SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(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 Sec. 240.14a-11(c) or Sec. 240.14a-12
Made2Manage Systems, Inc.
(Name of Registrant as Specified In Its Charter)
Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[Made2Manage Logo]
Made2Manage Systems, Inc.
9002 Purdue Road
Indianapolis, IN 46268
March 2, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders of
Made2Manage Systems, Inc. (the "Company") which will be held at Embassy Suites
Hotel - North, 3912 Vincennes Road, Indiananpolis, Indiana on Wednesday, April
22, 1998, at 10:00 a.m. (Eastern Standard Time).
Details of the business to be conducted at the Annual Meeting are given in the
attached Notice of Annual Meeting of Stockholders and Proxy Statement.
After careful consideration, the Company's Board of Directors has unanimously
approved the proposals set forth in the Proxy Statement and recommends that
you vote for each such proposal.
In order for us to have an efficient meeting, please sign, date and return the
enclosed proxy promptly in the accompanying reply envelope. If you are able to
attend the Annual Meeting and wish to change your proxy vote, you may do so
simply by voting in person at the Annual Meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ David B. Wortman
David B. Wortman
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested to
complete, sign and date the enclosed proxy as promptly as possible and return
it in the enclosed envelope. No postage need be affixed if mailed in the
United States.
<PAGE>
MADE2MANAGE SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1998
The 1998 Annual Meeting of Stockholders of Made2Manage Systems, Inc. (the
"Company") will be held at Embassy Suites Hotel - North, 3912 Vincennes Road,
Indianapolis, Indiana on Wednesday, April 22, 1998, at 10:00 a.m. (Eastern
Standard Time) for the following purposes:
1. To elect directors to serve until the 1999 Annual Meeting of
Stockholders, or in each case until their successors have been duly elected
and qualified;
2. To approve an amendment to the Made2Manage Systems, Inc. Stock Option
Plan (the "Option Plan") to annually increase the number of shares available
and reserved for issuance under the Option Plan by 5% of the total number of
shares of Common Stock outstanding on the last day of the prior fiscal year
plus the total number of shares of Common Stock reserved for issuance upon the
exercise of stock options outstanding on the last day of the prior fiscal
year; and
3. To act upon such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of record at the close of business on March 2, 1998 are
entitled to notice of and to vote at the meeting. A list of stockholders
entitled to vote at the meeting will be available for inspection at the
principal executive offices of the Company located at 9002 Purdue Road,
Indianapolis, Indiana 46268. Whether or not you plan to attend the meeting in
person, please sign, date and return the enclosed proxy card in the reply
envelope provided. If you attend the meeting and vote by ballot, your proxy
will be revoked automatically and only your vote at the meeting will be
counted. The prompt return of your proxy card will assist us in preparing for
the meeting.
By Order of the Board of Directors,
/s/ Stephen R. Head
Stephen R. Head
Secretary
1
PROXY STATEMENT
ANNUAL MEETING AND PROXY SOLICITATION INFORMATION
These proxy materials and the enclosed proxy card are being mailed in
connection with the solicitation of proxies by the Board of Directors of
Made2Manage Systems, Inc., an Indiana corporation (the "Company"), for the
1998 Annual Meeting of Stockholders to be held on Wednesday, April 22, 1998,
at 10:00 a.m. (Eastern Standard Time), and at any adjournment or postponement
thereof (the "Annual Meeting") at the Embassy Suites Hotel - North, 3912
Vincennes Road, Indianapolis, Indiana. These proxy materials were first mailed
to stockholders of record beginning on approximately March 22, 1998.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized in the accompanying Notice of Annual Meeting of Stockholders.
Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION
Any stockholder executing a proxy pursuant to this solicitation may revoke it
at any time prior to its exercise by delivering written notice of such
revocation, or by properly executing and delivering a proxy bearing a later
date, to the Secretary of the Company before the Annual Meeting. Any
stockholder present at the Annual Meeting who elects to vote his or her shares
in person may also revoke a previously submitted proxy. The cost of soliciting
proxies will be paid by the Company and may include reimbursement paid to
brokerage firms and others for their expense in forwarding solicitation
materials as well as the expense of preparing, assembling, photocopying and
mailing this Proxy Statement. Solicitation will be made primarily through the
use of the mail, however, regular employees of the Company may, without
additional remuneration, solicit proxies personally by telephone or facsimile.
The Company's Annual Report to Stockholders for the fiscal year ended December
31, 1997 (the "Annual Report") has been mailed concurrently with the mailing
of the Notice of the Annual Meeting of Stockholders and this Proxy Statement
to all stockholders entitled to notice of, and to vote at, the Annual Meeting.
The Annual Report is not incorporated into this Proxy Statement and is not
considered proxy soliciting material.
The record date for determining those stockholders who are entitled to notice
of, and to vote at, the Annual Meeting is March 2, 1998. At the close of
business on the record date, the Company had 4,249,553 outstanding shares of
Common Stock, no par value (the "Common Stock"). Each stockholder is entitled
to one vote for each share of Common Stock held by such stockholder as of the
record date. If a stockholder has specified a choice on the proxy as to the
matters coming before the Annual Meeting, the shares will be voted
accordingly. If no choice is specified on the returned proxy, the shares will
be voted in favor of the approval of the proposals described in the Notice of
Annual Meeting of Stockholders and in this Proxy Statement. Abstentions and
broker non-votes (i.e., the submission of a proxy by a broker or nominee
specifically indicating the lack of discretionary authority to vote on the
matter) will be counted for purposes of determining the presence or absence of
a quorum for the transaction of business. Abstentions will be counted towards
the tabulation of votes cast on proposals presented to the stockholders and
will have the same effect as negative votes, whereas broker non-votes will not
be counted for purposes of determining whether or not a proposal has been
approved.
At the record date, directors and executive officers of the Company may be
deemed to be beneficial owners of an aggregate of 1,320,980 shares of Common
Stock (not including shares of Common Stock issuable upon exercise of
outstanding stock options) constituting approximately 31% of the shares of
Common Stock outstanding and entitled to vote at the Annual Meeting. Such
directors and executive officers have indicated to the Company that each
intends to vote or direct the vote of all shares of Common Stock held or owned
by such persons, or over which such person has voting control, in favor of all
of the proposals described herein. The approval of these proposals is not
assured. See "Principal Stockholders."
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
GENERAL
The business of the Company is managed under the direction of a Board of
Directors currently consisting of four directors: Ira Coron, Gregory F.
Ehlinger, Standish H. O'Grady and David B. Wortman. The Board of Directors has
responsibility for establishing broad corporate policies and for the overall
performance of the Company. The Board of Directors is not, however, involved
in the day-to-day operation of the Company. The Board of Directors is kept
advised of the Company's business through regular reports and discussions with
the Company's executive officers between meetings.
The Company's Restated Bylaws require that the Board of Directors have at
least three members and that the Board of Directors may determine how many
additional directors it will have.
MEETING OF THE BOARD OF DIRECTORS
The Board of Directors meets on a regularly scheduled basis during the year to
review significant developments affecting the Company and to act on matters
requiring Board approval. It also holds special meetings when an important
matter requires Board action between regularly scheduled meetings. The Board
of Directors met four times during the Company's fiscal year ended December
31, 1997. During 1997, each director attended all of the meetings of the Board
of Directors and the committees of the Board of Directors of which each was a
member.
COMPENSATION OF DIRECTORS
Though the first quarter of 1998, the Company paid Mr. Coron $4,000 per
quarter plus expenses for his service as a director. Beginning with the second
quarter of fiscal 1998, the Company will pay each non-employee director
("Independent Director") $3,750 per quarter plus expenses for service as a
director. In addition, pursuant to the Made2Manage Systems, Inc. Stock Option
Plan (the "Option Plan"), each Independent Director receives a stock option to
purchase 20,000 shares of Common Stock on the date of election to the Board of
Directors and a stock option to purchase 5,000 shares on each anniversary
thereof so long as he or she is a director. Such options are exercisable at
the fair market value of the stock on the date of grant and 25% of each option
is exercisable on the first anniversary of the date of the grant and the
remaining is exercisable at the rate of 1/48th of the amount granted each
month thereafter.
During the year ended December 31, 1997, Messrs. Coron, Ehlinger and O'Grady
each received stock options to purchase 5,000 shares at an exercise price of
$5.75 per share.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee, currently composed of Messrs. Coron and Ehlinger, reviews
with the Company's independent auditors the scope and timing of their audit
services and any other services they are asked to perform, the auditor's
report on the Company's financial statements following completion of their
audit and the Company's policies and procedures with respect to internal
accounting and financial controls. The Audit Committee met twice during the
fiscal year ended December 31, 1997. The Compensation Committee, currently
composed of Messrs. Coron, Ehlinger and O'Grady, reviews and approves the
compensation and benefits to be provided to the Company's executive officers,
reviews general policy matters related to employee compensation and benefits
and administers the Stock Option Plan and the Made2Manage Systems, Inc.
Employee Stock Purchase Plan (the "Stock Purchase Plan"). The Compensation
Committee met four times during the fiscal year ended December 31, 1997.
<PAGE>
NOMINEES FOR DIRECTOR
The following individuals, each of whom currently serves as a director of the
Company, have been nominated for re-election at the Company's Annual Meeting.
Mr. O'Grady currently serves on the Board of Directors as the representative
of Hambrecht & Quist, which provided venture capital financing to the Company.
Mr. O'Grady is not standing for re-election in accordance with Hambrecht &
Quist's policy to no longer require representatives on the board of directors
once a portfolio company becomes publicly traded. Although no specific
candidate has been identified, the Board of Directors intends on appointing
additional Independent Directors to the Board during 1998. If appointed,
these individuals would stand for re-election at the 1999 Annual Meeting of
Stockholders.
IRA CORON, age 69, has been the Chairman of the Board of Directors of the
Company since 1993. Mr. Coron has served as Chairman of California Amplifier,
Inc. since March 1994 and served also as that Company's Chief Executive
Officer until August 1997. From 1989 to 1994, he was an independent management
consultant to several companies and venture capital firms. He retired from
TRW, Inc. in 1989, after serving in numerous senior management positions since
1967, including Vice President and General Manager of TRW's Electronic
Components Group. He is also a director of the Wireless Cable Association, and
a director of CMC Industries. He is a graduate of The U.S. Military Academy
with a B.S. engineering.
GREGORY F. EHLINGER, age ---35, has been a director of the Company since 1990.
He has been a Vice President and Treasurer of Irwin Financial Corporation
since 1992. From 1988 through 1992, Mr. Ehlinger was an associate of Miller
Venture Partners. Mr. Ehlinger has a B.A. in economics and psychology and a
M.B.A. from the University of Virginia.
DAVID B. WORTMAN, age 46, joined the Company in September 1993 as Senior Vice
President and has served as President and Chief Executive Officer and a
director since January 1994. Prior to joining the Company, Mr.Wortman held a
succession of senior executive positions and served as a director of Pritsker
Corporation, a computer software company he co-founded in 1973. Mr. Wortman is
a past President of the Institute of Industrial Engineers and a recipient of
its Outstanding Young Industrial Engineer award. He is Immediate Past
President and a Director of the Indiana Software Association. Mr. Wortman
holds B.S. and M.S. degrees in industrial engineering from Purdue University.
VOTE REQUIRED
The members of the Board of Directors elected at the Annual Meeting will hold
office until the next Annual Meeting of Stockholders or until their successors
are duly elected and qualified. Each nominee receiving the affirmative vote of
a majority of the shares present in person or represented by proxy at the
Annual Meeting and entitled to vote on the election of directors shall be
elected to the Board of Directors.
Unless otherwise instructed, the persons named in the accompanying proxy card
will vote the proxies received by them for each of the Company's nominees
named above, each of whom is presently a director of the Company. If any
nominee of the Company is unable or declines to serve as a Director at the
time of the Annual Meeting, the proxies will be voted for any nominee who is
designated by the present Board of Directors to fill the vacancy. It is not
expected that any nominee will be unable or will decline to serve as a
director.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
NOMINEES LISTED HEREIN, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
<PAGE>
PROPOSAL 2
APPROVAL OF AUTOMATIC 5% YEARLY INCREASE IN THE NUMBER OF SHARES AVAILABLE AND
RESERVED FOR ISSUANCE UNDER THE OPTION PLAN
As of March 2, 1998, there were a total of 1,800,000 shares of Common Stock
reserved for issuance under the Option Plan, of which options to purchase
1,397,781 shares had been granted and 150,563 shares were reserved for future
grants. In January 1998, the Board of Directors approved an amendment to the
Option Plan which provides for an automatic annual increase in the number of
shares available and reserved for issuance under the Option Plan beginning in
1999 and continuing until the Option Plan terminates in 2000. The Board
believes that the automatic annual increase mechanism is in the best interests
of the Company because it will provide an adequate reserve of shares for
issuance under the Option Plan which can be used to attract and retain key
employees.
This amendment provides that, on January 1 of 1999 and 2000, the number of
shares available and reserved for issuance under the Option Plan will be
increased by the number equal to 5% of the Base Shares (as defined below)
calculated as of the last day of the preceding fiscal year. The "Base Shares"
will equal the sum of (i) the number of shares of the Company's Common Stock
outstanding on the last day of the preceding fiscal year and (ii) the number
of shares of Common Stock reserved for issuance upon the exercise of options
outstanding on the last day of the preceding fiscal year. Under the terms of
the Option Plan, the number of shares available and reserved for issuance is
also increased automatically by the number of any outstanding shares subject
to issuance under options that have expired, terminated or become
unexercisable for any reason.
The following example is intended to illustrate the operation of this
amendment. If the amendment were in effect at the beginning of 1998,
approximately 289,895 shares would have been added to the Option Plan on
January 1, 1998. This number was calculated as follows: at December 31, 1997
there were 4,214,803 shares of Common Stock outstanding and 1,583,094 shares
of Common Stock reserved for issuance upon the exercise of options outstanding
providing a total of 5,797,897 Base Shares, 5% of which is 289,895. This
number would then have been added to the number of shares available for
issuance on December 31, 1997, resulting in 1,872,989 shares being available
for option grants on January 1, 1998.
SUMMARY OF OPTION PLAN
The summary of the Option Plan contained below is qualified in its entirety by
reference to the Option Plan, a copy of which may be obtained by submitting a
written request to the Secretary of the Company.
The Option Plan is administered by the Compensation Committee of the Board of
Directors, which is composed solely of non-employee directors of the Company.
Currently, Messrs. Coron, Elinger and O'Grady serve on the Compensation
Committee. Participants in the Option Plan are employees, including officers
of the Company, non-employee directors, independent contractors, consultants,
vendors and suppliers to the Company, as may be determined from time to time
by the Compensation Committee. There are 158 employees and three non-employee
directors eligible to participate. Subject to the terms of the Option Plan,
the Compensation Committee is authorized to determine the number of shares of
Common Stock subject to each option granted thereunder, the exercise price of
such option, the time and conditions of exercise of such option and all other
terms and conditions of such option. The Option Plan does, however, provide
that non-employee directors will automatically be granted an option to
purchase 20,000 shares of Common Stock upon becoming a member of the Board of
Directors and each non-employee director annually will be granted an option to
purchase 5,000 shares of Common Stock. Such options are exercisable at the
fair market value of the Common Stock on the date of grant. Unless sooner
terminated, the Option Plan will expire at the close of business on August 16,
2000.
Options granted under the Option Plan may be incentive stock options ("ISOs"),
as defined by Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or nonqualified stock options that do not meet the requirements
of Section 422 of the Code ("NQSOs"). ISOs may be granted only to employees of
the Company. The per share exercise price of an ISO will be not less than 100%
of the fair market value of the Common Stock on the date of the grant, except
that the per share exercise price for ISOs granted to holders of 10% or more
of the total combined voting power of all outstanding classes of stock of the
Company ("10% Stockholders") will be not less than 110% of such fair market
value. The per share exercise price of a NQSO will not be less than 85% of the
fair market value of the Common Stock at the date of grant, except that the
exercise price of all NQSOs granted to non-employee directors must be equal to
the fair market value of the Common Stock on the date of the grant. In
addition, for each participant, the maximum aggregate fair market value on the
date of grant of all shares subject to ISOs first exercisable in any one year
may not exceed $100,000.
Options will expire on a date determined by the Compensation Committee,
provided that in the case of ISOs, the options will expire not more than ten
years from the date of grant (five years in the case of ISOs issued to 10%
Stockholders). If an option holder's service with the Company is terminated,
whether by retirement or otherwise, options granted under the Option Plan
generally will expire 30 days (or such longer period as the Board of Directors
may approve) after the termination of employment or of service as a director,
as the case may be, unless termination occurs as a result of death or
permanent disability, in which case such options will expire one year after
such event. Options are not transferable other than by will or the laws of
descent and distribution.
Options granted under the Option Plan become exercisable with respect to 25%
of the shares on the first anniversary of the date of grant and with respect
to 1/48 of the shares in each of the next 36 consecutive months; provided,
however, the Board of Directors or the Compensation Committee may change this
vesting schedule. In the event of a merger of the Company with or into another
corporation in which the Company does not survive or a sale of substantially
all of the Company's assets, all outstanding options vest immediately and
become fully exercisable, provided that if the Compensation Committee
determines that such immediate vesting is not in the best interests of the
Company, then all outstanding options shall be assumed or an equivalent option
substituted by the successor corporation. If any options become exercisable
immediately, the Compensation Committee must notify each holder that the
option is exercisable for a period of not less than 10 or more 60 days from
the date of the notice and that all options not exercised by such date will
terminate.
The Option Plan contains anti-dilution provisions authorizing appropriate
adjustments in the outstanding options in certain circumstances. Shares of
Common Stock subject to options which expire without being exercised or which
are terminated for any reason are available for further grants. No shares of
Common Stock of the Company may be issued to any optionee until the full
option price has been paid. The option price may be paid by personal check, by
bank or cashier's check or in such other form of lawful consideration as the
Board of Directors or Compensation Committee may determine, including Common
Stock of the Company or a promissory note.
The Board of Directors may, at its discretion, amend the Option Plan;
provided, that no amendment shall materially affect the rights of any
participant without such participant's prior consent. In addition, any
amendment which increases the number of shares of Common Stock available for
grant under the Option Plan, changes the formula for determining the exercise
price or the maximum term of options that may be granted under the Option Plan
or materially lessens the requirements for participation in the Option Plan
must be approved by the stockholders of the Company.
The Company has filed a registration statement registering the shares of
Common Stock issued under the Option Plan. Accordingly, subject to certain
restrictions, those shares may be publicly traded upon issuance.
PARTICIPATION IN THE OPTION PLAN
To date, options to purchase an aggregate of 1,649,437 shares of Common Stock
(net of forfeitures) have been granted under the Option Plan and an aggregate
of 251,656 shares have been purchased pursuant to option grants. During the
fiscal year ended December 31, 1997, the Company granted options to purchase
293,000 shares of Common Stock under the Option Plan at an average exercise
price per share of $6.12. The table on page 11 sets forth the options granted
during 1997. At March 2, 1998 the closing market price as reported by The
Nasdaq Stock MarketSM of the underlying shares was $10.00 per share and the
aggregate market value of all shares underlying outstanding options was
$16,494,370.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
The following is a brief summary of the Federal income tax aspects of grants
made under the Option Plan based upon statutes, regulations and
interpretations in effect on the date hereof. This summary is not intended to
be exhaustive, and does not describe state or local tax consequences.
Incentive Stock Options
The participant will recognize no taxable income upon the grant or exercise of
an ISO. Upon a disposition of shares received upon the exercise of an option
after the later of two years from the date of grant and one year after the
issuance of the shares to the participant, (i) the participant will recognize
the difference, if any, between the amount realized and the exercise price as
long-term capital gain or long-term capital loss (as the case may be) if the
shares are capital assets in his or her hands; and (ii) the Company will not
qualify for any deduction in connection with the grant or exercise of the
options. The excess, if any, of the fair market value of the shares on the
date of exercise of any ISO over the exercise price will be treated as an item
of adjustment for his or her taxable year in which the exercise occurs and may
result in an alternative minimum tax liability for the participant. In the
case of a disposition of shares in the same taxable year as the exercise where
the amount realized on the disposition is less than the fair market value of
the shares on the date of exercise, there will be no adjustment since the
amount treated as an item of adjustment, for alternative minimum tax purposes,
is limited to the excess of the amount realized on such disposition over the
exercise price, which is the same amount included in regular taxable income.
If Common Stock acquired upon the exercise of an ISO is disposed of prior to
the expiration of the holding periods described above, (i) the participant
will recognize ordinary compensation income in the taxable year of disposition
in an amount equal to the excess, if any, of the lesser of the fair market
value of the shares on the date of exercise or the amount realized on the
disposition of the shares, over the exercise price paid for such shares; and
(ii) the Company will qualify for a deduction equal to any such amount
recognized, subject to the requirements of Section 162(m) of the Code and that
the compensation be reasonable. The participant will recognize the excess, if
any, of the amount realized over the fair market value of the shares on the
date of exercise, if the shares are capital assets in his or her hands, as
short-term or long-term capital gain, depending on the length of time that the
participant held the shares, and the Company will not qualify for a deduction
with respect to such excess.
Subject to certain exceptions for disability or death, if an ISO is exercised
more than three months following the termination of the participant's
employment, the option will generally be taxed as a Non-Qualified Stock
Option.
Non-Qualified Stock Options
With respect to NQSOs (i) upon grant of the option, the participant will
recognize no income; (ii) upon exercise of the option (if the shares are not
subject to a substantial risk of forfeiture), the participant will recognize
ordinary compensation income in an amount equal to the excess, if any, of the
fair market value of the shares on the date of exercise over the exercise
price, and the Company will qualify for a deduction in the same amount,
subject to the requirements of Section 162(m) of the Code and that the
compensation be reasonable; (iii) the Company will be required to comply with
applicable Federal income tax withholding requirements with respect to the
amount of ordinary compensation income recognized by the participant; and (iv)
on a sale of the shares, the participant will recognize gain or loss equal to
the difference, if any, between the amount realized and the sum of the
exercise price and the ordinary compensation income recognized. Such gain or
loss will be treated as short-term or long-term capital gain or loss if the
shares are capital assets in the participant's hands depending upon the length
of time that the participant held the shares.
VOTE REQUIRED
The affirmative vote of a majority of the votes cast will be required to
approve the amendment to the Option Plan.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
PROPOSED AMENDMENT TO THE OPTION PLAN.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors, executive officers and holders of more than 10% of the
Company's Common Stock (collectively the "Reporting Persons") to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock of the Company. Such Reporting Persons
are required by regulations of the Commission to furnish the Company with
copies of all such filings.
Based solely on a review of copies of reports filed by the Reporting Persons
pursuant to Section 16(a) of the Exchange Act, or written representations from
certain Reporting Persons that no Form 5 filing was required for such person,
the Company believes that all Reporting Persons complied with all Section
16(a) requirements in the fiscal year ended December 31, 1997, except that Mr.
O'Grady filed one Form 4 late reporting one purchase transaction.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth, as of March 2, 1998, certain information
regarding beneficial ownership of the Company's Common Stock by (i) each
person who is known by the Company to beneficially own more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each Named Executive Officer, as defined below, and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
<S> <C> <C>
NUMBER OF SHARES PERCENT OF
OF COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED OUTSTANDING (1)
NAME (1)(2)
Entities affiliated with Hambrecht & Quist Group (3) . . . . . . 1,210,599 28.5%
Fleet Financial Group (4). . . . . . . . . . . . . . . . . . . . 232,500 5.5
J. Irwin Miller (5). . . . . . . . . . . . . . . . . . . . . . . 229,328 5.4
Ira Coron (6). . . . . . . . . . . . . . . . . . . . . . . . . . 87,609 2.0
Gregory F. Ehlinger (7). . . . . . . . . . . . . . . . . . . . . 19,874 *
Standish H. O'Grady (8). . . . . . . . . . . . . . . . . . . . . 1,251,473 29.4
David B. Wortman (9) . . . . . . . . . . . . . . . . . . . . . . 152,395 3.5
Oliver C. Fowler (10). . . . . . . . . . . . . . . . . . . . . . 56,249 1.3
Stephen R. Head (11) . . . . . . . . . . . . . . . . . . . . . . 23,333 *
Gary W. Rush (12). . . . . . . . . . . . . . . . . . . . . . . . 64,791 1.5
Joseph W. Swern (13) . . . . . . . . . . . . . . . . . . . . . . 36,875 *
All Directors and executive officers as a group (9 persons) (14) 1,721,839 37.0
<FN>
__________________
* Less than 1% of outstanding Common Stock.
(1) Except as indicated in the footnotes to this table and pursuant to applicable community
property laws, the Company believes that the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock.
(2) The business address of all directors and executive officers is in care of Made2Manage
Systems, Inc., 9002 Purdue Road, Indianapolis, IN 46268.
(3) Consists of 33,355 shares of Common Stock owned by Hamco Capital Corporation; 623,405 shares
of Common Stock owned by H&Q London Ventures; 202,614 shares of Common Stock owned by Ivory & Sime
Enterprise Capital, plc; 287,044 shares of Common Stock owned by Hambrecht & Quist California; 1,730
shares of Common Stock owned by Hambrecht & Quist Venture Partners; and 62,451 shares of Common Stock
owned by Hambrecht 1980 Revocable Trust. All of the aforementioned entities (the "H&Q Entities") are
controlled, directly or indirectly, by Hambrecht & Quist Group. The address for each of the H&Q
Entities is One Bush Street, San Francisco, California, 94104.
(4) The address of Fleet Financial Group is One Federal Street, Boston, Massachusetts, 02110.
(5) The address of J. Irwin Miller is 301 Washington Street, Columbus, Indiana 47201.
(6) Includes 87,540 shares of Common Stock issuable upon the exercise of options within 60 days of
March 2, 1998.
(7) Includes 4,749 shares of Common Stock issuable upon the exercise of options within 60 days of
March 2, 1998.
(8) Includes 1,210,599 shares of Common Stock owned by the H&Q Entities. Mr. O'Grady, a director
of the Company, is a Managing Director of Hambrecht & Quist Group, and accordingly may be attributed
beneficial ownership of the shares of Common Stock owned by the H&Q Entities. Mr. O'Grady disclaims
beneficial ownership of the shares of Common Stock held by the H&Q Entities, except to the extent of
his pecuniary interest therein. Also includes 3,687 shares of Common Stock issuable upon the exercise
of options within 60 days of March 2, 1998.
(9) Includes 102,395 shares of Common Stock issuable upon the exercise of options within 60 days
of March 2, 1998.
(10) Includes 56,249 shares of Common Stock issuable upon the exercise of options within 60 days
of March 2, 1998.
(11) Includes 23,333 shares of Common Stock issuable upon the exercise of options within 60 days
of March 2, 1998.
(12) Includes 60,791 shares of Common Stock issuable upon the exercise of options within 60 days
of March 2, 1998.
(13) Includes 36,875 shares of Common Stock issuable upon the exercise of options within 60 days
of March 2, 1998.
(14) Includes 400,859 shares of Common Stock issuable upon the exercise of options within 60 days
of March 2, 1998.
</TABLE>
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total annual compensation paid to, or for
the account of, the Chief Executive Officer of the Company and the Company's
four other most highly compensated executive officers whose total annual
salary and bonus exceeded $100,000 during the year ended December 31, 1997
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C>
LONG-TERM
Compensation
Awards All
ANNUAL
COMPENSATION OPTIONS OTHER
NAME AND PRINCIPAL
POSITION. . . . . . . . . YEAR SALARY BONUS (# OF SHARES
COMPENSATION (1)
David B. Wortman. . . . . 1997 $150,000 $61,253 30,000 $ 2,789
President and Chief . . 1996 140,000 48,151 75,000 2,531
Executive Officer
Oliver C. Fowler. . . . . 1997 110,000 63,240 15,000 2,520
Vice President, Sales . 1996 100,000 44,287 25,000 2,262
Stephen R. Head . . . . . 1997 110,000 37,548 -- 1,917
Vice President, Finance 1996 9,167(2) -- 70,000 --
and Administration
Chief Financial Officer
Secretary and Treasurer
Gary W. Rush
Vice President, . . . . 1997 100,000 32,534 20,000 1,986
Development . . . . . . 1996 90,000 27,244 62,000 2,136
Joseph S. Swern . . . . . 1997 102,000 34,817 20,000 2,013
Vice President, . . . . 1996 92,000 30,150 20,000 1,246
Services and Support
<FN>
__________________
(1) Consists of Company matching contributions to the 401(k) plan and life
insurance premiums.
(2) Mr. Head joined the Company in December 1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of stock options during 1997 to (i) each of the
Named Executive Officers, (ii) all current executive officers as a group, (iii) all current directors who are not
executive officers as a group, and (iv) all employees, not including executive officers, as a group.
<S> <C> <C> <C> <C> <C> <C>
Potential Potential
Realizable Realizable
Value at Assumed Value at Assumed
Number of % of Total Annual Rates of Annual Rates of
Securities Options Stock Price Stock Price
Underlying Granted to Exercise Appreciation for Appreciation for
Options Employee Price Expiration Option Term (3) Option Term (3)
Granted (1) in Year ($/Share)(2) Date 5% 10%
David B. Wortman. . . . . 30,000 10.2% $ 5.75 1/29/07 $ 108,484 $ 274,921
Oliver C. Fowler. . . . . 15,000 5.1 5.75 1/29/07 54,542 137,460
Stephen R. Head . . . . . -- -- -- -- -- --
Gary W. Rush. . . . . . . 20,000 6.8 5.75 1/29/07 72,323 183,280
Joseph S. Swern . . . . . 20,000 6.8 5.75 1/29/07 72,323 183,280
All current executive
officers as a group . . 105,000 35.9 NA NA NA NA
All current directors who
are not executive
officers as a group . . 15,000 5.1 NA NA NA NA
All employees,
not including
executive officers,
as a group. . . . . . . 173,000 59.0 NA NA NA NA
<FN>
___________
(1) Options granted under the Option Plan become exercisable over a four-year period, 25% on the first anniversary
of the date of grant and 1/48 of the total each month thereafter, with vesting subject to the employee's continued
employment. The exercise of the options may be accelerated in the event of certain occurrences including the sale of
the Company.
(2) All options were granted at fair market value as determined by the Board of Directors of the Company on the
date of grant based upon a third-party valuation. The exercise price may in some cases be paid by delivery of other
shares or by offset of the shares subject to the options.
(3) The 5% and 10% assumed annual rates of compounded stock price appreciation are mandated by rules of the
Securities and Exchange Commission. There can be no assurance provided to any Named Executive Officer or any other
holder of the Company's securities that the actual stock price appreciation over the ten year option term will be at
the assumed 5% and 10% levels or at any other defined level. Unless the market price of the Common Stock appreciates
over the option term, no value will be realized from the option grants made to the Named Executive Officers.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning exercisable and
unexercisable stock options held by the Named Executive Officers at December
31, 1997.
NUMBER OF
SHARES SECURITIES UNDERLYING VALUE OF
ACQUIRED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ON VALUE AT DECEMBER 31, 1997 AT DECEMBER 31, 1997 (2)
<S> <C> <C> <C> <C> <C> <C>
EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
David B. Wortman -- $ -- 83,644 76,356 $ 497,028 $ 266,527
Oliver C. Fowler -- -- 45,312 44,688 293,966 202,684
Stephen R. Head. -- -- 17,500 52,500 39,550 118,650
Gary W. Rush . . 4,000 22,200 47,040 58,960 248,178 216,382
Joseph S. Swern. -- -- 26,458 43,542 159,732 172,468
<FN>
_____________
(1) Based on the fair market value of the Company's Common Stock on the date of exercise, less the
exercise price payable for such shares.
(2) Based of the fair market value of the Company's Common Stock at December 31, 1997 of $7.56 per
share less the per share exercise price.
</TABLE>
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company's Board of Directors (the
"Committee") has the exclusive authority to establish the base salary of the
Chief Executive Officer ("CEO") and the executive officers of the Company and
to administer the Company's Option Plan and Employee Stock Purchase Plan. In
addition, the Committee has the responsibility for approving the individual
bonus programs for the CEO and the other executive officers each fiscal year.
For the 1997 fiscal year, the process utilized by the Committee in determining
executive compensation levels took into account both qualitative and
quantitative factors. Among the factors considered by the Committee were
executive management surveys conducted by the Company, third party
compensation surveys disclosing executive compensation programs in place at
similar companies, and the recommendations of the Company's CEO.
GENERAL COMPENSATION POLICY
The Company's primary objective is to maximize stockholder value. This
objective requires the Company to develop, market and sell superior products
and to provide services that offer cost-effective solutions to customers. The
Committee's fundamental policy is to offer the Company's executive officers
competitive compensation opportunities based upon the Company's overall
performance, their individual contribution to the financial success of the
Company and their personal performance. It is the Committee's objective to
have a substantial portion of each officer's compensation contingent upon the
Company's performance, as well as upon his or her own level of performance.
Accordingly, each executive officer's compensation package consists of: (i)
base salary, (ii) cash bonus awards and (iii) long-term stock-based incentive
awards.
BASE SALARY
The base salary for each executive officer is set on the basis of personal
performance and the salary level in effect for comparable positions at
companies that compete for executive talent.
ANNUAL CASH BONUSES
The Company maintains annual cash incentive bonus programs to reward executive
officers and other key employees for attaining defined performance goals. For
the executive officers, bonuses are based completely or primarily on
Company-wide performance targets. In setting performance targets, the
Committee considered the Company's historical performance and expectations
related to operating results. Incentive compensation is subject to adjustment
based on a combination of financial factors, including attainment of personal
objectives, total revenues, pre-tax earnings and cash flow.
Each year, the annual incentive plan is reevaluated with a new achievement
threshold and new targets established for financial performance and personal
objectives.
LONG-TERM INCENTIVE COMPENSATION
During fiscal 1997, the Committee, in its discretion, granted options to the
executive officers under the Option Plan. Generally, a grant is made in the
year an officer commences employment. Grants may or may not be made in
subsequent years. Generally, the size of the initial grant and each subsequent
grant is set at a level that the Committee deems appropriate to create a
meaningful opportunity for stock ownership based upon the individual's
position with the Company, the individual's potential for future
responsibility and promotion and, for subsequent grants, the individual's
performance in the recent period and the number of unvested options held by
the individual at the time of the new grant. The relative weight given to each
of these factors will vary from individual to individual at the Committee's
discretion.
Each grant allows the officer to acquire shares of the Company's Common Stock
at a fixed price per share (the market price on the grant date). The option
vests in periodic installments, generally over a four year period, contingent
upon the executive officer's continued employment with the Company.
Accordingly, the option will provide a return to the executive officer only if
he or she remains in the Company's employ, and then only if the market price
of the Company's Common Stock appreciates over the option term.
BENEFITS
Benefits offered to the Company's executive officers serve as a safety net of
protection against the financial catastrophes that can result from illness,
disability or death and are the same as those offered to all the Company's
regular employees.
In 1994, the Company established a tax-qualified cash or deferred profit
sharing plan (the "401(k) Savings Plan") covering all of the Company's
eligible full-time employees. Under the plan, participants may elect to
contribute, through salary reductions, up to 15% of their annual compensation
subject to a statutory maximum. The Company provides a matching contribution
under the 401(k) Savings Plan of 25% of the first 6% of an employee's annual
compensation contributed. The 401(k) Savings Plan is designed to qualify under
Section 401 of the Internal Revenue Code so that contributions by employees or
by the Company to the plan, and income earned on plan contributions, are not
taxable to employees until withdrawn from the 401(k) Savings Plan, and so that
contributions by the Company, if any, will be deductible by the Company when
made. The trustee under the plan, at the direction of each plan participant,
currently invests the assets of the 401(k) Savings Plan in Company selected
diversified and money-market investments based on the election of each
employee.
CEO COMPENSATION
The annual base salary for Mr. Wortman, the Company's President and Chief
Executive Officer, was established by the Committee as of January 1997. The
Committee's decision to increase Mr. Wortman's salary was made primarily on
the basis of Mr. Wortman's personal performance of his duties and gave
consideration to compensation survey information of similar companies.
The cash incentive component of the Mr. Wortman's fiscal year compensation was
entirely dependent upon the Company's financial performance and provided no
dollar guarantees. The bonus paid to Mr. Wortman for the fiscal year 1997 was
based on the Company's financial performance relative to established financial
targets. An option grant was made to Mr. Wortman during the 1997 fiscal year
and was intended to create an incentive for Mr. Wortman to take actions to
increase the value of the Company and to place a significant portion of his
total compensation at risk, because the options will have no value unless
there is appreciation in the value of the Company's Common Stock over the
option term.
TAX LIMITATION
As a result of federal tax legislation enacted in 1993, a publicly-held
company such as the Company will not be allowed a federal income tax deduction
for compensation paid to certain executive officers to the extent that
compensation exceeds $1 million per officer in any year. Since it is not
expected that the compensation to be paid to the Company's executive officers
for the 1998 fiscal year will exceed the $1 million limit per officer, the
Committee will defer any decision on whether to limit the dollar amount of all
other compensation payable to the Company's executive officers to the $1
million cap.
Compensation Committee
Ira Coron
Gregory F. Ehlinger
Standish H. O'Grady
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors was formed in
January 1997, and the members of the Compensation Committee are Messrs. Coron,
Ehlinger and O'Grady. None of these individuals was at any time during 1997,
or at any other time, an officer or employee of the Company. No executive
officer of the Company serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock during the period from the Company's initial public offering on
December 19, 1997 through December 31, 1997, with NASDAQ Computer and Data
Processing Services Stocks (the "Computer Index") and the cumulative total
return on the NASDAQ Stock Market - U.S. Companies Index (the "NASDAQ U.S.
Index"). The comparison assumes $100.00 was invested in the Company's Common
Stock and in each of the indices and assumes any dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
[GRAPH]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Made2Manage Nasdaq Computer
Systems, Inc. U.S. Index Index
12/19/97 $100.00 $100.00 $100.00
12/31/97 $100.84 $102.95 $103.55
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
12/19/97 12/31/97
Made2Manage Systems, Inc. $100.00 $100.84
Nasdaq U.S. Index $100.00 $102.95
Computer Index $100.00 $103.55
</TABLE>
<PAGE>
INDEPENDENT ACCOUNTANTS AND AUDIT MATTERS
The firm of Coopers & Lybrand L.L.P. has audited the accounts of the Company
since 1988. In addition, the firm has rendered other services during that
time. The Board of Directors has not yet selected an accounting firm for
fiscal year 1998 but, consistent with prior practice, anticipates making such
selection before December 31, 1998.
A representative of Coopers & Lybrand L.L.P. is expected to be present at the
Annual Meeting, will have the opportunity to make a statement, and will be
available to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSAL FOR 1999 ANNUAL MEETING
An eligible stockholder who desires to have an qualified proposal considered
for inclusion in the proxy statement prepared in connection with the Company's
1999 Annual Meeting of Stockholders must deliver a copy of the proposal to the
Secretary of the Company, at the Company's principal executive offices, no
later than December 31, 1998. A stockholder must have been a record or
beneficial owner of at least one percent of the Company's outstanding Common
Stock, or shares of Common Stock having a market value of at least $1,000, for
a period of at least one year prior to submitting the proposal, and the
stockholder must continue to hold the shares through the date on which the
meeting is held.
OTHER BUSINESS
The Board of Directors knows of no other business that will come before the
Annual Meeting for action except as described in the accompanying Notice of
Annual Meeting of Stockholders. However, as to any such business, the persons
designated as proxies in the enclosed proxy will have discretionary authority
to act in their best judgment.
<PAGE>
APPENDIX A
MADE2MANAGE SYSTEMS, INC.
STOCK OPTION PLAN
This document sets out the terms of the Made2Manage Systems, Inc. Stock
Option Plan, as adopted on August 16, 1990; amended as of November 21, 1997;
and, contingent on stockholder approval, amended as of April 22, 1998.
1. Purpose of the Plan. The Made2Manage Systems, Inc. Stock Option
Plan is intended to promote the growth of the Company by attracting and
motivating key employees, directors, consultants, independent contractors,
vendors, suppliers, and other persons whose efforts are deemed worthy of
encouragement through the incentive effects of stock options.
2. Definitions. As used herein, the following definitions shall apply:
(1) "Board" shall mean the Committee, if one has been appointed, or,
if no Committee has been appointed, the Board of Directors of the Company.
(2) "Code" shall mean the Internal Revenue Code, the rules and
regulations promulgated thereunder, and the interpretations thereof, all from
time to time in effect.
(3) "Committee" shall mean the Committee, if any, appointed by the
Board of Directors in accordance with Section 3(a) and consisting solely of
two or more Non-Employee Directors.
(4) "Common Stock" shall mean the Common Stock of the Company.
(5) "Company" shall mean Made2Manage Systems, Inc., an Indiana
corporation.
(6) "Consultant" shall mean any person who is engaged by the Company
or any Parent or Subsidiary to render consulting services.
(7) "Continuous Status" shall mean the absence of any interruption or
termination of service as an Employee, Consultant, or other person providing
services on a regular basis to the Company or its Parent or any Subsidiary.
Continuous Status shall not be considered interrupted in the case of sick
leave, military leave, or any other leave of absence approved by the Board,
provided that either such leave is for a period of not more than ninety (90)
days or reemployment upon the expiration of such leave is provided or
guaranteed by contract or statute.
(8) "Director" shall mean any person serving on the Board of
Directors.
(9) "Employee" shall mean any person, including Officers and
Directors, employed by the Company or its Parent or any Subsidiary. The
payment or a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(10) "Fair Market Value" shall mean the average of the closing bid
and asked prices of a share of Common Stock, as reported by The Wall Street
Journal (or, if not reported, as otherwise quoted by the National Association
of Securities Dealers through NASDAQ), on the date of the grant the Option,
or, if the Common Stock is listed on the NASDAQ National Market System or is
listed on a national stock exchange, the closing price on such System or such
exchange on the date of the grant of the option, as reported in The Wall
Street Journal. In the event the Common Stock is not traded publicly, the Fair
Market Value of a share of Common Stock on the date of the grant of the option
shall be determined, in good faith, by the Board or the Committee and such
determination shall be conclusive for all purposes. The Board or Committee
shall take into account such factors affecting value as it, in its sole and
absolute discretion, may deem relevant.
(11) "Non-Employee Director" shall mean any Director of the Company
who is not an Employee of the Company or its Parent or any Subsidiary.
(12) "Officer" shall mean any person, which may include directors,
employed by the Company or its Parent or any Subsidiary who has been elected
an officer by the respective board of directors.
(13) "Option" shall mean stock options issued pursuant to the Plan.
Options may be either "Incentive Options," which are defined as Options
intended to meet the requirements of Section 422 of the Code, or "Nonqualified
Options," which are defined as options not intended to meet such requirements
of the Code.
(14) "Option Agreement" shall mean the written agreement setting forth
the terms and conditions of an option.
(15) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(16) "Optionee" shall mean a person who receives an Option.
(17) "Parent" shall mean a "parent corporation" of the Company,
whether now or hereafter existing, as defined in Section 424(e) of the Code.
(18) "Participant" shall mean a person to whom an Option has been
granted.
(19) "Plan" shall mean this Made2Manage Systems, Inc. Stock Option
Plan (1990), as set forth in this instrument, as it is amended from time to
time.
(20) "Share" shall mean a share of Common Stock, as may be adjusted in
accordance with Section 6 below.
(21) "Subsidiary" shall mean a "subsidiary corporation" of the
Company, whether now or hereafter existing, as defined in Section 424(f) of
the Code.
3. Administration of the Plan.
(a) By the Board of Directors or by the Committee. The Plan shall be
administered by the Board of Directors or, if appointed, by a Committee. The
Board and the Committee shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan and to
adopt such rules and regulations for administering the Plan as it may deem
necessary in order to comply with the requirements of the Plan, or in order
that any Option that is intended to be an Incentive Option will be classified
as an incentive stock option under the Code, or in order to conform to any
regulation or to any change in any law or regulation applicable thereto. The
Board of Directors may reserve to itself any of the authority granted to the
Committee as set forth herein, and it may perform and discharge all of the
functions and responsibilities of the Committee at any time that a duly
constituted committee is not appointed and serving.
(b) Actions of the Board and the Committee. All actions taken and all
interpretations and determinations made by the Board or by the Committee in
good faith (including determinations of Fair Market Value) shall be final and
binding upon all Participants, the Company, and all other interested persons.
No member of the Board or the Committee shall be personally liable for any
action, determination, or interpretation made in good faith with respect to
the Plan, and all members of the Board or the Committee shall, in addition to
their rights as directors, be fully protected by the Company with respect to
any such action, determination, or interpretation.
(c) Powers of the Board and the Committee. Subject to the provisions
of the Plan, the Board and, if appointed, the Committee shall have the
authority, in their discretion: (i) to determine, upon review of the relevant
information, the Fair Market Value of the Common Stock; (ii) to determine the
persons to whom Options shall be granted, the time or times at which Options
shall be granted, the number of shares to be represented by each Option, and
the exercise price per share; (iii) to interpret the Plan; (iv) to prescribe,
amend, and rescind rules and regulations relating to the Plan; (v) to
determine whether an option granted shall be an Incentive Option or a
Nonqualified Option and to determine the terms and provisions of each Option
granted (which need not be identical) and, with the consent of the holder
thereof, to modify or amend each option, including reductions in the exercise
price thereof; (vi) to accelerate or defer (with the consent of the Optionee)
the exercise date of any Option; (vii) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
Option previously granted by the Board; and (viii) to make all other
determinations deemed necessary or advisable for the administration of the
Plan.
4. Eligibility and Participation.
(a) Eligibility. Grants of Options may be made to any Employee or
Consultant (which may include officers and/or Directors) of the Company or of
its Parent or Subsidiary, any Non-Employee Director (according to the terms
provided in Section 4(c)), or any independent contractor, vendor, supplier, or
any other person providing services to the Company or a Parent or Subsidiary
whose efforts are deemed worthy of encouragement by the Board; provided,
however, an Incentive Option may be granted only to an Employee.
(b) Participation by Director. Members of the Board who are either
eligible for Options or have been granted Options may vote on any matters
affecting the administration of the Plan or the grant of any Options pursuant
to the Plan, except that no such member shall act upon the granting of an
option to himself, but any such member may be counted in determining the
existence of a quorum at any meeting of the Board and may be counted as part
of an action by unanimous written consent during or with respect to which
action is taken to grant Options to him.
(c) Formula Grants to Non-Employee Directors.
(i) Initial Grants and Annual Grants for Non-Employee Directors
Entitled to Initial Grants. If an individual first becomes a Non-Employee
Director after November 21, 1997, he or she shall automatically be granted an
option to purchase 20,000 shares of Common Stock. Such grant shall be
effective as of the date on which the individual becomes a Non-Employee
Director, and the option shall become exercisable (i) with respect to 1/4 of
the shares subject to the option on the first anniversary of the effective
date of the grant and (ii) with respect to 1/48th of the shares initially
subject to the option on the same day of the month as the first anniversary in
each of the 36 consecutive months immediately following the month in which
such anniversary occurs. Each Non-Employee Director entitled to an initial
grant pursuant to this paragraph shall also automatically be granted an option
to purchase 5,000 shares of Common Stock on each anniversary of the date on
which he or she first becomes a Non-Employee Director. An option granted
pursuant to the preceding sentence shall become exercisable (i) with respect
to 1/4 of the shares initially subject to the option on the first anniversary
of the effective date of such grant and (ii) with respect to 1/48th of the
shares subject to the option on the same day of the month as the first
anniversary in each of the 36 consecutive months immediately following the
month in which such anniversary occurs.
(ii) Other Annual Grants. Each Non-Employee Director not entitled to a
grant of an option to purchase 20,000 pursuant to the preceding paragraph
shall automatically be granted an option to purchase 5,000 shares of Common
Stock on the first anniversary of the most recent grant of options to
directors before November 21, 1997, and an option to purchase an additional
5,000 shares of Common Stock on each anniversary of such date. Options granted
pursuant to this subparagraph (ii) shall become exercisable with respect to
1/4 of the shares granted pursuant to the option on the first anniversary of
the effective date of the grant and with respect to 1/48th of the shares
initially subject to the option on the same day of the month as the first
anniversary in each of the 36 consecutive months immediately following the
month in which such anniversary occurs.
(iii) Eligibility for Grants. A Non-Employee Director shall be
eligible for a grant pursuant to this Section 4(c) only if he or she is a
Non-Employee Director on the effective date of the grant.
(iv) Termination of Option. Options granted pursuant to this Section
4(c) shall terminate on the earliest of (i) ten years after the effective date
of the grant, (ii) thirty (30) days after the Non-Employee Director's
cessation of Continuous Status, or (iii) such earlier date as required by
another provision of this Plan.
(v) Option Price. The option price for each share of Common Stock
granted to a Non-Employee Director pursuant to this Section 4(c) shall be its
Fair Market Value on the effective date of the grant.
5. Exercise Price Consideration and Form of Option Agreement.
(a) Exercise Price. The exercise price of any Incentive Option shall
be not less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock on the date of the grant of the Option. The exercise
price of a Nonqualified Option shall not be less than eighty-five percent
(85%) of the Fair Market Value on the date of the grant of the option. If an
Incentive Option is granted to an Optionee who then owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or its Parent or any Subsidiary, the exercise price of such Incentive
Option shall be at least one hundred ten percent (110%) of the Fair Market
Value of the Company's Common Stock on the date of the grant of such option.
(b) Consideration. The exercise price shall be paid in full, at the
time of exercise of the Option, by personal or bank cashier's check or in such
other form of lawful consideration as the Board of Directors or the Committee
may approve from time to time, including, without limitation, the transfer of
outstanding shares of Common Stock or the withholding of Optioned Stock as
provided in Section 7(c) or the Optionee's promissory note in form
satisfactory to the Company and bearing interest at a rate of not less than 6%
per annum.
(c) Form of Option Agreement. Each option shall be evidenced by an
Option Agreement specifying the number of shares which may be purchased upon
exercise of the option and containing such terms and provisions as the Board
or the Committee may determine, subject to the provisions of the Plan.
6. Shares of Common Stock Subject to the Plan.
(a) Number. The aggregate number of shares of Common Stock subject to
Options which may be granted under the Plan shall be 1,800,000, subject to
adjustment as provided herein. On January 1, 1999, and January 1, 2000, the
number of shares reserved for issuance pursuant to the preceding sentence
shall be increased by a number equal to 5% of the Base Shares (as defined
below), calculated as of the last day of the preceding fiscal year. The number
of Base Shares as of a date shall be equal to the sum of (i) the number of
shares of Common Stock outstanding on such date and (ii) the number of shares
of Common Stock reserved for issuance upon the exercise of options outstanding
as of such date. To the extent that any Option granted under the Plan shall
expire or terminate unexercised or for any reason become unexercisable, the
shares subject to such Option shall thereafter be available for future grants
under the Plan.
(b) Capital Changes. Except as hereinafter provided, no adjustment
shall be made in the number of shares of Common stock issued to a Participant,
or in any other rights of the Participant upon exercise of an Option, by
reason of any dividend, distribution, or other right granted to stockholders
for which the record date is prior to the date of exercise of the
Participant's Option. In the event any change is made to the shares of Common
Stock (whether by reason of a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination of shares, exchange
of shares, change in corporate structure, or otherwise), appropriate
adjustments shall be made in: (i) the number of shares of Common Stock
theretofore made subject to Options, and in the exercise price of such shares;
and (ii) the aggregate number of shares which may be made subject to Options.
If any of the foregoing adjustments shall result in a fractional share, the
fraction shall be disregarded, and the Company shall have no obligation to
make any cash or other payment with respect to such a fractional share.
7. Exercise of Stock Options.
(a) Time of Exercise. Subject to the provisions of the Plan, including
without limitation Section 7(d) and Section 8, the Board or the Committee, in
its discretion, shall determine the time when an Option, or a portion of an
Option, shall become exercisable, and the time when an Option, or a portion of
an Option, shall expire; provided, however, that (i) an Incentive Option shall
expire, to the extent not exercised, no later than the tenth anniversary of
the date on which it was granted; and (ii) any Incentive Option granted to any
person who owns shares possessing more than 10% of the total combined voting
power or value of all classes of stock of the Company or of its Parent or a
Subsidiary shall have a term not to exceed five (5) years. Such time or times
shall be set forth in the Option Agreement evidencing such Option.
(b) Notice of Exercise. An Optionee electing to exercise an Option
shall give written notice to the Company, as specified by the Option
Agreement, of his/her election to purchase a specified number of shares, such
notice shall be accompanied by the instrument evidencing such Option and any
other documents required by the Company, and shall tender the exercise price
of the shares he/she has elected to purchase. If the notice of election to
exercise is given by the executor or administrator of a deceased Participant,
or by the person or persons to whom the Option has been transferred by the
participant's will or the applicable laws of descent and distribution, the
Company will be under no obligation to deliver shares pursuant to such
exercise unless and until the Company is satisfied that the person or persons
giving such notice is or are entitled to exercise the Option.
(c) Exchange of Outstanding Stock or Optioned Stock. As part or full
payment for the exercise of an Option, the Board, in its sole discretion, may
permit an Optionee (i) to surrender to the Company shares of Common Stock
previously acquired by the Optionee at least six (6) months prior to such
surrender or (ii) to authorize the Corporation to withhold Optioned Stock.
Such surrendered shares shall be valued at their Fair Market Value on the date
of exercise of the option.
(d) Termination of Continuous Status Before Exercise. If a
Participant's Continuous Status with the Company or its Parent or any
Subsidiary shall cease for any reason (other than the Participant's death,
retirement, or disability as provided below), any Option then held by the
Participant or his/her estate, to the extent then exercisable, shall remain
exercisable after such cessation of the Continuous Status for a period of
thirty (30) days commencing upon the date of such cessation (or such longer
period as the Board may allow, either in the form of Option Agreement or by
Board action). If the Option is not exercised during this period it shall be
deemed to have been forfeited and be of no further force or effect.
Notwithstanding the exercise period hereinabove described, if the holder of an
option (i) is terminated for "cause" (as hereinafter defined) or (ii) is
terminated due to his expropriation of Company property (including trade
secrets or other proprietary rights), the Board shall have the authority, by
notice to the holder of an Option, to immediately terminate such Option,
effective on the date of termination, and such Option shall no longer be
exercisable to any extent whatsoever. As used herein, "cause" shall mean that
the holder of an Option has willfully and intentionally engaged in material
misconduct, gross neglect of duties or grossly negligent failure to act which
materially and adversely affects the business or affairs of the Company, or
has committed any act of fraud or any act not approved by the Board involving
any material conflict of interest or self-dealing adverse to the Company, or
has been convicted of a felony or any offense involving moral turpitude, or
has unreasonably failed to comply with any reasonable direction from the Board
or its Chairman with respect to a major policy decision affecting the Company,
issued pursuant to its authority under the By-Laws of the company, which
direction is approved by a majority of the Board.
(e) Death. If a Participant dies at a time when he is entitled to
exercise an Option, then at any time or times within twelve (12) months after
his/her death (or such further period as the Board may allow) such option may
be exercised, as to all or any of the shares which the Participant was
entitled to purchase immediately prior to his/her death by his/her executor or
administrator or the person(s) to whom the Option is transferred by will or
the applicable laws of descent and distribution, and except as so exercised
such Option will expire at the end of such period. In no event, however, may
any Option be exercised after the expiration of the term.
(f) Retirement and Disability. If a Participant retires from service
at age 65 or older or retires before age 65 with the consent of the Board of
Directors or becomes disabled (within the meaning of Section 105(d) (4) of the
Code) at a time when he is entitled to exercise an Option, then, at any time
or times within thirty (30) days of the date of such retirement or within
twelve (12) months of the date of such disability, he may exercise such Option
as to all or any of the shares which he was entitled to purchase under such
Option immediately prior to such retirement or disability. Except as so
exercised, such Option shall expire at the end of such period. In no event,
however, may any Option be exercised after the expiration of its term.
(g) Disposition of Terminated Stock Options. Any shares of Common
Stock subject to Options which have been terminated as provided above shall
not thereafter be eligible for purchase by the Participant but shall again be
available for grant by the Board to other Participants.
8. Special Provisions Relating to Incentive Options. The Company shall
not grant Incentive Options under the Plan to any Optionee to the extent that
the aggregate Fair Market Value of the Common Stock Covered by such Incentive
Options which are exercisable for the first time during any calendar year,
when combined with the aggregate Fair Market Value of all stock covered by
Incentive Options granted to such optionee after December 31, 1986 by the
Company, its Parent or a Subsidiary thereof which are exercisable for the
first time during the same calendar year, exceeds $100,000. Incentive Options
shall be granted only to persons who, on the date of grant, are Employees of
the Company or its Parent or Subsidiary.
9. No Contract of Employment. Unless otherwise expressed in a writing
signed by an authorized officer of the Company, all Employees of the Company
are for an unspecified period of time and are considered to be "at-will
employees." Nothing in this Plan shall confer upon any Participant the right
to continue in the employ of the Company, its Parent or any Subsidiary, nor
shall it limit or restrict in any way the right of the Company, its Parent or
any such Subsidiary to discharge the Participant at any time for any reason
whatsoever, with or without cause.
10. No Rights as a Stockholder. A Participant shall have no rights as
a stockholder with respect to any shares of Common Stock subject to an option.
11. Nontransferability of Options; Death of Participant. No option
acquired by a Participant under the Plan shall be assignable or transferable
by a Participant, other than by will or the laws of descent and distribution,
and such Options are exercisable, during his lifetime, only by Optionee.
Subject to Section 7(e), in the event of Optionee's death, the Option may be
exercised by the personal representative of the Participant's estate or if no
personal representative has been appointed, by the successor(s) in interest
determined under the Participant's will or under the applicable laws of
descent and distribution.
12. Liquidation or Merger of the Company.
(a) Liquidation. In the event of a proposed dissolution or liquidation
of the Company, the Option shall terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board.
The Board may, in the exercise of its sole discretion in such instances,
declare that any Option shall terminate as of a date fixed by the Board and
give each Optionee the right to exercise his Option, as to all or any part of
the Shares covered by an Option, including Shares as to which the option would
not otherwise be exercisable.
(b) Sale of Assets Merger or Consolidation. In the event of a proposed
sale of all or substantially all of the assets of the Company, or the merger
or consolidation of the Company with or into another corporation in a
transaction in which the Company does not survive, all Options shall vest
immediately and may be fully exercised without regard to the normal vesting
schedules of the Options; provided, however, that if the Board determines,
after giving due consideration to the effects of any such sale, merger, or
consolidation on the Employees of the Company, that such immediate vesting is
not in the best interests of the Company, the Option shall be assumed or an
equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation. If the Option becomes
fully exercisable immediately, the Board shall notify the Optionee that the
option shall be fully exercisable for a period of not less than ten (10) nor
more than sixty (60) days from the date of such notice and, if such Option
shall not be exercised, the Option shall terminate upon the expiration of such
period and be of no further force or effect.
13. Amendments; Discontinuance of Plan. The Board may from time to
time alter, amend, suspend, or discontinue the Plan, including, where
applicable, any modifications or amendments as it shall deem advisable for any
reason, including satisfying the requirements of any law or regulation or any
change thereof; provided, however, that no such action shall adversely affect
the rights and obligations with respect to Options at any time outstanding
under the Plan; and provided further, that no such action shall, without the
approval of the stockholders of the Company, (a) increase the maximum number
of shares of Common Stock that may be made subject to options (unless
necessary to effect the adjustments required by Section 6(b)), (b) change the
formula for determining the exercise price or the maximum term of Options that
may be granted under the Plan or (c) materially lessen the requirements as to
eligibility for participation in the Plan. No such amendment shall materially
adversely affect the rights of any Participant under any Option previously
granted without such Participant's prior consent.
14. Registration of Optioned Shares. The Options shall not be
exercisable unless the purchase of such Optioned Shares is pursuant to an
applicable effective registration statement under the Securities Act of 1933,
as amended, or unless, in the opinion of counsel to the Company, the proposed
purchase of such Optioned Shares would be exempt from the registration
requirements of the Securities Act of 1933, as amended.
15. Withholding Taxes; Satisfied by Withholding Optioned Shares.
(a) General. The Company, its Parent, or any Subsidiary may take such
steps as it may deem necessary or appropriate for the withholding of any taxes
which the Company, its Parent, or any Subsidiary is required by law or
regulation of any governmental authority, whether Federal, state, or local,
domestic or foreign, to withhold in connection with any Option including, but
not limited to, requiring the Optionee to pay such tax at the time of exercise
or the withholding of issuance of shares of Common Stock to be issued upon the
exercise of any Option until the Participant reimburses the Company for the
amount the Company is required to withhold with respect to such taxes, or, at
the Company's sole discretion, canceling any portion of such issuance of
Common Stock in any amount sufficient to reimburse itself for the amount it is
required to so withhold.
(b) Satisfying Taxes by Withholding Optioned Shares. Option Agreements
under the Plan may, at the discretion of the Board, contain a provision to the
effect that all Federal and state taxes required to be withheld or collected
from an Optionee upon exercise of an Option may be satisfied by the
withholding of a sufficient number of exercised Option Shares which, valued at
Fair Market Value on the date or exercise, would be equal to the total
withholding obligation of the Optionee for the exercise of such Option;
provided, however, that if the Company is a public reporting corporation, no
person who is an "officer" of the Company as such term is defined in Rule 3b-2
under the Securities Exchange Act of 1934 may elect to satisfy the withholding
of Federal and state taxes upon the exercise of an Option by the withholding
of Optioned Shares unless such election is made either (i) at least six months
prior to the date that the exercise of the Option becomes a taxable event or
(ii) during any of the periods beginning on the third business day following
the date on which the Company issues a news release containing the operating
results of a fiscal quarter or fiscal year and ending on the twelfth business
day following such date. Such election shall be deemed made upon receipt of
notice thereof by an officer of the Company, by mail, personal delivery, or by
facsimile message, and shall (unless notice to the contrary is provided to the
Company) be operative for all Option exercises which occur during the
twelve-month period following election.
16. Effective Date and Term of Plan. The Plan is effective as of the
date of adoption by the Board and Options may be granted at any time on or
after such date; provided, however, that the Plan shall terminate if the
stockholders of the Company do not approve and adopt it within twelve (12)
months of such date. No Options shall be granted subsequent to ten years after
the effective date of the Plan; however, Options outstanding subsequent to ten
years after the effective date of the Plan shall continue to be governed by
the provisions of the Plan until exercised or terminated in accordance with
the Plan or the respective Option Agreements.
Appendix B
MADE2MANAGE SYSTEMS, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder(s) of shares of Common Stock of Made2Manage Systems,
Inc. (the "Company") hereby constitutes and appoints Ira Coron, Stephen R.
Head and David B. Wortman, and each of them, with full power of substitution
and revocation, as proxy to appear and to vote the shares of Common Stock of
Made2Manage Systems, Inc. which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders to be held at Embassy
Suites Hotel - North, 3912 Vincennes Road, Indianapolis, Indiana on April 22,
1998, at 10:00 a.m. (Eastern Standard Time) and any adjournment or
adjournments thereof.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE STOCKHOLDER(S). IF NO
CHOICE IS MADE, THIS PROXY WILL BE VOTED FOR THE APPROVAL OF THE ELECTION AS
DIRECTORS OF THE PERSONS LISTED ON THE REVERSE AND FOR THE AUTOMATIC 5% YEARLY
INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE AND RESERVED FOR
ISSUANCE UNDER THE MADE2MANAGE SYSTEMS, INC. STOCK OPTION PLAN. IF ANY OTHER
MATTERS ARE PROPERLY BROUGHT BEFORE THE MEETING OR IF A NOMINEE FOR ELECTION
AS A DIRECTOR NAMED IN THE PROXY STATEMENT IS UNABLE TO SERVE OR FOR GOOD
CAUSE WILL NOT SERVE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
IN THE DISCRETION OF THE PROXY ON SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEES
AS THE BOARD OF DIRECTORS MAY RECOMMEND. THIS PROXY MAY BE REVOKED AT ANY TIME
PRIOR TO THE VOTING THEREOF.
(TO BE CONTINUED AND SIGNED ON REVERSE SIDE)
1. The election of the following nominees as directors of the Company
(except as marked to the contrary), each to serve for a term of one year
and until his successor is duly elected and qualified or his earlier
resignation, removal from office or death: Nominees: Ira Coron, Gregory
F. Ehlinger, David B. Wortman.
/ / FOR ALL NOMINEES LISTED AT RIGHT / / WITHOLD AUTHORITY TO VOTE FOR
ALL NOMINEES LISTED AT RIGHT
YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY STRIKING OUT HIS NAME.
2. Approval of an automatic 5% yearly increase in the number of shares of
Common Stock available and reserved for issuance under the Made2Manage
Systems, Inc. Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR
ADJOURNMENTS THEREOF.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement, dated March 2, 1998, and hereby expressly revokes any and
all proxies heretofore given or executed by the undersigned with respect to
the shares of Common Stock of Made2Manage Systems, Inc. the undersigned is
entitled to vote at the Annual Meeting.
PLEASE RETURN THIS CARD IN THE ENCLOSED ENVELOPE BY APRIL 21, 1998.
___________________________________
Signature of Shareholder
___________________________________
Signature of Shareholder
Dated: ____________________________, 1998
Note:
Please sign your name exactly as it appears on the envelope in which this card
was mailed. If shares of Common Stock are registered in two names, both should
sign. When signing as attorney, executor, administrator, trustee, guardian or
corporate official, please give your full title. If signer is a corporation,
please sign the full corporate name by authorized officer.
