<PAGE> 1
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 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
IMANAGE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(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> 2
IMANAGE, INC.
2121 SOUTH EL CAMINO REAL, SUITE 400
SAN MATEO, CALIFORNIA 94403
May 16, 2000
To our stockholders:
You are cordially invited to attend the annual meeting of stockholders of
iManage, Inc. on June 21, 2000 at 10:00 a.m. Pacific Daylight Time in the Menlo
Room of the Stanford Park Hotel, 100 El Camino Real, Menlo Park, California
94025.
The matters expected to be acted upon at the meeting are described in
detail in the attached Notice of Annual Meeting of Stockholders and Proxy
Statement. Also enclosed is a copy of the 1999 iManage, Inc. Annual Report,
which includes audited financial statements and certain other information.
It is important that you use this opportunity to take part in the affairs
of iManage, Inc. by voting on the business to come before this meeting. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN
THE ACCOMPANYING PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
Returning the proxy does not deprive you of your right to attend the meeting and
vote your shares in person.
We look forward to seeing you at the meeting.
Sincerely,
/s/ MAHMOOD PANJWANI
--------------------------------------
Mahmood Panjwani
President and Chief Executive Officer
<PAGE> 3
IMANAGE, INC.
2121 SOUTH EL CAMINO REAL, SUITE 400
SAN MATEO, CALIFORNIA 94403
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 21, 2000
Dear Stockholder:
You are invited to attend the annual meeting of stockholders of iManage,
Inc., which will be held on June 21, 2000 at 10:00 a.m. Pacific Daylight Time in
the Menlo Room of the Stanford Park Hotel, 100 El Camino Real, Menlo Park,
California, 94025, for the following purposes:
1. To elect two (2) Class I directors to the iManage, Inc. board of
directors to hold office for a three-year term and until their
successors are elected and qualified.
2. To amend the iManage, Inc. 1997 Stock Option Plan to modify the
automatic annual reserve increase and establish a grant limit for the
plan.
3. To ratify the appointment of PricewaterhouseCoopers LLP as our
independent accountants for the fiscal year ending December 31, 2000.
4. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on April 25, 2000, are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof. For ten days prior to the meeting, a complete list of the stockholders
entitled to vote at the meeting will be available for examination by any
stockholder for any purpose relating to the meeting during ordinary business
hours at our principal offices.
By order of the board of directors,
/s/ MARK CULHANE
--------------------------------------
Mark Culhane
Secretary
San Mateo, California
May 16, 2000
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. PROXIES ARE
REVOCABLE, AND ANY STOCKHOLDER MAY WITHDRAW HIS OR HER PROXY PRIOR TO THE
TIME IT IS VOTED, OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
<PAGE> 4
IMANAGE, INC.
2121 SOUTH EL CAMINO REAL, SUITE 400
SAN MATEO, CALIFORNIA 94403
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
The accompanying proxy is solicited by the board of directors of iManage,
Inc., a Delaware corporation, for use at the annual meeting of stockholders to
be held June 21, 2000, or any adjournment thereof for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders. The date of this
proxy statement is May 16, 2000, the approximate date on which this proxy
statement and the accompanying form of proxy were first sent or given to
stockholders.
GENERAL INFORMATION
Annual Report. An annual report for the year ended December 31, 1999, is
enclosed with this proxy statement.
Voting Securities. Only stockholders of record as of the close of business
on April 25, 2000, will be entitled to vote at the meeting and any adjournment
thereof. As of that date, there were 21,962,391 shares of our common stock, par
value $.001 per share, issued and outstanding. Stockholders may vote in person
or by proxy. Each stockholder of shares of common stock is entitled to one vote
for each share of stock held on the proposals presented in this proxy statement.
Our bylaws provide that a majority of all of the shares of our capital stock
entitled to vote, whether present in person or represented by proxy, shall
constitute a quorum for the transaction of business at the meeting.
Solicitation of Proxies. iManage will bear the cost of soliciting proxies.
We will solicit stockholders by mail through our regular employees, and will
request banks and brokers, and other custodians, nominees and fiduciaries, to
solicit their customers who have our stock registered in the names of such
persons and will reimburse them for their reasonable, out-of-pocket costs. We
may use the services of our officers, directors and others to solicit proxies,
personally or by telephone, without additional compensation.
Voting of Proxies. All valid proxies received prior to the meeting will be
voted. All shares represented by a proxy will be voted, and where a stockholder
specifies by means of the proxy a choice with respect to any matter to be acted
upon, the shares will be voted in accordance with the specification so made. If
no choice is indicated on the proxy, the shares will be voted in favor of the
proposal. A stockholder giving a proxy has the power to revoke his or her proxy,
at any time prior to the time it is voted, by delivery to the Secretary of
iManage at our principal offices at 2121 South El Camino Real, Suite 400, San
Mateo, California 94403, of a written instrument revoking the proxy or a duly
executed proxy with a later date, or by attending the meeting and voting in
person.
<PAGE> 5
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
iManage has a classified board of directors which currently consists of
five (5) directors: two (2) of whom are Class I directors, two (2) of whom are
Class II directors, and one (1) who is a Class III director. Class I and Class
II directors serve until the annual meeting of stockholders to be held in 2000
and 2001, respectively, and the Class III director serves until the annual
meeting of stockholders to be held in 2002. All directors serve until their
respective successors are duly elected and qualified. Directors in a class are
elected for a term of three years to succeed the directors in that class whose
terms expire at such annual meeting.
Management's nominees for election at the 2000 annual meeting of
stockholders to Class I of the board of directors are Rafiq Mohammadi and Moez
R. Virani. If elected, the nominees will serve as directors until iManage's
annual meeting of stockholders in 2003, and until their successors are elected
and qualified. If the nominees decline to serve or become unavailable for any
reason, or if a vacancy occurs before the election, although management knows of
no reason to anticipate that this will occur, the proxies may be voted for
substitute nominees as the board of directors may designate.
The table below sets forth the names and certain information of our
directors, including the Class I nominees to be elected at this meeting.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION WITH IMANAGE AGE SINCE
---- --------------------------------- --- --------
<S> <C> <C> <C>
Class I nominees to be elected at the 2000 annual meeting of stockholders:
Rafiq Mohammadi Director, Chief Technology Officer and Vice 39 1995
President, Engineering
Moez R. Virani Director 44 1996
Class II directors whose terms expire at the 2001 annual meeting of
stockholders:
Mahmood Panjwani Chairman of the Board of Directors, 41 1995
President and Chief Executive Officer
DuWayne Peterson Director 67 1999
Class III director whose term expires at the 2002 annual meeting of
stockholders:
Mark W. Perry Director 56 1998
</TABLE>
Rafiq Mohammadi is a co-founder of iManage and has served as our chief
technology officer and director since October 1995. Between 1985 and 1995, Mr.
Mohammadi co-founded and served as president of M/H Manage, a company that
developed and distributed software that converted documents between different
platforms and formats.
Moez R. Virani has been one of our directors since December 1996. Mr.
Virani has been a partner at Mohr Davidow Ventures, a venture capital firm,
since July 1999. From January 1998 to June 1999, Mr. Virani served as the chief
financial officer of Ziff-Davis Events, Inc., a media company. From February
1995 to December 1997, Mr. Virani was the chief financial officer and chief
operating officer of SOFTBANK Forums, Inc., a wholly-owned subsidiary of
SOFTBANK, Inc. From 1984 to 1995, Mr. Virani worked for Sun Microsystems in a
variety of senior domestic and international finance positions.
Mahmood Panjwani is a co-founder of iManage and has served as our
president, chief executive officer and chairman of our board of directors since
October 1995. In August 1988, Mr. Panjwani founded Q-Image Corporation, a
consulting services company, and served as its president and chairman of the
board of directors until December 1997.
DuWayne Peterson has been one of our directors since September 1999. Mr.
Peterson is currently serving as president of DuWayne Peterson Associates, a
consulting and advisory firm specializing in information technology. From June
1986 to June 1991, Mr. Peterson served as executive vice president and chief
information officer for Merrill Lynch. From March 1977 to June 1986 he served as
executive vice president of Security Pacific Corporation and chairman and chief
executive officer of Security Pacific Automation Company. He has also held
senior information technology management positions at Citibank and RCA.
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<PAGE> 6
Mr. Peterson serves on the board of directors of IFS International, an
electronic banking software company, as well as on the boards of directors of
several private companies.
Mark W. Perry has been one of our directors since September 1998. From
October 1995 to May 1996, Mr. Perry was a consultant to New Enterprise
Associates, a venture capital firm and one of our major stockholders. Mr. Perry
is currently a general partner at New Enterprise Associates, a position he has
held since June 1996. From May 1994 to December 1995, Mr. Perry was president
and chief executive officer of ViewStar Corporation, a client/server software
company. From 1985 to April 1994, Mr. Perry was an executive at Silicon
Graphics. Mr. Perry serves on the boards of directors of several private
companies.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
During 1999, the board of directors held 9 meetings. Each incumbent
director attended at least 75% of the aggregate of such meetings of the board
and any committee of the board on which he served. The board of directors has
established an audit committee and a compensation committee.
The audit committees function is to:
- review with the independent auditors and management of iManage the annual
financial statements and independent accountants' opinion,
- review the scope and results of the examination of our financial
statements by the independent accountants,
- approve all professional services and related fees performed by the
independent accountants,
- recommend the retention of the independent auditors to the board, subject
to ratification by the stockholders, and
- periodically review our accounting policies and internal accounting and
financial controls.
The audit committee also oversees actions taken by our independent
accountants and recommends the engagement of auditors. The members of the audit
committee during 1999 were Mark Perry, Moez Virani and DuWayne Peterson. The
audit committee held 1 meeting in 1999.
The compensation committees function is to make decisions concerning
salaries and incentive compensation for executive officers of iManage. The
members of the compensation committee during 1999 were Mark W. Perry, Moez R.
Virani and DuWayne Peterson. During 1999, the compensation committee held no
meetings.
COMPENSATION OF DIRECTORS
Directors of iManage do not receive compensation for attending board or
committee meetings and do not currently receive any reimbursement for expenses
incurred in attending board and board committee meetings.
Our amended 1997 stock option plan provides that upon each nonemployee
director's initial election or appointment, he automatically receives a
nonstatutory stock option to purchase 30,000 shares of common stock. As long as
the director continues to serve on the board, one-third of the option shares
will vest after one year and the remaining two-thirds will vest in equal monthly
increments over the following two years. In addition, beginning with our annual
stockholders meeting in 2001, when a nonemployee director is reelected to the
board, the director will automatically be granted a nonstatutory stock option to
purchase shares of common stock equal to 10,000 multiplied by the number of
years of the director's elected term. For example, if a director is reelected to
a three year term, the size of the option grant would be 30,000 shares.
Similarly, an option grant would be for 20,000 shares for a director reelected
to a two year term and 10,000 shares for a director reelected to a one year
term. Each of these additional options will vest in equal monthly increments
over the director's elected term. A director does not receive an additional
option if at the time of the director's reelection to the board, the director
has served on the board for less than one year. Each option granted to a
nonemployee director will have a per share exercise price equal to the fair
market value of a share of common stock on the grant date. Each option granted
to a nonemployee director will have a term of 10 years. Vesting of
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<PAGE> 7
nonemployee director options will accelerate in full if a change in control
occurs before the option becomes fully vested.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
If a quorum is present and voting at the annual meeting of stockholders,
the nominees for Class I director receiving the highest number of votes will be
elected. Abstentions and broker non-votes will each be counted as present for
purposes of determining the presence of a quorum. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE.
PROPOSAL NUMBER TWO
AMENDMENT OF THE 1997 STOCK OPTION PLAN
The board of directors and our stockholders approved the adoption of the
1997 Stock Option Plan, also referred to as the 1997 Plan, in June 1997, and the
plan has been amended from time to time. Currently, the maximum number of shares
issuable under the 1997 Plan is 6,000,000, and the share reserve is
automatically increased on the first day of each fiscal year beginning on or
after December 31, 2000 by a number of shares equal to the lesser of (a)
1,200,000 shares, (b) 5% of the number of shares of our common stock that was
issued and outstanding on the last day of the immediately preceding fiscal year,
or (c) a lesser number of shares as determined by our board of directors or a
committee of the board. Because the use of options is an important factor in
attracting and retaining qualified employees and consultants, the board of
directors has amended the 1997 Plan, subject to stockholder approval, to provide
that the automatic annual increase will not be limited to a maximum of 1,200,000
shares, and that the annual increase will be equal to 5% of the number of shares
of our common stock that was issued and outstanding on the last day of the
immediately preceding fiscal year, or a lesser number of shares as determined by
our board of directors or a committee of the board.
The Internal Revenue Code of 1986 (the "Code") limits the amount of
compensation paid to a corporation's chief executive officer and four other most
highly compensated officers that the corporation may deduct as an expense for
federal income tax purposes. To enable iManage to continue to deduct in full all
amounts of ordinary income recognized by its executive officers in connection
with awards granted under the 1997 Plan, the board of directors has amended the
1997 Plan, subject to stockholder approval, to limit to 1,000,000 the maximum
number of shares for which awards may be granted to any employee in any fiscal
year. However, our stock option grants typically do not approach this limit.
The stockholders are now being asked to approve the amendment to the
automatic annual share reserve increase provision, as well as the grant limit.
The board of directors believes that approval of these amendments is in the best
interests of iManage and our stockholders because (1) the future availability of
an adequate reserve of shares under the 1997 Plan is an important factor in
attracting, motivating and retaining qualified officers and employees essential
to our success and in aligning their long-term interests with those of the
stockholders and (2) approval of the grant limit will allow iManage to continue
to deduct compensation related to awards granted under the 1997 Plan for federal
income tax purposes.
SUMMARY OF THE PROVISIONS OF THE 1997 PLAN
The following summary of the 1997 Plan is qualified in its entirety by the
specific language of the 1997 Plan, a copy of which is available to any
stockholder upon request.
A total of 6,000,000 shares of common stock have been reserved for issuance
under the 1997 Plan. Currently, the share reserve will automatically be
increased on the first day of each fiscal year beginning on and after December
31, 2000 by the lesser of:
1,200,000 shares;
5% of the number of shares of our common stock that was issued and
outstanding on the last day of the immediately preceding fiscal year; or
a lesser number of shares as determined by our board of directors or a
committee of the board.
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<PAGE> 8
The board has amended the 1997 Plan, subject to stockholder approval, to
provide that the amount of the annual increase will not be limited to a maximum
of 1,200,000 shares, and that the annual increase will be equal to 5% of the
number of shares of our common stock that was issued and outstanding on the last
day of the immediately preceding fiscal year, or a lesser number of shares as
determined by our board of directors or a committee of the board. If the
stockholders approve the amendment to the automatic annual increase provision,
no more than 6,000,00 shares may be cumulatively issued pursuant to the exercise
of incentive stock options as defined in Section 422 of the Internal Revenue
Code of 1986 ("ISOs")
In the event of any stock dividend, stock split, reverse stock split,
combination, reclassification, or similar change in the capital structure of
iManage, appropriate adjustments will be made to the shares subject to the 1997
Plan, to the proposed grant limit and incentive stock option issuance limit
described above and to outstanding options. To the extent any outstanding option
under the 1997 Plan expires or terminates prior to exercise in full, or if
iManage repurchases shares issued upon exercise of an option, the shares of
common stock for which that award is not exercised or the repurchased shares are
returned to the 1997 Plan and will again be available for issuance under the
1997 Plan.
Under the 1997 Plan, all of our employees or employees of a subsidiary, all
directors who are not our employees or employees of a subsidiary and any
independent contractor or advisor who performs services for us or a subsidiary
are eligible to receive nonstatutory stock options. Employees are also eligible
to receive ISOs. In addition, subject to stockholder approval, the board has
amended the 1997 Plan to provide that during any fiscal year of iManage, no
employee may receive options under the plan for more than a total of 1,000,000
shares. The 1997 Plan is administered by our board of directors, which selects
the persons who will receive options, determines the number of shares in each
option and prescribes other terms and conditions, including the type of
consideration to be paid to us upon exercise and vesting schedules, in
connection with each option. However, this responsibility may be delegated to a
committee at the option of our board of directors.
The exercise price of nonstatutory stock options granted under the 1997
Plan must be at least 85% of the fair market value of our common stock on the
date of grant. The exercise price under incentive stock options cannot be lower
than 100% of the fair market value of our common stock on the date of grant and,
in the case of incentive stock options granted to 10% stockholders, not less
than 110% of the fair market value. The term of an incentive stock option cannot
exceed ten years, and the term of an incentive stock option granted to a 10%
stockholder cannot exceed five years. The 1997 Plan authorizes the board to
grant nonstatutory stock options with a term in excess of 10 years. An
individual's options generally expire 30 days following a termination of
employment or six months following the individual's termination date if the
termination was due to his death or disability.
Options granted under the 1997 Plan generally vest and become exercisable
over four years, although the board or committee may specify a different vesting
schedule for a particular grant. In addition, the 1997 Plan provides for the
automatic grant of options to nonemployee directors. See "Compensation of
Directors" on page 3. Options granted under the 1997 Plan are generally
nontransferable other than by will or the laws of descent and distribution,
although the board or committee may grant nonstatutory stock options which allow
for limited transferability.
In the event of a change in control of iManage, the acquiring or successor
corporation may assume or substitute for the outstanding options granted under
the 1997 Plan. The outstanding options will terminate if these options are not
exercised or assumed or substituted for by the acquiring or successor
corporation.
Under the 1997 Plan, as of March 31, 2000, there were outstanding options
to purchase 1,469,275 shares of common stock at exercise prices ranging from
$0.20 to $9.90 per share, or a weighted average exercise price per share of
$3.6949. Options to acquire 3,478,174 shares have been exercised. As of March
31, 2000, a total of 1,052,551 shares of common stock were available for future
option grants. If any option granted under the 1997 Plan expires, terminates or
is canceled for any reason, or if we repurchase shares of stock issued subject
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to a right of repurchase, the shares allocable to the unexercised option or the
repurchased shares will become available for further issuance for grants under
the 1997 Plan.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE 1997 PLAN
The following summary is intended only as a general guide as to the United
States federal income tax consequences under current law of participation in the
1997 Plan and does not attempt to describe all possible federal or other tax
consequences of such participation or tax consequences based on particular
circumstances.
ISOs. An optionee recognizes no taxable income for regular income tax
purposes as the result of the grant or exercise of an ISO qualifying under
Section 422 of the Code. Optionees who do not dispose of their shares for two
years following the date the option was granted or within one year following the
exercise of the option will normally recognize a long-term capital gain or loss
equal to the difference, if any, between the sale price and the purchase price
of the shares. If an optionee satisfies such holding periods upon a sale of the
shares, iManage will not be entitled to any deduction for federal income tax
purposes. If an optionee disposes of shares within two years after the date of
grant or within one year from the date of exercise, referred to as a
disqualifying disposition, the difference between the fair market value of the
shares on the exercise date and the option exercise price, not to exceed the
gain realized on the sale if the disposition is a transaction with respect to
which a loss, if sustained, would be recognized, will be taxed as ordinary
income at the time of disposition. Any gain in excess of that amount will be a
capital gain. If a loss is recognized, there will be no ordinary income, and
such loss will be a capital loss. A capital gain or loss will be long-term if
the optionee's holding period is more than 12 months. Generally, for federal
income tax purposes, iManage should be able to deduct any ordinary income
recognized by the optionee upon the disqualifying disposition of the shares,
except to the extent the deduction is limited by applicable provisions of the
Code or the regulations thereunder.
The difference between the option exercise price and the fair market value
of the shares on the exercise date of an ISO is an adjustment in computing the
optionee's alternative minimum taxable income and may be subject to an
alternative minimum tax which is paid if the tax exceeds the regular tax for the
year. Special rules may apply with respect to certain subsequent sales of the
shares in a disqualifying disposition, certain basis adjustments for purposes of
computing the alternative minimum taxable income on a subsequent sale of the
shares and certain tax credits which may arise with respect to optionees subject
to the alternative minimum tax.
Nonstatutory stock options. Options not designated or qualifying as ISOs
will be nonstatutory stock options. Nonstatutory stock options have no special
tax status. An optionee generally recognizes no taxable income as the result of
the grant of such an option. Upon exercise of a nonstatutory stock option, the
optionee normally recognizes ordinary income in an amount equal to the
difference between the option exercise price and the fair market value of the
shares on the exercise date. If the optionee is an employee, the ordinary income
generally is subject to withholding of income and employment taxes. Upon the
sale of stock acquired by the exercise of a nonstatutory stock option, any gain
or loss, based on the difference between the sale price and the fair market
value on the exercise date, will be taxed as capital gain or loss. A capital
gain or loss will be long-term if the optionee's holding period is more than 1
year. No tax deduction is available to iManage with respect to the grant of a
nonstatutory option or the sale of the stock acquired pursuant to that grant.
iManage generally should be entitled to a deduction equal to the amount of
ordinary income recognized by the optionee as a result of the exercise of a
nonstatutory option, except to the extent the deduction is limited by applicable
provisions of the Code or the regulations thereunder.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of a majority of the votes cast on the proposal at the
annual meeting of stockholders, at which a quorum representing a majority of all
outstanding shares of our common stock is present, either in person or by proxy,
is required for approval of this proposal. Votes for and against, abstentions
and broker non-votes will each be counted as present for purposes of determining
the presence of a quorum. However, abstentions and broker non-votes will have no
effect on the outcome of this vote.
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<PAGE> 10
The board of directors believes that approval of the proposed amendments to
the 1997 Plan are in the best interests of iManage and its stockholders for the
reasons described above. THEREFORE, FOR THE REASONS STATED ABOVE, THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT OF THE
AUTOMATIC ANNUAL RESERVE INCREASE AND THE ESTABLISHMENT OF THE GRANT LIMIT OF
1,000,000 SHARES.
PROPOSAL NUMBER THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The board of directors has selected PricewaterhouseCoopers LLP as
independent accountants to audit our financial statements for the fiscal year
ending December 31, 2000. PricewaterhouseCoopers LLP has acted in such capacity
since its appointment during the fiscal year ended December 31, 1995. A
representative of PricewaterhouseCoopers LLP is expected to be present at the
annual meeting of stockholders with the opportunity to make a statement if the
representative desires to do so, and is expected to be available to respond to
appropriate questions.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of a majority of the votes cast at the annual meeting
of stockholders, at which a quorum representing a majority of all outstanding
shares of iManage common stock is present and voting, either in person or by
proxy, is required for approval of this proposal. Abstentions and broker
non-votes will each be counted as present for purposes of determining the
presence of a quorum, but will not be counted as having been voted on the
proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS IMANAGE'S INDEPENDENT ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 31, 2000,
with respect to the beneficial ownership of iManage common stock by:
- the chief executive officer, and the four other highest compensated
executive officers of iManage whose salary and bonus for the year ended
December 31, 1999 exceeded $100,000, also referred to as the "Named
Executive Officers,"
- each director and director nominee of iManage,
- each person known by iManage to be the beneficial owner of more than 5%
of our common stock, and
- all executive officers and directors of iManage as a group.
Except as otherwise indicated, the address of each beneficial owner is c/o
iManage, Inc., 2121 South El Camino Real, Suite 400, San Mateo, California
94403.
Except as indicated in the footnotes to the table, iManage believes that
the persons named in the table have sole voting and dispositive power with
respect to all shares of common shown as beneficially owned by them, subject to
community property laws, where applicable. A person is deemed to be the
beneficial owner of securities that can be acquired by such person within 60
days of March 31, 2000 upon the exercise of options and these shares are
considered outstanding for purposes of computing the percentage ownership of
that person but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person. Percentages are based on 21,955,705
shares of common stock outstanding on March 31, 2000.
<TABLE>
<CAPTION>
SHARES OWNED
-----------------------
NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNERS SHARES PERCENTAGE
------------------------------------- --------- ----------
<S> <C> <C>
NAMED EXECUTIVE OFFICERS
Mahmood Panjwani(1)......................................... 3,156,000 14.4%
Rafiq Mohammadi(2).......................................... 2,823,334 12.9%
Owen Anthony Carton(3)...................................... 353,920 1.6%
Philip Uchno(4)............................................. 240,000 1.1%
Mark Culhane(5)............................................. 230,000 1.0%
OTHER DIRECTORS AND DIRECTOR NOMINEES
Mark W. Perry(6)............................................ 2,840,000 12.9%
c/o New Enterprise Associates
2490 Sand Hill Road
Menlo Park, CA 94025
Moez R. Virani(7)........................................... 329,930 1.5%
c/o Mohr Davidow Ventures
2775 Sand Hill Road, Suite 240
Menlo Park, CA 94025
DuWayne Peterson............................................ 0 *
</TABLE>
8
<PAGE> 12
<TABLE>
<CAPTION>
SHARES OWNED
-----------------------
NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNERS SHARES PERCENTAGE
------------------------------------- --------- ----------
<S> <C> <C>
OTHER 5% STOCKHOLDERS
New Enterprise Associates(8)................................ 2,740,000 12.5%
Attn: Mark W. Perry
2490 Sand Hill Road
Menlo Park, CA 94025
Entities and individuals associated with C.E. Unterberg,
Towbin, L.P.(9)........................................... 2,031,931 9.3%
Swiss Bank Tower
10 East 50th Street
New York, NY 10022
Entities and individuals associated with Louis Leitz Digital
Systems GmbH & Co.(10).................................... 1,293,885 5.9%
Seimenstrasse 64,
70469 Stuttgart Germany
All executive officers and directors as a group (8
persons)(11).............................................. 9,973,184 45.4%
</TABLE>
- ---------------
* Less than 1%
(1) Includes
(a) 2,623,000 shares held in joint tenancy with Ms. Rashid, Mr. Panjwani's
wife;
(b) 50,000 shares held by Mr. Panjwani and Ms. Rashid as the trustees of
the Danyal M. Panjwani Trust;
(c) 100,000 shares held by Mr. Panjwani and Ms. Rashid as the trustees of
the Panjwani Irrevocable Trust dated December 31, 1998;
(d) 180,000 shares held by Ms. Rashid, of which 59,828 shares are subject
to a right of repurchase in favor of iManage which lapses over time;
(e) 50,000 shares exercisable within 60 days of March 31, 2000 under an
option held by Ms. Rashid, of which 50,000 shares are subject to a
right of repurchase in favor of iManage which lapses over time;
(f) 100,000 shares exercisable within 60 days of March 31, 2000 under an
option held by Mr. Panjwani, of which 100,000 shares are subject to a
right of repurchase in favor of iManage which lapses over time; and
(g) 53,000 shares held by Sherbanu Panjwani, Mr. Panjwani's mother, who
resides with Mr. Panjwani.
(2) Includes:
(a) 130,000 shares of common stock held by Northern Trust Co. of Chicago as
Trustee of the Rafiq R. Mohammadi 1999 Irrevocable Trust, dated
November 8, 1999; and
(b) 50,000 shares exercisable within 60 days of March 31, 2000, of which
50,000 shares are subject to a right of repurchase in favor of iManage
which lapses over time.
(3) Includes:
(a) 88,959 shares subject to a right of repurchase in favor of iManage
which lapses over time, of which 10,000 shares are subject to a right
of repurchase in favor of iManage which lapses over time; and
(b) 50,000 shares exercisable within 60 days of March 31, 2000.
(4) Includes:
(a) 10,000 shares exercisable within 60 days of March 31, 2000; and
(b) 230,000 shares exercisable within 60 days of March 31, 2000.
(5) Includes:
(a) 112,500 shares subject to a right of repurchase in favor of iManage
which lapses over time;
(b) 5,000 shares held by Mark and Michele Culhane as trustees of the
Michael D. Culhane 1999 Irrevocable Trust;
9
<PAGE> 13
(c) 5,000 shares held by Mark and Michele Culhane as trustees of the
Maxwell A. Culhane 1999 Irrevocable Trust;
(d) 5,000 shares held by Mark and Michele Culhane as trustees of the Monica
G. Culhane 1999 Irrevocable Trust; and
(e) 50,000 shares exercisable within 60 days of March 31, 2000, of which
50,000 shares are subject to a right of repurchase in favor of iManage
which lapses over time.
(6) Includes:
(a) 100,000 shares subject to options held by Mark W. Perry that are
exercisable within 60 days of March 31, 2000, of which 62,500 are
subject to a right of repurchase in favor of iManage which lapses over
time;
(b) 2,783 shares held by NEA Ventures 1998, Limited Partnership;
(c) 27,828 shares held by NEA Presidents Fund, L.P.; and
(d) 2,709,389 shares held by New Enterprise Associates VIII, Limited
Partnership.
Mr. Perry is a general partner of New Enterprise Associates and a director
of iManage.
Mr. Perry disclaims beneficial ownership of shares held by these entities,
except for his proportional interest arising from his partnership interest
in New Enterprise Associates.
(7) Includes 254,930 shares registered in the name of the Moez R. Virani and
Vivienne Virani, Trustees of the Virani Family 93 Revocable Trust Dated
11/24/93.
(8) Includes:
(a) 2,783 shares held by NEA Ventures 1998, Limited Partnership;
(b) 27,828 shares held by NEA Presidents Fund, L.P.; and
(c) 2,709,389 shares held by New Enterprise Associates and has dispositive
and voting power for these shares.
(9) Includes:
(a) 127,388 shares held by C.E. Unterberg, Towbin, LLC;
(b) 1,016,786 shares held by Unterberg Harris Private Equity Partners,
L.P.;
(c) 323,940 shares held by C.E. Unterberg, Towbin, L.P.;
(d) 217,177 shares held by Unterberg Harris Private Equity Partners, C.V.;
(e) 63,694 shares held by A. Robert Towbin, a managing director of C.E.
Unterberg, Towbin L.P.; and
(f) an aggregate of 282,946 shares held by seven trusts and two 401(k)
profit sharing accounts, all of which have beneficiaries or trustees
who are affiliated with C.E. Unterberg, Towbin L.P. or the principals
of C.E. Unterberg, Towbin L.P.
(10) Includes 20,000 shares held by Harold Raetzsch, a former executive officer
of Louis Leitz Digital Systems GmbH & Co.'s U.S. subsidiary.
(11) Includes:
(a) 863,787 shares subject to a right of repurchase in favor of iManage
which lapses over time; and
(b) 410,000 shares subject to options that are exercisable within 60 days
of March 31, 2000.
10
<PAGE> 14
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information concerning the total
compensation of the Named Executive Officers for the years ended December 31,
1999, 1998 and 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
--------------------
ANNUAL COMPENSATION NUMBER OF SECURITIES
----------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) OPTIONS
--------------------------- ---- --------- -------- --------------------
<S> <C> <C> <C> <C>
Mahmood Panjwani............................. 1999 $205,000 $ 61,500 100,000
President, Chief Executive Officer 1998 120,000 84,066 --
1997 120,000 -- --
Owen Carton(2)............................... 1999 156,865 60,000 50,000
Vice President, Marketing and 1998 67,708 15,000 305,000
Strategic Planning
Mark Culhane(3).............................. 1999 146,442 45,000 50,000
Chief Financial Officer, Secretary 1998 35,000 10,000 180,000
Rafiq Mohammadi.............................. 1999 150,000 45,000 50,000
Vice President, Engineering and 1998 120,000 -- --
Chief Technology Officer 1997 120,000 -- --
Philip Uchno(4).............................. 1999 133,336 66,664 240,000
Vice President, Worldwide Sales
</TABLE>
- ---------------
(1) Amounts shown are on a full year basis, and include cash and noncash
compensation earned by executive officers.
(2) Mr. Carton was not employed by iManage in 1997 and his annualized salary in
1998 was $150,000.
(3) Mr. Culhane was not employed by iManage in 1997 and his annualized salary in
1998 was $140,000.
(4) Mr. Uchno was not employed by iManage in 1997 and 1998 and his annualized
salary in 1999 was $150,000.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides the specified information concerning grants of
options to purchase iManage common stock during 1999 to the Named Executive
Officers.
<TABLE>
<CAPTION>
NUMBER OF % OF POTENTIAL REALIZABLE VALUE
SECURITIES TOTAL AT ASSUMED ANNUAL RATES
UNDERLYING OPTIONS OF STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM
GRANTED EMPLOYEES IN OR BASE EXPIRATION ----------------------------
NAME (#) FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mahmood Panjwani(1)......... 100,000 6.0% $9.90 11/12/09 $476,005 $1,344,368
Owen Carton................. 50,000 3.0 9.00 11/12/09 283,003 717,184
Mark Culhane................ 50,000 3.0 9.00 11/12/09 283,003 717,184
Rafiq Mohammadi(1).......... 50,000 3.0 9.90 11/12/09 238,003 672,184
Phil Uchno.................. 240,000 14.3 9.00 (2) 186,782 473,342
</TABLE>
- ---------------
(1) Mr. Panjwani and Mr. Mohammadi each own more than 10% of our outstanding
stock. Thus, the exercise price must be 110% of fair market value on the
date of grant.
(2) 230,000 option shares expire 5/15/09 and 10,000 option shares expire
11/12/09.
11
<PAGE> 15
AGGREGATE OPTION EXERCISES FOR FISCAL 1999 AND FISCAL 1999 YEAR-END VALUES
The following table provides certain information concerning exercises of
options to purchase iManage common stock during 1999, and unexercised options
held as December 31, 1999, by the Named Executive Officers:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED 12/31/99(1) AT 12/31/99(2)
ON VALUE -------------------- ---------------------
NAME EXERCISE REALIZED(3) VESTED UNVESTED VESTED UNVESTED
---- -------- ----------- ------- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mahmood Panjwani..................... -- -- -- 100,000 -- 2,222,500
Owen Anthony Carton(1)............... 305,000 129,625 -- 50,000 -- 1,156,250
Mark Culhane(1)...................... -- 50,000 -- 1,156,250
Rafiq Mohammadi...................... -- -- -- 50,000 -- 1,111,250
Phil Uchno(1)........................ 230,000 207,000 -- 10,000 -- 231,250
</TABLE>
- ---------------
(1) iManage has a right of repurchase as to any unvested shares upon optionees
termination of employment at their original exercise price.
(2) Calculated on the basis of the fair market value of the underlying
securities as of December 31, 1999 of $32.125 per share, as reported as the
closing price on the National Association of Securities Dealers Automated
Quotations System, minus the aggregate exercise price.
(3) Fair market price on date of exercise, less exercise price.
No compensation intended to serve as incentive for performance to occur
over a period longer than one fiscal year was paid pursuant to a long-term
incentive plan during fiscal 1999 to any Named Executive Officer. iManage does
not have any defined benefit or actuarial plan under which benefits are
determined primarily by final compensation or average final compensation and
years of service with any of the Named Executive Officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The compensation committee is composed of Mark W. Perry, Moez R. Virani and
DuWayne Peterson. No interlocking relationships exist between any member of our
compensation committee and any member of any other company's board of directors
or compensation committee. The compensation committee makes recommendations
regarding our employee stock plans and makes decisions concerning salaries and
bonus compensation for executive officers of iManage. Before the creation of one
compensation committee, all compensation decisions were made by our full board
of directors. Neither Mr. Panjwani nor Mr. Mohammadi participated in discussions
by our board of directors regarding his own compensation.
CHANGE OF CONTROL AND SEVERANCE ARRANGEMENTS
In July 1998, we entered into a letter agreement with Mr. Carton that
provides that if he is terminated by us without cause, Mr. Carton will be
entitled to receive six months of his base salary paid consistent with our
normal payroll practices.
In September 1998, we entered into a letter agreement with Mr. Culhane that
provides that if, within 12 months following a transfer of control of iManage,
he is constructively terminated, Mr. Culhane will be entitled to receive six
months of his base salary to be paid under our normal payroll practices. In
addition, Mr. Culhane's options will immediately accelerate in an amount equal
to the lesser of (A) 60% of the total number of his shares subject to options as
of the date of the constructive termination or (B) the number of his remaining
unvested shares subject to options as of the date of the constructive
termination.
In May 1999, we entered into a letter agreement with Mr. Uchno that
provides that if, within 12 months following a transfer of control of iManage,
he is constructively terminated, Mr. Uchno's options will immediately accelerate
in an amount equal to 50% of his remaining unvested options as of the date of
the
12
<PAGE> 16
constructive termination. If at any time on or before May 5, 2000 we terminate
Mr. Uchno without cause, his options will vest based on the number of full
months of service he has provided to iManage as of the date of his termination.
If at any time on or before May 5, 2000 Mr. Uchno terminates his employment with
us for any reason, or if we terminate his employment for cause, we will have the
right to repurchase his vested options at the original option price.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires iManage's
executive officers, directors and persons who beneficially own more than 10% of
our common stock to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission. These persons are
required by SEC regulations to furnish iManage with copies of all Section 16(a)
forms that they file.
Based solely on our review of the forms furnished to us and written
representations from certain reporting persons, we believe that all filing
requirements applicable to our executive officers, directors and persons who
beneficially own more than 10% of our common stock were complied with in fiscal
1999.
13
<PAGE> 17
NEW PLAN BENEFITS
The following table sets forth grants of stock options received under the
1997 Plan during the fiscal year ended December 31, 1999 by:
- the Named Executive Officers;
- all current executive officers as a group;
- all current directors who are not executive officers as a group; and
- all employees, who are not executive officers, as a group.
<TABLE>
<CAPTION>
1997 PLAN
---------------------------
NUMBER OF
NAME AND POSITION EXERCISE PRICE SHARES
----------------- -------------- ---------
<S> <C> <C>
Mahmood Panjwani.................................... $9.90 100,000
Owen Carton......................................... 9.00 50,000
Mark Culhane........................................ 9.00 50,000
Rafiq Mohammadi..................................... 9.90 50,000
Phil Uchno.......................................... 9.00 240,000
Executive group (5 persons)......................... 9.36 490,000
Non-executive director group (3 persons)............ 2.55 55,000
Non-executive officer employee group................ 1.33 1,190,500
</TABLE>
14
<PAGE> 18
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation committee is comprised of Mark Perry, Moez Virani and
DuWayne Peterson, each an outside director of the board of directors and is
responsible for setting and monitoring policies governing compensation of
executive officers. The compensation committee reviews the performance and
compensation levels for executive officers and sets salary and bonus levels and
option grants under our 1997 Stock Option Plan. The objectives of the committee
are to correlate executive compensation with our business objectives and
performance, and to enable us to attract, retain and reward executive officers
who contribute to our long-term success.
SALARY
The compensation committee annually assesses the performance and sets the
salary of the President and Chief Executive Officer, Mahmood Panjwani. In turn,
Mr. Panjwani annually assesses the performance of all other executive officers
and recommends salary increases which are reviewed and approved by the
compensation committee.
In particular, Mr. Panjwani's compensation as President and Chief Executive
Officer is based on compensation levels of President/Chief Executive Officers of
comparable size companies. In addition, the compensation committee considers
certain incentive objectives based on iManage's performance as it relates to
revenue levels and earnings per share levels.
In determining executive officer salaries, the compensation committee
reviews recommendations from Mr. Panjwani which include information from salary
surveys, performance evaluations and the financial condition in 1999 of iManage.
The compensation committee also establishes both financial and operational based
objectives and goals in determining executive officer salaries. These goals and
objectives include sales and spending forecasts for the upcoming year and
published executive compensation literature for comparable sized companies.
For more information regarding the compensation and employment arrangements
of Mr. Panjwani and other executive officers, see "EXECUTIVE COMPENSATION AND
OTHER MATTERS."
BONUSES
While the compensation committee did not administer a bonus plan for
executives in 1999, the committee may administer such a bonus plan in the future
in order to provide additional incentives to executives who meet established
performance goals. Awards under this bonus plan may be contingent upon iManage's
attainment of revenue and operating profit targets, set by the compensation
committee in consultation with the Chief Executive Officer. Additionally, awards
may be weighted so that executives would receive proportionately higher awards
when our performance reaches maximum targets, proportionately smaller awards
when our performance reaches minimum targets, and no awards when we do not meet
minimum performance targets.
STOCK OPTIONS
The compensation committee believes that employee equity ownership provides
significant motivation to executive officers to maximize value for our
stockholders and, therefore, periodically grants stock options under our stock
option plan. Stock options are granted at the current market price and will only
have value if our stock price increases over the exercise price.
The compensation committee determines the size and frequency of option
grants for executive officers, after consideration of recommendations from the
Chief Executive Officer. Recommendations for options are based upon the relative
position and responsibilities of each executive officer, previous and expected
contributions of each officer to iManage and previous option grants to such
executive officers. Generally, option grants vest 25% twelve months after
commencement of employment or after the date of grant and continue to vest
thereafter in equal monthly installments over three years, conditioned upon
continued employment.
15
<PAGE> 19
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mahmood Panjwani has served as our president and chief executive officer
since October 1995. Early in 2000, the compensation committee reviewed Mr.
Panjwani's performance with regard to performance objectives set by the board of
directors in 1999, weighted among specific personal and corporate objectives, in
determining his eligibility for bonus compensation. Mr. Panjwani's bonus
compensation for fiscal 1999 was $61,500. In addition, the board of directors
increased Mr. Panjwani's salary to $250,000 per year and granted him options to
purchase 100,000 shares of iManage's common stock based on attainment of
predetermined financial and other corporate goals.
Respectfully submitted by the
Compensation Committee
Mark W. Perry
Moez R. Virani
DuWayne Peterson
16
<PAGE> 20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OPTION GRANTS TO DIRECTORS AND EXECUTIVE OFFICERS
In November 1997, we granted to Moez R. Virani, one of our directors, an
option to purchase a total of 50,000 shares of common stock at an exercise price
of $0.20 per share. In March 1999, we granted Mr. Virani an additional option to
purchase 25,000 shares of common stock at an exercise price of $0.60 per share.
Mr. Virani has exercised both options.
In July 1998, we granted to Owen Carton, our vice president, marketing and
strategic planning, an option to purchase 305,000 shares of common stock at an
exercise price of $0.30 per share. Mr. Carton exercised options to purchase
177,917 shares in April 1999 and 127,083 shares in May 1999 with funds we loaned
him under two full recourse promissory notes approved by our board of directors.
The April 1999 promissory note accrues interest at the rate of 4.71% per year
and is due on March 31, 2003. The May 1999 promissory note accrues interest at
the rate of 4.83% per year and is due on May 30, 2003.
In September 1998, we granted to Mark W. Perry, one of our directors, an
option to purchase 100,000 shares of common stock at an exercise price of $0.40
per share. Mr. Perry has not exercised the option.
In October 1998, we granted to Mark Culhane, our chief financial officer
and secretary, options to purchase 180,000 shares of common stock at an exercise
price of $0.40 per share. In November 1998, Mr. Culhane exercised the option in
full with funds we loaned him under a full recourse promissory note approved by
our board of directors. The promissory note accrues interest at the rate of
4.51% per year and is due on November 12, 2002. This promissory note and accrued
interest has been repaid in full.
In May 1999, we granted to Philip Uchno, our vice president, worldwide
sales, an option to purchase 230,000 shares of common stock at an exercise price
of $0.90 per share. In July 1999, Mr. Uchno exercised the option in full with
funds we loaned him under a full recourse promissory note approved by our board
of directors. The promissory note accrues interest at the rate of 5.22% per year
and is due on July 31, 2003.
In June 1999, we granted Shamshad Rashid, our vice president, business
development, an option to purchase 180,000 shares of common at an exercise price
of $1.65 per share. In July 1999, Ms. Rashid exercised the option in full with
funds we loaned her under a full recourse promissory note approved by our board
of directors. The promissory note accrues interest at the rate of 4.9% per year
and is due on July 26, 2001.
In November 1999, we granted options to purchase shares of common stock at
an exercise price of $9.00(1) per share to the following executive officers:
<TABLE>
<S> <C>
- - Mahmood Panjwani.......................................... 100,000 shares
- - Owen Carton............................................... 50,000 shares
- - Mark Culhane.............................................. 50,000 shares
- - Rafiq Mohammadi........................................... 50,000 shares
- - Shamshad Rashid........................................... 50,000 shares
- - Philip Uchno.............................................. 10,000 shares
</TABLE>
None of the above options has been exercised.
- ---------------
(1) Except with respect to Mr. Panjwani, Mr. Rashid and Mr. Mohammadi, who each
own more than 10% of our outstanding stock and as such have an exercise
price which equals 110% of fair market value on the date of grant.
OTHER INSIDER ARRANGEMENTS
Before founding iManage, Mahmood Panjwani, our president and chief
executive officer, and Shamshad Rashid, our vice president, business development
and Mr. Panjwani's spouse, operated Q-Image Corporation, a consulting services
company founded by Mr. Panjwani. Mr. Panjwani served as president of Q-Image
from
17
<PAGE> 21
August 1988 to December 1997. Ms. Rashid has continued her involvement with
Q-Image where she has served as president since December 1997. Ms. Rashid
estimates that she dedicates approximately 95% of her time to iManage.
Currently, Mr. Panjwani and Ms. Rashid jointly hold a 90% ownership in Q-Image.
From 1995 until late 1998, we subleased office space in Sunnyvale,
California from Q-Image. During 1998, we paid a total of $54,000 in rent to
Q-Image. In November 1998, we moved to our current location in San Mateo,
California and we terminated our sublease arrangement with Q-Image for the
Sunnyvale facility. Q-Image now subleases office space from us in our San Mateo
facility for $84,600 per year for 1999 and $91,650 per year for 2000 under a
written sublease agreement.
Since 1997, we have engaged Q-Image for personnel recruiting services under
an arrangement where we pay Q-Image a placement fee amounting to 25% of the base
salary of the candidates we hire. During 1998, we paid a total of $101,575 in
placement fees to Q-Image under the terms of a written agreement. Although this
written agreement expired in August 1999, we are currently negotiating with
Q-Image to renew the agreement. During the period ended December 31, 1999, we
paid a total of $155,250 in placement fees to Q-Image.
We are presently utilizing the services of several full-time consultants
who were referred to us by Q-Image. Under our current arrangement with Q-Image,
we pay fees to Q-Image equivalent to the salaries and incentive pay of these
consultants. We also pay additional fees to Q-Image to cover the cost of
employee benefits provided by Q-Image to these individuals. We have in the past,
and may in the future, hire consultants from Q-Image as full-time iManage
employees. During 1998 we paid Q-Image $365,826 for the services of these
consultants and $602,128 for the period ended December 31, 1999.
Mahmood Panjwani loaned us $25,000 on November 14, 1996, $10,000 on
December 12, 1996 and $15,000 on December 19, 1996. Each loan accrued interest
at the rate of 10% per year and was repaid in full on September 14, 1998.
Rafiq Mohammadi loaned us $24,010 on October 10, 1995 and $5,000 on June
25, 1996. Each loan accrued interest at the rate of 10% per year. Mr. Mohammadi
was repaid $10,000 of this loan in two installments of $7,000 in May 1997 and
$3,000 in August 1997, and the balance was repaid in full on September 14, 1998.
On November 4, 1999, we repurchased 166,666 shares of common stock from Mr.
Mohammadi at a price of $4.50 per share for a total repurchase price of
$749,997. The number of shares repurchased represents less than 10% of the
shares held by Mr. Mohammadi immediately before the repurchase.
On April 5, 2000, we made a loan to Mark Culhane for $1,000,000. The loan
carries interest at 5% per annum and principal and interest are due October 31,
2000. Outstanding principal and accrued interest may be renewed at October 31,
2000 upon agreement of the parties. The loan is secured by 165,000 shares of
iManage common stock.
All of the transactions described above were approved by disinterested
directors of the board of directors. As a result, we believe those transactions
were made on terms no less favorable to us than could have been obtained from
unaffiliated third parties. We intend that all future transactions, including
the agreements with Q-Image and loans between us and our officers, directors and
principal stockholders and their affiliates, will be approved by a majority of
the board of directors. In addition, we intend that all of these future
transactions will take place on terms no less favorable to us than could be
obtained from unaffiliated third parties.
18
<PAGE> 22
COMPARISON OF STOCKHOLDER RETURN
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the graph shall not be deemed to be incorporated by reference onto any such
filings.
The following graph compares the percentage change in the cumulative total
stockholder return on the Company's Common Stock from November 17, 1999, the
date of the Company's initial public offering at $11.00 per share, through the
end of the Company's fiscal year ended December 31, 1999, with the percentage
change in the cumulative total return for the Nasdaq National Market (U.S.
Companies) Index and Nasdaq Computer and Data Processing Services Group Index.
The comparison assumes an investment of $100 on November 17, 1999 in the
Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends. The stock performance shown on the graph below is not
necessarily indicative of future performance.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
NASDAQ COMPUTER & DATA
IMANAGE NASDAQ COMPOSITE PROCESSING
------- ---------------- ----------------------
<S> <C> <C> <C>
November 17, 1999 100.00 100.00 100.00
November 30, 1999 153.81 102.01 104.86
December 31, 1999 130.46 124.38 142.05
</TABLE>
19
<PAGE> 23
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the next annual
meeting of the stockholders of the Company must be received by the Company at
its offices at 2121 South El Camino Real, Suite 400, San Mateo, California
94403, not later than December 28, 2000, and satisfy the conditions established
by the Securities and Exchange Commission for stockholder proposals to be
included in iManage's proxy statement for that meeting.
20
<PAGE> 24
TRANSACTION OF OTHER BUSINESS
At the date of this proxy statement, the only business which the board of
directors intends to present or knows that others will present at the meeting is
as set forth above. If any other matter or matters are properly brought before
the meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying form of proxy to vote the proxy on such matters in
accordance with their best judgment.
By order of the board of directors
/s/ MARK CULHANE
--------------------------------------
Mark Culhane
Secretary
May 16, 2000
21
<PAGE> 25
iMANAGE, INC.
AMENDED 1997 STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. The iManage, Inc. 1997 Stock Option Plan (the
"PLAN") was established effective as of June 2, 1997. On August 30, 1999, the
Plan was amended and retitled the "Amended 1997 Stock Option Plan", effective as
of the date the Company first registers its Stock under Section 12 of the
Exchange Act.
1.2 PURPOSE. The purpose of the Plan is to advance the interests
of the Participating Company Group and its stockholders by providing an
incentive to attract, retain and reward persons performing services for the
Participating Company Group and by motivating such persons to contribute to the
growth and profitability of the Participating Company Group.
1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Incentive
Stock Options shall be granted, if at all, within ten (10) years from the
earlier of the date the Plan is adopted by the Board or the date the Plan is
duly approved by the stockholders of the Company.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) "BOARD" means the Board of Directors of the Company. If
one or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).
(b) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.
(c) "COMMITTEE" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.
(d) "COMPANY" means iManage, Inc., a Delaware corporation,
or any successor corporation thereto.
(e) "CONSULTANT" means a person engaged to provide
consulting or advisory services (other than as an Employee or a Director) to a
Participating Company,
<PAGE> 26
provided that the identity of such person, the nature of such services or the
entity to which such services are provided would not preclude the Company from
offering or selling securities to such person pursuant to the Plan in reliance
on either the exemption from registration provided by Rule 701 under the
Securities Act or, if the Company is required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act, registration on a form S-8 Registration
Statement under the Securities Act.
(f) "DIRECTOR" means a member of the Board or of the board
of directors of any other Participating Company.
(g) "DISABILITY" means the permanent and total disability
of the Optionee within the meaning of Section 22(e)(3) of the Code.
(h) "EMPLOYEE" means any person treated as an employee
(including an officer or a Director who is also treated as an employee) in the
records of a Participating Company and, with respect to any Incentive Stock
Option granted to such person, who is an employee for purposes of Section 422 of
the Code; provided, however, that neither service as a Director nor payment of a
director's fee shall be sufficient to constitute employment for purposes of the
Plan. The Company shall determine in good faith and in the exercise of its
discretion whether an individual has become or has ceased to be an Employee and
the effective date of such individual's employment or termination of employment,
as the case may be. For purposes of an individual's rights, if any, under the
Plan as of the time of the Company's determination, all such determinations by
the Company shall be final, binding and conclusive, notwithstanding that the
Company or any governmental agency subsequently makes a contrary determination.
(i) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(j) "FAIR MARKET VALUE" means, as of any date, the value of
a share of Stock or other property as determined by the Board, in its sole
discretion, or by the Company, in its sole discretion, if such determination is
expressly allocated to the Company herein, subject to the following:
(i) If, on such date, there is a public market for the
Stock, the Fair Market Value of a share of Stock shall be the closing sale price
of a share of Stock (or the mean of the closing bid and asked prices of a share
of Stock if the Stock is so quoted instead) as quoted on the Nasdaq National
Market, the Nasdaq Small-Cap Market or such other national or regional
securities exchange or market system constituting the primary market for the
Stock, as reported in the Wall Street Journal or such other source as the
Company deems reliable. If the relevant date does not fall on a day on which the
Stock has traded on such securities exchange or market system, the date on which
the Fair Market Value shall be established shall be the last day on which the
Stock was so traded prior to the relevant date, or such other appropriate day as
shall be determined by the Board, in its sole discretion.
(ii) If, on such date, there is no public market for the
Stock, the Fair Market Value of a share of Stock shall be as determined by the
Board without regard to any restriction other than a restriction which, by its
terms, will never lapse.
<PAGE> 27
(k) "INCENTIVE STOCK OPTION" means an Option intended to be
(as set forth in the Option Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.
(l) "INSIDER" means an officer or a Director of the Company
or any other person whose transactions in Stock are subject to Section 16 of the
Exchange Act.
(m) "NONEMPLOYEE DIRECTOR" means a Director of the Company
who is not an employee.
(n) "NONEMPLOYEE DIRECTOR OPTION" means a right to purchase
Stock (subject to adjustment as provided in Section 4.2) granted to a
Nonemployee Director pursuant to the terms and conditions of Section 7.
Nonemployee Director Options shall be Nonstatutory Stock Options.
(o) "NONSTATUTORY STOCK OPTION" means an Option not
intended to be (as set forth in the Option Agreement) or which does not qualify
as an Incentive Stock Option.
(p) "OPTION" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory
Stock Option.
(q) "OPTION AGREEMENT" means a written agreement between
the Company and an Optionee setting forth the terms, conditions and restrictions
of the Option granted to the Optionee and any shares acquired upon the exercise
thereof. An Option Agreement may consist of a form of "Notice of Grant of Stock
Option" and a form of "Stock Option Agreement" incorporated therein by
reference, or such other form or forms as the Board may approve from time to
time.
(r) "OPTIONEE" means a person who has been granted one or
more Options.
(s) "PARENT CORPORATION" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.
(t) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation.
(u) "PARTICIPATING COMPANY GROUP" means, at any point in
time, all corporations collectively which are then Participating Companies.
(v) "RULE 16b-3" means Rule 16b-3 under the Exchange Act,
as amended from time to time, or any successor rule or regulation.
(w) "SECTION 162(m)" means Section 162(m) of the Code and
the regulations promulgated thereunder.
(x) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
<PAGE> 28
(y) "SERVICE" means an Optionee's employment or service
with the Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant. The Optionee's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the
Participating Company for which the Optionee renders such Service, provided that
there is no interruption or termination of the Optionee's Service. Furthermore,
an Optionee's Service with the Participating Company Group shall not be deemed
to have terminated if the Optionee takes any military leave, sick leave, or
other bona fide leave of absence approved by the Company; provided, however,
that if any such leave exceeds ninety (90) days, on the ninety-first (91st) day
of such leave the Optionee's Service shall be deemed to have terminated unless
the Optionee's right to return to Service with the Participating Company Group
is guaranteed by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Company or required by law, a leave of absence shall
not be treated as Service for purposes of determining vesting under the
Optionee's Option Agreement. The Optionee's Service shall be deemed to have
terminated either upon an actual termination of Service or upon the corporation
for which the Optionee performs Service ceasing to be a Participating Company.
Subject to the foregoing, the Company, in its sole discretion, shall determine
whether the Optionee's Service has terminated and the effective date of such
termination.
(z) "STOCK" means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.2.
(aa) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
(bb) "TEN PERCENT OWNER OPTIONEE" means an Optionee who, at
the time an Option is granted to the Optionee, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
a Participating Company within the meaning of Section 422(b)(6) of the Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.
3. ADMINISTRATION.
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by
the Board. All questions of interpretation of the Plan or of any Option shall be
determined by the Board, and such determinations shall be final and binding upon
all persons having an interest in the Plan or such Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, determination or election which
is the responsibility of or which is allocated to the Company herein, provided
the officer has apparent authority with respect to such matter, right,
obligation, determination or election.
3.2 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered
<PAGE> 29
pursuant to Section 12 of the Exchange Act, the Plan shall be administered in
compliance with the requirements, if any, of Rule 16b-3.
3.3 POWERS OF THE BOARD. In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its sole discretion:
(i) to determine the persons to whom, and the time or times
at which, Options shall be granted and the number of shares of Stock to be
subject to each Option;
(ii) to designate Options as Incentive Stock Options or
Nonstatutory Stock Options;
(iii) to determine the Fair Market Value of shares of Stock
or other property;
(iv) to determine the terms, conditions and restrictions
applicable to each Option (which need not be identical) and any shares acquired
upon the exercise thereof, including, without limitation, (i) the exercise price
of the Option, (ii) the method of payment for shares purchased upon the exercise
of the Option, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with the Option or such shares, including by
the withholding or delivery of shares of stock, (iv) the timing, terms and
conditions of the exercisability of the Option or the vesting of any shares
acquired upon the exercise thereof, (v) the time of the expiration of the
Option, (vi) the effect of the Optionee's termination of Service with the
Participating Company Group on any of the foregoing, and (vii) all other terms,
conditions and restrictions applicable to the Option or such shares not
inconsistent with the terms of the Plan;
(v) to approve one or more forms of Option Agreement;
(vi) to amend, modify, extend, or renew, or grant a new
Option in substitution for, any Option or to waive any restrictions or
conditions applicable to any Option or any shares acquired upon the exercise
thereof;
(vii) to accelerate, continue, extend or defer the
exercisability of any Option or the vesting of any shares acquired upon the
exercise thereof, including with respect to the period following an Optionee's
termination of Service with the Participating Company Group;
(viii) to prescribe, amend or rescind rules, guidelines and
policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the tax
policy or custom of, foreign jurisdictions whose citizens may be granted
Options; and
(ix) to correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Option Agreement and to make all
other determinations and take such other actions with respect to the Plan or any
Option as the Board may deem advisable to the extent consistent with the Plan
and applicable law.
<PAGE> 30
3.4 COMMITTEE COMPLYING WITH SECTION 162(m). If a Participating
Company is a "publicly held corporation" within the meaning of Section 162(m),
the Board may establish a Committee of "outside directors" within the meaning of
Section 162(m) to approve the grant of any Option which might reasonably be
anticipated to result in the payment of employee remuneration that would
otherwise exceed the limit on employee remuneration deductible for income tax
purposes pursuant to Section 162(m).
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be Six Million (6,000,000), cumulatively
increased on January 1, 2001, and each January 1 thereafter, by an amount equal
to the lesser of (a) Five Percent (5%) of the number of shares of Stock issued
and outstanding on the immediately preceding December 31, or (b) a lesser amount
of shares determined by the Board, and shall consist of authorized but unissued
or reacquired shares of Stock or any combination thereof. In addition, except as
adjusted pursuant to Section 4.2, in no event shall more than 6,000,000 shares
of Stock be cumulatively available for issuance pursuant to the exercise of
Incentive Stock Options (the "ISO SHARE ISSUANCE LIMIT"). If an outstanding
Option for any reason expires or is terminated or canceled or shares of Stock
acquired, subject to repurchase, upon the exercise of an Option are repurchased
by the Company, the shares of Stock allocable to the unexercised portion of such
Option, or such repurchased shares of Stock, shall again be available for
issuance under the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan, the ISO Share Issuance Limit, the Section 162(m) Grant
Limit described in Section 5.4 below, the Nonemployee Director Options described
in Section 7 below and to any outstanding Options, to the automatic Nonemployee
Director Option grant provisions set forth in Section 7.1, and in the exercise
price per share of any outstanding Options. If a majority of the shares which
are of the same class as the shares that are subject to outstanding Options are
exchanged for, converted into, or otherwise become (whether or not pursuant to
an Ownership Change Event, as defined in Section 9.1) shares of another
corporation (the "NEW SHARES"), the Board may unilaterally amend the outstanding
Options to provide that such Options are exercisable for New Shares. In the
event of any such amendment, the number of shares subject to, and the exercise
price per share of, the outstanding Options shall be adjusted in a fair and
equitable manner as determined by the Board, in its sole discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 4.2 shall be rounded down to the nearest whole number,
as determined by the Board, and in no event may the exercise price of any Option
be decreased to an amount less than the par value, if any, of the stock subject
to the Option. The adjustments determined by the Board pursuant to this Section
4.2 shall be final, binding and conclusive.
5. ELIGIBILITY AND OPTION LIMITATIONS.
5.1 PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only to
Employees, Consultants, and Directors. For purposes of the foregoing sentence,
"Employees," "Consultants" and "Directors" shall include prospective Employees,
prospective Consultants and
<PAGE> 31
prospective Directors to whom Options are granted in connection with written
offers of an employment or other service relationship with the Participating
Company Group. Eligible persons may be granted more than one (1) Option.
5.2 OPTION GRANT RESTRICTIONS. Any person who is not an Employee
on the effective date of the grant of an Option to such person may be granted
only a Nonstatutory Stock Option. An Incentive Stock Option granted to a
prospective Employee upon the condition that such person become an Employee
shall be deemed granted effective on the date such person commences service with
a Participating Company, with an exercise price determined as of such date in
accordance with Section 6.1. Nonemployee Director Options may be granted only to
a person who at the time of grant is a Nonemployee Director.
5.3 FAIR MARKET VALUE LIMITATION. To the extent that Options
designated as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for Stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portion
of such Options which exceeds such amount shall be treated as Nonstatutory Stock
Options. For purposes of this Section 5.3, Options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of Stock shall be determined as of the time the Option
with respect to such Stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Section 5.3, such different
limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such amendment to the Code.
If an Option is treated as an Incentive Stock Option in part and as a
Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section 5.3, the Optionee may designate which portion of such Option the
Optionee is exercising. In the absence of such designation, the Optionee shall
be deemed to have exercised the Incentive Stock Option portion of the Option
first. Separate certificates representing each such portion shall be issued upon
the exercise of the Option.
5.4 SECTION 162(m) GRANT LIMIT. Subject to adjustment as provided
in Section 4.2, at any such time as a Participating Company is a "publicly held
corporation" within the meaning of Section 162(m), no Employee shall be granted
one or more Options within any fiscal year of the Company which in the aggregate
are for the purchase of more than ______________________shares of Stock (the
"SECTION 162(m) GRANT LIMIT"). An Option which is canceled in the same fiscal
year of the Company in which it was granted shall continue to be counted against
the Section 162(m) Grant Limit for such period.
6. TERMS AND CONDITIONS OF OPTIONS.
Options shall be evidenced by Option Agreements specifying the
number of shares of Stock covered thereby, in such form as the Board shall from
time to time establish. Option Agreements may incorporate all or any of the
terms of the Plan by reference and, except as otherwise set forth in Section 7
with respect to Nonemployee Director Options, shall comply with and be subject
to the following terms and conditions:
6.1 EXERCISE PRICE. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that (a) the
exercise price per share for an
<PAGE> 32
Incentive Stock Option shall be not less than the Fair Market Value of a share
of Stock on the effective date of grant of the Option, (b) the exercise price
per share for a Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of a share of Stock on the effective date
of grant of the Option, and (c) no Incentive Stock Option granted to a Ten
Percent Owner Optionee shall have an exercise price per share less than one
hundred ten percent (110%) of the Fair Market Value of a share of Stock on the
effective date of grant of the Option. Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of Section 424(a) of
the Code.
6.2 EXERCISE PERIOD. Options shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Board and
set forth in the Option Agreement evidencing such Option; provided, however,
that (a) no Incentive Stock Option shall be exercisable after the expiration of
ten (10) years after the effective date of grant of such Option, (b) no
Incentive Stock Option granted to a Ten Percent Owner Optionee shall be
exercisable after the expiration of five (5) years after the effective date of
grant of such Option, and (c) no Option granted to a prospective Employee,
prospective Consultant or prospective Director may become exercisable prior to
the date on which such person commences service with a Participating Company.
Subject to the foregoing, unless otherwise specified by the Board in the grant
of an Option, any Option granted hereunder shall have a term of ten (10) years
from the effective date of the grant of the Option.
6.3 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of shares of Stock owned by the
Optionee having a Fair Market Value (as determined by the Company without regard
to any restrictions on transferability applicable to such stock by reason of
federal or state securities laws or agreements with an underwriter for the
Company) not less than the exercise price, (iii) by the assignment of the
proceeds of a sale or loan with respect to some or all of the shares being
acquired upon the exercise of the Option (including, without limitation, through
an exercise complying with the provisions of Regulation T as promulgated from
time to time by the Board of Governors of the Federal Reserve System) (a
"CASHLESS EXERCISE"), (iv) provided that the Optionee is an Employee, by the
Optionee's promissory note in a form approved by the Company, (v) by such other
consideration as may be approved by the Board from time to time to the extent
permitted by applicable law, or (vi) by any combination thereof. The Board may
at any time or from time to time, by adoption of or by amendment to the standard
forms of Option Agreement described in Section 8, or by other means, grant
Options which do not permit all of the foregoing forms of consideration to be
used in payment of the exercise price or which otherwise restrict one or more
forms of consideration.
(b) TENDER OF STOCK. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company of shares of Stock to the
extent such tender of Stock would constitute a violation of the provisions of
any law, regulation or agreement restricting the
<PAGE> 33
redemption of the Company's stock. Unless otherwise provided by the Board, an
Option may not be exercised by tender to the Company of shares of Stock unless
such shares either have been owned by the Optionee for more than six (6) months
or were not acquired, directly or indirectly, from the Company.
(c) CASHLESS EXERCISE. The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise.
(d) PAYMENT BY PROMISSORY NOTE. No promissory note shall be
permitted if the exercise of an Option using a promissory note would be a
violation of any law. Any permitted promissory note shall be on such terms as
the Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any promissory
note used to exercise an Option with the shares of Stock acquired upon the
exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by the Board, if the Company at any time is subject to
the regulations promulgated by the Board of Governors of the Federal Reserve
System or any other governmental entity affecting the extension of credit in
connection with the Company's securities, any promissory note shall comply with
such applicable regulations, and the Optionee shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable
regulations.
6.4 TAX WITHHOLDING. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to such
Option or the shares acquired upon the exercise thereof. Alternatively or in
addition, in its sole discretion, the Company shall have the right to require
the Optionee, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof. The Company
shall have no obligation to deliver shares of Stock or to release shares of
Stock from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied by
the Optionee.
6.5 EFFECT OF TERMINATION OF SERVICE.
(a) OPTION EXERCISABILITY. Except as otherwise provided
herein or in the Option Agreement, subject to earlier termination of the Option
as otherwise provided herein or therein, an Option shall be exercisable after an
Optionee's termination of Service as follows:
(i) Disability. If the Optionee's Service with the
Participating Company Group is terminated because of the Disability of the
Optionee, the Option, to the extent unexercised and exercisable on the date on
which the Optionee's Service terminated, may be exercised by the Optionee (or
the Optionee's guardian or legal representative) at any time prior to the
expiration of six (6) months (or such other period of time as determined by the
Board, in
<PAGE> 34
its sole discretion) after the date on which the Optionee's Service terminated,
but in any event no later than the date of expiration of the Option's term as
set forth in the Option Agreement evidencing such Option (the "OPTION EXPIRATION
DATE").
(ii) Death. If the Optionee's Service with the
Participating Company Group is terminated because of the death of the Optionee,
the Option, to the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee's legal
representative or other person who acquired the right to exercise the Option by
reason of the Optionee's death at any time prior to the expiration of six (6)
months (or such other period of time as determined by the Board, in its sole
discretion) after the date on which the Optionee's Service terminated, but in
any event no later than the Option Expiration Date. The Optionee's Service shall
be deemed to have terminated on account of death if the Optionee dies within
three (3) months after the Optionee's termination of Service.
(iii) Other Termination of Service. If the Optionee's
Service with the Participating Company Group terminates for any reason, except
Disability or death, the Option, to the extent unexercised and exercisable by
the Optionee on the date on which the Optionee's Service terminated, may be
exercised by the Optionee within thirty (30) days (or such other period of time
as determined by the Board, in its sole discretion) after the date on which the
Optionee's Service terminated, but in any event no later than the Option
Expiration Date.
(b) EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding
the foregoing, if the exercise of an Option within the applicable time periods
set forth in Section 6.6(a) is prevented by the provisions of Section 12 below,
the Option shall remain exercisable until thirty (30) days after the date the
Optionee is notified by the Company that the Option is exercisable, but in any
event no later than the Option Expiration Date.
(c) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 6.5(a) of shares acquired upon the exercise of the Option would
subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of Service, or (iii) the Option Expiration
Date.
7. TERMS AND CONDITIONS OF NONEMPLOYEE DIRECTOR OPTIONS.
Nonemployee Director Options shall be evidenced by Option
Agreements specifying the number of shares of Stock covered thereby, in such
form as the Board shall from time to time establish. Such Option Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:
7.1 AUTOMATIC GRANT. Subject to execution by a Nonemployee
Director of an appropriate Option Agreement, Nonemployee Director Options shall
be granted automatically and without further action of the Board, as follows:
(a) INITIAL OPTION. Each person who first becomes a
Nonemployee Director after the effective date of the initial public offering of
the Company's Stock (the
<PAGE> 35
"EFFECTIVE DATE") shall be granted on the date he or she first becomes a
Nonemployee Director a Nonemployee Director Option to purchase thirty thousand
(30,000) shares of Stock (an "Initial Option"). Notwithstanding anything herein
to the contrary, an Initial Option shall not be granted to a Director who
previously did not qualify as a Nonemployee Director but subsequently becomes a
Nonemployee Director as a result of the termination of his or her status as an
Employee.
(b) ANNUAL OPTION. Each Nonemployee Director (including any
Director who previously did not qualify as a Nonemployee Director but who
subsequently becomes a Nonemployee Director) shall be granted on the date of
each Nonemployee Director's re-election to the Board at an annual meeting of the
stockholders of the Company which occurs after the Effective Date (an "ANNUAL
MEETING") an Option to purchase shares of Stock equal to ten thousand (10,000)
shares of Stock multiplied by the number of years in the term for which the
Nonemployee Director is elected to serve (an "ANNUAL OPTION"). Notwithstanding
the foregoing, a Nonemployee Director who has not served continuously as a
Director of the Company for at least one (1) year as of the date of such Annual
Meeting shall not receive an Annual Option on such date.
(c) RIGHT TO DECLINE NONEMPLOYEE DIRECTOR OPTION.
Notwithstanding the foregoing, any person may elect not to receive a Nonemployee
Director Option by delivering written notice of such election to the Board no
later than the day prior to the date such Nonemployee Director Option would
otherwise be granted. A person so declining a Nonemployee Director Option shall
receive no payment or other consideration in lieu of such declined Nonemployee
Director Option. A person who has declined a Nonemployee Director Option may
revoke such election by delivering written notice of such revocation to the
Board no later than the day prior to the date such Nonemployee Director Option
would be granted pursuant to Section 7.1(a) or (b), as the case may be.
7.2 EXERCISE PRICE. The exercise price per share of Stock subject
to a Nonemployee Director Option shall be the Fair Market Value of a share of
Stock on the date the Nonemployee Director Option is granted.
7.3 EXERCISE PERIOD. Each Nonemployee Director Option shall
terminate and cease to be exercisable on the date ten (10) years after the date
of grant of the Nonemployee Director Option unless earlier terminated pursuant
to the terms of the Plan or the Option Agreement.
7.4 RIGHT TO EXERCISE NONEMPLOYEE DIRECTOR OPTIONS.
(a) INITIAL OPTIONS. Except as otherwise provided in the
Plan or in the Option Agreement and provided that the Optionee's Service has not
terminated prior to the respective date set forth below, an Initial Option
granted pursuant to Section 7.1(a) shall become vested and exercisable
cumulatively as follows: (A) 1/3 of the shares shall vest on the first
anniversary of the date of grant of the Initial Option, and (B) the remainder of
the shares shall vest in equal monthly increments over the following two (2)
years.
(b) ANNUAL OPTIONS. Except as otherwise provided in the
Plan or in the Option Agreement and provided the Optionee's Service has not
terminated prior to the
<PAGE> 36
relevant date, each Annual Option shall become vested and exercisable in equal
monthly increments over a period equal to the term that the Nonemployee Director
is elected to serve on the Board.
(c) EFFECT OF TRANSFER OF CONTROL. Notwithstanding the
foregoing, in the event of a Transfer of Control which occurs prior to the
Optionee's termination of Service, any unexercisable or unvested portion of any
outstanding Nonemployee Director Option held by the Optionee shall be
immediately exercisable and vested in full as of the date ten (10) days prior to
the date of the Transfer of Control. The exercise or vesting of any such
Nonemployee Director Option shall be conditioned upon the consummation of the
Transfer of Control. In addition, if the Nonemployee Director no longer serves
as a Director of the Company after such transaction, any Nonemployee Director
Option held by such Optionee, to the extent unexercised and exercisable on the
date of the Transfer of Control, may be exercised within twelve (12) months
after the Transfer of Control, but in any event no later than the Option
Expiration Date.
8. STANDARD FORMS OF OPTION AGREEMENT.
8.1 GENERAL. Unless otherwise provided herein or by the Board at
the time the Option is granted, an Option shall comply with and be subject to
the terms and conditions set forth in the standard form of Option Agreement
adopted by the Board and as amended from time to time.
8.2 NONEMPLOYEE DIRECTOR OPTION. Each Nonemployee Director Option
shall comply with and be subject to the terms and conditions set forth in the
form of Option Agreement (Nonemployee Director Option) adopted by the Board and
as amended from time to time.
8.3 AUTHORITY TO VARY TERMS. The Board shall have the authority
from time to time to vary the terms of any of the standard forms of Option
Agreement described in this Section 8 either in connection with the grant or
amendment of an individual Option or in connection with the authorization of a
new standard form or forms; provided, however, that the terms and conditions of
any such new, revised or amended standard form or forms of Option Agreement
shall be in accordance with the terms of the Plan.
9. TRANSFER OF CONTROL.
9.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company:
(i) the direct or indirect sale or exchange in a single
or series of related transactions by the stockholders of the Company of more
than fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a
party;
(iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or
<PAGE> 37
(iv) a liquidation or dissolution of the Company.
(b) A "TRANSFER OF CONTROL" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the stockholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
9.2 EFFECT OF TRANSFER OF CONTROL ON OPTIONS. In the event of a
Transfer of Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "ACQUIRING
CORPORATION"), may either assume the Company's rights and obligations under
outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation's stock. For purposes of this
Section 9.2, an Option shall be deemed assumed if, following the Transfer of
Control, the Option confers the right to purchase, for each share of Stock
subject to the Option immediately prior to the Transfer of Control, the
consideration (whether stock, cash or other securities or property) to which a
holder of a share of Stock on the effective date of the Transfer of Control was
entitled. Any Options which are neither assumed or substituted for by the
Acquiring Corporation in connection with the Transfer of Control nor exercised
as of the date of the Transfer of Control shall terminate and cease to be
outstanding effective as of the date of the Transfer of Control. Notwithstanding
the foregoing, shares acquired upon exercise of an Option prior to the Transfer
of Control and any consideration received pursuant to the Transfer of Control
with respect to such shares shall continue to be subject to all applicable
provisions of the Option Agreement evidencing such Option except as otherwise
provided in such Option Agreement. Furthermore, notwithstanding the foregoing,
if the corporation the stock of which is subject to the outstanding Options
immediately prior to an Ownership Change Event described in Section 9.1(a)(i)
constituting a Transfer of Control is the surviving or continuing corporation
and immediately after such Ownership Change Event less than fifty percent (50%)
of the total combined voting power of its voting stock is held by another
corporation or by other corporations that are members of an affiliated group
within the meaning of Section 1504(a) of the Code without regard to the
provisions of Section 1504(b) of the Code, the outstanding Options shall not
terminate unless the Board otherwise provides in its sole discretion.
10. PROVISION OF INFORMATION.
Each Optionee shall be given access to information concerning the
Company equivalent to that information generally made available to the Company's
common stockholders.
<PAGE> 38
11. NONTRANSFERABILITY OF OPTIONS.
During the lifetime of the Optionee, an Option shall be
exercisable only by the Optionee or the Optionee's guardian or legal
representative. No Option shall be assignable or transferable by the Optionee,
except by will or by the laws of descent and distribution. Notwithstanding the
foregoing, to the extent permitted by the Board, in its discretion, and set
forth in the Option Agreement evidencing such Option, a Nonstatutory Stock
Option shall be assignable or transferable subject to the applicable
limitations, if any, described in Rule 701 under the Securities Act, and the
General Instructions to Form S-8 Registration Statement under the Securities
Act.
12. COMPLIANCE WITH SECURITIES LAW.
The grant of Options and the issuance of shares of Stock upon
exercise of Options shall be subject to compliance with all applicable
requirements of federal, state or foreign law with respect to such securities.
Options may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition,
no Option may be exercised unless (a) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (b) in the opinion
of legal counsel to the Company, the shares issuable upon exercise of the Option
may be issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of any
Option, the Company may require the Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.
13. INDEMNIFICATION.
In addition to such other rights of indemnification as they may
have as members of the Board or officers or employees of the Participating
Company Group, members of the Board and any officers or employees of the
Participating Company Group to whom authority to act for the Board or the
Company is delegated shall be indemnified by the Company against all reasonable
expenses, including attorneys' fees, actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan, or
any right granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such person is liable
for gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the
opportunity at its own
<PAGE> 39
expense to handle and defend the same.
14. TERMINATION OR AMENDMENT OF PLAN.
The Board may terminate or amend the Plan at any time. However,
subject to changes in applicable law, regulations or rules that would permit
otherwise, without the approval of the Company's stockholders, there shall be
(a) no increase in the maximum aggregate number of shares of Stock that may be
issued under the Plan (except by operation of the provisions of Section 4.2),
(b) no change in the class of persons eligible to receive Incentive Stock
Options, and (c) no other amendment of the Plan that would require approval of
the Company's stockholders under any applicable law, regulation or rule. In any
event, no termination or amendment of the Plan may adversely affect any then
outstanding Option or any unexercised portion thereof, without the consent of
the Optionee, unless such termination or amendment is required to enable an
Option designated as an Incentive Stock Option to qualify as an Incentive Stock
Option or is necessary to comply with any applicable law, regulation or rule.
<PAGE> 40
IMANAGE, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 21, 2000
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Mahmood Panjwani and Mark Culhane, and
each of them, with full power of substitution, to represent the undersigned and
to vote all of the shares of stock in iManage, Inc., a Delaware corporation (the
"Company"), which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the Menlo Room of the Stanford Park
Hotel, 100 El Camino Real, Menlo Park, California, 94025 on June 21, 2000 at
10:00 a.m. Pacific Daylight Time, and at any adjournment or postponement thereof
(1) as hereinafter specified upon the proposals listed on the reverse side and
as more particularly described in the Proxy Statement of the Company dated May
16, 2000 (the "Proxy Statement"), receipt of which is hereby acknowledged, and
(2) in their discretion upon such other matters as may properly come before the
meeting.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1 THROUGH 3.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
<PAGE> 41
Please mark
[X] votes as in
this example
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED
TO SIGN AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR
STOCK MAY BE REPRESENTED AT THE MEETING.
A vote FOR the following proposals is recommended by the Board of
Directors:
1. To elect two (2) Class I directors to the iManage, Inc. board of
directors to hold office for a three-year term and until their successors are
elected and qualified:
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed below (except to vote for all
as marked to the nominees listed
contrary below.) below.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through that nominee's name in the list below.)
Rafiq Mohammadi
Moez R. Virani
2. To amend the iManage, Inc. 1997 Stock Option Plan to modify the
automatic annual reserve increase and establish a grant limit for the plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of PricewaterhouseCoopers LLP as our
independent auditors for the fiscal year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
MARK HERE [ ] MARK [ ]
FOR HERE IF
ADDRESS YOU
CHANGE AND PLAN TO
NOTE AT ATTEND
LEFT THE
MEETING
PLEASE SIGN HERE. If shares of stock are held jointly, both or all of such
persons should sign. Corporate or partnership proxies should be signed in full
corporate or partnership name by an authorized person. Persons signing in a
fiduciary capacity should indicate their full titles in such capacity.
Signature: Date:
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Signature: Date:
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