depending on I-many's
performance. The letter also provides that Mr. Nicholson is entitled to receive
additional options based upon achieving certain individual performance goals
defined by Mr. Powell.
STEVEN I. HIRSCHFELD. Under an employment agreement dated December 26, 1998,
Mr. Hirschfeld received a base salary of $180,000 for fiscal year 2000, as well
as participation in a bonus and commission plan. If we terminate
Mr. Hirschfeld's employment for any reason other than for cause after the first
24 months of his employment, he will receive six months of his base pay as
severance. We are also obligated to pay this severance if he resigns following a
change of control of I-many which alters his duties or responsibilities. Upon a
sale of I-many or substantially all of its assets, or a merger or change of
control of I-many, 50% of his then unvested options will vest at that time, and
the remainder will vest within 12 months of such event, provided that the board
of directors may prevent such acceleration in certain circumstances.
THOMAS MUCHER. Under an employment agreement dated January 6, 1998,
Mr. Mucher is entitled to a base annual salary of at least $147,000 and a bonus
based upon achieving goals and objectives mutually established by Mr. Mucher and
Mr. Powell. Mr. Mucher received a base salary of $165,000 for fiscal year 2000,
as well as a bonus of $44,741. Pursuant to the employment agreement, in 1998
Mr. Mucher received options for 150,000 shares of our common stock at an
exercise price of $1.20 per share over a five-year vesting schedule. If I-many
merges with, or is acquired by, another company, 50% of his then unvested
options will vest at that time.
10
CERTAIN TRANSACTIONS
There were no transactions during 2000 to which I-many was a party, in which
the amount involved exceeded $60,000 and in which any director or executive
officer of I-many, any 5% stockholder, or any member of the immediate family of
any of those persons were involved.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is composed of Mr. Powell, our chief executive
officer, Mr. Doyle and, as of April 2001, Mr. Horing. It is the Compensation
Committee's responsibility to:
- establish the compensation policies applicable to the executive officers
and determine the annual compensation of each executive officer (other
than Mr. Powell);
- exercise all rights, authority and functions of the Board under the
various stock incentive plans; and
- perform such other duties as the Board from time to time may direct.
The stock plan subcommittee, which is composed of Mr. Doyle and, as of
April 2001, Mr. Horing, is responsible for administering the issuance of stock
options and other awards under the Company's stock option plans to the Company's
executive officers and other key employees and approves Mr. Powell's
compensation.
THE COMPENSATION COMMITTEE'S PHILOSOPHY
Our philosophy on establishing executive compensation is to foster a high
performance culture that motivates and retains high-performing executives. In
implementing this philosophy, we establish executive compensation policies based
on current corporate performance, the potential for future performance gains,
whether stockholder value has been or will be enhanced, and competitive market
conditions for executives in similar positions at local, regional and national
companies having similar revenues and number of employees. Subject to the
provisions of any long-term agreement we may have with the employees, we seek to
evaluate these factors for each officer on an annual basis, including
consideration of the contribution made by each officer over the prior fiscal
year. I-many's compensation package for its officers includes a combination of
an annual salary and bonus and, depending on the package of options already held
by the employee, an additional stock option grant. We believe that our executive
compensation provides an overall level of compensation that is competitive with
companies in our industry of comparable size and complexity.
BASE SALARY. In determining base salaries, we take into consideration
competitive market practices and each individual's role and responsibilities in
the organization.
BONUS. We award our executive officers discretionary year-end bonuses.
These bonuses reflect the individual's specific responsibilities, experience and
overall performance as well as performance of I-many during the year. We
generally seek to set bonuses such that total cash compensation to our
executives, including bonuses, is above the median for cash compensation paid by
comparable companies.
STOCK OPTION GRANTS. The stock plan subcommittee of the Compensation
Committee administers the issuance of stock options and other awards under the
Company's stock option plans to the company's executive officers and other key
employees.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to its chief executive officer and its four other most highly compensated
executive officers. Compensation above $1,000,000 may be deducted if it is
"performance-based compensation" within the meaning of the Internal Revenue
Code. Incentive stock-based awards granted prior to the date of the annual
meeting by the Company
11
generally qualify as a performance-based compensation pursuant to the
"grandfather" provision of Section 162(m). Based on the compensation awarded to
the chief executive officer and the other named executive officers of the
Company, it does not appear that the Section 162(m) limitation will have a
significant impact on the Company in the near term. Nevertheless, the
Compensation Committee reserves the right to grant compensation above the limits
of Section 162(m) if it deems it to be in the best interests of the
stockholders.
By the Compensation Committee:
William F. Doyle
A. Leigh Powell
THE FOREGOING REPORT SHOULD NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF
1934 (TOGETHER, THE "ACTS"), EXCEPT TO THE EXTENT THAT WE SPECIFICALLY
INCORPORATE THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED
FILED UNDER SUCH ACTS.
REPORT OF THE STOCK PLAN SUBCOMMITTEE ON EXECUTIVE COMPENSATION
The stock plan subcommittee of the Compensation Committee administers the
issuance of stock options and other awards under the Company's stock option
plans to the Company's executive officers and other key employees and approves
the compensation of Leigh Powell. The use of stock options is a significant
element of the compensation packages of the Company's executive officers. The
timing of new grants depends upon a number of factors, including the executives'
current stock and option holdings and such other factors as the stock plan
subcommittee deems relevant.
In fiscal 2000, the board of directors granted stock options to
Messrs. Powell and Nicholson. In its determination whether to grant stock
options to these named executive officers and the other executive officers of
the Company, the board of directors specifically considered the company's growth
and efforts to realize operational efficiencies and the stock and option package
already held by such persons.
In October 2000, the Company entered into a new employment agreement with
Mr. Powell, reflecting the subcommittee's determination that Mr. Powell's
existing compensation arrangements were not competitive.
STOCK PLAN SUBCOMMITTEE
(as of March 31, 2001)
William F. Doyle
12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Mr. Doyle, Mr. Powell
and, as of April 2001, Mr. Horing. Mr. Powell is the Chief Executive Officer of
the Company. No other member of the Compensation Committee was at any time
during the fiscal year ended December 31, 2000 an officer or employee of the
Company nor has any member of the Compensation Committee had any relationship
with the Company requiring disclosure under Item 404 of Regulation S-K under the
Securities Exchange Act of 1934.
None of the Company's executive officers has served as a director or member
of the Compensation Committee (or other committee serving an equivalent
function) of any other entity, one of whose executive officers served as a
director of or member of the Compensation Committee.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Company's Board of Directors is composed of four
members and acts under a written charter first adopted and approved in
March 2000. A copy of this charter is attached to this proxy statement as Annex
A. The members of the Audit Committee are independent directors, as defined by
its charter and the rules of the Nasdaq Stock Market.
The Audit Committee reviewed the Company's audited financial statements for
the fiscal year ended December 31, 2000 and discussed these financial statements
with management. Management is responsible for the Company's internal controls
and the financial reporting process. The Company's independent accountants are
responsible for performing an independent audit of the Company's financial
statements in accordance with generally accepted accounting principles and to
issue a report on those financial statements. The Audit Committee is responsible
for monitoring and overseeing these processes.
As appropriate, the Audit Committee reviews and evaluates, and discusses
with management, internal accounting, financial and auditing personnel and the
independent accountants, the following:
- the plan for, and the independent accountants' report on, each audit of
the Company's financial statements,
- the Company's financial disclosure documents, including all financial
statements and reports filed with the Securities and Exchange Commission
or sent to the Company's stockholders,
- changes in the Company's accounting practices, principles, controls or
methodologies,
- significant developments or changes in accounting rules applicable to the
Company, and
- the adequacy of the Company's internal controls and accounting, financial
and auditing personnel.
The Audit Committee also reviewed and discussed the audited financial
statements and the matters required by Statement on Auditing Standards 61
(Communication with Audit Committees) with Arthur Andersen LLP, the Company's
independent accountants. SAS 61 requires the Company's independent accountants
to discuss with the Audit Committee, among other things, the following:
- methods to account for significant unusual transactions,
- the effect of significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or consensus,
- the process used by management in formulating particularly sensitive
accounting estimates and the basis for the accountants' conclusions
regarding the reasonableness of those estimates, and
13
- disagreements with management over the application of accounting
principles, the basis for management's accounting estimates and the
disclosures in the financial statements.
The Company's independent accountants also provided the Audit Committee with
the written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). Independence
Standards Board Standard No. 1 requires accountants annually to disclose in
writing all relationships that in the accountants' professional opinion may
reasonably be thought to bear on independence, confirm their perceived
independence and engage in a discussion of independence. In addition, the Audit
Committee discussed with the independent accountants their independence from the
Company.
Based on its discussions with management and the independent accountants,
and its review of the representations and information provided by management and
the independent accountants, the Audit Committee recommended to the Company's
Board of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.
Audit Committee
William F. Doyle
Jeffrey Horing
E. David Hetz
Murray B. Low
INDEPENDENT ACCOUNTANT FEES AND OTHER MATTERS
AUDIT FEES
As of March 31, 2001, Arthur Andersen LLP billed the Company an aggregate of
$261,000 in fees for professional services rendered in connection with the audit
of the Company's financial statements for the most recent fiscal year and the
reviews of the financial statements included in each of the Company's Quarterly
Reports on Form 10-Q during the fiscal year ended December 31, 2000, which
includes $118,000 in fees for professional services rendered in connection with
the audit of the financial statements of Chi-Cor Information Management, Inc.
pursuant to its acquisition by the Company in November 2000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Arthur Andersen LLP did not bill the Company for any professional services
rendered to the Company and its affiliates for the fiscal year ended
December 31, 2000 in connection with financial information systems design or
implementation, the operation of its information system or the management of its
local area network.
ALL OTHER FEES
Arthur Andersen LLP billed the Company an aggregate of $639,250 in fees for
other services rendered to the Company and its affiliates for the fiscal year
ended December 31, 2000, including fees in connection with the Company's initial
public offering.
14
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total return on I-many's common
stock with The Nasdaq National Market index (U.S. companies) and Morgan Stanley
High Tech index for the period from July 13, 2000 to December 31, 2000. The
comparison assumes that $100 was invested on July 13, 2000, the effective date
of I-many's initial public offering, in I-many's common stock and in each of the
comparison indices, and assumes reinvestment of dividends, where applicable.
Stock price performance, presented for the period from July 13, 2000 through
December 31, 2000, is not necessarily indicative of future results.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
7/13/00 7/31/00 8/31/00 9/30/00 10/31/00 11/30/00 12/31/00
I-Many common stock 100 117.15 112.14 159.7 165.21 91.11 99.62
Nasdaq National Market index 100 90.23 100.75 87.97 80.71 62.23 59.18
Morgan Stanley High Tech index 100 93.94 106.26 90.51 88.31 67.45 63.58
15
PROPOSAL 2
APPROVAL OF THE 2001 STOCK INCENTIVE PLAN
On April 16, 2001, the Board of Directors of the Company adopted, subject to
stockholder approval, the 2001 Stock Incentive Plan (the "2001 Plan"). Up to
5,000,000 shares of Common Stock (subject to adjustment in the event of stock
splits and other similar events) may be issued pursuant to awards granted under
the 2001 Plan. In addition, if any award under the Plan, or any options or other
awards granted under the Company's earlier stock plans, including the 1994 Stock
Plan, the 1997 Stock Plan, the 2000 Stock Plan and the 2001 Employee Stock
Option Plan, expires or is terminated, surrendered or canceled without having
been fully exercised or is forfeited in whole or in part (including as the
result of shares of Common Stock subject to such award being repurchased by the
Company at the original issuance price pursuant to a contractual repurchase
right) or results in any Common Stock not being issued, the unissued or
repurchased Common Stock covered by such award shall be available for the grant
of awards under the 2001 Plan, subject, however, in the case of incentive stock
options to any limitation required under the Code.
The Board of Directors believes that the future success of the Company
depends, in large part, upon the ability of the Company to maintain a
competitive position in attracting, retaining and motivating key personnel.
Since the adoption of the 2000 Stock Incentive Plan, the Company's employee base
has grown rapidly, including as a result of acquisitions. This growth has
resulted in a shortage of options and other stock awards available for grant.
ACCORDINGLY, THE BOARD OF DIRECTORS BELIEVES ADOPTION OF THE 2001 PLAN IS IN THE
BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE FOR THIS
PROPOSAL.
On April 16, 2001, primarily to enable the Company to meet its commitments
in connection with certain acquisitions pending stockholder approval of the 2001
Plan, the Board of Directors of the Company also approved the 2001 Employee
Stock Option Plan, pursuant to which the Company is authorized to issue
non-qualified stock options to purchase up to an aggregate of 1,000,000 shares.
Not more than 25,000 shares may be issued in the aggregate under that plan to
officers or directors of the Company. No stockholder approval is being sought
for the 2001 Employee Stock Option Plan.
As of March 31, 2001, options to purchase 2,251,105 shares of Common Stock
were outstanding under the 2000 Stock Incentive Plan and our earlier plans, and
248,895 shares remained available for future grant under the 2000 Stock
Incentive Plan. As of such date, no options were outstanding under the 2001
Employee Stock Option Plan; however, the Company had commitments to issue
options to purchase approximately 450,000 shares under the 2001 Employee Stock
Option Plan in connection with recent acquisitions and may issue additional
options under such plan between the date of this proxy statement and the date of
the annual meeting of stockholders. Upon the approval of the 2001 Plan by
stockholders, no further shares will be issued under the 2001 Employee Stock
Option Plan. The Company intends to issue the awards remaining available for
grant under the 2000 Stock Incentive Plan prior to terminating such plan.
DESCRIPTION OF THE 2001 PLAN
The following is a brief summary of the 2001 Plan, a copy of which is
attached as Annex B to this Proxy Statement. The following summary is qualified
in its entirety by reference to the 2001 Plan.
TYPES OF AWARDS
The 2001 Plan provides for the grant of incentive stock options intended to
qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), non-statutory stock options, restricted stock awards and other
stock-based awards, including the grant of shares based upon
16
certain conditions, the grant of securities convertible into Common Stock and
the grant of stock appreciation rights (collectively, "Awards").
INCENTIVE STOCK OPTIONS AND NON-STATUTORY STOCK OPTIONS. Optionees receive
the right to purchase a specified number of shares of Common Stock at a
specified option price and subject to such other terms and conditions as are
specified in connection with the option grant. Options may be granted at an
exercise price which may be less than, equal to or greater than the fair market
value of the Common Stock on the date of grant. Under present law, however,
incentive stock options and options intended to qualify as performance-based
compensation under Section 162(m) of the Code may not be granted at an exercise
price less than 100% of the fair market value of the Common Stock on the date of
grant (or less than 110% of the fair market value in the case of incentive stock
options granted to optionees holding more than 10% of the voting power of the
Company). The 2001 Plan permits the following forms of payment of the exercise
price of options: (i) payment by cash, check or in connection with a "cashless
exercise" through a broker, (ii) delivery to the Company of a promissory note,
(iii) any other lawful means, or (iv) any combination of these forms of payment.
RESTRICTED STOCK AWARDS. Restricted stock Awards entitle recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares from the recipient in the event that the
conditions specified in the applicable Award are not satisfied prior to the end
of the applicable restriction period established for such Award.
OTHER STOCK-BASED AWARDS. Under the 2001 Plan, the Board of Directors has
the right to grant other Awards based upon the Common Stock having such terms
and conditions as the Board of Directors may determine, including the grant of
shares based upon certain conditions, the grant of securities convertible into
Common Stock and the grant of stock appreciation rights.
ELIGIBILITY TO RECEIVE AWARDS
Employees, officers, directors, consultants and advisors (and any
individuals who have accepted an offer for employment) of the Company and its
subsidiaries and of other business ventures in which the Company has a
significant interest are eligible to be granted Awards under the 2001 Plan.
Under present law, however, incentive stock options may only be granted to
employees of the Company and its subsidiaries. The maximum number of shares with
respect to which Awards may be granted to any participant under the 2001 Plan
may not exceed 600,000 shares per calendar year.
PLAN BENEFITS
As of April 16, 2001, approximately 400 persons were eligible to receive
Awards under the 2001 Plan, including the Company's seven executive officers and
four non-employee directors. The granting of Awards under the 2001 Plan is
discretionary, and the Company cannot now determine the number or type of Awards
to be granted in the future to any particular person or group.
On April 17, 2001, the last reported sale price of the Company Common Stock
on the Nasdaq National Market was $12.55.
ADMINISTRATION
The 2001 Plan is administered by the Board of Directors. The Board of
Directors has the authority to adopt, amend and repeal the administrative rules,
guidelines and practices relating to the 2001 Plan and to interpret the
provisions of the 2001 Plan. Pursuant to the terms of the 2001 Plan, the Board
of Directors may delegate authority under the 2001 Plan to one or more
committees or subcommittees of the Board of Directors. The Board of Directors
has authorized the compensation committee and the stock plans subcommittee to
administer certain aspects of the 2001 Plan, including the granting of
17
options to executive officers, and has authorized a committee of the Board of
Directors, consisting of Mr. St. Germain, to grant options, subject to
limitations set by the Board, to newly hired employees.
Subject to any applicable limitations contained in the 2001 Plan, the Board
of Directors, the Compensation Committee, or any other committee to whom the
Board of Directors delegates authority, as the case may be, selects the
recipients of Awards and determines (i) the number of shares of Common Stock
covered by options and the dates upon which such options become exercisable,
(ii) the exercise price of options, (iii) the duration of options, and (iv) the
number of shares of Common Stock subject to any restricted stock or other
stock-based Awards and the terms and conditions of such Awards, including
conditions for repurchase, issue price and repurchase price.
The Board of Directors is required to make appropriate adjustments in
connection with the 2001 Plan and any outstanding Awards to reflect stock
splits, stock dividends, recapitalizations, spin-offs and other similar changes
in capitalization. The 2001 Plan also contains provisions addressing the
consequences of any Reorganization Event, which is defined as (i) any merger or
consolidation of the Company with or into another entity as a result of which
all of the Common Stock of the Company is converted into or exchanged for the
right to receive cash, securities or other property or (ii) any exchange of all
of the Common Stock of the Company for cash, securities or other property
pursuant to a share exchange transaction. Upon the occurrence of a
Reorganization Event, all outstanding options are to be assumed, or substituted
for, by the acquiring or succeeding corporation. However, if the acquiring or
succeeding corporation does not agree to assume, or substitute for, outstanding
options, then the Board of Directors must either accelerate the options to make
them fully exercisable prior to consummation of the Reorganization Event or
provide for a cash out of the value of any outstanding options. Upon the
occurrence of a Reorganization Event, the repurchase and other rights of the
Company under each outstanding restricted stock Award will inure to the benefit
of the acquiring or succeeding corporation. The Board of Directors will specify
the effect of a Reorganization Event on any other Award at the time the Award is
granted.
AMENDMENT OR TERMINATION
No Award may be made under the 2001 Plan after April 16, 2011, but Awards
previously granted may extend beyond that date. The Board of Directors may at
any time amend, suspend or terminate the 2001 Plan, except that no Award
designated as subject to Section 162(m) of the Code by the Board of Directors
after the date of such amendment shall become exercisable, realizable or vested
(to the extent such amendment was required to grant such Award) unless and until
such amendment shall have been approved by the Company's stockholders.
If stockholders do not approve the adoption of the 2001 Plan, the 2001 Plan
will not go into effect, and the Company will not grant any Awards under the
2001 Plan. In such event, the Board of Directors will consider whether to adopt
alternative arrangements based on its assessment of the needs of the Company.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under the
2001 Plan and with respect to the sale of Common Stock acquired under the 2001
Plan. This summary is based on the federal tax laws in effect as of the date of
this proxy statement. Changes to these laws could alter the tax consequences
described below.
INCENTIVE STOCK OPTIONS
In general, a participant will not recognize taxable income upon the grant
or exercise of an incentive stock option. Instead, a participant will recognize
taxable income with respect to an incentive stock option only upon the sale of
Common Stock acquired through the exercise of the option
18
("ISO Stock"). The exercise of an incentive stock option, however, may subject
the participant to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior to
having owned it for at least two years from the Grant Date and one year from the
Exercise Date (a "Disqualifying Disposition"), then all or a portion of the gain
recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss in an amount equal to the excess of the
exercise price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
NON-STATUTORY STOCK OPTIONS
As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a non-statutory stock option. Unlike
the case of an incentive stock option, however, a participant who exercises a
non-statutory stock option generally will recognize ordinary compensation income
in an amount equal to the excess of the fair market value of the Common Stock
acquired through the exercise of the option ("NSO Stock") on the Exercise Date
over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
Stock and the participant's tax basis in the NSO Stock. This capital gain or
loss will be a long-term gain or loss if the participant has held the NSO Stock
for more than one year prior to the date of the sale.
RESTRICTED STOCK AWARDS
A participant will not recognize taxable income upon the grant of a
restricted stock Award unless the participant makes a Section 83(b) Election. If
the participant makes a valid under Section 83(b) of the Code (a "Section 83(b)
Election") within 30 days of the date of the grant, then the participant will
recognize ordinary compensation income, for the year in which the Award is
granted, in an amount equal to the difference between the fair market value of
the Common Stock at the time the Award is granted and the purchase price paid
for the Common Stock. If a valid Section 83(b) Election is not made, then the
participant will recognize ordinary compensation income, at the time that the
forfeiture provisions or restrictions on transfer lapse, in an amount equal to
the difference between the fair market value of the Common Stock at the time of
such lapse and the original purchase price paid for the Common Stock. The
participant will have a tax basis in the Common Stock acquired equal to the sum
of the price paid and the amount of ordinary compensation income recognized.
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock Award, the participant will recognize a capital gain or loss equal to the
difference between the sale price of the Common Stock and the participant's tax
basis in the Common Stock. This capital gain or loss will be a long-term capital
gain or loss if the shares are held for more than one year.
19
OTHER STOCK-BASED AWARDS
The tax consequences associated with any other stock-based Award granted
under the 2001 Plan will vary depending on the specific terms of such Award.
Among the relevant factors are whether or not the Award has a readily
ascertainable fair market value, whether or not the Award is subject to
forfeiture provisions or restrictions on transfer, the nature of the property to
be received by the participant under the Award and the participant's holding
period and tax basis for the Award or underlying Common Stock.
TAX CONSEQUENCES TO THE COMPANY
The grant of an Award under the 2001 Plan generally will have no tax
consequences to the Company. Moreover, in general, neither the exercise of an
incentive stock option nor the sale of any Common Stock acquired under the 2001
Plan will have any tax consequences to the Company. The Company generally will
be entitled to a business-expense deduction, however, with respect to any
ordinary compensation income recognized by a participant under the 2001 Plan,
including in connection with a restricted stock Award or as a result of the
exercise of a non-statutory stock option or a Disqualifying Disposition. Any
such deduction will be subject to the limitations of Section 162(m) of the Code.
PROPOSAL 3
SELECTION OF INDEPENDENT ACCOUNTANTS
Subject to ratification by the stockholders at the annual meeting, the board
of directors has selected the firm of Arthur Andersen LLP as independent
accountants for I-many for the year ending December 31, 2001. If the
stockholders do not ratify the selection of Arthur Andersen LLP, the board of
directors will reconsider the matter. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting. They will have an opportunity to
make a statement if they desire to do so, and will also be available to respond
to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS FOR I-MANY FOR THE YEAR ENDING
DECEMBER 31, 2001.
OTHER MATTERS
The board of directors knows of no other matters which may properly be and
are likely to be brought before the meeting, other than the matters discussed
herein. However, if any other matters properly come before the meeting, the
persons named in the enclosed proxy will vote in accordance with their best
judgment.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report of I-many for the year ended December 31, 2000, including
audited financial statements, accompanies this Proxy Statement. The Annual
Report does not form any part of the material for the solicitation of proxies.
ANNUAL REPORT ON FORM 10-K
We will provide without charge, at the written request of any holder of
record of our Common Stock as of the close of business on April 16, 2001, a copy
of our Annual Report on Form 10-K, including the financial statements and
financial statement schedules, as filed with the Securities and Exchange
Commission, except exhibits thereto. We will provide copies of the exhibits upon
written
20
request by eligible stockholders, and we may impose a reasonable fee for
providing such exhibits. Requests should be mailed to:
I-many, Inc.
Attn: Controller
537 Congress Street
5th Floor
Portland, Maine 04101
(207) 774-3244
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
The Company expects to hold its 2002 Annual Meeting in May 2002 and to mail
its proxy statement in connection therewith by April 26, 2002. Accordingly,
stockholder proposals submitted pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") for inclusion in the
Company's proxy materials for its 2002 Annual Meeting of Stockholders must be
received by the Controller of the Company at the principal offices of the
Company no later than December 27, 2001. Written notice of proposals of
Stockholders submitted outside the processes of Rule 14a-8 under the Exchange
Act for consideration at the 2002 Annual Meeting must be received on or before
March 12, 2002, in order to be considered timely for purposes of Rule 14a-4
under the Exchange Act.
EXPENSES OF SOLICITATION
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
facsimile machine and personal interviews. The Company has retained Georgeson
Shareholder Communications, Inc. to assist in soliciting proxies at a cost not
expected to exceed $6,500, exclusive of expenses. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and the Company will reimburse them for their
out-of-pocket expenses in this regard.
By Order of the Board of Directors,
A. Leigh Powell
President and Chief Executive Officer
Portland, Maine
April 26, 2001
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING, AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
21
ANNEX A
I-MANY, INC. AUDIT COMMITTEE CHARTER
I. Membership
A. The Audit Committee shall consist of at least three independent,
financially literate members of the board of directors meeting the
requirements set forth in Sections I.B and I.C below.
B. INDEPENDENCE. A director is independent if he or she is not an officer
or employee of the Company or its subsidiaries, if he or she has no
relationship which, in the opinion of the Company's board of directors,
would interfere with his or her exercise of independent judgment in
carrying out the responsibilities of a director, and if he or she:
1. Has not been an employee of the Company or an affiliate of the
Company in the current year or in any of the past three years;
2. Has no immediate family member who has been employed by the Company
or an affiliate of the Company in any of the past three years (an
immediate family member includes a person's spouse, parents,
children, siblings, mother-in-law, father-in-law, brother-in-law,
sister-in-law, son-in-law, daughter-in-law, and anyone who resides in
a person's home);
3. Is not employed as an executive of an entity other than the Company
having a compensation committee which includes any of the Company's
executives;
4. Did not within the last fiscal year receive from the Company or its
affiliates compensation--other than benefits under a tax qualified
retirement plan, compensation for director service or
nondiscretionary compensation--greater than $60,000; and
5. Has not in any of the past three years been a partner in, or
controlling shareholder or executive of, a for profit business
organization to which the Company made or from which the Company
received payment (other than payment arising solely from investments
in the Company's securities) that exceeds the greater of:
(i) $200,000; or (ii) more than 5% of the Company's or the business
organization's consolidated gross revenues.
Under exceptional and limited circumstances, one director who has a
relationship making him or her not independent, and who is not a
Company employee or an immediate family member of a Company employee,
may serve on the Audit Committee if the board of directors determines
that the director's membership on the Audit Committee is required by
the best interests of the Company and its shareholders, and discloses
in the next annual proxy statement after such determination the
nature of the relationship and the reasons for the determination.
C. FINANCIAL LITERACY. Each member of the Audit Committee must be able to
read and understand fundamental financial statements, including the
Company's balance sheet, income statement, and cash flow statement, or
must become able to do so within a reasonable time after his or her
appointment to the Audit Committee. At least one member of the Audit
Committee must have past employment experience in finance or accounting,
professional certification in accounting, or other comparable experience
or background which result in the member having financial sophistication
(such as being or having been a chief executive officer, chief financial
officer or other senior officer with financial oversight
responsibilities).
D. CHAIRMAN. Unless a Chairman is elected by the board of directors, the
Audit Committee shall elect a Chairman by majority vote.
A-1
II. Responsibilities of the Audit Committee
The Audit Committee shall assist the board of directors in fulfilling their
responsibilities to shareholders concerning the Company's accounting and
reporting practices, and shall facilitate open communication between the Audit
Committee, board of directors, outside auditors, and management. The Audit
Committee shall discharge its responsibilities, and shall assess the information
provided by the Company's management and the outside auditor, in accordance with
its business judgment. The responsibilities set forth herein do not reflect or
create any duty or obligation of the Audit Committee to plan, conduct, oversee
or determine the appropriate scope of any audit, or to determine that the
Company's financial statements are complete, accurate, fairly presented, in
accordance with Generally Accepted Accounting Principles or applicable law. In
exercising its business judgment, the Audit Committee shall rely on the
information and advice provided by the Company's management and/or its outside
auditor.
A. The Audit Committee shall review and reassess the adequacy of this
charter at least annually.
B. The outside auditor shall be accountable to the Audit Committee and the
board of directors, which together shall have the ultimate authority and
responsibility to nominate the outside auditor to be proposed for
shareholder approval in any proxy statement, and to select, evaluate, and
(where appropriate) replace the outside auditor.
C. The Audit Committee shall ensure that they receive from the outside
auditor the written disclosures and letter from the outside auditor
required by Independence Standards Board Standard No. 1, as modified or
amended.
D. The Audit Committee shall discuss with the outside auditor its
independence, and shall actively engage in a dialogue with the outside
auditor regarding any disclosed relationships or services that might
impact the objectivity and independence of the auditor. The Audit
Committee shall take, or recommend that the full board of directors take,
appropriate action to oversee the independence of the outside auditor.
E. The Audit Committee shall review and discuss with the Company's
management the Company's audited financial statements.
F. The Audit Committee shall direct and request that the outside auditor
represent to the Audit Committee that the auditor has brought to the
attention of the Audit Committee the matters about which Statement on
Auditing Standards No. 61 (as amended) requires discussion, and shall
discuss such matters with the outside auditor.
G. Based upon its discharge of its responsibilities pursuant to Sections
II.C through II.F and any other information, discussion or communication
that the Audit Committee in its business judgment deems relevant, the
Audit Committee shall consider whether they will recommend to the board
of directors that the Company's audited financial statements be included
in the Company's annual reports on Forms 10-K.
H. The Audit Committee shall prepare for inclusion in any proxy or
information statement of the Company relating to an annual meeting of
security holders at which directors are to be elected (or special meeting
or written consents in lieu of such meeting), the report described in
Item 306 of Regulation S-K.
I. The Audit Committee shall direct the outside auditor to use its best
efforts to perform all reviews of interim financial information prior to
disclosure by the Company of such information, and to discuss promptly
with the Chairman of the Audit Committee and the Chief Financial Officer
any matters identified in connection with the auditor's review of interim
financial information which are required to be discussed by Statement on
Auditing Standards No. 61. The Chairman of the Audit Committee shall
discuss any such matters with
A-2
the outside auditor, and shall notify the other members of the Audit
Committee of any discussions which the outside auditor or the Chairman in
the exercise of his or her business judgment believes should be
considered by the Audit Committee prior to disclosure or filing of the
interim financial information, or the Audit Committee's next scheduled
meeting.
J. The Audit Committee shall direct management to advise the Audit
Committee in the event that the Company proposes to disclose or file
interim financial information prior to completion of review by the
outside auditor.
K. The Audit Committee shall prepare minutes of its meetings that shall be
presented to the Board of Directors for review. The Audit Committee may
determine that some or all of its minutes shall not be made available to
members of management who are directors of the Company.
L. The Audit Committee shall regularly report to the board of directors
concerning any action the Audit Committee in the exercise of its business
judgment believes the board of directors should consider.
A-3
ANNEX B
I-MANY, INC.
2001 STOCK INCENTIVE PLAN
1. PURPOSE.
The purpose of this 2001 Stock Incentive Plan (the "Plan") of I-many, Inc.,
a Delaware corporation (the "Company"), is to advance the interests of the
Company's stockholders by enhancing the Company's ability to attract, retain and
motivate persons who make (or are expected to make) important contributions to
the Company by providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company's stockholders. Except where the context
otherwise requires, the term "Company" shall include any of the Company's
present or future parent or subsidiary corporations as defined in Sections
424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a significant interest, as determined by the Board of
Directors of the Company (the "Board").
2. ELIGIBILITY.
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options or restricted stock awards or other stock based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant".
3. ADMINISTRATION AND DELEGATION.
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board. The Board shall have authority to grant Awards and to adopt,
amend and repeal such administrative rules, guidelines and practices
relating to the Plan as it shall deem advisable. The Board may correct
any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem expedient
to carry the Plan into effect and it shall be the sole and final judge of
such expediency. All decisions by the Board shall be made in the Board's
sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person
acting pursuant to the authority delegated by the Board shall be liable
for any action or determination relating to or under the Plan made in
good faith.
(b) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or
more committees or subcommittees of the Board (a "Committee"). All
references in the Plan to the "Board" shall mean the Board or a Committee
of the Board to the extent that the Board's powers or authority under the
Plan have been delegated to such Committee.
4. STOCK AVAILABLE FOR AWARDS.
(a) NUMBER OF SHARES. Subject to adjustment under Section 8, Awards may be
made under the Plan for up to 5,000,000 shares of common stock, $.0001
par value per share, of the Company (the "Common Stock"). If any Award
under the Plan, or any options or other awards granted under the
company's 1994 Stock Plan, 1997 Stock Plan or 2000 Stock Incentive Plan
expires or is terminated, surrendered or canceled without having been
fully exercised or is forfeited in whole or in part (including as the
result of shares of Common Stock subject to such Award being repurchased
by the Company at the original issuance price pursuant to a contractual
repurchase right) or results in any Common Stock not being issued, the
unused Common
B-1
Stock covered by such Award, or any options or other awards, shall again
be available for the grant of Awards under the Plan, subject, however, in
the case of Incentive Stock Options (as hereinafter defined), to any
limitations under the Code. Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.
(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 8, the
maximum number of shares of Common Stock with respect to which Awards may
be granted to any Participant under the Plan shall be 600,000 per
calendar year. The per-Participant limit described in this Section 4(b)
shall be construed and applied consistently with Section 162(m) of the
Code ("Section 162(m)").
5. STOCK OPTIONS.
(a) GENERAL. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the
conditions and limitations applicable to the exercise of each Option,
including conditions relating to applicable federal or state securities
laws, as it considers necessary or advisable. An Option which is not
intended to be an Incentive Stock Option (as hereinafter defined) shall
be designated a "Nonstatutory Stock Option".
(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an
"Incentive Stock Option") shall only be granted to employees of the
Company and shall be subject to and shall be construed consistently with
the requirements of Section 422 of the Code. The Company shall have no
liability to a Participant, or any other party, if an Option (or any part
thereof) which is intended to be an Incentive Stock Option is not an
Incentive Stock Option.
(c) EXERCISE PRICE. The Board shall establish the exercise price at the time
each Option is granted and specify it in the applicable option agreement.
(d) DURATION OF OPTIONS. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the
applicable option agreement.
(e) EXERCISE OF OPTION. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number
of shares for which the Option is exercised.
(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise provide in
an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver
promptly to the Company sufficient funds to pay the exercise price
and any required tax withholding or (ii) delivery by the Participant
to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the
Company cash or a check sufficient to pay the exercise price and any
required tax withholding;
(3) to the extent permitted by the Board, in its sole discretion by
(i) delivery of a promissory note of the Participant to the Company
on terms determined by the Board, or (ii) payment of such other
lawful consideration as the Board may determine; or
(4) by any combination of the above permitted forms of payment.
B-2
(g) SUBSTITUTE OPTIONS. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or
stock of an entity, the Board may grant Options in substitution for any
options or other stock or stock-based awards granted by such entity or an
affiliate thereof. Substitute Options may be granted on such terms as the
Board deems appropriate in the circumstances, notwithstanding any
limitations on Options contained in the other sections of this Section 5
or in Section 2.
6. RESTRICTED STOCK.
(a) GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase
all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at no
cost) from the recipient in the event that conditions specified by the
Board in the applicable Award are not satisfied prior to the end of the
applicable restriction period or periods established by the Board for
such Award (each, a "Restricted Stock Award").
(b) TERMS AND CONDITIONS. The Board shall determine the terms and conditions
of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any.
(c) STOCK CERTIFICATES. Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant
and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the
Company (or its designee). At the expiration of the applicable
restriction periods, the Company (or such designee) shall deliver the
certificates no longer subject to such restrictions to the Participant or
if the Participant has died, to the beneficiary designated, in a manner
determined by the Board, by a Participant to receive amounts due or
exercise rights of the Participant in the event of the Participant's
death (the "Designated Beneficiary"). In the absence of an effective
designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. OTHER STOCK BASED AWARDS.
The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.
8. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS.
(a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock
other than a normal cash dividend, (i) the number and class of securities
available under this Plan, (ii) the per-Participant limit set forth in
Section 4(b), (iii) the number and class of securities and exercise price
per share subject to each outstanding Option, (iv) the repurchase price
per share subject to each outstanding Restricted Stock Award, and
(v) the terms of each other outstanding Award shall be appropriately
adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that
such an adjustment (or substitution) is necessary and appropriate. If
this Section 8(a) applies and Section 8(c) also applies to any event,
Section 8(c) shall be applicable to such event, and this Section 8(a)
shall not be applicable.
(b) LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then
B-3
unexercised Options will (i) become exercisable in full as of a specified
time at least 10 business days prior to the effective date of such
liquidation or dissolution and (ii) terminate effective upon such
liquidation or dissolution, except to the extent exercised before such
effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under
the Plan at the time of the grant of such Award.
(c) REORGANIZATION EVENTS.
(1) DEFINITION. A "Reorganization Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result
of which all of the Common Stock of the Company is converted into or
exchanged for the right to receive cash, securities or other property
or (b) any exchange of all of the Common Stock of the Company for
cash, securities or other property pursuant to a share exchange
transaction.
(2) CONSEQUENCES OF A REORGANIZATION EVENT ON OPTIONS. Upon the
occurrence of a Reorganization Event, or the execution by the Company
of any agreement with respect to a Reorganization Event, the Board
shall provide that all outstanding Options shall be assumed, or
equivalent options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof). For purposes
hereof, an Option shall be considered to be assumed if, following
consummation of the Reorganization Event, the Option confers the
right to purchase, for each share of Common Stock subject to the
Option immediately prior to the consummation of the Reorganization
Event, the consideration (whether cash, securities or other property)
received as a result of the Reorganization Event by holders of Common
Stock for each share of Common Stock held immediately prior to the
consummation of the Reorganization Event (and if holders were offered
a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock);
provided, however, that if the consideration received as a result of
the Reorganization Event is not solely common stock of the acquiring
or succeeding corporation (or an affiliate thereof), the Company may,
with the consent of the acquiring or succeeding corporation, provide
for the consideration to be received upon the exercise of Options to
consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in fair market value
to the per share consideration received by holders of outstanding
shares of Common Stock as a result of the Reorganization Event.
Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or
substitute for, such Options, then the Board shall, upon written
notice to the Participants, provide that all then unexercised Options
will become exercisable in full as of a specified time prior to the
Reorganization Event and will terminate immediately prior to the
consummation of such Reorganization Event, except to the extent
exercised by the Participants before the consummation of such
Reorganization Event; provided, however, that in the event of a
Reorganization Event under the terms of which holders of Common Stock
will receive upon consummation thereof a cash payment for each share
of Common Stock surrendered pursuant to such Reorganization Event
(the "Acquisition Price"), then the Board may instead provide that
all outstanding Options shall terminate upon consummation of such
Reorganization Event and that each Participant shall receive, in
exchange therefor, a cash payment equal to the amount (if any) by
which (A) the Acquisition Price multiplied by the number of shares of
Common Stock subject to such outstanding Options (whether or not then
exercisable), exceeds (B) the aggregate exercise price of such
Options.
B-4
(3) CONSEQUENCES OF A REORGANIZATION EVENT ON RESTRICTED STOCK AWARDS.
Upon the occurrence of a Reorganization Event, the repurchase and
other rights of the Company under each outstanding Restricted Stock
Award shall inure to the benefit of the Company's successor and shall
apply to the cash, securities or other property which the Common
Stock was converted into or exchanged for pursuant to such
Reorganization Event in the same manner and to the same extent as
they applied to the Common Stock subject to such Restricted Stock
Award.
9. GENERAL PROVISIONS APPLICABLE TO AWARDS.
(a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are granted,
either voluntarily or by operation of law, except by will or the laws of
descent and distribution, and, during the life of the Participant, shall
be exercisable only by the Participant. References to a Participant, to
the extent relevant in the context, shall include references to
authorized transferees.
(b) DOCUMENTATION. Each Award shall be evidenced in such form (written,
electronic or otherwise) as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The
terms of each Award need not be identical, and the Board need not treat
Participants uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or
other change in the employment or other status of a Participant and the
extent to which, and the period during which, the Participant, the
Participant's legal representative, conservator, guardian or Designated
Beneficiary may exercise rights under the Award.
(e) WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by
law to be withheld in connection with Awards to such Participant no later
than the date of the event creating the tax liability. Except as the
Board may otherwise provide in an Award, when the Common Stock is
registered under the Exchange Act, Participants may satisfy such tax
obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation,
valued at their fair market value; provided, however, that the total tax
withholding where stock is being used to satisfy such tax obligations
cannot exceed the Company's minimum statutory withholding obligations
(based on minimum statutory withholding rates for federal and state tax
purposes, including payroll taxes, that are applicable to such
supplemental taxable income). The Company may, to the extent permitted by
law, deduct any such tax obligations from any payment of any kind
otherwise due to a Participant.
(f) AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor
another Award of the same or a different type, changing the date of
exercise or realization, and converting an Incentive Stock Option to a
Nonstatutory Stock Option, provided that the Participant's consent to
such action shall be required unless the Board determines that the
action, taking into account any related action, would not materially and
adversely affect the Participant.
(g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until
(i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Company's
counsel, all other legal
B-5
matters in connection with the issuance and delivery of such shares have
been satisfied, including any applicable securities laws and any
applicable stock exchange or stock market rules and regulations, and
(iii) the Participant has executed and delivered to the Company such
representations or agreements as the Company may consider appropriate to
satisfy the requirements of any applicable laws, rules or regulations.
(h) ACCELERATION. The Board may at any time provide that any Award shall
become immediately exercisable in full or in part, free of some or all
restrictions or conditions, or otherwise realizable in full or in part,
as the case may be.
10. MISCELLANEOUS.
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or
any other relationship with the Company. The Company expressly reserves
the right at any time to dismiss or otherwise terminate its relationship
with a Participant free from any liability or claim under the Plan,
except as expressly provided in the applicable Award.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as
a stockholder with respect to any shares of Common Stock to be
distributed with respect to an Award until becoming the record holder of
such shares. Notwithstanding the foregoing, in the event the Company
effects a split of the Common Stock by means of a stock dividend and the
exercise price of and the number of shares subject to such Option are
adjusted as of the date of the distribution of the dividend (rather than
as of the record date for such dividend), then an optionee who exercises
an Option between the record date and the distribution date for such
stock dividend shall be entitled to receive, on the distribution date,
the stock dividend with respect to the shares of Common Stock acquired
upon such Option exercise, notwithstanding the fact that such shares were
not outstanding as of the close of business on the record date for such
stock dividend.
(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on the
date on which it is adopted by the Board, but no Award granted to a
Participant that is intended to comply with Section 162(m) shall become
exercisable, vested or realizable, as applicable to such Award, unless
and until the Plan has been approved by the Company's stockholders to the
extent stockholder approval is required by Section 162(m) in the manner
required under Section 162(m) (including the vote required under
Section 162(m)). No Awards shall be granted under the Plan after the
completion of ten years from the earlier of (i) the date on which the
Plan was adopted by the Board or (ii) the date the Plan was approved by
the Company's stockholders, but Awards previously granted may extend
beyond that date.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to
comply with Section 162(m) after the date of such amendment shall become
exercisable, realizable or vested, as applicable to such Award, unless
and until such amendment shall have been approved by the Company's
stockholders if required by Section 162(m) (including the vote required
under Section 162(m)).
(e) GOVERNING LAW. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the
State of Delaware, without regard to any applicable conflicts of law.
B-6
I-MANY, INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, JUNE 7, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY.
The undersigned, having received notice of the annual meeting of
stockholders and the proxy statement therefor and revoking all prior proxies,
hereby appoints A. Leigh Powell, Philip M. St. Germain and Edward Lawrence,
Esq. (with full power of substitution), as proxies of the undersigned, to
attend the annual meeting of stockholders of I-many, Inc. (the "Company") to
be held on Thursday, June 7, 2001, and any adjourned or postponed session
thereof, and there to vote and act, as indicated, upon the matters on the
reverse side in respect of all shares of common stock of the Company which
the undersigned would be entitled to vote or act upon, with all powers the
undersigned would possess if personally present.
Attendance of the undersigned at the annual meeting of stockholders or at
any adjourned or postponed session thereof will not be deemed to revoke this
proxy unless the undersigned affirmatively indicates thereat the intention of
the undersigned to vote said shares of common stock in person. If the
undersigned hold(s) any such shares in a fiduciary, custodial or joint capacity
or capacities, this proxy is signed by the undersigned in every such capacity as
well as individually.
PLEASE VOTE, DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY
IN THE ENCLOSED POSTAGE PRE-PAID ENVELOPE.
/X/ Please mark votes as in this example.
1. To elect the following persons as directors for one-year terms:
(1) William F. Doyle
(2) E. David Hetz
(3) Jeffrey Horing
(4) Murray B. Low
(5) A. Leigh Powell
(6) Philip M. St. Germain
FOR
all nominees
(except as marked to WITHHOLD
the contrary below) AUTHORITY
/ / / /
NOTE: IF YOU DO NOT WISH YOUR SHARES TO BE VOTED "FOR" A PARTICULAR NOMINEE,
MARK THE "FOR" BOX AND STRIKE A LINE THROUGH THE NAME OF THE NOMINEE. YOUR
SHARES WILL BE VOTED FOR THE REMAINING NOMINEES.
2. To approve the Company's 2001 Stock Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. To ratify the selection of Arthur Andersen LLP as the Company's independent
auditors for the current fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
THE SHARES OF COMMON STOCK REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED
BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY PROPOSAL
SPECIFIED HEREIN, THIS PROXY WILL BE VOTED FOR THE PROPOSAL. IF ANY OTHER
MATTERS PROPERLY COME BEFORE THE MEETING, THE PERSONS NAMED IN THIS PROXY WILL
VOTE THE SHARES REPRESENTED BY THIS PROXY IN THEIR DISCRETION.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY BELOW.
CHECK HERE IF YOU PLAN TO ATTEND THE MEETING.
Stockholder(s) sign here ______________________________ Date ______________
NOTE: Please sign exactly as name appears hereon. When Shares are held by joint
tenants, all joint tenants should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give the full title
as such. If a corporation, please sign in the full corporate name by the
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.