SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
I-many, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
I-MANY, INC.
537 Congress Street
5th Floor
Portland, Maine 04101
May 3, 2002
To the Stockholders of I-many, Inc.:
We cordially invite you to attend the 2002 Annual Meeting of Stockholders of
I-many, Inc. to be held on May 30, 2002 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 ensure 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
MAY 30, 2002
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of I-many,
Inc. will be held on Thursday, May 30, 2002 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 four directors to hold office until the 2003 Annual Meeting of
Stockholders; and
2. 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 10, 2002 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 10, 2002 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
May 3, 2002
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 MAY 30, 2002
The 2002 Annual Meeting of Stockholders of I-many, Inc. will be held on May
30, 2002 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 May 3, 2002.
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, Kevin F. Collins
and Robert G. Schwartz, Jr., Esq. as your representatives at the meeting.
Messrs. Powell, Collins and Schwartz 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, Collins and Schwartz will vote your shares in accordance with
their best judgment.
What am I voting on?
You are being asked to vote on the election of four directors. 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 10, 2002 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.
You may vote in person at the meeting. Written ballots will be given to
stockholders of record who want 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.
1
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 10, 2002, 40,265,374 shares of our common stock were issued and
outstanding. A majority of our outstanding shares as of the Record Date, equal
to 20,132,688 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. The 1,700 outstanding shares of our Series A Convertible Preferred
Stock do not have voting rights.
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, 5/th/ 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 four nominees receiving the highest number of affirmative votes will
each be elected as directors. 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 four nominees.
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How will votes be counted?
You may vote "FOR" or you may "WITHHOLD AUTHORITY" to vote for each nominee.
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.
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 2002. 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.
PROPOSAL
ELECTION OF DIRECTORS
The Board of Directors has nominated four people to stand for election or
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 2003 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 four 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.
WILLIAM F. DOYLE, age 39, has served as a director since December 1999 and
as chairman of our board from December 1999 until April 2001. He has been a
partner of Insight Capital Partners, a venture capital firm, since November
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
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manager at McKinsey & Co., a management consulting firm. Mr. Doyle holds an
M.B.A. from Harvard Business School and an S.B. from the Massachusetts
Institute of Technology.
MURRAY B. LOW, age 49, 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 it
was established in July 2000. 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.
KARL E. NEWKIRK, age 61, has served as a director since February 2002. Mr.
Newkirk was a partner at Accenture LLP (formerly Andersen Consulting) from 1972
through December 2001. He currently sits on the boards of directors of Flamenco
Networks, See Beyond Technology Corp. and Acero, Inc., all privately held
companies. He also serves as the Vice Chairman of Acero, Inc. Mr. Newkirk
graduated from Case Institute of Technology with a degree in Industrial
Engineering and subsequently received his MBA from Case Western Reserve
University.
A. LEIGH POWELL, age 40, 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NAMED NOMINEE.
Meetings of the Board of Directors
During 2001, the Board of Directors held eight regular meetings and acted by
unanimous written consent three times. Each of the directors attended at least
75% of the total number of board meetings and meetings of the committee(s) on
which he served in 2001.
Committees of the Board of Directors
Audit Committee. I-many has an Audit committee, currently consisting of Mr.
Doyle, Mr. E. David Hetz (whose term of office will expire at the Annual
Meeting and who is not standing for re-election), Mr. Low and Mr. Newkirk, each
of whom is independent as defined by the applicable listing standards of the
National Association of Securities Dealers. Mr. Newkirk joined the Audit
Committee on February 4, 2002. 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
ensure 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 telephonic meetings during
2001.
Compensation Committee. The Board of Directors has established a
Compensation Committee consisting of Messrs. Doyle and Powell. The Compensation
Committee held three meetings in 2001. The Compensation Committee is
responsible for:
. reviewing and recommending salaries, bonuses and other compensation for
I-many's senior employees;
4
. 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.
Executive Compensation Committee. On September 27, 2001, the Board of
Directors reconstituted its Stock Plan Subcommittee as a new committee of the
Board of Directors, named the "Executive Compensation Committee," consisting of
Messrs. Doyle and Hetz. Effective upon the annual meeting, Messrs. Doyle and
Low will constitute the Executive Compensation Committee. The Executive
Compensation Committee 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 employment. In 2001,
the Executive Compensation Committee (including its predecessor, the Stock Plan
Subcommittee) held two meetings and acted once by unanimous written consent.
Committee for Limited Stock Option Grants. On September 27, 2001, the Board
of Directors established a Committee for Limited Stock Option Grants,
consisting of Kevin F. Collins, the Company's Chief Financial Officer. This
committee is authorized to grant stock options under the Company's stock option
plans to employees who are not executive officers, except that the committee
may not grant options for more than 30,000 shares of common stock to any single
employee in any 12-month period. The Committee for Limited Stock Option Grants
acted once by unanimous written consent in 2001.
The Company 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 our 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 2001 all filings required to be made by its
reporting persons were timely made in accordance with the requirements of the
Exchange Act, except that Mr. Terrence Nicholson inadvertently failed to file a
Form 4 report for the sale of 18,953 shares of common stock pursuant to a stock
option exercise in May 2001.
Compensation of Directors
We compensate our non-employee 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. During 2001, options to
acquire an aggregate of 100,000 shares of common stock were also granted to two
non-employee directors who were affiliates of institutional investors that own
shares of our common stock. The weighted average exercise price of these
options was $1.96 per share.
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In addition to the foregoing, the Company pays $2,000 to each non-employee
director for each meeting attended, plus expenses.
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 April 10, 2002 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 40,265,374 shares outstanding as of April 10, 2002
plus all common stock issuable on exercise of options within 60 days of that
date 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, 5/th/ Floor, Portland, Maine
04101.
Shares Percentage
Beneficially Beneficially
Name of Beneficial Owner Owned Owned
- ------------------------ ------------ ------------
Five Percent Owners
Van Wagoner Capital Management, Inc. (1)(2)................... 4,095,300 10.2%
345 California Street, Suite 2450
San Francisco, CA 94104
Chilton Investment Company, Inc. (1)(3)....................... 2,493,500 6.2%
1266 East Main Street, 7/th/ Floor
Stamford, CT 06902
Zurich Scudder Investment, Inc. (1)(4)........................ 2,389,811 5.9%
345 Park Avenue
New York, NY 10154
Non-Employee Directors
William F. Doyle (5).......................................... 168,751 *
Murray B. Low (5)............................................. 29,168 *
Karl E. Newkirk............................................... -- --
Executive Officers
A. Leigh Powell (6)........................................... 597,001 1.5%
Terrence M. Nicholson (5)..................................... 91,413 *
Timothy P. Curran (5)......................................... 75,108 *
Kevin F. Collins (5).......................................... -- --
All Executive Officers and Directors as a Group (7 people) (7) 961,441 2.3%
6
- --------
* Indicates less than one percent.
(1) Reported by the investor on Schedule 13G as most recently filed with the
Securities and Exchange Commission.
(2) Consist of 4,095,300 shares for which the investor claims sole dispositive
power and 0 shares for which the investor claims sole voting power. Van
Wagoner Funds, Inc. claims beneficial ownership of, and sole voting power
over, 3,877,300 of these shares.
(3) Consists of 2,493,500 shares for which the investor claims sole dispositive
power, as to which the investor claims sole voting power with respect to
2,481,025 shares.
(4) Consists of 2,389,811 shares for which the investor claims sole dispositive
power, as to which the investor claims sole voting power with respect to
1,678,983 shares.
(5) Consists entirely of shares issuable upon exercise of Presently Exercisable
Options.
(6) Includes 394,701 shares issuable upon exercise of Presently Exercisable
Options.
(7) Includes 759,141 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, 2001 and 2000, as well as our three other executive officers
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Securities
Annual Compensation (1) Underlying
-------------------------------- ----------
Other All Other
Name and Principal Position Year Salary Bonus Compensation Options (#) Compensation
--------------------------- ---- -------- ---------- ------------ ----------- ------------
A. Leigh Powell.................. 2001 $250,000 $1,057,475(2) $4,865(3) 396,416 $3,462(4)
Chairman, President and Chief 2000 $220,000 $ 169,475 -- 221,250 --
Executive Officer
Terrence M. Nicholson............ 2001 $181,000 $ 101,229 $4,806(3) 246,928 $3,462(4)
Chief Operating Officer 2000 $165,000 $ 82,867 -- 175,000 --
Timothy P. Curran................ 2001 $165,000 $ 78,446 $3,266(3) 216,399 $3,462(4)
Executive Vice 2000 $142,011 $ 35,758 -- 150,000 --
President, Sales
Kevin F. Collins (5)............. 2001 $ 98,053 -- $2,570(3) 185,000 $3,092(4)
Chief Financial Officer
- --------
(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) Consists of a cash bonus of $319,475 and an award of 100,000 unrestricted
shares of common stock issued on February 1, 2002 for 2001 performance.
(3) Consists of Company contributions to 401(k) Plan.
(4) Consists of car allowance.
(5) Mr. Collins joined the Company in May 2001.
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Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to stock
options granted during the fiscal year ended December 31, 2001 to each of the
executive officers named in the Summary Compensation Table above, including the
potential realizable value over the ten-year term of the options, based on
assumed rates of stock appreciation from date of grant of 5% and 10%,
compounded annually. These assumed rates of appreciation comply with the rules
of the Securities and Exchange Commission and do not represent our estimate of
our future stock price. Actual gain, if any, on stock options that are
exercised will depend on the future performance of our common stock.
We granted the options listed below at an exercise price equal to the fair
market value of our common stock, as determined by our Board of Directors, on
the date of grant. The options become exercisable as to 25% of the underlying
shares upon the first anniversary of the date of grant and an additional 25%
per year thereafter. The options generally expire on the earlier of 10 years
from the date of grant or three months after termination of employment.
Potential Realized
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
----------------------------------- ---------------------
Number of
Securities % of Total Exercise
Underlying Options Price Per
Options Granted to Share Expiration
Name Granted (#) Employees (1) ($/Sh) Date 5%($) 10%($)
---- ----------- ------------- --------- ---------- -------- ----------
A. Leigh Powell...... 40,263 0.7% $14.00 1/22/11 $354,500 $ 898,340
356,153 5.8% $ 1.96 9/27/11 $439,010 $1,112,498
Terrence M. Nicholson 9,663 0.2% $14.00 1/22/11 $ 85,079 $ 215,599
15,000 0.2% $11.30 4/17/11 $106,599 $ 270,132
222,265 3.6% $ 1.96 9/27/11 $273,974 $ 694,279
Timothy P. Curran.... 8,858 0.1% $14.00 1/22/11 $ 77,991 $ 197,638
15,000 0.2% $11.30 4/17/11 $106,599 $ 270,132
192,541 3.1% $ 1.96 9/27/11 $237,335 $ 601,431
Kevin F. Collins..... 75,000 1.2% $ 7.33 7/19/11 $345,738 $ 876,137
110,000 1.8% $ 1.96 9/27/11 $135,591 $ 343,602
- --------
(1) The percentage of total options granted to employees during the fiscal year
ended December 31, 2001 is based upon options to purchase an aggregate of
6,141,854 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 2001 and
the number and value of unexercised stock options held by these executive
officers as of December 31, 2001. The value of unexercised in-the-money options
is based on a per share market value of $9.65, the closing price of our stock
at December 31, 2001 as reported by the Nasdaq National Market, less the
applicable per share exercise price, multiplied by the number of shares
issuable upon exercise of the option.
Number of Unexercised Value of Unexercised
Options at In-the-Money Options
December 31, 2001 (#) at December 31, 2001 ($)
- - ------------------------- -------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
A. Leigh Powell...... 367,500 $4,034,109 213,699 1,027,842 $1,220,281 $7,074,491
Terrence M. Nicholson 30,000 $ 436,805 85,248 432,765 $ 216,762 $2,116,480
Timothy P. Curran.... 50,000 $ 755,826 53,519 360,666 $ 95,155 $1,849,396
Kevin F. Collins..... -- -- -- 185,000 -- $1,019,900
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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 or the Executive Compensation Committee. 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.
TERRENCE NICHOLSON. In July 2001, we entered into an employment agreement
with Mr. Nicholson, our chief operating officer. Under the agreement, which
provides that Mr. Nicholson is employed on a "at will" basis, he receives a
base salary of $181,000 per year. During the term of his employment, Mr.
Nicholson will participate in a performance-based bonus program that is
partially discretionary, the terms of which shall be determined by Mr. Powell.
Mr. Nicholson is entitled to severance pay equal to six 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,
50% of his then unvested options will vest at that time, and the remaining
unvested options will vest if his employment is terminated or his compensation
is reduced during the following 12 months, provided that the Board of Directors
may prevent such acceleration in certain circumstances.
TIMOTHY P. CURRAN. In July 2001, we entered into an employment agreement
with Mr. Curran, our Executive Vice President of Sales. Under the agreement,
which provides that Mr. Curran is employed on a "at will" basis, he receives a
base salary of $170,000 per year. During the term of his employment, Mr. Curran
will participate in a performance-based bonus program that is partially
discretionary, the terms of which shall be determined by Mr. Powell. Mr. Curran
is entitled to severance pay equal to six 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, 50% of his then
unvested options will vest at that time, and the remaining options will vest if
his employment is terminated or his compensation is reduced during the
following 12 months, provided that the Board of Directors may prevent such
acceleration in certain circumstances.
KEVIN F. COLLINS. In July 2001, we entered into an employment agreement with
Mr. Collins, our chief financial officer. Under the agreement, which provides
that Mr. Collins is employed on a "at will" basis, he receives a base salary of
$175,000 per year. During the term of his employment, Mr. Collins will
participate in a performance-based bonus program that is partially
discretionary, the terms of which shall be determined by Mr. Powell. Mr.
Collins is entitled to severance pay equal to six 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, 50% of his then
unvested options will vest at that time, provided that the Board of Directors
may prevent such acceleration in certain circumstances.
CERTAIN TRANSACTIONS
There were no transactions during 2001 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.
9
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is composed of Messrs. Doyle and Powell. 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.
In performing these duties, the Compensation Committee considers
recommendations from management along with other factors. The Executive
Compensation Committee (the report of which follows below), which is composed
of Messrs. Doyle and Hetz, 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. Effective upon the Annual Meeting, Messrs. Doyle and Low will
become the members of Executive Compensation Committee.
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 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 generally 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 conditions and each individual's role and responsibilities
in the organization.
Bonus. We award our executive officers quarterly and 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 salary and bonus compensation
(not including the value of any stock option grant) to our executives,
including bonuses, is above the median for cash compensation paid by comparable
companies. These bonuses are determined partially on a subjective basis and
partially with reference to pre-established formulas.
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 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
10
Compensation Committee and the Executive Compensation Committee reserve the
right to grant compensation above the limits of Section 162(m) if in the best
interests of the stockholders.
By the Compensation Committee:
William F. Doyle
A. Leigh Powell
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee (formerly 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 Executive Compensation Committee deems relevant.
In fiscal 2001, the Executive Compensation Committee granted stock options
to Messrs. Powell and Nicholson. In addition, the Executive Compensation
Committee amended Mr. Powell's employment agreement in January 2002 to reduce a
target thirty-day average of the Company's common stock to $7.00, which had the
effect of awarding Mr. Powell a bonus of 100,000 unrestricted shares of the
Company's common stock for his 2001 performance. In its determination whether
to grant stock options or other awards to these named executive officers of the
Company, the Executive Compensation Committee specifically considered the
company's growth and efforts to realize operational efficiencies and the option
package already held by such persons.
By the Executive Compensation Committee (as of
May 3, 2002):
William F. Doyle
E. David Hetz
THE FOREGOING REPORTS 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.
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation Committee are Messrs. Doyle and
Powell, and the current members of the Executive Compensation Committee are
Messrs. Doyle and Hetz. Mr. Powell is the Chief Executive Officer of the
Company. No other member of the Compensation Committee or the Executive
Compensation Committee was at any time during the fiscal year ended December
31, 2001 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 or Executive Compensation
Committee.
11
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Company's Board of Directors is currently
composed of four members and acts under a written charter first adopted and
approved in March 2000. Prior to February 4, 2002, the Audit Committee was
composed of three members. Mr. Newkirk joined the Board of Directors and the
Audit Committee on February 4, 2002, after the completion of the audit of the
Company's financial statements for 2001. 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
2001 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.
During 2001, the Audit Committee reviewed and evaluated, and discussed 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 for 2001 and prior periods. 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
. 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,
2001.
12
By the Audit Committee*
William F. Doyle
E. David Hetz
Murray B. Low
* Mr. Newkirk joined the Audit Committee on February 4, 2002, after completion
of the audit of the Company's financial statements for the year ended
December 31, 2001.
Independent Accountant Fees and Other Matters
Audit Fees
As of March 31, 2002, Arthur Andersen LLP billed the Company an aggregate of
$243,000 in fees for professional services rendered in connection with the
audit of the Company's financial statements for the fiscal year ended December
31, 2001 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, 2001.
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, 2001 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 $453,000 in fees for
other services rendered to the Company and its affiliates for the fiscal year
ended December 31, 2001. The Audit Committee determined that the provision of
these services was compatible with maintaining Arthur Andersen LLP's
independence.
13
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 (the effective date of
I-many's initial public offering) to December 31, 2001. The comparison assumes
that $100 was invested on July 13, 2000, 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, 2001, is not necessarily indicative of future results.
[GRAPH]
Stock/Index 7/13/00 12/31/00 12/31/01
----------- ------- -------- --------
I-many Common Stock........... $100.00 $99.62 $77.30
Nasdaq National Market Index.. $100.00 $59.18 $46.72
Morgan Stanley High Tech Index $100.00 $63.58 $48.24
14
APPOINTMENT OF INDEPENDENT AUDITORS
In the prior year, the Audit Committee recommended the appointment of
independent auditors to the Board of Directors, which in turn recommended
ratification of such appointment by our shareholders. Arthur Andersen LLP has
served as our independent auditor since 2000 and is familiar with our business
affairs, financial controls and accounting procedures. However, in light of
recent public events surrounding Arthur Andersen LLP, the Audit Committee and
management of I-many are not prepared to request that our shareholders ratify
the appointment of independent auditors to audit our financial statements for
fiscal 2002. While we are continuing to work with Arthur Andersen LLP as our
independent auditor for the financial statement review for the first quarter of
fiscal 2002, the Audit Committee has recommended that management investigate
the possible engagement of another independent auditor for fiscal 2002.
Management will make a decision, in consultation with the Audit Committee, with
respect to the appointment of independent auditors for fiscal 2002 that we
believe to be in the best interests of I-many and its shareholders.
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, 2001, 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 our
Common Stock as of the close of business on April 10, 2002, 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
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
5/th/ Floor
Portland, Maine 04101
(207) 774-3244
Deadline for Submission of Stockholder Proposals
The Company expects to hold its 2003 Annual Meeting in May 2003 and to mail
its proxy statement in connection therewith by April 30, 2003. 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 2003 Annual Meeting of Stockholders must be
received by the Controller of the Company at the principal offices of the
Company no later than January 3, 2003. Written notice of proposals of
Stockholders submitted outside the processes of Rule 14a-8 under the Exchange
Act for consideration at the 2003 Annual Meeting must be received on or before
March 18, 2003, in order to be considered timely for purposes of Rule 14a-4
under the Exchange Act.
15
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.
By Order of the Board of Directors,
A. Leigh Powell
President and Chief Executive Officer
Portland, Maine
May 3, 2002
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.
16
I-MANY, INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 30, 2002
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, Kevin F. Collins and Robert G. Schwartz, Jr.,
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, May 30, 2002, 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.
To elect the following persons as directors for one-year terms:
(1) William F. Doyle
(2) Murray B. Low
(3) A. Leigh Powell
(4) Karl E. Newkirk
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.
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.