INDUSTRI MATEMATIC INTERNATIONAL CORP, DEF 14A, 1998-08-28

INDUSTRI MATEMATIC INTERNATIONAL CORP
DEF 14A, 1998-08-28
PREPACKAGED SOFTWARE

Previous: AETNA VARIABLE PORTFOLIOS INC, NSAR-A, 1998-08-28

Next: COLUMBIA SMALL CAP FUND INC, NSAR-A, 1998-08-28

<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

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 240.14a-11(c) or 240.14a-12

INDUSTRI-MATEMATIK INTERNATIONAL CORP.
- --------------------------------------------------------------------------------
(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 Rules14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule0-11(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:
------------------------------------------------------------------------
<PAGE>
[LOGO]

[LOGO]

INDUSTRI-MATEMATIK INTERNATIONAL CORP.

901 MARKET STREET
WILMINGTON, DE 19801

------------------------

NOTICE OF 1998 ANNUAL MEETING

---------------------

Please take notice that the Annual Meeting of the Shareholders of
Industri-Matematik International Corp., a Delaware corporation ("Company"), will
be held on October 9, 1998, at 2:00 p.m., local time, at the Grand Hyatt New
York, Park Avenue at Grand Central Station, New York, New York for the following
purposes:

1. To elect five directors to serve for one-year terms;

2. To approve the Industri-Matematik International Corp. 1998 Stock Option
Plan;

3. To ratify the appointment of Ohrlings Coopers & Lybrand AB as the
Company's independent public accountants for the fiscal year ending April
30, 1999; and

4. To transact such other business as may properly come before the meeting.

Shareholders of record at the close of business on August 12, 1998, are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof.

By Order of the Board of Directors,

Marvin S. Robinson,
SECRETARY

August 28, 1998

IMPORTANT: PLEASE COMPLETE, DATE, SIGN, AND PROMPTLY MAIL THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO
SO EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
<PAGE>
[LOGO]

INDUSTRI-MATEMATIK INTERNATIONAL CORP.
901 MARKET STREET
WILMINGTON, DE 19801

------------------------

PROXY STATEMENT

---------------------

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Industri-Matematik International Corp.
("Company") for the Annual Meeting of Shareholders of the Company to be held on
October 9, 1998, at 2:00 p.m., local time, at the Grand Hyatt New York, Park
Avenue at Grand Central Station, New York, New York ("Annual Meeting"). The
Company's Annual Report for the fiscal year ended April 30, 1998, a Notice of
1998 Annual Meeting, and a Proxy accompany this Proxy Statement. Any proxy given
pursuant to this solicitation may be revoked by the person giving it at any time
before it is exercised by filing with the Secretary of the Company an instrument
revoking it, by presenting at the Annual Meeting a duly executed proxy bearing a
later date, or by attending the Annual Meeting and voting in person.

Only holders of Common Stock on August 12, 1998, the record date for the
Annual Meeting, are entitled to vote at the Annual Meeting. On that date, the
Company had outstanding 33,087,431 shares of Common Stock, all of which are
entitled to vote on all matters to be acted upon at the Annual Meeting. Each
holder of Common Stock is entitled to one vote for each share of Common Stock
held by him or her.

The date of this Proxy Statement is August 28, 1998, which is the
approximate date on which the Company's Annual Report, this Proxy Statement, the
Notice of 1998 Annual Meeting, and Proxy are being sent to shareholders.

ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)

The Company has a five member Board of Directors. At the 1998 Annual Meeting
all five directors are to be elected to terms expiring at the 1999 Annual
Meeting or until their successors are duly elected and qualified.

The Board of Directors of the Company has nominated each of the current
directors, Stig G. Durlow, Jeffrey A. Harris, William H. Janeway, Martin
Leimdorfer, and Geoffrey W. Squire, to be re-elected at the Annual Meeting. The
proxy holders intend to vote each proxy received by them for the election of the
named nominees unless otherwise instructed on the proxy card. The Company is not
aware of any circumstances which will cause any nominee to be unable or to
decline to serve as a director. In the event that a nominee for director becomes
unavailable, becomes unable to serve, or declines to serve, it is intended that
votes pursuant to the proxies will be cast for such substitute nominee as may be
nominated by the Board of Directors.

If a quorum is present or represented at the Annual Meeting, the affirmative
vote of the holders of a plurality of the shares of Common Stock present or
represented at the Annual Meeting is required to elect each director, provided
that abstentions and shares held by brokers that are present or represented but
not voted because the brokers were prohibited from exercising discretionary
authority, i.e., "broker non-

1
<PAGE>
votes," will be counted as present for purposes of determining the quorum but
will have no effect on the vote.

The following table sets forth the names and ages of the current directors,
each of whom is also a nominee for director, and the year during which each
individual began serving as a director of the Company.

<TABLE>
<CAPTION>
SERVED AS DIRECTOR
AGE OF THE COMPANY FROM
--- -------------------
<S> <C> <C>
Stig G. Durlow........................................................................... 48 1996
Jeffrey A. Harris........................................................................ 42 1995
William H. Janeway....................................................................... 55 1995
Martin Leimdorfer........................................................................ 62 1995
Geoffrey W. Squire....................................................................... 51 1996
</TABLE>

Set forth below are biographical summaries of the directors, including
descriptions of their principal occupations. (References to IMAB are to
Industri-Matematik AB, a Swedish corporation formed in 1967 which is a
predecessor to, and now a subsidiary of, the Company.)

Stig G. Durlow joined IMAB as Vice President, Nordic Operations in 1994 and
in February 1995, was elected President and Chief Executive Officer of IMAB, and
on formation of the Company on May 1, 1995, of the Company. Mr. Durlow has
served as a director of the Company and as Chairman of the Board since May 1996.
Prior to joining the Company, Mr. Durlow held various sales and marketing
positions at IBM. In 1991 he became the Director of Systems Strategies for IBM
Europe in Paris and thereafter he was responsible for IBM's Industrial Sector in
the Nordic countries as well as for IBM's Public Sector in Sweden. Mr. Durlow is
a member of the Compensation Committee.

Jeffrey A. Harris has served as a director of IMAB since 1991 and of the
Company since its formation in 1995. Mr. Harris has been a Managing Director of
E.M. Warburg, Pincus & Co., LLC ("E.M. Warburg") since 1988, where he has been
employed since 1983. Mr. Harris is a director of Comcast UK Cable Partners
Limited, Knoll, Inc., ECsoft Group plc, and several privately held companies.
Mr. Harris is a member of the Audit Committee and the Compensation Committee.

William H. Janeway has served as a director of IMAB since 1991 and of the
Company since its formation in May 1995. Mr. Janeway has been a Managing
Director of E.M. Warburg since 1988 and is head of its High Technology
Investment Group. Mr. Janeway is a director of BEA Systems, Inc., Indus
International, Inc., Vanstar Corporation, VERITAS Software Corporation, and
several privately held companies.

Martin Leimdorfer founded IMAB in 1967 and was its President and Chief
Executive Officer from 1967 to 1995. Dr. Leimdorfer has been a director of IMAB
since its formation and of the Company since its formation in May 1995. Dr.
Leimdorfer is a member of the Royal Swedish Academy of Engineering Sciences and
serves on the boards of the Swedish Trade Council and the Swedish Institute for
Industrial and Economics Research. Dr. Leimdorfer is a member of the Audit
Committee and the Compensation Committee.

Geoffrey W. Squire has served as a director of IMAB since 1994 and of the
Company since May 1996. Mr. Squire is a director and the co-Chairman of the
Board and the Executive Vice President for Worldwide Operations of VERITAS
Software Corporation, a storage management software company. Mr. Squire served
at various positions at Oracle Corporation from 1984, eventually being appointed
in 1992 to Oracle's five-person Executive Committee with responsibility as Chief
Executive, International Operations. Mr. Squire joined OpenVision Technologies,
Inc. in 1994 and was its Chief Executive Officer from July, 1995, through April,
1997, when it merged with VERITAS Software Corporation. Mr. Squire is a member
of the Audit Committee.

2
<PAGE>
There is no family relationship between any director or executive officer of
the Company. During the 1998 fiscal year, the Board of Directors held a total of
seven meetings, and all directors attended all of the meetings.

COMPENSATION OF DIRECTORS

Non-employee directors are paid $10,000 per year plus $1,000 for each board
meeting they attend. The Company does not pay additional amounts for committee
participation. All directors are reimbursed for their reasonable out-of-pocket
expenses incurred in attending the meetings of the Board of Directors and
committees thereof. Non-employee directors are eligible to receive options under
the Company's Stock Option Plan.

COMMITTEES

The Audit Committee consists of Messrs. Harris and Squire and Dr.
Leimdorfer. The Audit Committee, among other things, reviews the internally
prepared quarterly and annual financial statements, makes recommendations to the
Board of Directors regarding the selection of independent public accountants,
and reviews the result and scope of the audit and other services provided by the
Company's independent public accountants. The Compensation Committee, which
consists of Messrs. Durlow and Harris and Dr. Leimdorfer, administers the
Company's Stock Option Plan and Restricted Stock Program and makes
recommendations concerning salaries and incentive compensation for executive
officers of the Company. The Audit Committee and Compensation Committee each met
on an informal basis at various times during the last fiscal year.

The Company does not have a Nominating Committee, and nominations for
directors are made by the entire Board of Directors.

COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION

During the last fiscal year, Mr. Durlow, the President, Chairman, and Chief
Executive Officer of the Company, was a member of the Compensation Committee.
Mr. Durlow took no part in any recommendation made by the Compensation Committee
to the Board of Directors concerning himself. During the last fiscal year, Mr.
Harris, a former Secretary of the Company, and Dr. Leimdorfer, a former
President of the Company, were also members of the Compensation Committee.

3
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table contains information regarding the ownership of the
Common Stock of the Company as of August 17, 1998, by each director of the
Company, each of the current executive officers named in the Summary
Compensation Table on page 6, and all current directors and executive officers
of the Company as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNED (1) OF CLASS
- ---------------------------------------------------------------------------------------------- ----------------- --------
<S> <C> <C>
Stig G. Durlow................................................................................ 565,000(2) 1.7
John P. Geraci, Jr............................................................................ 70,000 *
Jeffrey A. Harris............................................................................. 12,287,502(3) 37.1
William H. Janeway............................................................................ 12,295,252(3) 37.2
Carl Joelsson................................................................................. 86,000(2) *
Martin Leimdorfer............................................................................. 3,067,017 9.3
Mats Lillienberg.............................................................................. 190,000(2) *
Lars-Goran Peterson........................................................................... 232,000(2) *
Geoffrey W. Squire............................................................................ 30,000(4) *
All executive officers and directors as a group (11 persons).................................. 16,600,016(3)(4) 50.1
</TABLE>

- ------------

* Less than 1%.

(1) Beneficial ownership is based on 33,087,431 outstanding shares of Common
Stock as of August 17, 1998. In computing the number of shares beneficially
owned and the percentage beneficially owned by a person and by all executive
officers and directors as a group, shares of Common Stock which may be
acquired presently or within the next 60 days by exercise of options,
conversion, or otherwise are included.

(2) Represents shares purchased pursuant to the Restricted Stock Program (see
page 9).

(3) Includes 12,282,752 shares owned of record by Warburg Pincus Investors, LP
("Warburg") which are included because of Mr. Janeway's and Mr. Harris's
affiliation with Warburg (see footnote 1 to the chart which follows).
Messrs. Janeway and Harris disclaim beneficial ownership of these shares,
except to the extent of their respective pecuniary interests therein.

(4) Includes 30,000 shares subject to options exercisable currently or within
the next 60 days.

Except for Martin Leimdorfer, whose mailing address is P.O.B. 71,
Waterville, NH 03215, the Company knows of no beneficial owner of more than 5%
of its outstanding Common Stock as of August 17, 1998, except as follows:

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF CLASS
- -------------------------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
Warburg Pincus Investors, LP (1)................................................ 12,282,752 37.1
466 Lexington Avenue, 10th Floor
New York, NY 10017

FMR Corp. (2)................................................................... 4,923,900 14.9
82 Devonshire Street
Boston, MA 02109
</TABLE>

- ------------------------

(1)The sole General Partner of Warburg is Warburg, Pincus & Co. ("WP"), a
New York general partnership. E. M. Warburg, Pincus & Co. LLC ("EMWP &
Co."), a New York limited liability company, manages Warburg. The members
of EMWP & Co. are substantially the same as the

4
<PAGE>
partners of WP. Lionel I. Pincus is the managing partner of WP and the
managing member of EMWP & Co. and may be deemed to control both WP and
EMWP & Co. WP has a 20% interest in the profits of Warburg. Mr. Janeway
and Mr. Harris, directors of the Company, are Managing Directors of EMWP
& Co. and General Partners of WP. As such, Mr. Janeway and Mr. Harris may
be deemed to have an indirect pecuniary interest (within the meaning of
Rule 16a-1 under the Securities Exchange Act of 1934, as amended) in an
indeterminate portion of the shares beneficially owned by Warburg and WP.

(2)Based upon the amended Schedule 13D filed August 18, 1998, with the
Securities and Exchange Commission, FMR Corp. is a holding company one of
whose principal assets is the capital stock of a wholly-owned subsidiary,
Fidelity Management & Research Company, an investment advisor registered
under Section 203 of the Investment Advisors Act of 1940. An amended
Schedule 13D was also filed on August 18, 1998, with respect to these
shares by Fidelity International Limited, located at Pembroke Hall, 42
Crow Lane, Hamilton, Bermuda, an investment advisor.

EXECUTIVE OFFICERS

In addition to Mr. Durlow, the Executive Officers of the Company include
Per-Olof Ekholtz, John P. Geraci, Jr., Carl Joelsson, Mats Lillienberg,
Lars-Goran Peterson, and Marvin S. Robinson.

Per-Olof Ekholtz, age 50, became an Executive Officer of the Company in
June, 1997, and he is currently Vice President-Product Marketing. Mr. Ekholtz
joined IMAB in its sales and marketing department in 1992.

John P. Geraci, Jr., age 46, joined the Company in March, 1998. Prior to
joining the Company, Mr. Geraci was a partner at The Complex Sale, where he
provided sales consulting and training from 1995 to 1998, from 1993 to 1995 he
was the Chief Operating Officer at Blessing/White Inc., a human resource
training Company, and prior to that Mr. Geraci held various management positions
at Management Science America, Inc., an applications software company, for ten
years. Mr. Geraci is currently the Company's Senior Vice President--Worldwide
Sales and Marketing and President--Americas.

Carl Joelsson, age 54, joined IMAB in 1988 as President of
Industri-Matematik Projektledning AB, a subsidiary of IMAB and an indirect
subsidiary of the Company, which provides implementation services and support
for the Company's customers. Mr. Joelsson was also the project leader for
developing System ESS and installing the system at Ahlsell AB. Mr. Joelsson is
currently Senior Vice President-Worldwide Service and Support.

Mats Lillienberg, age 37, joined IMAB in 1984 as a System Analyst
responsible for development of enhancements to System ESS products and is
currently Senior Vice President-Product Development.

Lars-Goran Peterson, age 53, joined IMAB in 1992 as a Business Unit Manager
and became its Chief Financial Officer in January, 1994. From 1982 to 1992, Mr.
Peterson was the Chief Financial Officer of AB Calvert & Co., a wholesale
distributor of tube and steel. Mr. Peterson is currently Senior Vice
President-Finance and Chief Financial Officer of the Company.

Marvin S. Robinson, age 65, became the Secretary of the Company in October
1997. He has been a practicing attorney for more than the past five years and is
a member of Tannenbaum Dubin & Robinson, LLP, which has been counsel to the
Company since its inception. Mr. Robinson also has been a director, Vice
President--General Counsel and Secretary of Garan, Incorporated, an American
Stock Exchange listed apparel manufacturer which is not engaged in business with
the Company, for more than the past five years.

It is anticipated that all executive officers will be re-elected after the
Annual Meeting.

5
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth, for the fiscal years ended April 30, 1998,
1997, and 1996, the compensation paid to or earned by the Company's Chief
Executive Officer, the Company's four other most highly compensated executive
officers whose salary and bonus on an annual basis exceeded $100,000 for
services rendered to the Company during the fiscal year ended April 30, 1998,
and one former executive officer who would have been included in the table as
one of the Company's most highly compensated executive officers had he been
serving in such capacity on April 30, 1998:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ----------------------
COMPENSATION(1) RESTRICTED SECURITIES ALL
--------------------- STOCK UNDERLYING OTHER
NAME AND FISCAL SALARY BONUS PURCHASES OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (#)(2)(3) (#)(2) ($)
- ------------------------- ---- -------- ----------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Stig G. Durlow 1998 275,021 130,701(4) 100,000 70,135 (5)(6)
Chairman, President, 1997 225,000 183,284(4) 50,912 (5)(6)
and Chief Executive 1996 187,579 86,214(4) 600,000 49,027 (5)(6)
Officer

John P. Geraci, Jr. 1998 30,691(7) 275,000
Senior Vice President-
Worldwide Sales
and Marketing and
President-Americas

Carl Joelsson 1998 112,032 46,972(4) 50,000 16,128 (5)(6)(8)
Senior Vice President- 1997 109,000 29,306(4) 18,114 (5)(6)(8)
Worldwide Service and 1996 91,400 21,565(4) 60,000 18,114 (5)(6)(8)
Support

Mats Lillienberg 1998 92,750 23,402(4) 50,000 6,314 (5)(6)(8)
Senior Vice President- 1997 95,800 26,444(4) 7,117 (5)(6)(8)
Product Development 1996 78,300 180,000 7,214 (5)(6)(8)

Lars-Goran Peterson 1998 113,827 28,621(4) 100,000 (6)(8)
Senior Vice President- 1997 113,200 52,886(4) (6)(8)
Finance and Chief 1996 101,353 192,000 (6)(8)
Financial Officer

David J. Simbari (9) 1998 195,956 376,791 50,000 6,293 (11)
Senior Vice President- 1997 200,000 211,449 6,771 (11)
Worldwide Sales 1996 200,000 203,652 450,000 (10) 4,213 (11)
and Marketing
</TABLE>

- ---------------
(1) Amounts paid in foreign currency have been converted into U.S. dollars with
respect to salaries at the average exchange rate in effect during each
fiscal quarter, and with respect to bonuses and pension contributions at the
average exchange rate in effect during each fiscal year.

(2) Adjusted to give effect to the three-for-one stock split effective July
1996.

(3) Represents shares of Common Stock purchased under the Company's Restricted
Stock Program for which the named executives incurred indebtedness to the
Company (see page 9). As of the end of the last fiscal year, the number and
value (calculated on the basis of the market price less the consideration)
of such shares of Common Stock held by the named executive officers was: Mr.
Durlow, 565,000 shares, $10,158,750; Mr. Peterson, 232,000 shares,
$3,460,500; Mr. Joelsson, 86,000 shares, $1,122,750; and Mr. Lillienberg,
190,000 shares, $3,228,750.

(4) Includes amounts earned with respect to the specified fiscal year but not
paid until the next fiscal year.

(5) Represents a private supplementary pension contribution.

(6) See page 8, "Employment Agreements", for a summary of the terms of the
various employment agreements.

(7) Mr. Geraci joined the Company on March 16, 1998, at an annual salary of
$240,000.

(8) Excludes pension contributions made on behalf of these executive officers
pursuant to a plan administered by a Swedish national organization. See page
10, "Employee Benefit Plans".

(9) Mr. Simbari's employment with the Company terminated on March 6, 1998, and
all of his unvested options lapsed.

6
<PAGE>
(10) A total of 600,000 options were granted to Mr. Simbari on May 1, 1995, some
of which were conditioned on the Company achieving certain fiscal sales
targets. 75,000 of such options lapsed prior to vesting on April 30, 1996,
and 75,000 of such options lapsed prior to vesting on April 30, 1997, when
sales targets were not met.

(11) Represents matching contributions made by the Company pursuant to its
401(k) plan.

STOCK OPTION GRANTS IN FISCAL 1998

The following table sets forth information regarding options to purchase
shares of the Company's Common Stock granted to the Company's executive officers
during fiscal 1998 other than pursuant to the Company's Employee Stock Purchase
Plan (see page 9). The Company has no outstanding stock appreciation rights. In
accordance with the rules of the Securities and Exchange Commission, the table
shows the hypothetical "gains" or "option spreads" that would exist for the
respective options based on assumed rates of annual stock price appreciation of
5% and 10% from the date the options were granted over the full option term.

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE
SECURITIES TOTAL OPTIONS EXERCISE AT ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS GRANTED TO PRICE EXPIRATION STOCK PRICE APPRECIATION
NAME GRANTED EMPLOYEES (%) PER SHARE ($) DATE FOR OPTION TERM (1)($)
- -------------- ------------------ --------------- ------------- ----------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
FIVE PERCENT TEN PERCENT
---------------- ----------------
John P.
Geraci, Jr. 258,750(2) 44.8 24.75 03/04/08 4,026,150 10,218,038
John P.
Geraci, Jr. 16,250(2) 2.8 31.125 03/15/08 318,094 806,081
David J.
Simbari 50,000(3) 8.6 15.375 07/20/07 483,250 1,225,250
</TABLE>

- ------------

(1) Potential realizable value is based on the assumption that the price of the
Company's Common Stock appreciates at the rates shown (compounded annually)
from the date of grant to the expiration date. These numbers are presented
in accordance with the requirements of the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
performance.

(2) All options would have become exercisable in 20% annual increments
commencing March 16, 1999. However, on May 18, 1998, all of Mr. Geraci's
options were cancelled and 275,000 new options were granted to him at an
exercise price of $14.875 per share, representing the market value of the
stock on that date, which options become exercisable in 20% annual
increments commencing March 16, 1999, and expire on May 17, 2008.

(3) Options would have become exercisable in 20% annual increments commencing
July 21, 1998. However, Mr. Simbari's employment with the Company terminated
on March 6, 1998, and all of his unvested options lapsed.

RESTRICTED STOCK PROGRAM PURCHASES IN FISCAL 1998

The following table sets forth information regarding purchases of the
Company's Common Stock by the named executive officers pursuant to the Company's
Restricted Stock Program (see page 9) during fiscal 1998.

<TABLE>
<CAPTION>
DATE OF NUMBER OF SHARES PURCHASE PRICE
NAME PURCHASE PURCHASED ($)
- ---------------------------------------------------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
Stig G. Durlow 08/26/97 100,000 14.375
Lars-Goran Peterson 08/26/97 100,000 14.375
Carl Joelsson 08/26/97 50,000 14.375
Mats Lillienberg 08/26/97 50,000 14.375
</TABLE>

7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES VALUE UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
ACQUIRED ON REALIZED AT FISCAL YEAR END (#) FISCAL YEAR END ($)(1)
NAME EXERCISE (#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------- ------------- -------------- -------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
David J. Simbari........... 351,000 7,224,236 0 0 N/A N/A
John P. Geraci, Jr. ....... N/A N/A 0 275,000 N/A N/A
</TABLE>

- ---------------

(1) Market value of the underlying securities at exercise date or year-end, as
the case may be, minus the exercise price. No in-the-money options were held
by any executive officer at fiscal year-end.

During the last fiscal year, a total of 259,000 shares which had been
purchased pursuant to the Restricted Stock Program were sold by executive
officers named in the Summary Compensation Table on page 6. The number of shares
sold and the gain (sales price less purchase price) for each individual are as
follows: Mr. Durlow, 135,000 shares sold, $2,683,031 gain; Mr. Joelsson, 24,000
shares sold, $303,163 gain; Mr. Lillienberg, 40,000 shares sold, $763,913 gain;
and Mr. Peterson, 60,000 shares sold, $1,122,662 gain.

EMPLOYMENT AGREEMENTS

The Company is party to an employment agreement with Mr. Durlow, amended and
restated as of May 1, 1996, which provides for an annual salary and bonus based
upon the Company's revenues and profitability. The agreement also includes
change of control provisions and provides for reimbursement for housing expenses
while Mr. Durlow is resident in the United States. The Company also makes a
supplementary pension contribution for Mr. Durlow. The Company is party to an
Employment Agreement dated March 16, 1998, with Mr. Geraci which expires on
April 30, 2000. The agreement provides for an annual salary and a bonus based
upon the revenues and profitability of the Company. The Company is party to
employment agreements with its Swedish based executive officers named in the
Summary Compensation Table on page 6 which provide for an annual salary and
bonus and include other provisions that are customary in the Swedish labor
market. The agreements with Messrs. Joelsson and Lillienberg also provide for
supplementary pension contributions. Each of the executive officers referred to
above also is entitled to an automobile allowance.

CERTAIN TRANSACTIONS

During the last fiscal year, in connection with the Company's secondary
public offering, 4,030,625 shares owned by Warburg, 35,000 shares owned by Mr.
Durlow, 15,000 shares owned by Mr. Peterson, 15,000 shares owned by Mr. Simbari,
and 10,000 shares owned by Mr. Lillienberg were registered and sold to the
public. The selling shareholders received $19.075 per share (the offering price
net of the underwriters' discount) for their shares.

With respect to the last fiscal year, the Company and its subsidiaries paid
a total of $546,927 in legal fees to the law firm of Tannenbaum Dubin &
Robinson, LLP, of which Mr. Robinson is a member.

STOCK OPTION PLAN

In May 1995, the Company adopted the Industri-Matematik International Corp.
Stock Option Plan ("Stock Option Plan"), pursuant to which 3,000,000 shares of
Common Stock (after adjustment for the three-for-one stock split effective July
1996) were reserved for issuance upon exercise of options granted to key
employees, members of the Company's Board of Directors, consultants, and other
advisors of the Company. The Stock Option Plan provides for grants of incentive
stock options to key employees (including officers and employee directors) and
non-statutory stock options for members of the Board of Directors, consultants,
and other advisors of the Company who are not employees of the Company. The
Stock Option Plan is administered by the Compensation Committee which determines
recipients (in

8
<PAGE>
certain instances based upon the recommendation of the Chief Executive Officer)
and types of awards to be granted, including the exercise price, number of
shares subject to the award, vesting, and other conditions.

During the fiscal year ended April 30, 1998, options to purchase a total of
577,500 shares were granted at an average exercise price of $20.74 per share,
and as of April 30, 1998, options to purchase 1,706,519 shares of Common Stock
remained available for future grant. The Stock Option Plan will terminate April
30, 2005, unless terminated sooner by the Board of Directors.

RESTRICTED STOCK PROGRAM

In May 1995, the Company instituted a restricted stock program ("Restricted
Stock Program") pursuant to which shares of the Company's Common Stock may be
purchased by certain key employees of the Company resident in Sweden in exchange
for non-recourse promissory notes. The shares are issued through a wholly owned
subsidiary of the Company, Software Finance Corporation ("SFC"). Principal on
the promissory notes is due either nine or ten years after issuance with
interest being due and payable annually.

Under the terms of the Restricted Stock Program, SFC has an option to
repurchase the shares issued to each employee so long as SFC pays an annual
option price. The exercise price to be paid by SFC upon exercise of a purchase
option is fair market value, provided that if the option to purchase is
exercised prior to the end of a stated period, the exercise price is the initial
purchase price for a percentage of the shares after the first anniversary of the
option agreement, decreasing by 20% each subsequent year, until the exercise
price is fair market value. The annual option price is substantially equal to
the interest due on the non-recourse promissory note.

SFC has the right and obligation to apply against the payment of any
principal due on the promissory note any amounts payable by SFC to the recipient
of the shares as the exercise price under the Option Agreement. The Company has
the ability to prevent the recipients from selling the purchased securities. The
Company has not recognized any compensation expense in respect of the restricted
stock in its statements of operations since the purchase price of the restricted
stock did not differ from the estimated fair market value of the Common Stock on
the date of issuance. The restricted stock shares issued under this program and
any dividends paid are subject to a pledge and security interest held by SFC.

During fiscal 1998, a total of 325,000 shares of Common Stock were purchased
pursuant to the Restricted Stock Program at an average price of $14.375 per
share.

EMPLOYEE STOCK PURCHASE PLAN

In February, 1997, the Board of Directors adopted the Industri-Matematik
International Corp. 1997 Employee Stock Purchase Plan ("ESPP") and reserved
600,000 shares of the Company's Common Stock for issuance thereunder. The ESPP
was approved by the Company's shareholders at the 1997 Annual Meeting. The
purpose of the ESPP is to promote the success and enhance the value of the
Company by providing eligible employees of the Company and its participating
subsidiaries with the opportunity to purchase shares of Common Stock through
payroll deductions at a discount from market value. The ESPP is administered by
a Plan Administrator appointed by the Board of Directors, currently Lars-Goran
Peterson, the Company's Senior Vice President-Finance and Chief Financial
Officer.

Employees contribute to the ESPP through payroll deductions. On the last day
of each accrual period, each participating employee's payroll deductions are
used to purchase shares of Common Stock for the employee. The price of the
shares purchased will be 85% of the lower of (i) the market value of the Common
Stock on the first business day of the purchase period or (ii) the market value
of the Common Stock on the last business day of the accrual period. Each
employee may purchase up to 500 shares of Common Stock in each accrual period,
and no employee may invest more than $21,250 in Common Stock through the ESPP in
any calendar year. During the last fiscal year, a total of 263,685 shares were
purchased pursuant to the ESPP at an average price of $5.65 per share.

9
<PAGE>
EMPLOYEE BENEFIT PLANS

The Company provides retirement benefits for substantially all employees in
the United States and in foreign locations. In the United States, the United
Kingdom, and The Netherlands the Company sponsors defined contribution plans.
During the last fiscal year, the Company's French subsidiary established a
defined benefit plan. The Company's Swedish subsidiary, IMAB, has a supplemental
defined contribution plan for certain key management. IMAB also participates in
several pension plans (non-contributory for employees), which cover
substantially all employees of its Swedish operations. The plans are
administered by a national organization, Pensionsregistreringsinstitutet, in
which most companies in Sweden participate. The level of benefits and actuarial
assumptions are established by the national organization and, accordingly, IMAB
may not change benefit levels or actuarial assumptions.

SECTION 16(a) BENEFICAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors, and persons who beneficially own
more than 10% of a registered class of the Company's equity securities to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Such executive officers, directors, and greater than 10% beneficial
owners are required by Securities and Exchange Commission regulations to furnish
the Company with copies of all Section 16(a) forms filed by such reporting
persons. Based solely on the Company's review of such forms furnished to the
Company and written representations from certain reporting persons, other than
Messrs. Durlow, Ekholtz, Joelsson, Lillienberg, and Peterson, who failed to
report in a timely fashion purchases pursuant to the Restricted Stock Program,
the Company believes that there was compliance with all filing requirements
applicable to the Company's executive officers, directors, and greater than 10%
beneficial owners.

Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph shall not be incorporated by reference into any such
filings, nor shall they be deemed to be soliciting material or deemed filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended.

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

The duty of the Compensation Committee is to set and administer policies for
the Company's compensation programs, which include base and incentive pay plans
for executive officers, stock option and employee stock purchase plans, and
certain other employee benefit plans. The Committee is comprised of three
members of the Board of Directors: Messrs. Durlow and Harris and Dr. Leimdorfer.

The Compensation Committee of the Board of Directors is directly responsible
for making recommendations relating to Mr. Durlow, the Company's President,
Chairman, and Chief Executive Officer, and the Company's other executive
officers although the Compensation Committee relies upon the recommendations of
Mr. Durlow with respect to the executive officers other than himself. The
Compensation Committee also is responsible for administering the Company's Stock
Option Plan and Restricted Stock Program. All action taken by the Compensation
Committee with respect to the executive officers is ratified by the Board of
Directors. Mr. Durlow abstains from any action taken by the Compensation
Committee regarding himself.

The Compensation Committee of the Board of Directors reports to the Board of
Directors with respect to compensation of executive officers as follows:

The principal policy of the Compensation Committee relating to compensation
of the executive officers is to take into account the operating results of the
Company as a whole while recognizing the particular contributions of individual
officers in attaining specific or overall financial goals and in carrying out
their assigned functions. Base salaries are determined by evaluating the
responsibilities associated with

10
<PAGE>
each officer's respective position and his skills and experience in comparison
to salaries paid in the marketplace to others with comparable skills and
experience. Bonuses, if paid, are determined on a yearly basis based upon the
performance of the Company measured against the Company's operating budget or
other performance goals and of the individual in that year unless based upon
other compensation formulas set forth in written agreements.

In particular, Mr. Durlow's performance is considered to be reflected in the
performance of the Company as a whole and he receives a fixed base salary plus
contingent compensation based upon a formula taking into account the Company's
revenues and profitability in each fiscal year as a percentage of the Company's
targeted performance. His compensation in the 1998 fiscal year was calculated in
accordance with his Amended and Restated Employment Agreement.

Compensation Committee

Stig G. Durlow
Jeffrey A. Harris
Martin Leimdorfer

COMPANY STOCK PRICE PERFORMANCE

The following graph shows a comparison of cumulative total shareholder
returns for the Company, the Nasdaq United States and Foreign Stock Index and
the Nasdaq Computer and Data Processing Stock Index for the period commencing
September 26, 1996, and ending on April 30, 1998.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Company Common Stock Nasdaq US & Foreign Stock Index Nasdaq Computer & Data Processing Stock Index
26-Sep-96 $100.00 $100.00 $100.00
30-Apr-97 $88.09 $102.35 $108.75
30-Apr-98 $211.90 $152.68 $169.64
</TABLE>

Cumulative total shareholder returns assume that $100 was invested on
September 26, 1996, at the closing sales price in the Company's Common Stock and
in each index and that all dividends were reinvested. No cash dividends have
been declared on the Company's Common Stock. Shareholder returns over the
indicated period should not be considered indicative of future shareholder
returns. The Nasdaq United States and Foreign Stock Index and the Nasdaq
Computer and Data Processing Stock Index were prepared by the Center for
Research in Security Prices.

11
<PAGE>
APPROVAL OF THE INDUSTRI-MATEMATIK INTERNATIONAL CORP.
1998 STOCK OPTION PLAN
(ITEM 2 ON PROXY CARD)

Shareholders are asked to approve the Industri-Matematik International Corp.
1998 Stock Option Plan ("Plan") for selected employees and selected non-employee
members of the Board of Directors, consultants, and other advisors of the
Company and its subsidiaries. The purpose of the Plan is to attract and retain
individuals of exceptional skill and to provide these individuals with an
increased incentive to contribute to the future success and prosperity of the
Company, thereby enhancing the value of the Common Stock for the benefit of the
shareholders. The Board of Directors has authorized 3,000,000 shares of Common
Stock for grant under the Plan, subject to adjustment to avoid dilution by stock
splits, stock dividends, and the like.

SUMMARY OF THE PLAN:

The following is a brief summary of the terms of the Plan. The summary does
not purport to be complete and is qualified in its entirety by the full text of
the Plan set forth in Exhibit A to this Proxy Statement.

Options granted under the Plan ("Options") may be "incentive stock options"
("ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended ("Code"), or options that are not ISOs ("Non-ISOs"). The purchase
price of a share of Common Stock ("Exercise Price") under an Option may not be
less than the fair market value of a share of Common Stock on the date the
Option is granted.

The Plan will be administered by the Compensation Committee of the Board of
Directors, which presently consists of Messrs. Durlow and Harris and Dr.
Leimdorfer. The Compensation Committee has full power to grant Options, construe
and interpret the Plan, establish and amend rules and regulations for its
administration, and perform all other acts relating to the Plan, including the
delegation of administrative responsibilities that it believes reasonable and
proper. Subject to the provisions of the Plan and the right of the Board of
Directors to give specific directions as to the grant of options, the
Compensation Committee determines in its discretion which of the key employees
and non-employee members of the Board, consultants, or other advisors of the
Company or any of its subsidiaries will be granted Options ("Optionee"),
provided that if authorized by the Board, the Committee may delegate to an
individual member of the Committee or an officer of the Company the discretion
to determine, in accordance with guidelines established by the Board, which
individuals will be granted options. At the direction of the Board, the
Committee has delegated such authority to Mr. Durlow, the Company's Chief
Executive Officer. Key employees will comprise those who contribute to the
management, direction, and/or success of the Company.Non-employee Optionees will
comprise members of the Board of Directors, consultants, or other advisors who,
while not employees of the Company, have an ongoing relationship with the
Company and make significant contributions to the overall success of the
Company. Subject to the provisions of the Plan, the Compensation Committee
determines in its discretion the number of shares of Common Stock subject to
option under any such Options, the dates after which Options may be exercised in
whole or in part (which shall be no later than the day preceding the tenth
anniversary of the date of grant), whether Options shall be ISOs or Non-ISOs,
and other terms and conditions of the Options. No ISO may be granted to any
Optionee who is not an employee of the Company or any of its subsidiaries on the
date of grant, and to the extent the fair market value at the date of grant of
Common Stock subject to an Option which is exercisable for the first time in any
calendar year exceeds $100,000, such excess portion of the Option may not be
treated as an ISO.

The Compensation Committee, in its sole discretion, may at any time, with
the consent of the Optionee, cancel any Option and issue to the Optionee a new
Option for an equivalent or lesser number of shares of Common Stock and at a
lower Exercise Price.

12
<PAGE>
Subject to the provisions of the Plan, an Option or portion thereof may be
exercised by written notice to the Company accompanied by full payment of the
Exercise Price in cash or cash equivalents, through the delivery of shares of
Common Stock with an aggregate fair market value on the date of exercise equal
to the Exercise Price, or by any combination of the above methods of payment,
together with payment or arrangement for payment of any Federal income tax
required to be withheld by the Company, if any. The Committee also may permit an
Optionee to pay the Exercise Price by authorizing a third party to sell the
shares of Common Stock acquired upon the exercise on condition that such third
party remit to the Company a sufficient portion of the sale proceeds to pay the
Exercise Price and any required tax withholding. The Compensation Committee will
determine acceptable methods for tendering shares of Common Stock as payment
upon exercise of an Option and will impose such limitations and prohibitions on
the use of shares of Common Stock to exercise an Option as it deems appropriate.

At or after the grant of an Option, the Compensation Committee also may
grant stock appreciation rights as an alternate means for an Optionee to
exercise an Option or a designated portion thereof. A stock appreciation right
with respect to an Option or portion thereof is a right to receive an amount,
payable in cash and/or shares of Common Stock in the discretion of the
Compensation Committee, having a market value on the date of exercise equal to
the product of (a) the excess of the fair market value of a share of Common
Stock on the date of exercise over the Exercise Price of such share of Common
Stock and (b) the number of shares of Common Stock that the Optionee would have
received had such Option or portion thereof been exercised through the purchase
of shares of Common Stock at such Exercise Price.

At or after the grant of an Option, the Compensation Committee in its
discretion may provide an Optionee with an alternate means of exercising an
Option, or a designated portion thereof, by granting the Optionee limited
rights. A limited right with respect to an Option or portion thereof is the
right to receive an amount in cash equal in value to the excess over the
Exercise Price specified in the related Option, of the higher of (a) the highest
price per share of Common Stock paid or offered in any transaction related to a
Change of Control (as defined below) of the Company or (b) the highest fair
market value per share of Common Stock at any time during the 60-day period
preceding a Change of Control, such excess to be multiplied by the number of
shares of Common Stock in respect of which the limited right is exercised.
Generally, limited rights only may be exercised within the 30-day period
following a Change of Control. However, limited rights are not exercisable by
any Optionee who is subject to Section 16(b) of the Securities Exchange Act of
1934, as amended ("Exchange Act") during the first 6 months after the grant of
the limited right. In the event a Change of Control occurs within 6 months of
the date of grant of a limited right, the 30-day exercise period for an Optionee
who is subject to Section 16(b) of the Exchange Act shall be deemed to commence
on the first day following such 6 month period.

Under the Plan, a Change of Control is deemed to take place under four
different circumstances: (a) the individuals who are directors on August 19,
1998, or successor directors who have been so designated by a majority of such
directors ("Continuing Directors"), no longer constitute at least a majority of
the Company's Board of Directors, (b) any person or group of persons (as defined
in Rule 13d-5 under the Exchange Act), together with its affiliates, through
transactions not approved by the Continuing Directors who constitute a majority
of the Board of Directors becomes the beneficial owner, directly or indirectly,
of at least 40% of the Company's then outstanding Common Stock (including Common
Stock owned prior to August 19, 1998) (c) the approval by the Company's
shareholders of the merger or consolidation of the Company with any other
corporation, the sale of substantially all of the assets of the Company, or the
liquidation or dissolution of the Company unless, in the case of a merger or
consolidation, the Continuing Directors in office immediately prior to such
merger or consolidation will constitute at least a majority of the directors of
the surviving corporation of such merger or consolidation and any parent (as
such term is defined in Rule 12b-2 under the Exchange Act) of such corporation,
and such surviving corporation (and such parent, if any) shall have at least
five directors, or (d) at least a majority, all of whom shall be Continuing
Directors, of the Directors in office immediately prior to any other action
proposed to be taken by the Company's shareholders or by the Company's Board of
Directors

13
<PAGE>
determines that such proposed action, if taken, would constitute a Change of
Control of the Company and such proposed action is thereafter taken.

Each Option is non-transferable during the lifetime of the Optionee. If an
Optionee's employment with the Company or a subsidiary is terminated by the
Company for cause or the service of the Optionee as a member of the Board of
Directors, consultant, or other advisor is terminated for conduct constituting
cause, each unexercised Option will expire on the date of cessation of
employment or service as a director, consultant, or other advisor. If the
Optionee's employment with the Company or a subsidiary or the Optionee's service
as a director, consultant, or other advisor terminates for any reason other than
for cause, each Option remains exercisable, to the extent it was exercisable at
the time of cessation of employment or service as a director, consultant, or
other advisor, until the earliest of: (a) the termination date under the Plan,
(b) the death of the Optionee, or such later date not more than six months after
the death of the Optionee as the Compensation Committee, in its discretion, may
provide, (c) the date two months after cessation of the Optionee's employment or
service as a director, consultant, or other advisor by reason of retirement or
if the Optionee's employment or service as a director, consultant, or other
advisor is terminated by the Company other than for cause, (d) the date six
months after cessation of the Optionee's employment or service as a director,
consultant, or other advisor by reason of disability, and (e) the date one month
after the cessation by the Optionee of his employment or service as a director,
consultant, or other advisor other than by reason of retirement, disability, or
death. If the Optionee dies while employed by the Company or any of its
subsidiaries or while serving as a member of the Board of Directors, consultant,
or other advisor each Option may be exercised by the Optionee's heirs or legal
representatives until six months after the Optionee's death or, if earlier, the
termination date of the Option.

The Board of Directors may suspend, amend, or terminate the Plan in whole or
in part. No amendment may be made without approval of the shareholders, however,
which would: (a) materially modify the eligibility requirements for receiving
Options, (b) materially increase the total number of shares of Common Stock
which may be issued pursuant to Options, except as permitted under the Plan, or
(c) materially increase in any other way the benefits accruing to Optionees.
Furthermore, no amendment, suspension, or termination of the Plan, without the
consent of the Optionee, may impair any of the rights or obligations under any
Option previously granted to an Optionee under the Plan.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES:

ISOS. Under present law, neither the grant nor the exercise of an ISO will
result in taxable income to the Optionee, and the Company will not be entitled
to receive a Federal income tax deduction at the date of grant or exercise.
However, the difference between the Option exercise price and the fair market
value of the shares of Common Stock at the time the Option is exercised is
generally an item of tax preference for the Optionee.

If the Optionee does not sell the shares of Common Stock acquired upon
exercise of the Option within either (a) two years after the date of the grant
of the Option or (b) one year after the date of exercise, a subsequent sale of
the shares of Common Stock at a price different than the Option Price will be
taxed as long-term capital gain or long-term capital loss, as the case may be.
If the Optionee, within either of the above periods, disposes of shares of
Common Stock acquired upon exercise of the Option, the Optionee will generally
recognize as ordinary income an amount equal to the lesser of (i) the gain
realized by the Optionee on such disposition or (ii) the difference between the
exercise price and the fair market value of the shares of Common Stock on the
date of exercise. In such event, the Company generally will be entitled to an
income tax deduction equal to the amount recognized as ordinary income by the
Optionee. Any gain in excess of such amount recognized by the Optionee as
ordinary income or any loss will be taxed as a long-term or short-term capital
gain or loss, as the case may be (subject to the holding period requirements for
long-term or short-term capital gain or loss treatment).

14
<PAGE>
NON-ISOS. Under present law, the grant of a Non-ISO under the Plan will not
cause the Optionee to realize taxable income upon such grant nor will the
Company receive a Federal income tax deduction at such time. Upon exercise of a
Non-ISO, the Optionee will generally realize ordinary income in an amount equal
to the excess of the fair market value of the shares of Common Stock received
over the exercise price of such shares of Common Stock. Upon a subsequent sale
of the shares of Common Stock, the Optionee will recognize short-term or
long-term gain or loss, as the case may, be depending upon the Optionee's
holding period for the stock on the difference between the fair market value of
the shares of Common Stock on the date of exercise and the amount realized on
the subsequent sale. The Company will be allowed an income tax deduction for the
amount recognized as ordinary income by the Optionee.

STOCK APPRECIATION RIGHTS. Cash amounts received by the Optionee upon the
exercise of a stock appreciation right are taxed at ordinary income tax rates
when received. An equivalent amount may be deducted at such time by the Company.

LIMITED RIGHTS. Cash amounts received by the Optionee upon the exercise of
a limited right are taxed at ordinary income tax rates when received and are
deductible by the Company to the extent such amounts are included in an
Optionee's income. However, certain amounts received by the Optionee upon the
exercise of a limited right may be deemed "excess parachute payments" (within
the meaning of Section 28OG of the Code) and to such extent would cause the
Optionee to become liable for an additional 20% excise tax payable by the
Optionee. Amounts that are deemed excess parachute payments are not deductible
by the Company.

SHAREHOLDER APPROVAL

If a quorum is present or represented at the Annual Meeting, the affirmative
vote of the holders of a majority of the shares of Common Stock present or
represented at the Annual Meeting is required to adopt the Plan, provided that
abstentions and shares held by brokers that are present or represented but not
voted because the brokers were prohibited from exercising discretionary
authority, i.e., "broker non-votes," will be counted as present for purposes of
determining the quorum but will have no effect on the vote.

15
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(ITEM 3 ON PROXY CARD)

The Board of Directors selects the Company's independent accountants on an
annual basis for each ensuing fiscal year to serve at the discretion of the
Board of Directors. The Board of Directors, upon the recommendation of the Audit
Committee, has selected Ohrlings Coopers & Lybrand, AB, as the Company's
independent accountants for its 1999 fiscal year. Ohrlings Coopers & Lybrand, AB
has audited the financial statements of the Company since fiscal year 1994, and
the Board of Directors considers the firm to be well qualified. No
representative of Ohrlings Coopers & Lybrand, AB will be present at the Annual
Meeting.

If a quorum is present or represented at the Annual Meeting, the affirmative
vote of the holders of a majority of the shares of Common Stock present or
represented at the Annual Meeting is required to ratify the appointment of
Ohrlings Coopers & Lybrand, AB as the Company's independent auditors, provided
that abstentions and shares held by brokers that are present or represented but
not voted because the brokers were prohibited from exercising discretionary
authority, i.e., "broker non-votes," will be counted as present for purposes of
determining the quorum but will have no effect on the vote.

OTHER BUSINESS

The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated herein and in the
Notice of 1998 Annual Meeting attached hereto. If, however, other matters are
properly brought before the meeting, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters as
directed by the Board of Directors.

SHAREHOLDER PROPOSALS TO BE PRESENTED AT THE NEXT ANNUAL MEETING

Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders of the Company (i) must be received by the Company at
its offices no later than April 30, 1999, and (ii) must satisfy the conditions
established by the Securities and Exchange Commission for shareholder proposals
to be included in the Company's Proxy Statement for that meeting.

PROXY SOLICITATION

In addition to soliciting shareholders by mail, the Company will request
banks, brokerage houses, and other custodians, nominees, and fiduciaries to
forward solicitation materials to the beneficial owners of the shares of Common
Stock held of record by such persons and the Company will reimburse them for
their reasonable out-of-pocket expenses incurred in doing so. The Company may
use the services of its officers, directors, and others, including professional
proxy solicitors, to solicit proxies, personally or by telephone. The cost of
soliciting proxies will be borne by the Company.

By Order of the Board of Directors,

Marvin S. Robinson,
SECRETARY

16
<PAGE>
EXHIBIT A

INDUSTRI-MATEMATIK INTERNATIONAL CORP.
1998 STOCK OPTION PLAN

SECTION I
PURPOSE

The purpose of the Industri-Matematik International Corp. 1998 Stock Option
Plan is to provide favorable opportunities for (a) certain selected employees
and (b) certain selected non-employee members of the Board of Directors,
consultants, and other advisors of Industri-Matematik International Corp. and
its subsidiaries to purchase shares of Industri-Matematik International Corp.
Common Stock in order to attract and retain individuals of exceptional skill and
to provide an increased incentive for these individuals to contribute to the
future success and prosperity of Industri-Matematik International Corp., thereby
enhancing the value of the Common Stock for the benefit of shareholders.

SECTION II
DEFINITIONS AND CONSTRUCTION

2.1. Terms used in this Stock Option Plan shall be defined as follows:

Board shall mean the Board of Directors of IMIC.

Cause shall mean, with respect to a non-employee Optionee, (a) the breach by
the Optionee of any agreement between the Company and the Optionee, (b) willful
and gross misconduct on the part of the Optionee that is materially and
demonstrably detrimental to the Company, or (c) the commission by the Optionee
of one or more acts which constitute an indictable crime under Federal, state,
or local law, each as may be determined in good faith by written resolution
adopted by a majority of the members of the Board at a meeting duly called and
held for that purpose after reasonable notice to the Optionee and opportunity
for the Optionee and his or her counsel to be heard.

Change of Control shall mean: (a) Continuing Directors no longer constitute
at least a majority of the Board; (b) any person or group of persons (as defined
in Rule 13d-5 under the Exchange Act) through transactions not approved by the
Continuing Directors who constitute a majority of the Board, become the
beneficial owner, directly or indirectly, after the Effective Date of 40% or
more of IMIC's then outstanding Common Stock (including Common Stock owned by
such person or group of persons prior to the Effective Date); (c) the approval
by IMIC's shareholders of the merger or consolidation of IMIC with any other
corporation, the sale of substantially all of the assets of IMIC, or the
liquidation or dissolution of IMIC unless, in the case of a merger or
consolidation, the Continuing Directors in office immediately prior to such
merger or consolidation will constitute at least a majority of directors of the
surviving corporation of such merger or consolidation and any parent (as such
terms is defined in Rule 12b-2 under the Exchange Act) of such corporation, and
such surviving corporation (and such parent, if any) shall have at least five
directors; or (d) at least a majority, all of whom shall be Continuing
Directors, of the directors in office immediately prior to any other action
proposed to be taken by IMIC's shareholders or by the Board determines that such
proposed action, if taken, would constitute a change of control of IMIC and such
proposed action is thereafter taken.

Change of Control Exercise Period shall mean the period during which a
Limited Right may be exercised in accordance with Section 8.2.

Change of Control Price shall mean the higher of (i) the highest price per
share of Common Stock paid or offered in any transaction related to a Change of
Control of IMIC or (ii) the highest Fair Market Value per share of Common Stock
at any time during the 60-day period preceding a Change of Control.

A-1
<PAGE>
Code shall mean the Internal Revenue Code of 1986, as amended from time to
time.

Committee shall mean the Compensation Committee appointed by the Board to
administer the Plan which shall be composed of at least two persons.

Common Stock shall mean the Common Stock, $.01 par value, of IMIC.

Company shall mean Industri-Matematik International Corp. and its
Subsidiaries.

Continuing Director shall mean any individual who is a member of the Board
on August 19, 1998, or is designated (before such person's initial election as a
director) as a Continuing Director by a majority of the then Continuing
Directors.

Disability shall mean disability within the meaning of Section 22(e)(3) of
the Code, as determined by the Committee.

Effective Date shall mean August 19, 1998.

Exchange Act shall mean the Securities Exchange Act of 1934, as amended from
time to time.

Exercise Price shall mean the price of a share of Common Stock payable by
the Optionee on exercise of an Option.

Fair Market Value on a specified day shall mean, if the Common Stock is
publicly traded, the reported closing price on that day, or if there was no sale
of Common Stock reported on that day, then the reported closing price on the
next preceding day on which there was such a sale, but if the Common Stock is
not publicly traded, the Committee shall make a good faith determination of Fair
Market Value.

IMIC shall mean Industri-Matematik International Corp.

ISO shall mean an incentive stock option within the meaning of Section 422
of the Code.

Limited Right shall mean the right pursuant to an award granted under
Section 8.1 to surrender to IMIC all or a portion of an Option in accordance
with Section 8.2.

Non-ISO shall mean a stock option which is not an ISO.

Option shall mean a stock option granted under the Plan.

Optionee shall mean an individual who has been granted one or more Options.

Parent Corporation shall mean a parent corporation as defined in Section
424(e) of the Code.

Plan shall mean this Industri-Matematik International Corp. 1998 Stock
Option Plan.

Retirement shall mean retirement on or after age 65 or, with the advance
consent of the Committee, at an earlier age.

Securities Act shall mean the Securities Act of 1933, as amended from time
to time.

Stock Appreciation Right shall mean a right to receive cash or Common Stock
upon the exercise of an Option in accordance with Section 6.7.

Subsidiary shall mean a subsidiary corporation as defined in Section 424(f)
of the Code.

Termination Date shall mean the last day on which an Option may be
exercised, which date shall be fixed by the Committee but which shall not be
later than the day preceding the tenth anniversary of the date on which the
Option is granted.

Termination for Cause shall mean, with respect to an employee Optionee, a
termination by the Company of his employment (a) based upon the Company's
determination that (i) the Optionee has breached any agreement between the
Company and the Optionee, (ii) the Optionee has willfully acted in a manner that
is materially and demonstrably detrimental to the Company, (iii) the Optionee
has materially failed to perform the duties or carry out the responsibilities
assigned to him, or (iv) the Optionee committed one or more acts which
constitute an indictable crime under Federal, state, or local law, or (b) for
any other reason that the Company considers to be cause.

A-2
<PAGE>
2.2. When used in this Plan, unless the context clearly indicates to the
contrary, (a) the masculine gender shall include the feminine and neuter
genders, (b) the feminine gender shall include the masculine and neuter genders,
(c) the neuter gender shall include the masculine and feminine genders, (d) the
singular shall include the plural, and (e) if a defined term is intended, it
shall be capitalized.

SECTION III
ADMINISTRATION

3.1. Except as otherwise provided in the Plan, and subject to the
provisions of Section 3.2, the Committee shall administer the Plan and shall
have full power to grant Options, construe and interpret the Plan, establish and
amend rules and regulations for its administration, and perform all other acts
relating to the Plan including the delegation of administrative responsibilities
which it believes reasonable and proper.

3.2. Subject to the provisions of the Plan and/or a specific direction from
the Board, the Committee shall establish the policies and criteria pursuant to
which it shall grant Options and administer the Plan and, in its discretion,
shall determine which employees of the Company and/or members of the Board,
consultants, or other advisors shall be granted Options, the number of shares
covered by such Options, and the terms and conditions of the Options. If
authorized by the Board, the Committee may delegate to an individual member of
the Committee or an officer of the Company the discretion to determine, in
accordance with guidelines established by the Board, which employees of the
Company and/or members of the Board, consultants, or other advisors shall be
granted options, the number of shares covered by any such Options, and the terms
and conditions of the Options.

3.3. The Committee may at any time, with the consent of the Optionee, in
its sole discretion cancel any Option and issue to the Optionee a new Option for
an equivalent or lesser number of shares of Common Stock and at a lower Exercise
Price.

3.4. Any decision made, or action taken, by the Committee or the Board
arising out of or in connection with the interpretation and administration of
the Plan shall be final and conclusive.

SECTION IV
SHARES SUBJECT TO THE PLAN

4.1. The total number of shares of Common Stock available for grants of
Options under the Plan shall be 3,000,000, subject to adjustment in accordance
with Section IX. These shares may be either authorized and unissued or
reacquired shares of Common Stock. If an Option or portion thereof shall expire
or terminate for any reason without having been exercised in full, the
unpurchased shares covered by such Option shall be available for future grants
of Options. An Option or portion thereof exercised through the exercise of a
Stock Appreciation Right pursuant to Section 6.7 or related to a Limited Right
exercised pursuant to Section VIII shall be treated, for the purposes of this
Section IV, as though the Option or portion thereof had been exercised through
the purchase of Common Stock with the result that the shares of Common Stock
subject to the Option or portion thereof that was so exercised shall not be
available for future grants of Options.

SECTION V
ELIGIBILITY

5.1. Options may be granted to employees of the Company or to persons who
have been engaged to become employees of the Company. Such Optionees will
comprise, in general, employees who contribute or who are expected to contribute
to the management, direction, and overall success of the Company.

5.2. Options also may be granted to members of the Board, consultants, and
other advisors who are not employees of the Company. Such Optionees will
comprise, in general, those who, while not employees

A-3
<PAGE>
of the Company, have an ongoing relationship with the Company and make or who
are expected to make significant contributions to the overall success of the
Company.

SECTION VI
TERMS OF OPTIONS

6.1.a. All Options shall be evidenced by written agreements executed by
the Company and the Optionee. Such Options shall be subject to the applicable
provisions of the Plan and shall contain such provisions as are required by the
Plan and any other provisions the Committee may prescribe. All agreements
evidencing Options shall specify the total number of shares subject to each
grant, the Exercise Price, and the Termination Date. Those Options that comply
with the requirements for an ISO set forth in Section 422 of the Code and that
the Committee wishes to designate as an ISO shall be ISOs, and all other Options
(including any Option that would otherwise qualify as an ISO but which the
Committee designates as an Non-ISO) shall be Non-ISOs. Only Non-ISOs shall be
granted to any Optionee who is not an employee of the Company on the date the
Option is granted.

6.1.b. The written agreement referred to in Section 6.1.a also shall
provide that unless the shares of Common Stock acquired on the exercise of the
Option are then currently registered under the Securities Act, if counsel to
IMIC advises that the same is required, prior to delivery of the shares acquired
upon the exercise of the Option the Optionee shall agree to hold such shares for
investment only and not with a view to resale or distribution thereof to the
public, and such Optionee shall deliver to IMIC a letter to that effect in a
form specified by counsel to IMIC together with any additional documents
specified by counsel. In the event that issuance of shares of Common Stock on
exercise of the Option is subject to laws, rules, and/or regulations of a
jurisdiction other than the United States of America, the Optionee
simultaneously shall comply with the requirements of counsel to IMIC to satisfy
the same.

6.2. The Exercise Price for an ISO shall not be less than the Fair Market
Value of a share of Common Stock on the date the Option is granted.

6.3.a. The Committee shall determine the dates after which Options may
be exercised in whole or in part. If Options are exercisable in installments,
installments or portions thereof that are exercisable and not exercised shall
accumulate and remain exercisable. The Committee also may amend an Option to
accelerate the dates after which Options may be exercised in whole or in part.
However, no Option or portion thereof shall be exercisable after the Termination
Date.

6.3.b. Notwithstanding any contrary provisions of Section 6.3.a, upon a
Change of Control (i) each Option or portion thereof which, by its terms, is not
yet exercisable shall vest and become exercisable in full and (ii) each Option
which has a Termination Date falling within 90 days after a Change of Control
shall have its Termination Date extended until the earlier of the 90th day after
the Change of Control or the day before the 10th anniversary of the date such
Option was granted.

6.4. Notwithstanding any contrary provisions of Sections 6.2 and 6.3.a, no
ISO shall be granted to any employee who, at the time the Option is granted,
owns (directly, or within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of IMIC or of any
of its Subsidiaries or its Parent, if any, unless (a) the Exercise Price under
such Option is at least 110% of the Fair Market Value of a share of Common Stock
on the date the Option is granted and (b) the Termination Date of such Option is
a date not later than the day preceding the 5th anniversary of the date on which
the Option is granted.

6.5. An Option or portion thereof shall be exercised by delivery of a
written notice of exercise to IMIC and payment of the full price of the shares
being purchased pursuant to the Option. An Optionee may exercise an Option with
respect to less than the full number of shares for which the Option may then be
exercised, but an Optionee must exercise the Option in full shares of Common
Stock. Payment of the price of Common Stock purchased pursuant to an Option or
portion thereof, subject to the provisions of Section 6.6, shall be made as
follows:

A-4
<PAGE>
6.5.a. In United States dollars in cash or by check, bank draft, or
money order payable to the order of IMIC, by wire transfer to an account
designated by IMIC, or by such other payment method as the Committee, in its
discretion, may authorize;

6.5.b. Through the delivery of shares of Common Stock with an aggregate
Fair Market Value on the date of exercise equal to the Exercise Price; or

6.5.c. By any combination of the above methods of payment. The
Committee also may permit a participant to pay the Exercise Price by authorizing
a third party to sell shares of Common Stock acquired upon exercise of the
Option on condition that such third party remit to the Company a sufficient
portion of the sale proceeds to pay the entire Exercise Price and any tax
withholding resulting from such exercise as required by Section 6.6. The
Committee shall determine acceptable methods for tendering Common Stock as
payment upon exercise of an Option and may impose such limitations and
prohibitions on the use of Common Stock to exercise an Option as it deems
appropriate including, without limitation, any limitation or prohibition
designed to avoid certain accounting consequences which may result from the use
of Common Stock as payment upon exercise of an Option.

6.6. IMIC, in its discretion, may require an Optionee to pay to IMIC at the
time of exercise the amount that IMIC deems necessary to satisfy its obligation
to withhold Federal, state, or local income or other taxes incurred by reason of
the exercise. Upon the exercise of an Option requiring tax withholding, an
Optionee may make a written election to have shares of Common Stock withheld by
IMIC from the shares otherwise to be received. The number of shares so withheld
shall have an aggregate Fair Market Value on the date of exercise sufficient to
satisfy the applicable withholding taxes. The approval of any such election by
an Optionee shall be at the sole discretion of the Committee. Where the exercise
of an Option does not give rise to an obligation to withhold income taxes on the
date of exercise, IMIC, in its discretion, may require an Optionee to place
shares of Common Stock purchased under the Option in escrow for the benefit of
IMIC until such time as income tax withholding is required on amounts included
in the gross income of the Optionee as a result of the exercise of an Option. At
such time, IMIC in its discretion may require an Optionee to pay to IMIC the
amount that IMIC deems necessary to satisfy its obligation to withhold Federal,
state, or local income or other taxes incurred by reason of the exercise of the
Option, in which case the shares of Common Stock will be released from escrow to
the Optionee. Alternatively, subject to acceptance by the Committee, in its sole
discretion, an Optionee may make a written election to have shares of Common
Stock held in escrow released from escrow and applied toward IMIC's obligation
to withhold Federal, state, or local income or other taxes incurred by reason of
the exercise of the Option based on the Fair Market Value of the shares on the
date of the termination of the escrow arrangement. Upon application of such
shares toward IMIC's withholding obligation, any shares of Common Stock held in
escrow and, in the judgment of the Committee, not necessary to satisfy such
obligation shall be released from escrow to the Optionee.

6.7. At or after the grant of an Option, the Committee, in its discretion,
may provide an Optionee with an alternate means of exercising an Option, or a
designated portion thereof, by granting the Optionee a Stock Appreciation Right.
A Stock Appreciation Right is a right to receive, upon exercise of an Option or
any portion thereof, in the Committee's sole discretion, an amount of cash equal
to, and/or shares of Common Stock having a Fair Market Value on the date of
exercise equal to, the excess of the Fair Market Value of a share of Common
Stock on the date of exercise over the Exercise Price, multiplied by the number
of shares of Common Stock that the Optionee would have received had the Option
or portion thereof been exercised through the purchase of shares of Common Stock
at the Exercise Price, provided that (a) such Option or portion thereof has been
designated by the Committee as exercisable in this alternative manner, (b) such
Option or portion thereof is otherwise exercisable, and (c) the Fair Market
Value of a share of Common Stock on the date of exercise exceeds the Exercise
Price.

6.8. Each Option, during the Optionee's lifetime, shall be exercisable only
by the Optionee, and neither it nor any right under the Plan shall be
transferable otherwise than by Will or the laws of descent and distribution or
be subject to attachment, execution, or other similar process. In the event of
any

A-5
<PAGE>
attempt by the Optionee to alienate, assign, pledge, hypothecate, or otherwise
dispose of an Option or of any right under the Plan, except as provided for in
the Plan, or in the event of any levy or any attachment, execution, or similar
process upon the rights or interest conferred by the Plan, IMIC may terminate
the Option by notice to the Optionee and the Option shall thereupon become null
and void.

6.9.a. If a Termination for Cause of an Optionee's employment occurs,
each Option held by such Optionee together with all rights under the Plan shall
terminate on the date of termination of employment to the extent not previously
exercised.

6.9.b. If a non-employee Optionee engages in conduct which constitutes
Cause, each Option held by such Optionee together with all rights under the Plan
shall terminate on the date the Board determines that the Optionee has engaged
in such conduct constituting Cause to the extent not previously exercised.

6.10. If an Optionee's employment with the Company terminates for any
reason other than as a result of a Termination for Cause, or if a non-employee
Optionee shall cease to have an ongoing relationship with the Company as a
member of the Board, consultant, or other advisor for any reason other than for
Cause, each Option held by such Optionee shall remain exercisable, to the extent
it was exercisable at the time of termination of employment or cessation of
ongoing relationship, until the earliest of:

6.10.a. The Termination Date of such Option;

6.10.b. The death of the Optionee, or such later date not more than six
months after the death of the Optionee as provided in Section 6.11;

6.10.c. Two months after the date of termination of the Optionee's
employment or the date of cessation of ongoing relationship by reason of
Retirement;

6.10.d. Six months after the date of termination of the Optionee's
employment or the date of cessation of ongoing relationship by reason of
Disability;

6.10.e. Two months after the date of the termination by the Company of
the Optionee's employment other than as a result of a Termination for Cause or
the date of cessation of ongoing relationship other than for Cause; or

6.10.f. One month after the date of the termination by the Optionee of
the Optionee's employment or the date of cessation of ongoing relationship other
than by reason of Retirement, Disability, or death.

After such date all Options shall terminate, together with all rights under the
Plan, to the extent not previously exercised.

6.11. In the event of the death of an Optionee while employed by the
Company or in an ongoing relationship with the Company, an Option may be
exercised at any time or from time to time prior to the earlier of the
Termination Date and a date six months after the date of the Optionee's death by
the person or persons to whom the Optionee's rights under each Option shall pass
by Will or by the applicable laws of descent and distribution to the extent that
the Optionee was entitled to exercise it on the date of the Optionee's death. In
the event of the death of an Optionee no longer employed by the Company or no
longer in an on-going relationship with the Company while entitled to exercise
an Option pursuant to Section 6.10, the Committee, in its discretion, may permit
such Option to be exercised at any time or from time to time prior to the
Termination Date during a period of up to six months from the death of the
Optionee, as determined by the Committee, by the person or persons to whom the
Optionee's rights under each Option shall pass by Will or by the applicable laws
of descent and distribution to the extent that the Option was exercisable at the
time of cessation of the Optionee's employment or service as a member of the
Board, consultant, or other advisor. Any person or persons to whom an Optionee's
rights under an Option have passed by Will or by the applicable laws of descent
and distribution shall be subject to all terms and conditions of the Plan and
the Option applicable to the Optionee.

A-6
<PAGE>
6.12. Any Optionee who disposes of shares of Common Stock acquired upon the
exercise of an ISO either (a) within two years after the date of the grant of
the ISO under which the Common Stock was acquired or (b) within one year after
the transfer of such shares to the Optionee, shall notify IMIC of such
disposition and of the amount realized upon such disposition.

SECTION VII
LIMITATION ON GRANTS OF ISOS

7.1. To the extent the aggregate Fair Market Value of the Common Stock
subject to an Option which is exercisable for the first time during any one
calendar year by an employee exceeds $100,000, such excess portion of the Option
may not be treated as an ISO.

SECTION VIII
LIMITED RIGHTS

8.1.a. Limited Rights may be granted by the Committee in conjunction
with all or any portion of any Option granted under the Plan and such rights may
be granted either at or after the time of the grant of such Option.

8.1.b. Limited Rights or any applicable portion thereof granted with
respect to a given Option shall terminate and no longer be exercisable upon the
termination of the related Option. Upon the exercise of an Option, the related
Limited Right shall cease to be exercisable to the extent of the shares of
Common Stock with respect to which such Option is exercised.

8.1.c. A Limited Right related to an Option may be exercised by an
Optionee, in accordance with Section 8.2, by surrendering the applicable portion
of the related Option. Upon such exercise and surrender, the Optionee shall be
entitled to receive an amount determined in the manner prescribed in Section
8.2.

8.2. Limited Rights shall be subject to such terms and conditions not
inconsistent with the provisions of the Plan, as shall be determined from time
to time by the Committee or the Board, including the following:

8.2.a. Limited Rights can only be exercised within the Change of
Control Exercise Period, which is the 30-day period following a Change of
Control, and will become fully exercisable, if not already fully exercisable,
upon the Change of Control, provided that any Limited Right shall not
exercisable by any Optionee who is subject to Section 16(b) of the Exchange Act
during the first 6 months of the date of grant of a Limited Right. In the event
a Change of Control shall occur within 6 months of the date of grant of a
Limited Right to an Optionee who is subject to Section 16(b) of the Exchange
Act, the Change of Control Exercise Period for such Optionee shall be deemed to
commence on the first day following such 6 month period.

8.2.b. Upon the exercise of a Limited Right related to an Option, an
Optionee shall be entitled to receive an amount in cash equal in value to the
excess of the Change of Control Price over the Option Price specified in the
related Option, such excess to be multiplied by the number of shares of Common
Stock in respect of which the Limited Right shall have been exercised.

8.2.c. Limited Rights shall be transferable only at such time or times
and to the extent that the underlying Option would be transferable under Section
6.8.

SECTION IX
ADJUSTMENTS

9.1. If (a) IMIC shall at any time be involved in a transaction to which
Section 424(a) of the Code is applicable, (b) IMIC shall declare a dividend
payable in, or shall subdivide or combine, its Common Stock,

A-7
<PAGE>
or (c) any other event shall occur which in the judgment of the Committee
necessitates action by way of adjusting the terms of the outstanding Options,
the Committee may take any such action as in its judgment shall be necessary to
preserve the Optionee's rights substantially proportionate to the rights
existing prior to such event and to the extent that such action shall include an
increase or decrease in the number of shares of Common Stock subject to
outstanding Options, the number of shares available under Section IV shall be
increased or decreased, as the case may be, proportionately. The judgment of the
Committee with respect to any matter referred to in this Section IX shall be
conclusive and binding upon each Optionee.

SECTION X
AMENDMENT AND TERMINATION OF PLAN

10.1. The Board may at any time, or from time to time, suspend or terminate
the Plan in whole or in part or amend it in such respects as the Board may deem
appropriate, provided that no such amendment shall be made which would, without
approval of the shareholders of IMIC:

10.1.a. Materially modify the eligibility requirements for receiving
Options;

10.1.b. Materially increase the total number of shares of Common Stock
which may be issued pursuant to Options, except as provided in Section IX; or

10.1.c. Materially increase in any way the benefits accruing to
Optionees.

10.2. No amendment, suspension, or termination of this Plan, without the
Optionee's consent, shall alter or impair any of the rights or obligations under
any Option theretofore granted to an Optionee under the Plan.

SECTION XI
GOVERNMENT AND OTHER REGULATIONS

11.1. The obligation of IMIC to issue, or transfer and deliver, shares for
Options exercised under the Plan or to deliver cash upon exercise of a Limited
Right or with respect to a Stock Appreciation Right, shall be subject to all
applicable laws, regulations, rules, orders, and approvals which shall then be
in effect and required by governmental entities and/or any national securities
exchange on which Common Stock may be traded or listed.

SECTION XII
MISCELLANEOUS PROVISIONS

12.1. The right of the Company to terminate (whether by dismissal,
discharge, retirement, or otherwise) the Optionee's employment or service as a
member of the Board, consultant, or other advisor at any time at will or as
otherwise provided by any agreement between the Company and the Optionee is
specifically reserved. Neither the Optionee nor any person entitled to exercise
the Optionee's rights in the event of the Optionee's death shall have any of the
rights of a shareholder with respect to the shares subject to each Option except
to the extent that, and until, such shares shall have been issued upon the
exercise of each Option.

12.2. All expenses of administering the Plan shall be borne by IMIC.

12.3. Payments received from Optionees upon the exercise of Options shall
be used for the general corporate purposes of IMIC except that any stock
received or withheld in payment may be canceled, retired, or retained in IMIC's
treasury and reissued.

12.4. In addition to such other rights of indemnification as they may have
as members of the Board or the Committee, the members of the Board and the
Committee shall be indemnified by IMIC against all costs and expenses reasonably
incurred by them in connection with any action, suit, or proceeding to which
they or any of them may be party by reason of any action taken or failure to act
under or in connection

A-8
<PAGE>
with the Plan or any Option granted under the Plan, and against all amounts paid
by them in settlement thereof (provided such settlement is approved by
independent legal counsel selected by IMIC) or paid by them in satisfaction of a
judgment in any such action, suit, or proceeding, except a judgment based upon a
finding of wilful misconduct or bad faith, provided that upon the institution of
any such action, suit, or proceeding, a Committee or Board member, in writing,
shall give IMIC notice thereof and an opportunity, at its own expense, to handle
and defend the same before such Committee or Board member undertakes to handle
and defend it on such member's own behalf.

SECTION XIII
SHAREHOLDER APPROVAL AND EFFECTIVE DATE

13.1. The Plan shall become effective upon adoption by the Board. However,
if the Plan is not approved within one year after the Plan is adopted by the
Board by the vote at a meeting of the shareholders of IMIC at which a quorum is
present by the holders of a majority of the shares voting at that meeting, the
Plan and all Options shall terminate at the time of that meeting of
shareholders, or, if no such meeting is held, after the passage of one year from
the date the Plan was adopted by the Board. Options may not be granted under the
Plan after the day before the 10th anniversary of adoption by the Board.

A-9
<PAGE>

PROXY

INDUSTRI-MATEMATIK INTERNATIONAL CORP.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Stig G. Durlow and Marvin S. Robinson, or
either of them, as attorneys of the undersigned with full power of
substitution, to vote all shares of stock which the undersigned is entitled
to vote at the Annual Meeting of Shareholders of Industri-Matematik
International Corp., to be held at the Grand Hyatt New York, Park Avenue and
Grand Central Station, New York, New York, on Friday, October 9, 1998, at
2:00 p.m., local time, and at any continuation or adjournment thereof, with
all the powers which the undersigned might have if personally present at the
meeting.

The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement dated August 28, 1998, and hereby expressly revokes any
and all proxies heretofore given or executed by the undersigned with respect
to the shares of stock represented by this Proxy and by filing this Proxy
with the Secretary of the Company, gives notice of such revocation.

WHERE NO CONTRARY CHOICE IS INDICATED BY THE SHAREHOLDER, THIS PROXY, WHEN
RETURNED, WILL BE VOTED FOR SUCH PROPOSALS AND WITH DISCRETIONARY AUTHORITY
UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THIS PROXY
MAY BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED.

SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE

<PAGE>

Please mark
/X/ votes as in
this example.

PLEASE COMPLETE, DATE, SIGN, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING:

<TABLE>
<S> <C>
1. Election of Directors. FOR AGAINST ABSTAIN
Nominee: Stig G. Durlow, Jeffrey A. Harris, 2. To approve the Industri-Matematik / / / / / /
William H. Janeway, Martin Leimdorfer, and International Corp. 1998 Stock
Geoffrey W. Squire Option Plan.

FOR ALL WITHHELD FROM ALL 3. To ratify the selection of Ohrlings, / / / / / /
/ / / / Coopers & Lybrand, AB as independent
public accountants for the fiscal
year ending April 30, 1999.
/ /
---------------------------------- 4. To transact such other business as
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE may properly come before the meeting.

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /

Please sign exactly as your name of names appear hereon. Corporate
or partnership proxies should be signed in full corporate or
partnership name by an authorized person. Persons signing in a
fiduciary capacity should indicate their full titles in such
capacity.

Signature:_________________________________ Date:____________ Signature:__________________________________ Date:____________
</TABLE>