<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
-
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[x] Definitive Proxy Statement
-
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Integral Systems, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
-
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
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<PAGE>
INTEGRAL SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 26, 2000
TO THE STOCKHOLDERS OF INTEGRAL SYSTEMS, INC.:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Annual Meeting") of Integral Systems, Inc. (the "Company") will be held at
Patuxent Greens Country Club, located at 14415 Greensview Drive, Laurel,
Maryland at 6:00 p.m. on Wednesday, April 26, 2000, for the following purposes:
1. To elect seven directors to serve for a term of one year or until
their successors are duly elected and qualified;
2. To ratify the appointment of Rubino & McGeehin, Chartered as
independent accountants of the Company for the fiscal year ending
September 30, 2000; and
3. To consider and transact such other business as may properly and
lawfully come before the Annual Meeting or any adjournment thereof.
All of the foregoing is more fully set forth in the Proxy Statement
accompanying this Notice.
All stockholders are cordially invited to attend the Annual Meeting in
person. IF YOU CANNOT ATTEND THE ANNUAL MEETING, PLEASE TAKE THE TIME TO
PROMPTLY SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE WE HAVE
PROVIDED. If you attend the Annual Meeting and decide that you want to vote in
person, you may revoke your proxy.
By Order of the Board of Directors
/s/ Thomas L. Gough
--------------------
March 13, 2000 Thomas L. Gough
Lanham, Maryland President
<PAGE>
INTEGRAL SYSTEMS, INC.
5000 Philadelphia Way
Lanham, Maryland 20706-4417
Annual Meeting of Stockholders
April 26, 2000
------------------------------------
PROXY STATEMENT
------------------------------------
Information Concerning Solicitation and Voting
General
The enclosed proxy is solicited on behalf of Integral Systems, Inc. (the
"Company") for the annual meeting of stockholders of the Company (the "Annual
Meeting") to be held at 6:00 p.m. on Wednesday, April 26, 2000, at Patuxent
Greens Country Club, located at 14415 Greensview Drive, Laurel, Maryland or any
adjournment or adjournments thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting.
These Proxy solicitation materials were mailed on or about March 20, 2000
to all stockholders entitled to vote at the meeting.
Record Date; Outstanding Shares
Only stockholders of record at the close of business on March 13, 2000 (the
"Record Date") are entitled to receive notice of and to vote at the Annual
Meeting. The outstanding voting securities of the Company as of the Record Date
consisted of 8,681,246 shares of common stock of the Company, par value $.01 per
share (the "Common Stock"). For information regarding holders of more than 5%
of the outstanding Common Stock, see "Security Ownership of Certain Beneficial
Owners and Management."
Revocability of Proxies
The enclosed Proxy is revocable at any time before its use by delivering to
the Company a written notice of revocation or a duly executed proxy bearing a
later date. If a stockholder who has executed and returned a proxy is present
at the Annual Meeting and wishes to vote in person, he or she may elect to do so
and thereby suspend the power of the proxy holders to vote his or her proxy.
Voting and Solicitation
Every stockholder of record on the Record Date is entitled, for each share
held, to one vote on each proposal or item that comes before the meeting. All
shares represented at the Annual Meeting by a proxy will be voted in accordance
with the choices specified on the proxy. If no direction is given, proxies will
be voted in accordance with the recommendations of the Board of Directors set
forth in this Proxy Statement. In the election of directors (Proposal 1), a
plurality of the votes cast at the Annual Meeting at which a quorum is present
is sufficient to elect a director. Thus, each stockholder will be entitled to
vote for seven nominees and the seven nominees with the greatest number of votes
will be elected. The ratification of the independent auditors for the Company
for the current year (Proposal 2) will require the affirmative vote of a
=
majority of the votes cast by the stockholders present in person or by proxy and
entitled to vote at the Annual Meeting. Under
1
<PAGE>
Maryland law, there are no appraisal or dissenter's rights with respect to any
matter to be voted on at the Annual Meeting that is described herein.
The cost of soliciting proxies will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owners. Proxies may also be solicited by certain
of the Company's directors, officers and regular employees, without additional
compensation, personally or by telephone, telecopy or electronic mail.
Quorum; Abstentions; and Broker Non-Votes
The presence, in person or by proxy, of the holders of a majority of the
shares entitled to be voted generally at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. An abstaining vote and a broker
"non-vote" (a broker non-vote occurs if a broker or other nominee does not have
discretionary authority and has not received instructions with respect to a
particular item) are counted as present and entitled to vote and are, therefore,
included for purposes of determining whether a quorum of shares exists. For
purposes of electing directors (Proposal 1) and the ratification of the
selection of the Company's independent auditors (Proposal 2), abstentions and
broker non-votes will not be treated as a vote cast and will not affect the
outcome of such votes.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 2001 annual meeting of stockholders must
be received by the Company no later than November 22, 2000 in order that they
may be included in the proxy statement and form of proxy relating to that
meeting. If a stockholder intends to present a stockholder proposal at the 2001
annual meeting in a manner other than by the inclusion of the proposal in the
Company's proxy statement and proxy relating to that meeting, unless the
stockholder notifies the Company of such intention by February 4, 2001, the
proxies named by the Company may exercise their discretionary voting authority
on the matter in accordance with their best judgment. Any such stockholder
proposal should be addressed to the Company's Secretary, Elaine M. Parfitt, and
delivered to the Company's principal executive offices at 5000 Philadelphia Way,
Lanham, Maryland 20706-4417.
Annual Report
The Company's Annual Report to Stockholders on Form 10-KSB for the fiscal
year ended September 30, 1999, is being mailed to stockholders with these Proxy
solicitation materials. A copy of the Company's Annual Report, including the
financial statements and the financial statement schedules included therein, is
also available upon written request to the Company at 5000 Philadelphia Way,
Lanham, Maryland 20706-4417, Attn: Elaine M. Parfitt, Corporate Secretary.
2
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
General
A Board of Directors consisting of seven directors is to be elected at the
Annual Meeting. Unless otherwise instructed, the proxy holders will vote all of
the proxies received by them for the Company's seven nominees. The seven
directors nominated for election at the Annual Meeting are: Steven R.
Chamberlain, Thomas L. Gough, Steven A. Carchedi, Dominic A. Laiti, R. Doss
McComas, Bonnie K. Wachtel and John R. Murphy (collectively, the "Nominees").
In the event that any of the Nominees shall become unavailable, the proxy
holders will vote in their discretion for a substitute nominee. It is not
expected that any Nominee will be unavailable.
The Bylaws of the Company provide that the number of members of the Board
of Directors shall consist of between three and seven directors and that the
exact number may be determined, within the foregoing limits, by the Board of
Directors. At its meeting held on February 16, 2000, the Board of Directors
determined that the number of directors of the Company shall be seven. Each
director is elected for a one-year term at each annual meeting of the
stockholders. Directors serve until the next annual meeting of stockholders or
until successors have been duly elected and qualified. Officers are elected by
the Board of Directors. Each officer holds office until his or her successor is
elected or appointed and qualified or until his or her earlier resignation or
removal.
The terms of each of the elected directors will expire at the next annual
meeting of stockholders or when their successors are elected and qualified.
The Board of Directors Unanimously Recommends That Stockholders Vote "For"
Each of the Nominees.
Set forth below is certain information regarding the directors (including
the Nominees) and executive officers of the Company.
Directors and Executive Officers: Age Position
Steven R. Chamberlain............... 44 Chairman of the Board, Chief
Executive Officer and Director
Thomas L. Gough..................... 51 President, Chief Operating
Officer and Director
Steven A. Carchedi.................. 48 Executive Vice President,
Business Development and Director
Elaine M. Parfitt................... 36 Vice President, Chief Financial
Officer, Secretary and Treasurer
Patrick R. Woods.................... 44 Vice President, Government Programs
Peter J. Gaffney.................... 40 Vice President, Commercial Products
Bonnie K. Wachtel................... 44 Outside Director
Dominic A. Laiti.................... 68 Outside Director
R. Doss McComas..................... 45 Outside Director
John R. Murphy...................... 66 Outside Director
3
<PAGE>
Steven R. Chamberlain, 44, a Company founder, has been Chairman of the
Board since June 1992, President since May 1988, and a Director since 1982. He
served as Vice President from 1982 until he became President. From 1978 to
1982, OAO Corporation ("OAO") employed Mr. Chamberlain where he progressed from
Systems Analyst to Manager of the Offutt Air Force Base field support office.
Mr. Chamberlain holds a B.S. degree in Physics from Memphis State University and
has done graduate work in Physics and Mathematics at Memphis State and the
University of Maryland.
Thomas L. Gough, 51, became a member of the Company's staff in January
1984. In March 1996, he was elected to the Board of Directors of the Company.
He has served as President and Chief Operating Officer of the Company since June
1992. For three years before being named President, he served as Vice President
and Chief Financial Officer. Prior to joining the Company, he was employed by
Business and Technological Systems, Inc., serving initially as a Project Leader
and later as the Software Systems Division Manager. From 1972 to 1977, he was
employed by Computer Sciences Corporation, where he progressed from Programmer
Analyst to Section Manager. Mr. Gough earned a B.S. degree from the University
of Maryland, where he majored in Information Systems Management in the School of
Business and Public Administration.
Steven A. Carchedi, 48, joined the Company in 1991 and has served on
the Board of Directors of the Company since February 2000. Mr. Carchedi was
named Executive Vice President in August 1999, and had served as Vice President
of Commercial Programs since 1994. Before joining the Company as a Vice
President in 1991, Mr. Carchedi worked with the Company for two years as an
independent business development consultant. Previously, he worked for
Computational Engineering, Inc., where he held positions as a Mathematician,
Program Manager, Vice President of Business Development, and Director. He
currently serves on the Board of Directors for Horsesmouth, a company that
specializes in Web-based training for the financial industry. Mr. Carchedi holds
a B.S. degree in Mathematics from Wake Forest University and an M.A. degree in
Mathematics from the University of Maryland.
Elaine M. Parfitt, 36, joined the Company in 1983. She served as Staff
Accountant/Personnel Administrator until January 1995, when she was promoted to
Controller/Director of Accounting. In March 1997, Ms. Parfitt was appointed Vice
President and Chief Financial Officer. In February 2000, she was appointed
Secretary and Treasurer. She holds a B.S. degree in Accounting from the
University of Maryland.
Patrick R. Woods, 44, joined the Company in 1995 and has been Vice
President, Government Programs, since May 1998. From 1996 to April 1998, Mr.
Woods served as Vice President, NOAA Programs. From 1994 to 1995, he worked for
Space Systems/Loral (SS/L), and from 1985 to 1994, he worked for the Lockheed
Martin Corporation (formerly Loral Aerospace). Mr. Woods served as the Director
of Mission Operations for both SS/L and the AeroSys Division of Loral Aerospace.
While at Loral Aerospace, Mr. Woods received the NASA Public Service Group
Achievement Award from NASA Administrator Admiral Richard Truly for his
management of the Hubble Space Telescope control center development and launch
support. Mr. Woods holds a B.S. in Public Administration and a M.P.A. in Public
Management from Indiana University.
Peter J. Gaffney, 40, joined the Company in 1986. In February 2000 Mr.
Gaffney was appointed Vice President, Commercial Products. From May 1999 until
February 2000, Mr. Gaffney served as Vice President, Commercial Division. From
1986 to 1992, he worked on simulators for the Company's DMSP and Tiros Programs.
In 1992, he became a project manager for EPOCH 2000 ground systems programs,
which included the Command and Range Generator project for GE Americom, the
Loral Skynet Telstar 3,4, and 5 ground systems, and the Echostar 1,2,3 and 4
ground systems. Prior to joining Integral Systems, Mr. Gaffney was a design
engineer for the General
4
<PAGE>
Electric Co., where he worked on the DSCS, Milstar, Landsat, and Spot satellite
programs. Mr. Gaffney graduated from the University of Maryland in 1981 with a
B.S. in Electrical Engineering.
Bonnie K. Wachtel, 44, has served as an outside director since May
1988. Since 1984, she has been Vice President, General Counsel and a Director of
Wachtel & Co., Inc., an investment-banking firm in Washington, D.C. Ms. Wachtel
serves as a Director of several corporations, including VSE Corporation and
Information Analysis, Inc. She holds a B.A. and M.B.A. from the University of
Chicago and a J.D. from the University of Virginia, and she is a Certified
Financial Analyst.
Dominic A. Laiti, 68, has served as an outside director of the Company
since July 1995. Mr. Laiti is presently employed as an independent consultant
and was President and Director of Globalink, Inc. from January 1990 to December
1994. He has over 26 years of experience in starting, building, and managing
high-technology private and public companies with annual revenues from $2
million to over $120 million dollars. Mr. Laiti was President of Hadron, Inc.
from 1979 to 1989, Vice President of Xonics, Inc. from 1972 to 1979, and Vice
President of KMS Industries from 1968 to 1972. He is a Director of Energy
Recovery, Inc. and former director of United Press International, Saturn
Chemicals Company, Hadron, Inc., Telecommunications Industries, Inc., MAXXAM
Technology, Inc. and Jupiter Technology, Inc.
R. Doss McComas, 46, joined the Board as an outside director in July
1995. He is President of Fortel Technologies Inc., a manufacturer of antennas
and Internet Wireless Services, Inc., a manufacturer and integrator of internet,
cellular and wireless local loop systems. Previously, he was Chairman of Plexsys
International and held positions with COMSAT RSI and Radiation Systems, Inc.,
including Group Vice President, Vice President of Acquisitions, Strategic
Planning and International Marketing, and General Counsel. He holds a B.A.
degree from Virginia Polytechnic Institute, an M.B.A. from Mt. Saint Mary's, and
a J.D. from Gonzaga University.
John R. (Reg) Murphy, 66, was elected to the Board as an outside
director in February 2000. He is Vice Chairman of the National Geographic
Society based in Washington, D.C. He was President and CEO of the Society from
1995 to 1998. Prior to National Geographic, he was the publisher and CEO of the
Baltimore Sun and a member of the Times Mirror Management Committee. Mr. Murphy
has also been the Editor of the Atlanta Constitution, and Editor and Publisher
of the San Francisco Examiner. He is a past President of the United States Golf
Association and Chairman of its Centennial Celebration Committee. Mr. Murphy is
on the Board of Directors of The Omnicom Group, Provant, Inc., MSD&T Funds,
Arbos Inc., Saxotech, and Asia Foundation. He is also President of Caves Valley
Golf Club in Baltimore, Maryland and a Trustee of Mercer and Brenau
Universities.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of the Company's Common Stock, to file reports of ownership
and changes in ownership of the Company's Common Stock with the Securities and
Exchange Commission and Nasdaq. Based on a review of the copies of such
reports, the Company believes that during the fiscal year ending September 30,
1999 its executive officers, directors and greater than ten percent stockholders
filed on a timely basis all reports due under Section 16(a) of the Exchange Act,
with the following exceptions: Carroll Dudley, a former executive officer of the
Company, inadvertently filed late a Form 3; Steven Carchedi, an executive
officer of the Company, inadvertently filed late a Form 4 for January 1999,
reporting two transactions; Dominic Laiti, an outside director of the Company,
inadvertently filed late a Form 4 for August 1999 reporting one transaction.
5
<PAGE>
Board of Directors and Committees
The Board of Directors met four (4) times in the fiscal year ended
September 30, 1999. Each of the directors attended at least 75% of all meetings
of the Board of Directors. The Company has an Audit Committee, a Stock Option
Committee and a Compensation Committee. The Audit Committee, the Stock Option
Committee and the Compensation Committee held their meetings concurrently with
the meetings of the Board of Directors. The Company does not have a nominating
committee.
The Audit Committee, Compensation Committee and Stock Option Committee
are comprised of Dominic A. Laiti, R. Doss McComas and Bonnie Wachtel, each a
non-employee director.
The Stock Option Committee administers the Company's 1988 Stock Option
Plan, as amended and restated effective May 8, 1998 (the "Stock Option Plan").
The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public accountants
the plan and results of the audit engagement, reviews the independence of the
Company's public accountants, considers the range of audit and non-audit fees
and reviews the adequacy of the Company's internal accounting controls. The
Compensation Committee determines the salary and bonus for the Chief Executive
Officer, and makes recommendations regarding compensation levels for other
officers of the Company.
Director Compensation
Directors who are employees of the Company do not receive any
compensation for their service as directors. The Company pays each director who
is not an employee of the Company an aggregate of $10,000 per year for their
services, which amount is paid in equal quarterly installments. Outside
directors are also annually granted options to purchase 10,000 shares of the
Company's common stock pursuant to the Stock Option Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of February 18, 2000, by
(i) each person known by the Company to beneficially own more than five percent
of the outstanding shares of Common Stock, (ii) each Nominee, director and
executive officer of the Company and (iii) all executive officers and directors
as a group. Except as indicated, the persons named in the table have sole voting
and investment power with respect to all shares beneficially owned. Except as
indicated, the address of each of the persons named in the table is that of the
Company's principal executive offices.
6
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Owner of Class
- ------------------------------------------------ ----------------------------------- -----------
<S> <C> <C>
Chartwell Capital Investors II LP 555,556 6.4%
One Independent Drive
Suite 3120
Jacksonville, FL 32202
Executive Officers, Directors, and Nominees
Steven R. Chamberlain 409,905 (1) 4.7%
Thomas L. Gough 169,600 (2) 2.0%
Steven A. Carchedi 101,150 (3) 1.2%
Elaine M. Parfitt 14,400 (4) *
Patrick R. Woods 2,400 (5) *
Peter J. Gaffney 30,600 (6) *
Bonnie K. Wachtel 41,400 (7) *
1101 Fourteenth Street, N.W.
Suite 800
Washington, D.C. 20036
Dominic A. Laiti 0 *
12525 Knoll Brook Drive
Clifton, Va. 22024
R. Doss McComas 16,000 (8) *
409 Biggs Drive
Front Royal, Va. 22630
John R. Murphy 2,000 *
Cottage 448
West 31st Street
Sea Island, GA. 31561
All Directors, Executive Officers and Nominees
as a group. (10 persons). 787,455 8.9%
</TABLE>
. *Less than one percent of the Common Stock outstanding.
(1) Includes outstanding options to purchase 93,400 shares of Common Stock
which are exercisable within 60 days.
(2) Includes outstanding options to purchase 20,000 shares of Common Stock
which are exercisable within 60 days.
(3) Includes outstanding options to purchase 35,150 shares of Common Stock
which are exercisable within 60 days.
(4) Includes outstanding options to purchase 5,000 shares of Common Stock which
are exercisable within 60 days.
(5) Includes outstanding options to purchase 2,400 shares of Common Stock which
are exercisable within 60 days.
(6) Includes outstanding options to purchase 27,600 shares of Common Stock
which are exercisable within 60 days.
(7) Includes outstanding options to purchase 15,000 shares of Common Stock
which are exercisable within 60 days.
(8) Includes outstanding options to purchase 16,000 shares of Common Stock
which are exercisable within 60 days.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table presents certain information concerning
compensation earned for services rendered in all capacities to the Company for
the fiscal years ended September 30, 1997, 1998 and 1999 by the Chief Executive
Officer and each of the other four most highly compensated individuals of the
Company whose salaries and bonuses exceeded $100,000 and who were executive
officers at the time (the "Named Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
=========================== =========================================
Awards Payouts
---------------- -----------------------
Number of
Shares
Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation (1)
- -------------------------------- --------- ------------- ------------ ---------------- -----------------------
<S> <C> <C> <C> <C> <C>
Chief Executive Officer
Steven R. Chamberlain 1999 $187,862 $65,000 20,000 $19,066
1998 $140,120 $30,000 0 $13,847
1997 $117,088 $13,000 0 $11,639
Chief Operating Officer and
President
Thomas L. Gough 1999 $167,545 $35,000 0 $16,885
1998 $125,251 $20,000 0 $12,357
1997 $106,242 $11,000 0 $10,508
Executive Vice President
Business Development
Steven A. Carchedi 1999 $162,476 $35,000 12,000 $16,092
1998 $122,432 $20,000 0 $11,092
1997 $103,701 $11,000 0 $10,136
Vice President, Commercial
Products
Steven K. Kowal 1999 $157,386 $12,000 8,000 $15,695
1998 $119,672 $12,000 0 $11,711
1997 $102,257 $10,000 0 $10,001
Vice President, Government
Programs
Patrick R. Woods 1999 $156,119 $30,000 12,000 $16,799
1998 $117,284 $15,000 0 $12,382
1997 $104,857 $ 8,000 0 $ 9,674
</TABLE>
_________________
(1) All Other Compensation represents employer pension contributions. It does
not include the value of insurance premiums paid by or on behalf of the
Company with respect to term life insurance for the benefit of each
identified individual in the approximate amounts of $594, $584 and $435 in
fiscal 1999, 1998 and 1997, respectively.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Individual Grants
- ------------------------------------------------------------------------------------------------------------------------
Number of Percent of Total Exercise/Base Expiration
Securities Options Price Date
Underlying Granted to ($/Share)
Name Options Employees in
Granted Fiscal Year
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CEO
Steven R. Chamberlain 20,000 7% $18.88 2004
EXECUTIVE VP BUSINESS DEVELOPMENT
Steven A. Carchedi 12,000 4% $18.88 2004
VP COMMERCIAL PRODUCTS
Steven K. Kowal 8,000 3% $18.88 2004
VP GOVERNMENT PROGRAMS
Patrick R. Woods 12,000 4% $18.88 2004
</TABLE>
Fiscal Year 1999 Stock Option Exercises and Year-End Option Values
Steven A. Carchedi exercised a total of 63,000 options, consisting of
21,000 Non-Statutory Stock Options and 42,000 Incentive Stock Options. Thomas
L. Gough exercised 6,000 Incentive Stock Options. No other Named Officer
exercised options during the fiscal year ended September 30, 1999.
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Shares
Acquired on Value Number of Securities Underlying Value of Unexercised
Name Exercise (#) Realized ($) Unexercised Options at Sept. 30, "In-the-Money" Options at Sept.
1999 30, 1999 (1)
- -----------------------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Steven R. 0 0 104,400 50,600 $2,644,632 $960,358
Chamberlain
- -----------------------------------------------------------------------------------------------------------------------------------
Thomas L. Gough 6,000 $ 58,980 22,000 24,000 $ 546,260 $595,920
- -----------------------------------------------------------------------------------------------------------------------------------
Steven A. Carchedi 63,000 $959,508 51,750 29,250 $1,305,068 $550,643
- -----------------------------------------------------------------------------------------------------------------------------------
Steven K. Kowal 0 0 18,000 14,000 $ 453,060 $230,020
- -----------------------------------------------------------------------------------------------------------------------------------
Patrick R. Woods 0 0 0 12,000 $ 0 $118,500
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Value for "In the Money" options represents the difference between the
exercise prices of outstanding options and the fair market value of the
Company's Common Stock of $28.75 per share at September 30, 1999.
9
<PAGE>
Employment Agreements
There are no employment agreements in effect with respect to any
directors or executive officers of the Company.
Compensation Pursuant to Plans
The Compensation Committee determines the annual bonuses and salary
awarded to Steven R. Chamberlain. The Compensation Committee also makes
recommendations regarding compensation levels for other officers of the Company
to Steven R. Chamberlain, who determines the annual bonuses and salaries awarded
to such officers on a discretionary basis. Currently, no formal plan exists for
determining bonus amounts. Prior to the formation of the Compensation Committee,
the functions currently performed by such committee were performed by the Board
of Directors as a whole.
Effective October 1, 1987, the Company established a 401(k) pension
and profit sharing plan under Section 401 of the Internal Revenue Code. Under
the pension plan and the profit sharing plan, the Company contributes annually
an aggregate amount equal to 5% of an eligible employee's salary to the plans
and may make additional contributions of up to 7% of an eligible employee's
salary. The employee may contribute up to an additional 10% as salary deferral.
In each of fiscal years 1999 and 1998, the Company contributed a total of 11% of
eligible employees' salaries to both plans.
Stock Option Plan
Effective May 25, 1988, the Company established the Stock Option Plan,
as amended and restated in 1994 and 1998, to create additional incentives for
the Company's employees, consultants and directors to promote the financial
success of the Company. The Stock Option Committee has the authority to select
full-time employees, directors or consultants to receive awards of options for
the purchase of stock of the Company under this plan. The maximum number of
shares of Common Stock which may be issued pursuant to the Stock Option Plan was
increased from 1,200,000 to 1,800,000 during fiscal year 1998. Options to
purchase a total of 296,840 shares of Common Stock were granted and options to
purchase 140,656 shares of Common Stock were exercised during fiscal year 1999.
The total number of shares of Common Stock subject to options issued and
outstanding as of January 31, 2000 was 767,810. Pursuant to the Stock Option
Plan, options may be incentive stock options within the meaning of Section 422
of the Internal Revenue Code or nonstatutory stock options, although incentive
stock options may be granted only to employees.
Termination of Employment and Change of Control Termination
The Company has no compensatory plan or arrangement with respect to
any individual named in the Summary Compensation Table which results or will
result from the resignation, retirement or any other termination of that
individual's employment with the Company or its subsidiaries or from a change in
control of the Company or a change in the individual's responsibilities
following a change in control.
RATIFICATION OF THE APPOINTMENT OF RUBINO & MCGEEHIN, CHARTERED AS INDEPENDENT
ACCOUNTANTS (PROPOSAL 2)
Management has selected Rubino & McGeehin, Chartered as the
independent accountants to audit the books, records and accounts of the Company
for the current fiscal year ending September
10
<PAGE>
30, 2000. Rubino & McGeehin, Chartered has audited the Company's financial
statements since 1984.
A representative of Rubino & McGeehin, Chartered is expected to be
present at the Annual Meeting and will have the opportunity to make a statement,
and will be available to answer questions from stockholders.
The Board of Directors Unanimously Recommends A Vote "For" Ratification of the
Appointment of Rubino & McGeehin, Chartered as the Company's Independent
Accountants.
OTHER MATTERS
There is no reason to believe that any other business will be
presented at the Annual Meeting; however, if any other business should properly
and lawfully come before the Annual Meeting, the proxies will vote in accordance
with their best judgment in such matters pursuant to discretionary authority
granted in the proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Thomas L. Gough
--------------------
March 13, 2000 Thomas L. Gough
Lanham, Maryland President and Chief Operating Officer
11
<PAGE>
PROXY CARD
INTEGRAL SYSTEMS, INC.
5000 Philadelphia Way
Lanham, Maryland 20706-4417
The undersigned hereby appoints Elaine Parfitt and Albert Alderete, or
either of them, as proxies with full powers of substitution, to vote all shares
of the Common Stock of Integral Systems, Inc. (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on April 26, 2000 (the "Annual Meeting") and at any
adjournment thereof, upon the items described in the Proxy Statement. The
undersigned acknowledges receipt of notice of the meeting and the Proxy
Statement.
A. PROPOSAL BY THE COMPANY FOR THE ELECTION OF DIRECTORS (PROPOSAL NO. 1)
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY for
(except as marked to the contrary all nominees listed below
below)
Nominees: Steven R. Chamberlain, Thomas L. Gough, Steven A. Carchedi, Dominic
A. Laiti, R. Doss McComas, Bonnie K. Wachtel and John R. Murphy.
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
PRINT THAT NOMINEE(S)'S NAME:_______________________________
B. PROPOSAL BY THE COMPANY TO RATIFY THE APPOINTMENT OF RUBINO & McGEEHIN,
=
CHARTERED AS INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 2000 (PROPOSAL NO. 2)
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
C. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE. YOU MAY ALSO RETURN A COPY OF THIS PROXY CARD TO THE COMPANY BY
FACSIMILE, BUT YOU MUST ALSO RETURN THE EXECUTED PROXY CARD IN THE ENCLOSED
ENVELOPE. THE COMPANY'S FACSIMILE NUMBER IS 301-731-9606.
This Proxy, when properly executed, will be voted as directed herein. If no
instructions are given, the shares represented by this proxy will be voted "FOR"
all of the nominees and proposals set forth in proposals No. 1 and No. 2 and in
the discretion of the proxy holders as to other Business.
Please date and sign this proxy exactly as your name appears hereon.
_______________________ ______________________________
Number of Shares Print Name
_______________________ ______________________________
Date Signature of Owner
____________________________________________
Additional Signature of Joint Owner (if any)
If stock is jointly held, each joint
owner should sign. When signing as
attorney-in-fact, executor,
administrator, trustee, guardian,
corporate officer or partner, please
give full title.
