<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[X] Preliminary proxy statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ALLSCRIPTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[_] 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:
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<PAGE>
[Allscripts, Inc. Color Logo]
2401 Commerce Drive
Libertyville, Illinois 60048
Telephone: (847) 680-3515
Facsimile: (847) 680-9887
, 2000
Fellow Stockholders:
You are cordially invited to attend the Allscripts, Inc. Annual Meeting of
Stockholders on Wednesday, May 10, 2000 at 9:00 a.m. (Central Time), at
LaSalle Bank, 135 South LaSalle Street, Chicago, Illinois 60603, 43rd Floor,
Room A.
This will be our first Annual Meeting as a public company and we are
looking forward to discussing our 1999 performance. This Notice of Annual
Meeting and Proxy statement describes the business to be transacted at the
meeting and provides other information concerning Allscripts that you should
be aware of when you vote your shares. The principal business of the Annual
Meeting will be to elect three directors to each serve for a three-year term,
to amend our Certificate of Incorporation and to amend Allscripts' employee
stock option plan.
All stockholders are welcome to attend the Annual Meeting, but it is
important that your shares are represented at the Annual Meeting whether or
not you plan to attend. To ensure that you will be represented, we ask you to
sign, date and return the enclosed proxy card or proxy voting instruction form
as soon as possible. You may also be able to vote by telephone or the Internet
and if you are able to and choose to use one of those forms of voting, it is
not necessary for you to return your proxy card. In any event, please vote as
soon as possible.
On behalf of the Board of Directors and our management team, I would like
to express our appreciation for your interest in the affairs of Allscripts.
Sincerely,
Glen E. Tullman
Chairman and
Chief Executive Officer
<PAGE>
Allscripts, Inc.
2401 Commerce Drive
Libertyville, Illinois 60048
----------------
Notice of Annual Meeting of Stockholders
----------------
Wednesday, May 10, 2000
9:00 a.m.
LaSalle Bank
135 South LaSalle Street
Chicago, Illinois 60603
43rd Floor, Room A
The purpose of our Annual Meeting is to:
1. Elect three directors for three-year terms;
2. Amend our Certificate of Incorporation to increase the number of
authorized shares of common stock from 75,000,000 to 150,000,000;
and
3. Amend our Amended and Restated 1993 Stock Incentive Plan to increase
the number of shares that we may issue under the Plan by 3,000,000
shares.
You can vote at the Annual Meeting in person or by proxy if you were a
stockholder of record on March 27, 2000. You may revoke your proxy at any time
prior to its exercise at the Annual Meeting.
We have enclosed with this notice and proxy statement a copy of our Annual
Report to Stockholders for the fiscal year ended December 31, 1999.
By Order of the Board of Directors,
John G. Cull
Senior Vice President, Finance,
Secretary and Treasurer
, 2000
<PAGE>
Allscripts, Inc.
----------------
Proxy Statement
----------------
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Questions and Answers...................................................... 1
Election of Directors...................................................... 3
Meetings and Committees of the Board of Directors.......................... 4
Director Compensation...................................................... 4
Ownership of Allscripts Common Stock....................................... 5
Section 16(a) Beneficial Ownership Reporting Compliance.................... 6
Executive Compensation..................................................... 6
Compensation Committee Report on Executive Officers' Compensation.......... 8
Company Performance........................................................ 11
Certain Relationships and Related Party Transactions....................... 12
Amendment of Certificate of Incorporation.................................. 13
Amendment of Amended and Restated 1993 Stock Incentive Plan................ 14
Independent Public Accountants............................................. 17
Executive Officers......................................................... 17
</TABLE>
Annual Report on Form 10-K
You may obtain a free copy of our Annual Report on Form 10-K for the year
ended December 31, 1999, including schedules, that is on file with the
Securities and Exchange Commission. Please contact J. Gregory Cull, Secretary,
Allscripts, Inc., 2401 Commerce Drive, Libertyville, Illinois 60048.
<PAGE>
Questions and Answers
What am I voting on?
We are soliciting your vote on:
1. the election of three directors to each serve for a three-year term;
2. the amendment of our Certificate of Incorporation; and
3. the amendment of our Amended and Restated 1993 Stock Incentive Plan.
Who may vote?
Stockholders at the close of business on March 27, 2000 (the record date)
are entitled to vote. On that date, there were 26,212,138 shares of Allscripts
common stock outstanding.
How many votes do I have?
Each share of Allscripts common stock that you own entitles you to one
vote.
How do I vote?
All stockholders may vote by mail. You also may be able to vote by
telephone or over the Internet. To vote by mail, please sign, date and mail
your proxy in the postage paid envelope provided. If you hold your shares
through a bank or broker and they do not offer telephone or Internet voting,
please complete and return your proxy by mail. If you attend the Annual
Meeting in person and would like to vote then, we will give you a ballot. If
your shares are held in the name of your broker, bank or other nominee, you
need to bring an account statement or letter from the nominee indicating that
you were the beneficial owner of the shares on March 27, 2000, the record date
for voting.
How does discretionary voting authority apply?
If you sign, date and return your proxy card, your vote will be cast as you
direct. If you do not indicate how you want to vote, you give authority to
Glen E. Tullman and David B. Mullen to vote for the items discussed in these
proxy materials and any other matter that is properly raised at the Annual
Meeting. In such a case, your vote will be cast FOR the election of each
director nominee, FOR the amendment of our Certificate of Incorporation, FOR
the amendment of the Stock Incentive Plan and FOR or AGAINST any other
properly raised matters at the discretion of Messrs. Tullman and Mullen.
May I revoke my proxy?
You may revoke your proxy at any time before it is exercised in one of four
ways:
1. Notify our Secretary in writing before the Annual Meeting that you
are revoking your proxy.
2. Submit another proxy with a later date.
3. Vote by telephone or Internet after you have given your proxy.
4. Vote in person at the Annual Meeting.
What does it mean if I receive more than one proxy card?
Your shares are likely registered differently or are in more than one
account. You should sign and return all proxy cards to guarantee that all of
your shares are voted.
<PAGE>
What constitutes a quorum?
The presence, in person or by proxy, of the holders of one-third of the
total number of shares of Allscripts stock issued and outstanding constitutes
a quorum. You will be considered part of the quorum if you return a signed and
dated proxy card, if you vote by telephone or Internet, or if you attend the
Annual Meeting.
Abstentions and broker non-votes are counted as "shares present" at the
Annual Meeting for purposes of determining whether a quorum exists. A broker
non-vote occurs when a broker submits a proxy that does not indicate a vote
for a proposal because he or she does not have voting authority and has not
received voting instructions from you.
What vote is required to approve each proposal?
Election of Directors: A majority of the shares present or represented by
proxy at the Annual Meeting must approve the election of the directors. If you
do not want to vote your shares for a particular nominee, you may indicate
that in the space provided on the proxy card or withhold authority as prompted
during telephone or Internet voting. Abstentions will have the effect of votes
against the election of the directors since they result in fewer votes for
approval, but broker non-votes will have no effect.
Amendment of Certificate of Incorporation: Amendment of our Certificate of
Incorporation requires that a majority of the shares of common stock
outstanding vote for the action. Abstentions and broker non-votes will have
the effect of votes against the amendment since they result in fewer votes for
the action.
Amendment of Stock Incentive Plan: Amendment of our Stock Incentive Plan
requires that a majority of the shares present or represented by proxy and
having the power to vote at the Annual Meeting vote in its favor. An
abstention will have the effect of a vote against the amendment of the Plan,
but a broker non-vote will have no effect.
How do I submit a stockholder proposal?
You must submit a proposal to be included in our proxy statement for the
2001 annual meeting of stockholders in writing no later than ,
. Your proposal must comply with the proxy rules of the Securities and
Exchange Commission. You should send your proposal to our Secretary at our
address on the cover of this proxy statement.
You also may submit a proposal that you do not want included in the proxy
statement but that you want to raise at the 2001 annual meeting of
stockholders. We must receive your proposal in writing after December 11, 2000
but before January 10, 2001. If you submit your proposal after the deadline,
then Securities and Exchange Commission rules permit the individuals named in
the proxies solicited by Allscripts' Board of Directors for that meeting to
exercise discretionary voting power as to that proposal. To be properly
brought before an annual meeting, our by-laws require that your proposal give:
(1) a brief description of the business you want to bring before the meeting;
(2) your name and address as they appear on our stock records; (3) the class
and number of shares of Allscripts that you beneficially own; and (4) any
interest you may have in the business you want to bring before the meeting.
You should send your proposal to our Secretary at the address on the cover of
this proxy statement.
How do I nominate a director?
If you wish to recommend a nominee for director for the 2001 annual meeting
of stockholders, our Secretary must receive your written nomination after
December 11, 2000 but before January 10, 2001. You should submit your proposal
to the Secretary at our address on the cover of this proxy statement. Our by-
laws require that you provide: (1) your name and address and the name and
address of the nominee; (2) a statement that the nominee is a record holder of
Allscripts entitled to vote at the meeting and that you plan to appear in
person or by proxy at the meeting to make the nomination; (3) a description of
all arrangements or understandings under which you
2
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are making the nominations; (4) any other information that the rules of the
Securities and Exchange Commission require to be included in a proxy
statement; and (5) the nominee's agreement to serve as a director if elected.
Who pays to prepare, mail and solicit the proxies?
We will pay all of the costs of preparing, mailing and soliciting these
proxies. We will ask brokers, banks, voting trustees and other nominees and
fiduciaries to forward the proxy materials to the beneficial owners of
Allscripts common stock and to obtain the authority to execute proxies. We
will reimburse them for their reasonable expenses upon request. In addition to
mailing proxy materials, our directors, officers and employees may solicit
proxies in person, by telephone or otherwise. These individuals will not be
specially compensated.
Election of Directors
Eight directors currently serve on our Board of Directors. The directors
are divided into three classes. At this Annual Meeting, you will be asked to
elect three directors. Each director will serve for a term of three years,
until a qualified successor director has been elected, or until he resigns or
is removed by the Board. The remaining five directors will continue to serve
on the Board as described below. The nominees, Philip D. Green, L. Ben Lytle
and Edward M. Philip, are currently Allscripts directors.
Your shares will be voted as you specify on the enclosed proxy card or in
telephone or Internet voting. If you do not specify how you want your shares
voted, we will vote them FOR the election of Messrs. Green, Lytle and Philip.
If unforeseen circumstances (such as death or disability) make it necessary
for the Board of Directors to substitute another person for a nominee, your
shares will be voted FOR that other person. The Board does not anticipate that
any nominee will be unable to serve. The nominees and continuing directors
have provided the following information about themselves.
Nominees
Philip D. Green, 49, has been one of our directors since 1992. Mr. Green is
a founding partner of the Washington, D.C. based law firm of Green, Stewart,
Farber & Anderson, P.C., which was formed in 1989. From 1978 through 1989, Mr.
Green was a partner in the Washington, D.C. based law firm of Schwalb,
Donnenfeld, Bray & Silbert, P.C. Mr. Green practices healthcare law and
represents several major teaching hospitals.
L. Ben Lytle, 53, has been one of our directors since March 1999. He is
Chairman of the Board of Anthem, Inc., one of the largest healthcare
management companies in the United States. Before joining Anthem's predecessor
company in 1976, he held positions with LTV Aerospace, Associates Corp. of
North America and American Fletcher National Bank. Mr. Lytle serves on the
boards of IPALCO Enterprises, Inc., an energy company; Central Newspapers,
Inc., a media company; CID Equity Partners, a venture capital firm; and Duke
Realty Investments, Inc., a real estate investment firm; and Xcare.net, Inc.,
an e-commerce health care company.
Edward M. Philip, 34, Edward M. Philip has been one of our directors since
July 1999. Mr. Philip is Chief Operating Officer of Lycos, Inc., which he has
been since December 1996. He has been Chief Financial Officer and Secretary of
Lycos, Inc. since December 1995. From July 1991 to December 1995, Mr. Philip
was employed by The Walt Disney Company, where he served in various finance
positions, most recently as Vice President and Assistant Treasurer. Prior to
joining The Walt Disney Company, Mr. Philip was an investment banker at
Salomon Brothers Inc.
Directors Continuing Until 2001 Annual Meeting
Michael J. Kluger, 43, has been one of our directors since 1994. He is a
founding partner of Liberty Partners, L.P., whose general partner is Liberty
Capital Partners, Inc., a New York investment management firm, where he has
served as a Managing Director since 1992. For five years prior thereto, Mr.
Kluger was a Director and Senior Vice President of Merrill Lynch Interfunding
Inc., a subsidiary of Merrill Lynch & Co., an investment banking and brokerage
firm. Mr. Kluger is also a managing director of Liberty Capital Partners, Inc.
Mr. Kluger serves on the Board of Directors of Monaco Coach Corporation.
3
<PAGE>
David B. Mullen, 49, has been our President and Chief Financial Officer and
a director since August 1997. From January 1995 to June 1997, Mr. Mullen
served as Chief Financial Officer of Enterprise Systems, Inc. From 1983 to
1995, Mr. Mullen was employed in various positions by CCC Information Services
Group, Inc., including Vice Chairman, President and Chief Financial Officer.
Prior to that, he was employed by Ernst & Young LLP.
Gary M. Stein, 32, has been one of our directors since April 1998. Mr.
Stein is a Vice President of Morgan Stanley Dean Witter & Co., an investment
banking firm, where he has been employed since 1997 and a Vice President of
Morgan Stanley Venture Partners III, L.L.C. Prior to joining Morgan Stanley
Dean Witter in 1997, Mr. Stein was an Associate at Patricof & Co. Ventures,
Inc., where he focused on private equity investments in the healthcare
industry from 1992 to 1997. Prior to that time, Mr. Stein was a Financial
Analyst at Morgan Stanley & Co., Inc. and Morgan Stanley Australia, Ltd.
Directors Continuing Until 2002 Annual Meeting
M. Fazle Husain, 35, has been one of our directors since April 1998. Mr.
Husain is a Principal of Morgan Stanley Dean Witter & Co., an investment
banking firm, where he has been employed since 1991, and is a Managing Member
of Morgan Stanley Venture Partners III, L.L.C., the General Partner of Morgan
Stanley Venture Partners III, L.P., Morgan Stanley Venture Investors III, L.P.
and The Morgan Stanley Venture Partners Entrepreneur Fund, L.P. Mr. Husain was
also employed at Morgan Stanley Dean Witter from 1987 until 1989. Mr. Husain
focuses primarily on investments in the healthcare industry, including
healthcare services, medical devices and healthcare information technology. He
serves on the Boards of Directors of IntegraMed America, Inc. and Cardiac
Pathways Corporation.
Glen E. Tullman, 40, has been the Chairman of the Board since May 1999 and
our Chief Executive Officer since August 1997. From October 1994 to July 1997,
Mr. Tullman was Chief Executive Officer of Enterprise Systems, Inc., a
publicly traded healthcare information services company providing resource
management solutions to large integrated healthcare networks. From 1983 to
1994, Mr. Tullman was employed by CCC Information Services Group, Inc., a
computer software company servicing the insurance industry, most recently as
President and Chief Operating Officer.
Meetings and Committees of the Board of Directors
The Board of Directors met seven times during 1999. In addition to meetings
of the full Board, directors attended meetings of Board committees. The Board
of Directors has standing audit and compensation committees. In 1999, each
director attended at least 75% of the meetings of the Board and of the
committees on which he served that were held during the period for which he
was a director.
The Audit Committee recommends the independent auditors to the Board and
oversees the accounting and audit functions of Allscripts. Philip D. Green, L.
Ben Lytle and Gary M. Stein are the members of the Audit Committee. Mr. Green
will not serve on the Committee after the date of the Annual Meeting. Mr.
Philip will replace Mr. Green on the Committee at the time of the Annual
Meeting. The Committee met two times during 1999.
The Compensation Committee determines executive officers' salaries, bonuses
and other compensation and administers the Stock Incentive Plan. M. Fazle
Husain, Michael J. Kluger and L. Ben Lytle are the members of the Compensation
Committee. The Committee met three times during 1999.
Director Compensation
Directors who are Allscripts employees or affiliates of Allscripts receive
no compensation for their services as directors. Our independent directors
receive a fee of $1,000 for each meeting of the Board of Directors that they
attend. We also reimburse them for their travel expenses. Under our Stock
Incentive Plan, these directors are eligible to receive stock option grants at
the discretion of the Board of Directors or the Compensation Committee. In
1999, Mr. Philip received an option to purchase 40,000 shares of our common
stock at a per share exercise price of $12.6875. The option vests one-third
per year and becomes fully vested in 2002.
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<PAGE>
Ownership of Allscripts Common Stock
The following table shows how much Allscripts common stock was beneficially
owned as of March 15, 2000 by:
. our Chief Executive Officer and the four other most highly compensated
executive officers based on compensation earned during 1999;
. each director;
. each stockholder known by us to own beneficially more than 5% of
Allscripts common stock; and
. all directors and executive officers as a group.
Beneficial ownership is a technical term broadly defined by the Securities
and Exchange Commission to mean more than ownership in the usual sense. In
general, beneficial ownership includes any shares that the holder can vote or
transfer and stock options and warrants that are exercisable currently or
become exercisable within 60 days. These shares are considered to be
outstanding for the purpose of calculating the percentage of outstanding
Allscripts common stock owned by a particular stockholder, but are not
considered to be outstanding for the purpose of calculating the percentage
ownership of any other person. Percentage of ownership is based on 26,212,138
shares outstanding as of March 15, 2000. Except as otherwise noted, the
stockholders named in this table have sole voting and investment power for all
shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
Options and
Shares of Warrants
Common Stock Exercisable
Named Executive Officers, Beneficially Within Percent
Directors and 5% Stockholders Owned 60 Days Total of Class
- ----------------------------- ------------ ----------- ---------- --------
<S> <C> <C> <C> <C>
Glen E. Tullman (1)............... 600,832 130,148 730,980 2.8
David B. Mullen................... 388,807 142,618 531,425 2.0
Steven M. Katz.................... 185,053 94,160 279,213 1.1
John G. Cull...................... 19,903 86,817 106,720 *
Joseph E. Carey................... 98,062 34,584 132,646 *
Philip D. Green................... 36,421 74,472 110,893 *
M. Fazle Husain (2)............... 5,254,063 -- 5,254,063 20.0
Michael J. Kluger (3)............. 3,248,170 -- 3,248,170 12.4
L. Ben Lytle...................... -- 8,333 8,333 *
Edward M. Philip.................. -- -- -- --
Gary M. Stein (2)................. 5,254,063 -- 5,254,063 20.0
Morgan Stanley Dean Witter & Co.
(2).............................. 5,254,063 -- 5,254,063 20.0
Liberty Partners Holdings 6,
L.L.C. (3)....................... 3,248,170 -- 3,248,170 12.4
All directors and executive
officers as a group (11 persons). 9,831,311 571,132 10,402,443 38.8
</TABLE>
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*Less than 1%.
(1) Mr. Tullman is a limited partner in The Morgan Stanley Venture Partners
Entrepreneur Fund, L.P., an affiliate of Morgan Stanley Dean Witter & Co.,
and has an approximately 2.5% interest therein. His interest does not
constitute beneficial ownership of any of the shares owned by this entity.
(2) Morgan Stanley Dean Witter & Co. is the sole shareholder of Morgan Stanley
Venture Partners III, Inc., which is the institutional managing member of
Morgan Stanley Venture Partners III, L.L.C. Mr. Husain is a Managing
Member of Morgan Stanley Venture Partners III, L.L.C. and Mr. Stein is a
Vice President. Except to the extent of his proportionate interest
therein, each of Messrs. Husain and Stein disclaims beneficial ownership
of the shares held beneficially by this entity by virtue of it being the
general partner of Morgan Stanley Venture Partners III, L.P., which is the
record owner of 4,611,499 shares, Morgan Stanley Venture Investors III,
L.P., which is the record owner of 442,914 shares and The Morgan Stanley
Venture Partners Entrepreneur Fund, L.P., which is the record owner of
199,650 shares. The address for Messrs. Husain and Stein and these
entities is c/o Morgan Stanley Dean Witter Venture Partners, 1221 Avenue
of the Americas, New York, New York 10020.
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<PAGE>
(3) Mr. Kluger is a Managing Director of Liberty Capital Partners, Inc., an
affiliate of Liberty Partners Holdings 6, L.L.C. Mr. Kluger disclaims
beneficial ownership of the shares held by Liberty Partners Holdings 6,
L.L.C., except to the extent of his proportionate interest therein. The
address for Mr. Kluger and Liberty Partners Holdings 6, L.L.C. is c/o
Liberty Partners, L.P., 1177 Avenue of the Americas, New York, New York
10036.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that
Allscripts' executive officers, directors and 10% stockholders file reports of
ownership and changes of ownership of Allscripts common stock with the
Securities and Exchange Commission. Based on a review of copies of these
reports provided to us and written representations from executive officers and
directors, we believe that all filing requirements were met during 1999,
except that the initial Form 4 reports for each of the officers and directors
were required to be amended.
Executive Compensation
This table summarizes the compensation for the Chief Executive Officer and
the other four most highly compensated executive officers of Allscripts. The
amount shown in the "all other compensation" column represents our matching
contributions under our 401(k) plan.
Summary Compensation
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual
Compensation Awards
---------------- ------------
Securities
Name and Underlying All Other
Principal Position Year Salary Bonus Options Compensation
------------------ ---- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Glen E. Tullman............ 1999 $225,000 $12,500 -- $ 996
Chairman and Chief 1998 225,000 -- 548,083 498
Executive Officer
David B. Mullen............ 1999 $225,000 $12,500 -- $1,000
President and Chief 1998 225,000 -- 548,083 1,000
Financial Officer
Steven M. Katz............. 1999 $215,000 $12,500 -- --
Executive Vice President, 1998 215,000 -- 382,841 --
Sales and Marketing
John G. Cull............... 1999 $141,000 $35,000 4,166 $1,000
Senior Vice President, 1998 140,000 -- 19,164 1,000
Finance,
Secretary and Treasurer
Joseph E. Carey............ 1999 $134,583 $37,500(1) 69,166 --
Chief Operating Officer 1998 -- -- -- --
</TABLE>
- --------
(1) Includes a signing bonus of $25,000 awarded in April 1999 pursuant to the
terms of Mr. Carey's employment agreement.
Option Grants in 1999
This table gives information relating to option grants during 1999 to the
executive officers listed in the Summary Compensation Table. The options were
granted under our Amended and Restated 1993 Stock Incentive Plan. The
potential realizable value is calculated based on the term of the option at
its time of grant, 10 years. The calculation assumes that the fair market
value on the date of grant appreciates at the indicated rate compounded
annually for the entire term of the option and that the option is exercised at
the exercise price and
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<PAGE>
sold on the last day of its term at the appreciated price. Stock price
appreciation of 0%, 5% and 10% is assumed pursuant to the rules of the
Securities and Exchange Commission. Based on the closing price of the common
stock on March 31, 2000 of $60.125 per share, the actual price appreciation
may be substantially greater than that assumed under these rules. We cannot
assure you that the actual stock price will appreciate over the 10-year option
term at the assumed levels or at any other defined level.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
------------------------------------------------- ----------------------------
Percent of Fair
Total Market
Securities Options Exercise Value
Underlying Granted to Price at
Options Employees Per Grant Expiration
Name Granted in 1999 Share Date Date 0% 5% 10%
- ---- ---------- ---------- -------- ------ ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Glen E. Tullman......... -- -- -- -- -- -- -- --
David B. Mullen......... -- -- -- -- -- -- -- --
Steven M. Katz.......... -- -- -- -- -- -- -- --
John G. Cull............ 4,166(1) 0.4% $3.00 $9.00 3/31/09 $ 24,996 $ 48,576 $ 84,752
Joseph E. Carey......... 69,166(2) 6.7 3.00 9.00 3/31/09 414,996 806,479 1,407,091
</TABLE>
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(1) The option vests 25% on each of March 31, 2000, 2001, 2002 and 2003.
(2) The option vested 25% on October 11, 1999 and vests 25% on each of March
31, 2000, 2001 and 2002.
Option Exercises in 1999 and 1999 Year-End Option Values
This table provides information regarding the exercise of options during
1999 by the CEO and the other four most highly compensated executives. The
value realized is calculated using the difference between the option exercise
price and the price of Allscripts common stock on the date of exercise
multiplied by the number of shares subject to the option. For Messrs. Mullen
and Katz, the fair market value on the date of exercise has been deemed to be
$9.00 per share. The value of unexercised in-the-money options at year end
1999 is calculated using the difference between the option exercise price and
$44.00 (the last reported market price of Allscripts common stock on December
31, 1999) multiplied by the number of shares underlying the option. An option
is in-the-money if the market value of the common stock subject to the option
is greater than the exercise price.
<TABLE>
<CAPTION>
Securities Underlying Value of Unexercised In-
Unexercised Options at the-Money Options at Year
Shares Year End 1999 End 1999
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Glen E. Tullman......... -- -- 130,148 146,454 $5,718,703 $6,435,189
David B. Mullen......... 262,683 $2,348,386 137,703 142,129 6,050,670 6,245,148
Steven M. Katz.......... 185,053 1,654,374 94,160 100,794 4,137,390 4,428,888
John G. Cull............ 12,498 173,465 84,214 22,448 3,576,374 965,209
Joseph E. Carey......... -- -- 17,292 51,874 708,972 2,126,834
</TABLE>
Employment Agreements
We have entered into employment agreements with Messrs. Tullman and Mullen
effective August 1, 1997, with Mr. Katz effective September 2, 1997 and with
Mr. Carey effective August 2, 1999. Each agreement has an initial term ending
December 31, 2000 and renews for consecutive one-year terms unless either
party gives 30 days' notice prior to the expiration of any term. Messrs.
Tullman and Mullen were each paid an annual salary of $225,000 and are each
entitled to an annual bonus as determined by the Board of Directors or the
Compensation Committee. As of April 1, 2000, the annual salary for Messrs.
Tullman and Mullen was increased to $285,000. Mr. Katz is paid an annual
salary of $215,000, and Mr. Carey is paid an annual salary of $190,000 and was
paid a signing bonus of $25,000. As of April 1, 2000, the annual salary for
Mr. Carey was increased to $215,000.
7
<PAGE>
Messrs. Katz and Carey are each entitled to an annual bonus, contingent upon
the attainment of certain objectives, as determined by the Chief Executive
Officer in consultation with the Board of Directors or the Compensation
Committee. The agreements also provide that each of Messrs. Tullman, Mullen,
Katz and Carey will not compete with us during the term of his employment and
for one year thereafter. If we terminate any of Messrs. Tullman, Mullen, Katz
or Carey without Cause or if any of them terminates his employment For Good
Reason, as each of those terms is defined in the agreements, he will be
entitled to 12 months' salary as severance, as well as any salary that was
accrued but not yet paid as of the termination date, the unpaid performance
bonus, if any, for the calendar year preceding the termination date and any
performance bonus for the calendar year in which the termination date occurs
that would have been payable had there been no termination. The amount of
these performance bonuses is to be determined in the manner in which it would
have been determined had there been no termination.
Termination of Employment and Change in Control Agreements
We have entered into stock option agreements with each of Messrs. Tullman,
Mullen and Katz pursuant to their employment agreements granting them options
to purchase shares of our common stock as follows: Mr. Tullman, 548,083
shares; Mr. Mullen, 548,083 shares; and Mr. Katz, 382,841 shares. Under the
option agreements, in the event of a Change of Control, as defined in the
stock option agreements, vesting of the options will accelerate so that the
unvested portion of the options will vest immediately. The option agreements
also provide for accelerated vesting of a portion of the options in the event
of termination of employment without Cause, For Good Reason or because of
death or disability, as each of those terms is defined in the employment
agreements. In addition, we have entered into a stock option agreement with
Mr. Carey granting him options to purchase 69,166 shares of common stock.
Under this option agreement, in the event of a Change in Control, as defined
in the stock option agreement, vesting of the options will accelerate so that
the unvested portion of the options will vest immediately.
Under an agreement entered into between us and Mr. Cull, if Mr. Cull is
discharged for any reason other than for Cause, as defined in the agreement,
he will be entitled to monthly payments equal to his then in-effect monthly
salary together with a pro rata bonus amount and a continuation of health
insurance benefits, for a period of 12 months. If, within six months of a
Change in Control of Allscripts, as defined in the agreement, Mr. Cull is
discharged by Allscripts other than for Cause or voluntarily terminates his
employment following a change in his position that materially reduces his
level of responsibilities or a material reduction in his overall level of
compensation, Mr. Cull will be entitled to monthly payments equal to his then
in-effect monthly salary for a period of 12 months together with a pro rata
bonus amount and a continuation of health insurance benefits. In addition, the
agreement provides that all existing stock options owned by Mr. Cull will
immediately vest upon the occurrence of the same events that require us to
make severance payments to him following a Change in Control. In addition, Mr.
Cull has agreed not to compete with us for a period of 12 months following the
termination of his employment.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee of our Board of Directors are
Messrs. Husain, Kluger and Lytle. None of these persons has ever been an
officer or employee of Allscripts or any of its subsidiaries. We refer you to
the information under "Certain Relationships and Related Transactions" for a
discussion of insider participation.
Compensation Committee Report on Executive Officers' Compensation
The Compensation Committee of the Board of Directors is composed of three
independent non-employee directors, M. Fazle Husain, Michael J. Kluger and L.
Ben Lytle. Mr. Lytle serves as Chairman of the Committee. The Committee
determines executive officers' salaries, bonuses and other compensation and
administers the Stock Incentive Plan.
8
<PAGE>
Compensation Policies Applicable to Executive Officers
The overall compensation program for salaried employees has been designed
and is administered to ensure that employee compensation promotes superior job
performance and the achievement of business objectives. The main policy
objective of executive officer compensation is the maximization of stockholder
value over the long term. The Compensation Committee believes that this can
best be accomplished by an executive compensation program that reflects the
following three principles:
First, base salaries should be sufficient to attract and retain
qualified management talent, without exceeding competitive practice at
similar companies in the information technology market.
Second, annual bonus and incentive programs should provide opportunity
for significant increases in compensation, based on meeting or exceeding
pre-determined company and individual performance targets.
Third, a substantial portion of total long-term compensation should
reflect performance on behalf of Allscripts' stockholders, as measured by
increases in the value of Allscripts' stock.
In the judgment of the Compensation Committee, the performance of
Allscripts in 1999 confirms that the compensation program is achieving its
main objectives.
Base Salary
All of Allscripts' executive officers but John G. Cull have employment
agreements that set their base compensation. At its February 4, 2000 meeting,
the Committee reviewed the compensation of Messrs. Tullman, Mullen and Carey
and increased their annual base salary, effective April 1, 2000, to $285,000,
$285,000 and $215,000, respectively.
Annual Bonus
Executive officers and certain other key personnel of Allscripts are
eligible for cash bonuses after the end of each fiscal year. The bonus program
has not been formalized in writing. The Board of Directors or the Compensation
Committee determines bonuses for Mr. Tullman, the CEO, and Mr. Mullen, the
President and Chief Financial Officer. Bonuses are based on the overall
performance and financial results of Allscripts, including Allscripts'
achievement of goals pertaining to revenue growth, cost reductions, improved
operating methods, acquisitions and accounting controls. These factors are
weighted and then Allscripts' fulfillment of these goals is evaluated. Bonuses
for other executive officers are recommended by the CEO and them submitted to
the Committee for its approval. In making recommendations, the CEO determines
how each executive officer contributed to Allscripts' achievement of its
goals.
Stock Incentives
Under the Stock Incentive Plan, stock options and stock appreciation rights
may be granted to Allscripts' executive officers. Executives generally receive
stock incentives through initial grants at the time of hire and periodic
additional grants. The Compensation Committee determines the number of stock
incentives to be granted based on an officer's job responsibilities and
individual performance evaluation. This approach is designed to encourage the
creation of long-term stockholder value as the Committee believes that the
significant equity interests in Allscripts held by management helps to align
the interests of stockholders and management and maximize stockholder returns
over the long term. In 1999, Messrs. Cull and Carey were the only executive
officers named in the Summary Compensation Table who received new grants of
stock incentives.
Compensation of the Chairman and Chief Executive Officer
The overall compensation package of the Chief Executive Officer is designed
to recognize that the Chief Executive Officer bears primary responsibility for
increasing the value of stockholders' investments. The Chief Executive
Officer's base compensation is set at $225,000 by his employment agreement,
which expires
9
<PAGE>
December 31, 2000. As noted above, Mr. Tullman's annual base salary was
increased to $285,000 effective April 1, 2000. The Chief Executive Officer
received a cash bonus of $12,500 for 1999, reflecting Allscripts' achievement
of some of its performance goals.
The Compensation Committee is directly responsible for determining all
awards and grants to the Chief Executive Officer under the incentive
components of the compensation program. While Mr. Tullman was not granted any
stock incentives in 1999, the Committee intends that a substantial portion of
the Chief Executive Officer's future compensation will be incentive-based,
providing greater compensation as direct and indirect financial measures of
stockholder value increase. The Chief Executive Officer's compensation will
thus be structured and administered to motivate and reward the successful
achievement of these objectives.
The Committee intends for the Chief Executive Officer's compensation to
relate directly to the overall performance of Allscripts as measured by
financial criteria. In addition, the Chief Executive Officer's compensation
reflects achievements such as the continued strong performance of the senior
management team and the successful negotiation of acquisitions and strategic
alliances.
Deductibility of Compensation
Under, Internal Revenue Code Section 162(m), a company generally may not
deduct compensation in excess of $1,000,000 paid to the CEO and the other four
most highly compensated officers. Certain "performance based compensation" is
not included in compensation included for purposes of the limit. The Committee
believes that the current structure of Allscripts' executive compensation does
not give rise to Section 162(m) concerns. The Compensation Committee will
continue to assess the impact of Section 162(m) on its compensation practices.
Compensation Committee
L. Ben Lytle, Chairman
M. Fazle Husain
Michael J. Kluger
10
<PAGE>
Company Performance
This graph shows a comparison of cumulative total returns for Allscripts,
the Nasdaq Stock Market-U.S. and the Nasdaq Health Services Index from July
23, 2000 (the date Allscripts common stock was first offered to the public at
an initial public offering price of $16.00 per share) through December 31,
1999. The graph assumes an initial investment of $100 and the reinvestment of
dividends.
[Performance Graph]
[Logo Graph]
Cumulative Total Return
<TABLE>
<CAPTION>
7/23/99 7/31/99 8/31/99 9/30/99 10/31/99 11/30/99 12/31/99
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Allscripts, Inc........ $100.00 $100.00 $ 80.86 $ 99.22 $ 97.66 $225.78 $275.00
- --------------------------------------------------------------------------------------
Nasdaq Stock Market-
U.S................... 100.00 98.05 102.14 102.23 110.21 123.08 150.62
- --------------------------------------------------------------------------------------
Nasdaq Health Services. 100.00 98.54 88.29 84.27 71.10 75.01 83.08
</TABLE>
11
<PAGE>
Certain Relationships and Related Party Transactions
Our policy is that all transactions between us and our executive officers,
directors and principal stockholders must be on terms no less favorable to us
than we could obtain from unaffiliated third parties or else must be approved
by our disinterested directors.
Shopping@Home Acquisition
In June 1999, we acquired substantially all of the assets of Shopping@Home,
Inc. in exchange for a promissory note in the principal amount of $650,000. We
repaid this note in August 1999. Messrs. Tullman and Carey were principal
shareholders of Shopping@Home.
Redeemable Preferred Stock Redemptions
We used a portion of the net proceeds of our initial public offering in
July 1999 to redeem shares of preferred stock held by some of our affiliates
according to their redemption terms as follows, including accrued dividends:
. $10,468,581 to redeem 815,594 shares of Series H preferred stock and
439,883 shares of Series J preferred stock held by Liberty Partners
Holdings 6, L.L.C., with which Mr. Kluger is affiliated;
. $12,473,513 to redeem 217,459 shares of Series H preferred stock,
1,199,770 shares of Series I preferred stock and 268,204 shares of Series
J preferred stock held collectively by the Morgan Stanley Venture
Partners III, L.P., Morgan Stanley Venture Investors III, L.P. and The
Morgan Stanley Venture Partners Entrepreneur Fund, L.P., with which
Messrs. Husain and Stein are affiliated;
. $605,892 to redeem 18,929 shares of Series H preferred stock, 37,493
shares of Series I preferred stock and 23,345 shares of Series J
preferred stock held by Mr. Tullman;
. $245,780 to redeem 7,764 shares of Series H preferred stock, 14,997
shares of Series I preferred stock and 9,575 shares of Series J preferred
stock held by Mr. Mullen;
. $14,179 to redeem 796 shares of Series H preferred stock and 982 shares
of Series J preferred stock held by Mr. Cull;
. $189,992 to redeem 9,159 shares of Series H preferred stock, 3,749 shares
of Series I preferred stock and 11,295 shares of Series J preferred stock
held by Mr. Carey;
. $46,430 to redeem 796 shares of Series H preferred stock, 4,499 shares of
Series I preferred stock and 982 shares of Series J preferred stock held
by Mr. Rosenblum, a former executive officer of Allscripts; and
. $49,642 to redeem 2,787 shares of Series H preferred stock and 3,438
shares of Series J preferred stock held by Mr. Green.
Registration Rights Agreement
Liberty Partners Holdings 6, L.L.C., Morgan Stanley Venture Investors III,
L.P., Morgan Stanley Venture Partners III, L.P. and The Morgan Stanley Venture
Partners Entrepreneur Fund, L.P., which as of March 15, 2000 collectively held
approximately 8,500,000 shares of common stock, are entitled to registration
rights with respect to these shares. Under our Registration Agreement, these
Morgan Stanley entities, collectively, on the one hand, and Liberty Partners
Holdings 6, L.L.C., on the other hand, is each entitled to require us to
register their shares of common stock three times, but not more than once in
any six-month period. In addition, if we propose or are required to register
any of our common stock, either for our own account or for the account of
other of our stockholders, we are required to notify the holders described
above and, subject to certain limitations, to include in that registration all
of the common stock requested to be included by those holders. We are
obligated to bear the expenses, other than underwriting commissions, of the
first registration required by Liberty or the Morgan Stanley parties and of
all incidental registrations.
12
<PAGE>
Certain Business Relationships
In 1999, we retained the law firm of Green, Stewart, Farber & Anderson,
P.C., of which Mr. Green is a partner. We paid Mr. Green's law firm fees of
approximately $130,000 in 1999.
Prior to April 1999, we provided pharmacy benefit management services for
Anthem, Inc. Mr. Lytle is Chairman of the Board of Anthem. Revenue from Anthem
was approximately $375,000 in 1999 for these services.
Amendment of Certificate of Incorporation
The Board of Directors has approved the amendment of our Certificate of
Incorporation to increase the number of authorized shares of common stock that
we may issue from 75,000,000 shares to 150,000,000 shares. As of March 27,
2000, the record date, there were 26,212,138 shares of common stock issued and
outstanding, 45,796,555 shares unissued and not reserved for issuance,
2,899,709 shares unissued and reserved for issuance under our employee stock
option plan, 57,133 shares unissued and reserved for issuance upon exercise of
outstanding warrants and 34,465 shares in treasury.
We believe that the proposed increase in the number of authorized shares of
common stock will benefit Allscripts by improving our flexibility in
responding to future business needs and opportunities. The additional
authorized shares will be available for issuance from time to time in
connection with, for example, stock splits in the form of stock dividends,
financings, acquisitions, employee incentive plans and other corporate
purposes that the Board determines are appropriate. Other than our obligations
under our stock option plan, with respect to outstanding warrants and in
connection with the April 2000, acquisition of Master Chart, Inc., we have no
arrangements, agreements, understandings or plans for the issuance of the
additional shares. Unless rules of the Nasdaq Stock Market or laws or
regulations applicable in particular circumstances require further stockholder
action, none is required to issue the shares.
While we do not currently intend to issue shares of common stock in order
to make acquisition of control of Allscripts more difficult, future issuances
of common stock could have that effect. For example, our issuance of
additional shares might discourage the acquisition of shares by an entity
attempting to acquire control of Allscripts because the issuance would dilute
the acquiring entity's stock ownership. We could also issue shares to existing
stockholders as a dividend or privately place shares with purchasers who might
side with the Board in opposing a takeover bid. We are not aware of any
current efforts to accumulate our stock or to acquire control of Allscripts.
This proposal is not a part of any plan by our management to recommend a
series of similar amendments to the Board and the stockholders.
Although we are not proposing to increase the number of authorized shares
for anti-takeover purposes, the securities rules require us to discuss the
provisions in our charter and bylaws that could have an anti-takeover effect.
Like many publicly held companies, our Certificate of Incorporation and Bylaws
contain the following provisions:
. our Board is divided into three classes of directors serving staggered
three-year terms;
. only a majority of the Board, the Chairman or the President may call
special stockholder meetings;
. our stockholders may not take action by written consent;
. to bring business before, or nominate directors at, an annual meeting,
stockholders must give timely written notice that meets requirements
stated in our bylaws;
. directors may be removed only for cause and only by the holders of at
least 80% of the outstanding shares of common stock; and
. in evaluating an acquisition proposal, the Board may consider subjective
factors, for example, the effects of the acquisition on employees,
suppliers, customers and the communities in which we are located.
13
<PAGE>
The Board of Directors could use these provisions to place stock in friendly
hands, delay or deter or otherwise make a takeover of Allscripts more
difficult. While permitted under Delaware law, our stockholders do not have
cumulative voting rights.
Allscripts stockholders do not have preemptive rights to subscribe to
additional securities that we may issue, which means that current stockholders
do not have a prior right to purchase any new issue of Allscripts common stock
in order to maintain their proportionate ownership. Moreover, our issuance of
additional shares could have a dilutive effect on the earnings per share,
voting power and holdings of current stockholders.
In addition to common stock, our current Certificate of Incorporation
authorizes us to issue up to 1,000,000 shares of preferred stock, in series,
without further stockholder approval. As of the date of this proxy statement,
there were no shares of preferred stock outstanding.
If stockholders approve the amendment, it will become effective upon the
filing of a Certificate of Amendment in accordance with the General
Corporation Law of Delaware.
The Board of Directors unanimously recommends a vote FOR
the amendment of our Certificate of Incorporation.
Amendment of Amended and Restated 1993 Stock Incentive Plan
The Board of Directors has approved the amendment of the Amended and
Restated 1993 Stock Incentive Plan to increase the number of shares reserved
for issuance under the Plan from 4,393,489 to 7,393,489. The Board recommends
that you approve this amendment. The following summary describes the basic
features of the Plan, however, it is not complete and, therefore, you should
not rely solely on it for a detailed description of every aspect of the Plan.
The Stock Option Plan Generally
The Board originally adopted the Plan on September 14, 1993. The Plan has
been amended from time to time since its initial adoption. The Plan will
terminate on June 7, 2009. Under the Plan, the Compensation Committee may
grant stock incentives to key individuals performing services for Allscripts,
including employees, officers, eligible directors, consultants and agents.
Awards under the Plan may be in the form of incentive stock options,
nonqualified stock options and stock appreciation rights.
Shares Available for the Plan
We presently have 4,393,489 shares of common stock reserved for issuance
under the Plan. The Board proposes to amend the Plan to increase the number of
shares that can be issued to 7,393,489. We believe that we need to increase
the number of shares issuable under the Plan in order to ensure that there are
adequate shares available for future grants to support broad-based
participation. The number of shares underlying awards made to any one
participant in a fiscal year may not exceed 3,000,000 shares. The number of
shares that can be issued and the number of shares subject to outstanding
options may be adjusted in the event of a stock split, stock dividend,
recapitalization or other similar event affecting the number of shares of
Allscripts' outstanding common stock. In that event, the Compensation
Committee may also make appropriate adjustments to any stock appreciation
rights outstanding under the Plan.
Plan Administration
The Compensation Committee administers the Plan. Subject to the specific
provisions of the Plan, the Committee determines award eligibility, timing and
the type, amount and terms of the awards. The Committee also interprets the
Plan, establishes rules and regulations under the Plan and makes all other
determinations necessary or advisable for the Plan's administration.
14
<PAGE>
Stock Options
Options under the Plan may be either incentive stock options, as defined
under the tax laws, or nonqualified stock options. The per share exercise
price may not be less than the fair market value of Allscripts common stock on
the date the option is granted. The Compensation Committee may specify any
period of time following the date of grant during which options are
exercisable, so long as the exercise period is not more than 10 years.
Incentive stock options are subject to additional limitations relating to such
things as employment status, minimum exercise price, length of exercise
period, maximum value of the stock underlying the options and a required
holding period for stock received upon exercise of the option. Only
nonqualified options may be granted to individuals who are not Allscripts
employees.
Upon exercise, the option holder may pay the exercise price in several
ways. He or she can pay: (1) in cash; (2) by delivering previously owned
Allscripts common stock with a fair market value equal to the exercise price;
(3) by surrendering stock appreciation rights for their cash value; (4) by
directing us to withhold shares of Allscripts common stock with a fair market
value equal to the exercise price; or (5) by a combination of these methods.
Stock Appreciation Rights
A holder of a stock appreciation right, or SAR, has the right to receive
upon exercise of the SAR, in cash or in Allscripts common stock, the
appreciation in the fair market value of the number of shares of common stock
specified in the SAR. The Committee may grant SARs independently or in tandem
with options. If a SAR is granted in tandem with an option, the exercise of
the tandem option will result in a cancellation of the SAR and vice versa.
Expiration of Options and SARs
Generally, options and SARs granted under the Plan expire on the date
determined by the Committee at the time of the grant, subject to earlier
expiration as specified in the award agreement if the holder terminates
employment with Allscripts prior to that date. IRS rules require that
incentive stock options expire no later than three months after the
termination of employment for any reason other than death or disability, or
one year after termination of employment by reason of death or disability, in
either case subject to the normal expiration date of the option. In no event
may an option or SAR be exercised after its expiration date. Any unvested
portion of an option or SAR will expire immediately upon termination of
employment.
15
<PAGE>
Outstanding Options
We cannot determine the number of shares that may be acquired under stock
options that will be awarded under the Plan to the CEO and the other four most
highly compensated executive officers. There are no stock appreciation rights
outstanding under the Plan. On March 27, 2000, the last reported sale price of
Allscripts common stock on the Nasdaq National Market was $60.3125 per share.
As of February 29, 2000, the following options had been granted under the
Plan:
<TABLE>
<CAPTION>
Name Number of Shares
- ---- ----------------
<S> <C>
Glen E. Tullman............................................... 598,083
Chairman and Chief Executive Officer
David B. Mullen............................................... 598,083
President and Chief Financial Officer
Steven M. Katz................................................ 382,841
Executive Vice President, Sales and Marketing
John G. Cull.................................................. 144,160
Senior Vice President, Finance, Secretary and Treasurer
Joseph E. Carey............................................... 141,666
Chief Operating Officer
Philip D. Green............................................... 85,571
Director Nominee
L. Ben Lytle.................................................. 25,000
Director Nominee
Edward M. Philip.............................................. 40,000
Director Nominee
All current executive officers................................ 1,864,833
All current directors who are not executive officers.......... 150,571
All employees (other than current executive officers)......... 3,429,021
</TABLE>
Transferability
Generally, an option or SAR may not be sold, assigned or otherwise
transferred during its holder's lifetime, except by will or the laws of
descent and distribution. In certain limited circumstances, the Committee, in
its sole discretion, may provide that a nonqualified stock option or SAR may
be transferred, subject to the terms and conditions established by the
Committee.
Tax Consequences
The following is a summary, based on current law, of some significant
federal income tax consequences of awards under the Plan. Participants are
advised to consult with their own tax advisor regarding the federal, state and
local tax consequences of the grant and exercise of an option or SAR.
Participants in the Plan do not recognize taxable income by reason of the
grant or vesting of an option or SAR, and Allscripts does not receive a tax
deduction by reason of either event. At exercise, the federal tax consequences
vary depending on whether the award is an incentive stock option, nonqualified
stock option or SAR.
Incentive Stock Options
Upon exercise of an incentive stock option, its holder does not recognize
taxable income, and Allscripts does not receive a tax deduction. However, the
excess of the fair market value of Allscripts common stock on the date of
exercise over the exercise price is an adjustment that increases alternative
minimum taxable income, the base upon which alternative minimum tax is
computed.
16
<PAGE>
If the shares purchased upon the exercise of an incentive stock option are
sold at a gain within two years from the date of grant, or within one year
after the option is exercised, then the difference, with certain adjustments,
between the fair market value of the stock at the date of exercise and the
exercise price will be considered ordinary income. Any additional gain will be
treated as a capital gain. If the shares are sold at a gain after they have
been held at least one year and more than two years after the grant date, any
gain will be treated as a long-term capital gain. Any loss recognized upon a
taxable disposition of the shares generally would be characterized as a
capital loss.
Nonqualified Stock Options
Upon exercise of a nonqualified stock option, its holder recognizes
ordinary income in an amount equal to the difference between the fair market
value of Allscripts common stock at the time of exercise and the exercise
price. Generally, Allscripts is entitled to a corresponding tax deduction for
compensation income recognized by the holder. Upon the subsequent sale of the
shares acquired in the exercise, the holder will recognize a short-term or
long-term capital loss, depending on the length of time he or she has held the
shares.
Stock Appreciation Right
Upon exercise of a SAR, the holder recognizes ordinary income in an amount
equal to the amount of the cash payment or fair market value of the shares of
Allscripts common stock he or she received. Generally, Allscripts is entitled
to a corresponding tax deduction.
Plan Amendment and Termination
The Plan will terminate on June 7, 2009. The Board of Directors may amend
or terminate the Plan at any time. An amendment is subject to shareholder
approval if it increases the number of shares available for issuance under the
Plan, permits the grant of an incentive stock option at an exercise price less
than that set forth in the Plan, changes the class of individuals eligible for
participation in the Plan, or permits the grant of awards after the Plan
termination date.
The Board of Directors unanimously recommends a vote FOR
the amendment of the 1993 Stock Incentive Plan.
Independent Public Accountants
The Board has engaged PricewaterhouseCoopers LLP as our independent public
accountants for 2000. Representatives of PricewaterhouseCoopers will be
present at the Annual Meeting. They will have the opportunity to make a
statement if they so desire and to respond to appropriate questions.
Executive Officers
Following is certain information about the executive officers of
Allscripts, based on information furnished by them.
Glen E. Tullman, 40, has been the Chairman of the Board since May 1999 and
our Chief Executive Officer since August 1997. From October 1994 to July 1997,
Mr. Tullman was Chief Executive Officer of Enterprise Systems, Inc., a
publicly traded healthcare information services company providing resource
management solutions to large integrated healthcare networks. From 1983 to
1994, Mr. Tullman was employed by CCC Information Services Group, Inc., a
computer software company servicing the insurance industry, most recently as
President and Chief Operating Officer.
17
<PAGE>
David B. Mullen, 49, has been our President and Chief Financial Officer and
a director since August 1997. From January 1995 to June 1997, Mr. Mullen
served as Chief Financial Officer of Enterprise Systems, Inc. From 1983 to
1995, Mr. Mullen was employed in various positions by CCC Information Services
Group, Inc., including Vice Chairman, President and Chief Financial Officer.
Prior to that, he was employed by Ernst & Young LLP.
Steven M. Katz, 50, has been our Executive Vice President, Sales and
Marketing since September 1997. From December 1994 to July 1997, Mr. Katz
served as Chief Operating Officer of Enterprise Systems, Inc. From December
1993 to November 1994, Mr. Katz was employed by CCC Information Services
Group, Inc. as President of its Insurance Division.
John G. Cull, 38, has been our Senior Vice President, Finance, Secretary
and Treasurer since 1995. From 1991 to 1993, Mr. Cull was our assistant
controller, and from 1993 to 1995 he was our controller. From 1986 to 1991,
Mr. Cull was controller of Federated Foods, Inc., a food brokerage company.
Prior to joining Federated Foods, Mr. Cull was employed by Arthur Andersen &
Co.
Joseph E. Carey, 42, has been our Chief Operating Officer since April 1999.
From September 1998 to April 1999, he served as President and Chief Operating
Officer of Shopping@Home, Inc. Prior to that time, he was Senior Vice
President and General Manager of the Resource Management Group of HBO &
Company, a healthcare software firm. Mr. Carey joined HBO in 1997 with HBO's
acquisition of Enterprise Systems, Inc., where he held the role of President
from 1993 until the acquisition.
18
<PAGE>
[Back cover]
[Allscripts Color Logo]
To come
<PAGE>
-- --
PROXY PROXY
ALLSCRIPTS, INC.
2401 Commerce Drive
Libertyville, Illinois 60048
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Glen E. Tullman and David B. Mullen and each
of them, as Proxies, each with power of substitution, and hereby authorizes
them to vote, as designated below, all shares of common stock of Allscripts,
Inc. held of record by the undersigned on March 27, 2000, at the annual
meeting of stockholders to be held on May 10, 2000, and any adjournment
thereof. If only one Proxy is present at the Meeting, then that one may
exercise the power of all the Proxies hereunder.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
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<PAGE>
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ALLSCRIPTS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
[ ]
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this Proxy will be voted
FOR the election of all listed Directors and FOR Proposal 2 and 3.
1. ELECTION OF DIRECTORS--
Nominees: Philip D. Green, L. Ben Lytle, Edward M. Philip
For Withhold For All
All All Except
[_] [_] [_]
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.
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2. AMENDMENT OF CERTIFICATE OF INCORPORATION.
For Against Abstain
[_] [_] [_]
3. AMENDMENT OF AMENDED AND RESTATED 1993 STOCK INCENTIVE PLAN.
For Against Abstain
[_] [_] [_]
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Dated: ___________ , 2000
Signature(s)_____________________________
_________________________________________
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee, or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
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. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
