<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
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 14a-11(c) or Section 14a-12
MANHATTAN ASSOCIATES, 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:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
MANHATTAN ASSOCIATES, INC.
2300 Windy Ridge Parkway, Suite 700
Atlanta, Georgia 30339
(770) 955-7070
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Manhattan
Associates, Inc. (the "Company") will be held at 2300 Windy Ridge Parkway,
Atlanta, Georgia 30339, at 9:00 a.m., Atlanta, Georgia time, on Saturday, May
15, 1999 (the "Annual Meeting"), to consider and act upon:
1. the election of five (5) directors to the Company's Board of
Directors;
2. a proposal to increase the number of shares available for issuance
under the Company's 1998 Stock Incentive Plan from 5,000,000 shares to
7,000,000 shares, an increase of 2,000,000 shares and to authorize the
Company to automatically adjust the number of shares available under
the 1998 Stock Incentive Plan on the first day of each fiscal year;
3. a proposal to ratify the selection of independent public accountants
for the Company's current fiscal year; and
4. such other business as may properly come before the Annual Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on March 31, 1999,
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting.
By Order of the Board of Directors,
/s/ Alan J. Dabbiere
Alan J. Dabbiere,
Chairman of the Board of Directors, Chief
Executive Officer and President
April 14, 1999
Atlanta, Georgia
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE WHICH HAS BEEN PROVIDED.
NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES. IN THE EVENT YOU ARE
ABLE TO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
<PAGE>
MANHATTAN ASSOCIATES, INC.
2300 Windy Ridge Parkway, Suite 700
Atlanta, Georgia 30339
---------------------
Proxy Statement
---------------------
May 15, 1999
-------------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
Shareholders Meeting
This Proxy Statement and the enclosed Proxy card ("Proxy") are furnished on
behalf of the Board of Directors of Manhattan Associates, Inc., a Georgia
corporation ("Manhattan" or the "Company" or "we"), for use at the Annual
Meeting of Shareholders to be held on May 15, 1999 at 9:00 a.m., Atlanta,
Georgia time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at 2300 Windy Ridge Parkway,
Atlanta, Georgia 30339. The Company intends to mail this Proxy Statement and
the accompanying Proxy on or about April 20, 1999, to all shareholders entitled
to vote at the Annual Meeting.
Shareholders Entitled to Vote
Only holders of record of the Company's $.01 par value per share common
stock (the "Common Stock") at the close of business on March 31, 1999 will be
entitled to notice of and to vote at the Annual Meeting. At the close of
business on March 31, 1999, the Company had outstanding and entitled to vote
24,013,137 shares of Common Stock. Each holder of record of Common Stock on
such date will be entitled to one vote for each share held on all matters to be
voted upon at the Annual Meeting. Any shareholder who signs and returns a Proxy
has the power to revoke it at any time before it is exercised by providing
written notice of revocation to the Secretary of the Company or by filing with
the Secretary of the Company a Proxy bearing a later date. The holders of a
majority of the total shares of Common Stock outstanding on the record date,
whether present at the Annual Meeting in person or represented by Proxy, will
constitute a quorum for the transaction of business at the Annual Meeting. The
shares held by each shareholder who signs and returns the enclosed Proxy will be
counted for the purposes of determining the presence of a quorum at the meeting,
whether or not the shareholder abstains on all or any matter to be acted on at
the meeting. Abstentions and broker non-votes both will be counted toward
fulfillment of quorum requirements. A broker non-vote occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that proposal and has not received instructions from the beneficial owner.
Counting of Votes
The purpose of the Annual Meeting is to consider and act upon the matters
which are listed in the accompanying Notice of Annual Meeting and set forth in
this Proxy Statement. The enclosed Proxy provides a means for a shareholder to
vote upon all of the matters listed in the accompanying Notice of Annual Meeting
and described in the Proxy Statement. The enclosed Proxy also provides a means
for a shareholder to vote for all of the nominees for Director listed thereon or
to withhold authority to vote for one or more of such nominees. The Company's
Bylaws provide that Directors are elected by a plurality of the votes cast.
Plurality means that more votes must be cast in favor of the election of a
Director than those cast against election of such Director.
1
<PAGE>
Accordingly, the withholding of authority by a shareholder (including broker
non-votes) will not be counted in computing a plurality and thus will have no
effect on the results of the election of such nominees.
The accompanying Proxy also provides a means for a shareholder to vote for,
against or abstain from voting on each of the other matters to be acted upon at
the Annual Meeting. Each Proxy will be voted in accordance with the
shareholder's directions. The affirmative vote of a majority of the shares of
Common Stock present in person or represented by a Proxy and entitled to vote on
proposals two and three set forth in the accompanying Notice of Annual Meeting
is required for the approval of such proposals. Approval of any other matters
as may properly come before the meeting also will require the affirmative vote
of a majority of the shares of Common Stock present in person or represented by
a Proxy and entitled to vote at the meeting. Abstentions with respect to
proposals two and three will have the same effect as a vote against these
proposals. With respect to broker non-votes, the shares will not be considered
present at the meeting for the proposal to which authority was withheld.
Consequently, broker non-votes will not be counted with regard to such proposal,
but they will have the effect of reducing the number of affirmative votes
required to approve the proposal, because they reduce the number of shares
present or represented from which a majority is calculated.
Proxies
When the enclosed Proxy is properly signed and returned, the shares which
it represents will be voted at the Annual Meeting in accordance with the
instructions noted thereon. In the absence of such instructions, the shares
represented by a signed Proxy will be voted in favor of the nominees for
election to the Board of Directors, and in favor of the approval of proposals
two and three.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the amount and percent of shares of Common
Stock that, as of March 31, 1999, are deemed under the rules of the Securities
and Exchange Commission (the "Commission") to be "beneficially owned" by each
member of the Board of Directors of the Company, by each nominee to become a
member of the Board of Directors, by each Executive Officer of the Company, by
all Directors and Executive Officers of the Company as a group, and by any
person or "group" (as that term is used in the Securities Act of 1934, as
amended) known to the Company as of that date to be a "beneficial owner" of more
than 5% of the outstanding shares of Common Stock of the Company.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned(2)
--------------------------
Number of Percentage
Shares of Of
Name of Beneficial Owner(1) Common Stock Class
- --------------------------- -------------- ----------
<S> <C> <C>
Alan J. Dabbiere(3).................................................. 10,845,063 45.2%
Deepak Raghavan(4)................................................... 2,591,193 10.8%
Gregory Cronin(5).................................................... 126,667 *
Robert Bearden(6).................................................... 126,000 *
David K. Dabbiere(7)................................................. 364,000 1.5%
Michael J. Casey(8).................................................. 46,668 *
Neil Thall........................................................... -- *
Oliver M. Cooper(9).................................................. 17,500 *
Brian J. Cassidy(10)................................................. 62,500 *
John J. Huntz, Jr.(10)............................................... 12,500 *
Thomas Noonan(10).................................................... 11,000 *
Ponnambalam Muthiah(11).............................................. 2,714,561 11.3%
Deepak M.J. Rao(12).................................................. 2,675,861 11.1%
All executive officers and directors as a group (10 persons) (13).... 14,185,591 58.0%
</TABLE>
__________
* Less than 1% of the outstanding Common Stock.
(1) Except as set forth herein, the street address of the named beneficial
owner is c/o Manhattan Associates, Inc., 2300 Windy Ridge Parkway,
Suite 700, Atlanta, Georgia 30339.
(2) For purposes of calculating the percentage beneficially owned, the number
of shares of common stock deemed outstanding include (i) 24,013,137 shares
outstanding as of March 31, 1999 and (ii) 488,335 shares issuable by us
pursuant to options held by the respective person or group which may be
exercised within 60 days following March 31, 1999 ("Presently Exercisable
Options"). Presently Exercisable Options are considered to be outstanding
and to be beneficially owned by the person or group holding such options
for the purpose of computing the percentage ownership of such person or
group but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person or group.
(3) Consists of 10,845,063 shares held by Pegasys Systems Incorporated, a
corporation controlled by Mr. Dabbiere, 80% of the equity interest of which
is held by a trust for the benefit of Mr. Dabbiere's siblings, certain
extended relatives and any future descendants. Mr. Dabbiere disclaims
beneficial ownership of the shares held by Pegasys which are allocable to
the interest held by the trust.
(4) Includes 2,485,193 shares held by a limited partnership controlled by Mr.
Raghavan, the 99% limited partnership interest of which is owned by a trust
for the benefit of his descendants, and 6,000 shares held by Mr. Raghavan
for the benefit of his minor child. Mr. Raghavan disclaims beneficial
ownership of the shares held by the limited partnership which are allocable
to the interest held by the trust and the shares held for the benefit of
his child.
(5) Includes 126,667 shares issuable pursuant to Presently Exercisable Options.
(6) Includes 125,000 shares issuable pursuant to Presently Exercisable Options.
(7) Includes 50,000 shares held by Mr. Dabbiere for the benefit of his minor
children and 160,000 shares issuable pursuant to Presently Exercisable
Options.
(8) Includes 46,668 shares issuable pursuant to Presently Exercisable Options.
(9) Includes 17,500 shares issuable pursuant to Presently Exercisable Options.
(10) Includes 10,000 shares issuable pursuant to Presently Exercisable Options.
(11) Includes 1,897,917 shares held by a limited partnership controlled by
Ponnambalam Muthiah, the 99% limited partnership interest of which is held
by a trust for the benefit of his descendants, and 12,000 shares held by
him for the benefit of his minor children. Ponnambalam Muthiah disclaims
beneficial ownership of the shares held by the limited partnership which
are allocable to the interest held by the trust and the shares held for the
benefit of his children.
(12) Includes 2,369,461 shares held by a limited partnership controlled by
Mr. Rao, the 99% limited partnership interest of which is held by a trust
for the benefit of his descendants, and 6,400 shares held by Mr. Rao for
the benefit of his minor children. Mr. Rao disclaims beneficial ownership
of the shares held by the limited partnership which are allocable to the
interest held by the trust and the shares held for the benefit of his
children.
(13) Includes 10,845,063 shares held by a corporation controlled by
Mr. Dabbiere; 2,485,193 shares held by a limited partnership controlled by
Mr. Raghavan; 100,000 shares held by Mr. Raghavan and 6,000 shares held by
Mr. Raghavan's child, who is a minor; 1,000 shares held by Robert Bearden;
154,000 shares held by David K. Dabbiere and 50,000 shares held by
Mr. Dabbiere for the benefit of his minor children; 52,500 shares held by
Brian J. Cassidy; 2,500 shares held by John J. Huntz, Jr.; 1,000 shares
held by Thomas Noonan; and 488,335 shares issuable pursuant to Presently
Exercisable Options.
3
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Introduction
At the Annual Meeting, five directors are to be elected for the terms
described below. The Board of Directors is divided into three classes, each of
whose members serve for staggered three-year terms. The Board is currently
comprised of two Class I directors (Mr. Dabbiere and Mr. Cassidy), two Class II
directors (Mr. Raghavan and Mr. Cronin) and two Class III directors (Mr. Huntz
and Mr. Noonan). At each annual meeting of shareholders, a class of directors
will be elected for a three-year term to succeed the directors of the same class
whose terms are then expiring. The terms of the initial Class I directors, Class
II directors and Class III directors will expire upon the election and
qualification of successor directors at the 1999, 2000 and 2001 annual meeting
of shareholders, respectively. There are no family relationships among any of
the directors or director nominees of the Company.
The Board of Directors has adopted a policy statement that provides as
follows: "[i]t is the policy of Manhattan Associates, Inc., in order to ensure
full representation of the Company's shareholders on the Board of Directors and
to enhance the Company's access to talented managerial advisors, that no
nonemployee director of the Company shall serve as a director for more than
eight consecutive years and that each nonemployee director when first elected to
the Board of Directors (including after a period of non-service) shall serve for
only a one year term unless renominated by the Board of Directors at that time,
in which case he or she shall be included in the Company's staggered board in a
manner determined by the Board of Directors."
Shares represented by executed Proxies will be voted, if authority to do so
is not withheld, for the election of the six nominees named below. In the event
that any nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as the Board of Directors may select. Each person nominated for
election has agreed to serve if elected, and management has no reason to believe
that any nominee will be unable to serve.
The Board of Directors recommends a vote FOR each named nominee.
Nominees
The name and age, principal occupation or employment, and other data
regarding each nominee, based on information received from the respective
nominees, are set forth below:
Nominees to Serve as Class I Directors
Alan J. Dabbiere, age 37, a founder of Manhattan, has served as Chief
Executive Officer and President of Manhattan since its inception in 1990 and
Chairman of the Board since February 1998. From 1986 until 1990, Mr. Dabbiere
was employed by Kurt Salmon Associates, a management consulting firm
specializing in consumer products manufacturing and retailing, where he
specialized in consulting for the retail and consumer products manufacturing
industries. At Kurt Salmon Associates, Mr. Dabbiere participated in Quick
Response pilot projects focused on the value of an integrated supply chain
initiative. Mr. Dabbiere serves on the American Apparel Manufacturer
Association's Management Systems Committee.
Brian J. Cassidy, age 53, has served as a Director of Manhattan since May
1998. Mr. Cassidy has served as the Vice-Chairman and Co-Founder of WebForia
Inc., formerly LiveContent Inc., a developer and supplier of research tools for
the Internet, since April 1996. Prior to joining LiveContent Inc., Mr. Cassidy
served as Vice President of Business Development of Saros Corporation, a
developer of document management software, from January 1993 to March 1996.
Prior to joining Saros Corporation, Mr. Cassidy was employed by Oracle
Corporation, as Joint Management Director of European Operations and a member of
the Executive Management Board from 1983 to 1988 and as Worldwide Vice President
of Business Development from 1988 to 1990.
4
<PAGE>
Nominee to Serve as a Class II Director
Gregory Cronin, age 51, has served as a Director of Manhattan since March
1999. Mr. Cronin serves as the Chief Executive Officer of Frontec AMT, Inc. Mr.
Cronin served as Executive Vice President of Manhattan from December 1997 until
March 1999. Prior to joining Manhattan, Mr. Cronin served as President and
Chief Operating Officer of McHugh Software International, Inc., a competing
developer of distribution center management and transportation management
software, from September 1996 until November 1997, and as Senior Vice President
of Sales and Marketing of McHugh Software International, Inc. from September
1992 until September 1996.
Nominees to Serve as Class III Directors
John J. Huntz, Jr., age 48, has served as a Director of Manhattan since
January 1999. Mr. Huntz serves as Managing Director of Fuqua Ventures, LLC, a
private equity investment firm. Mr. Huntz served as Executive Vice President and
Chief Operating Officer of Fuqua Enterprises, Inc., a company that manufactures
health-care products, from August 1995 to March 1998 and as its Senior Vice
President since March 1994. From June 1989 to March 1994, Mr. Huntz served as
the Managing Partner of Noble Ventures International, Inc., a private
international investment company. From 1984 to 1989, Mr. Huntz held the position
of Director of Capital Resources for Arthur Young & Company, and from 1979 to
1984, Mr. Huntz was with Harrison Capital, Inc., a venture capital investment
subsidiary of Texaco, Inc. Mr. Huntz founded and serves as President of the
Atlanta Venture Forum, a risk capital network, and is a member of the National
Association of Small Business Investment Companies and the Southern Regional
Association of Small Business Investment Companies.
Thomas E. Noonan, age 38, has served as a Director of Manhattan since January
1999. Mr. Noonan has served as the President and as a Director of ISS Group,
Inc., a provider of network security monitoring, detection and response
software, since June 1995, and as its Chief Executive Officer and Chairman of
the Board of Directors since November 1996. Prior to joining ISS Group, Inc.,
Mr. Noonan served as Vice President, Sales and Marketing with TSI International,
Inc., an electronic commerce company, from September 1994 until May 1995. From
November 1989 until September 1994, Mr. Noonan held high-level sales and
marketing positions at Dun & Bradstreet Software, a developer of enterprise
business software.
Current Director
The Director of the Company continuing in office as a Class II Director,
elected to serve until the 2000 Annual Meeting, is as follows:
Deepak Raghavan, age 33, a founder of Manhattan, has served as Senior Vice
President of Manhattan since August 1998, as a Director since February 1998 and
as Chief Technology Officer since its inception in 1990. From 1987 until 1990,
Mr. Raghavan was a Senior Software Engineer for Infosys Technologies Limited, a
software development company, where he specialized in the design and
implementation of information systems for the apparel manufacturing industry.
Board of Directors Meetings, Committees and Compensation
During 1998, the Board of Directors held three meetings. All of the
incumbent directors attended at least 75% of the aggregate total number of
meetings of the Board of Directors and meetings of committees of the Board of
Directors on which they served.
Messrs. Dabbiere and Raghavan served as members of the Executive Committee
in 1998. The Executive Committee is empowered to exercise all authority of the
Board of Directors, except as limited by the Georgia Business Corporation Code
("GBCC"). Under the GBCC, an Executive Committee may not, among other things,
approve or propose to shareholders actions required to be approved by
shareholders, fill vacancies on the Board of Directors or any of its committees,
amend or repeal the bylaws, or approve a plan of merger not requiring
shareholder approval. Messrs. Cassidy and Charles W. McCall served as members of
the Compensation Committee in 1998. Beginning in 1999, the Compensation
Committee consists of Messrs. Cassidy, Huntz and Noonan. The Compensation
Committee is responsible for reviewing and recommending salaries, bonuses and
other compensation
5
<PAGE>
for our officers. The Compensation Committee is also responsible for
administering Manhattan's stock option plans and for establishing the terms and
conditions of all stock options granted under these plans. Messrs. Cassidy and
McCall served as members of the Audit Committee in 1998. Beginning in 1999, the
Audit Committee consists of Messrs. Huntz and Noonan. The Audit Committee is
responsible for recommending independent auditors, reviewing with the
independent auditors the scope and results of the audit engagement, monitoring
our financial policies and internal control procedures, and reviewing and
monitoring the provisions of non-audit services by our auditors.
Non-employee members of the Board of Directors received $1,000 for each
board meeting attended in 1998 and $500 for each committee meeting held
independently of a board meeting. The Company may also grant stock options to
the non-employee members of the Board of Directors. In 1998, the Company granted
stock options to purchase 10,000 shares of common stock to each non-employee
director.
Executive Compensation
Summary Compensation Table. The following table sets forth, for the year
ended December 31, 1998, the total compensation paid to or accrued by our Chief
Executive Officer and the five other executive officers with the next highest
total annual salary and bonus that exceeded $100,000 (collectively, the "Named
Executive Officers").
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------------- --------------
Number of
Other Securities All
Annual Underlying Other
Name and Principal Position Year Salary Bonus Compensation(1) Options Compensation
- ------------------------------------------- ---- --------- ------------ --------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Alan J. Dabbiere........................... 1998 $150,000 -- -- -- --
Chairman of the Board, Chief 1997 250,000 $406,170(2) -- -- --
Executive Officer and President
Gregory Cronin (3)......................... 1998 203,941 100,000(4) $70,634(5) -- --
Executive Vice President 1997 17,692 100,000(6) -- 350,000 --
David K. Dabbiere(7)....................... 1998 104,340 150,000(8) 50,280(5) 160,000 $17,000(9)
Senior Vice President, Chief 1997 -- -- -- -- --
Legal Officer and Secretary
Michael J. Casey........................... 1998 121,939 25,000(11) -- 45,000 --
Senior Vice President, Chief 1997 16,154 20,000(6) -- 100,000 --
Financial Officer and Treasurer
Neil Thall................................. 1998 184,633 40,000(4) -- -- --
Senior Vice President--Supply 1997 -- -- -- 150,000 --
Chain Strategy
Oliver M. Cooper(10)....................... 1998 148,981 56,250(11) -- -- 29,167(12)
Chief Operating Officer 1997 69,327 70,000(6) -- 200,000 --
</TABLE>
__________
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation received in the form of perquisites and other personal
benefits has been omitted because such perquisites and other personal
benefits constituted less than the lesser of $50,000 or 10% of the total
annual salary and bonus for the Named Executive Officer for such year.
(2) Represents bonuses and sales commissions awarded and paid in 1997 based
upon 1997 performance.
(3) Mr. Cronin resigned as Executive Vice President in March 1999.
(4) Represents bonuses accrued in 1998 based upon 1998 performance.
(5) Represents payments of relocation expenses.
(6) Represents a bonus paid to Messrs. Cronin, Casey and Cooper in December
1997, November 1997 and August 1997, respectively, upon joining Manhattan.
(7) Mr. David Dabbiere joined Manhattan in March 1998.
(8) Represents a bonus paid to Mr. Dabbiere in April 1998 upon joining
Manhattan and a bonus accrued in 1998 based upon 1998 performance.
(9) Represents payments for consulting services made prior to Mr. David
Dabbiere's joining Manhattan in March 1998.
(10) Mr. Cooper resigned as Chief Operating Officer in November 1998.
(11) Represents a bonus awarded and paid in 1998 based upon 1998 performance.
(12) Represents payments pursuant to Mr. Cooper's severance agreement. For more
information, see "Certain Transactions--Related Party Transactions."
6
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth all individual grants of stock options
during the year ended December 31, 1998, to each of the Named Executive
Officers:
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------
Number of Percent of Potential Realizable
Securities Total Options Value at Assumed
Underlying Granted to Exercise or Annual Rates of Stock
Options Employees in Base Price Expiration Price Appreciation
Name Granted Fiscal Year Per Share Date for Option Term(1)
- ------------------------------------- ------------- ------------- ----------- ----------- -----------------------
5% 10%
---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alan J. Dabbiere..................... -- -- -- -- -- --
Gregory Cronin(2).................... -- -- -- -- -- --
David K. Dabbiere.................... 160,000 4.3% $ 10.00 2/29/08 $1,006,231 $2,549,988
Michael J. Casey..................... 45,000 1.2% 13.875 8/25/08 392,666 995,093
Neil Thall........................... -- -- -- -- -- --
Oliver M. Cooper(3).................. -- -- -- -- -- --
</TABLE>
__________
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on the fair market value per share on the date of grant and
assumed rates of stock price appreciation of 5% and 10% compounded annually
from the date the respective options were granted to their expiration date.
These assumptions are mandated by the rules of the Securities and Exchange
Commission and are not intended to forecast future appreciation of our stock
price. The potential realizable value computation is net of the applicable
exercise price, but does not take into account federal or state income tax
consequences and other expenses of option exercises or sales of appreciated
stock. Actual gains, if any, are dependent upon the timing of such exercise
and the future performance of our common stock. There can be no assurance
that the rates of appreciation in this table can be achieved. This table
does not take into account any appreciation in the price of our common stock
to date.
(2) Mr. Cronin resigned as Executive Vice President in March 1999.
(3) Mr. Cooper resigned as Chief Operating Officer in November 1998.
Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values
The following table summarizes the number of shares and value realized by
each of the Named Executive Officers upon the exercise of options and the value
of the outstanding options held by the Named Executive Officers at December 31,
1998:
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year-End at Fiscal Year-End(2)
Acquired Value ----------------------------- -----------------------------
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------- ----------- -------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan J. Dabbiere.................. -- -- -- -- -- --
Gregory Cronin(3)................. -- -- 116,667 233,333 $2,770,841 $5,541,659
David K. Dabbiere................. -- -- 160,000 -- 2,760,000 --
Michael J. Casey.................. -- -- 46,668 98,332 1,155,033 1,921,842
Neil Thall........................ 80,000 $1,180,000 -- 70,000 -- 1,610,000
Oliver M. Cooper(4)............... 82,500 1,713,335 17,500 -- 433,125 --
</TABLE>
__________
(1) Amounts disclosed in this column do not reflect amounts actually received by
the Named Executive Officers but are calculated based on the difference
between the fair market value on the date of exercise of the options and the
exercise price of the options. The Named Executive Officers will receive
cash only if and when they sell the common stock issued upon exercise of the
options, and the amount of cash received by such individuals is dependent on
the price of our common stock at the time of such sale.
(2) Based on the fair market value of our common stock as of December 31, 1998
of $27.25 per share as reported on the Nasdaq National Market, less the
exercise price payable upon exercise of such options.
(3) Mr. Cronin resigned as Executive Vice President in March 1999.
(4) Mr. Cooper resigned as Chief Operating Officer in November 1998.
7
<PAGE>
Employment Agreements
Mr. Casey entered into an employment agreement with Manhattan effective as
of November 10, 1997. Pursuant to this agreement, Mr. Casey is entitled to
receive an annual base salary of $120,000 and is entitled to a performance-
related bonus of up to $25,000 per year. In addition, Mr. Casey received a
signing bonus of $20,000 and an option to purchase 100,000 shares of our common
stock, of which 20,000 shares vested over the first six months of the option
term beginning on November 10, 1997, 26,668 shares vested on November 10, 1998,
26,666 shares vest on November 10, 1999, and 26,666 shares vest on November 10,
2000. All of the shares granted pursuant to this option will become immediately
exercisable upon a sale of Manhattan. Under the terms of the agreement, Mr.
Casey has agreed to assign to Manhattan all patents, copyrights and other
intellectual property developed by him during the course of his employment. In
addition, Mr. Casey has agreed not to solicit our customers for a period of one
year following the termination of his employment. In connection with any
termination of Mr. Casey's employment, other than a termination based on gross
negligence or willful misconduct, Mr. Casey will be entitled to receive a
severance payment within 30 days of termination equal to fifty percent of his
base salary.
Mr. Cronin entered into an employment agreement with Manhattan effective as
of November 15, 1997. Pursuant to this agreement, Mr. Cronin is entitled to
receive an annual base salary of $200,000 and is entitled to a performance-
related bonus of up to $100,000 per year. In addition, Mr. Cronin received a
signing bonus of $100,000 and an option to purchase 350,000 shares of our common
stock, which began to vest in three equal annual installments beginning November
14, 1998. Under the terms of the agreement, Mr. Cronin has agreed to assign to
Manhattan all patents, copyrights and other intellectual property developed by
him during the course of his employment. In addition, Mr. Cronin has agreed not
to solicit any of our customers for a period of one year following the
termination of his employment.
Mr. Thall entered into an employment agreement with Manhattan effective as
of November 25, 1997. Pursuant to this agreement, Mr. Thall is entitled to
receive an annual base salary of $200,000 and is entitled to a performance-
related bonus of up to $40,000 per year. In addition, Mr. Thall received an
option to purchase 150,000 shares of our common stock, of which 40,000 shares
vested on each of November 25, 1997 and November 25, 1998, 40,000 shares vest on
November 25, 1999 and 30,000 shares vest on November 25, 2000. Under the terms
of the agreement, Mr. Thall has agreed to assign to us all patents, copyrights
and other intellectual property developed by him during the course of his
employment. In addition, Mr. Thall has agreed not to solicit our customers for
a period of one year following his voluntary termination or termination without
cause.
Mr. Bearden entered into an employment agreement with Manhattan effective
as of August 12, 1998. Pursuant to this agreement, Mr. Bearden is entitled to
receive an annual base salary of $180,000 and is entitled to a performance-
related bonus of up to $175,000 per year. In addition, Mr. Bearden received a
signing bonus of $75,000 and an option to purchase 600,000 shares of our common
stock, of which 125,000 shares vested on August 25, 1998, 50,000 shares vest on
December 31, 2000, 75,000 shares vest on December 31, 2001, 100,000 shares vest
on December 31, 2002, and 125,000 shares vest on each of December 31, 2003 and
December 31, 2004. The agreement provides for the accelerated vesting of certain
of these shares if Manhattan achieves certain sales and revenue goals. In
addition, all of the shares granted pursuant to this option will become
immediately exercisable upon a sale of Manhattan. Under the terms of the
agreement, Mr. Bearden has agreed to assign to us all patents, copyrights and
other intellectual property developed by him during the course of his
employment. In addition, Mr. Bearden has agreed not to solicit our customers or
to compete with Manhattan for a period of two years following the termination of
his employment. In connection with any termination of Mr. Bearden's employment
occurring prior to August 12, 2000, other than a termination based on gross
negligence or willful misconduct, Mr. Bearden will be entitled to receive a
severance payment within 30 days of termination, equal to fifty percent of his
base salary.
8
<PAGE>
Stock Option Plans
Manhattan Associates, LLC Option Plan. The Manhattan Associates, LLC
Option Plan (the "LLC Option Plan") became effective on January 1, 1997. The
aggregate number of shares reserved for issuance under the LLC Option Plan was
5,000,000 shares. The purpose of the LLC Option Plan was to provide incentives
for key employees, officers, consultants and directors to promote the success of
Manhattan and to enhance our ability to attract and retain the services of such
persons. Options granted under the LLC Option Plan were not options intended to
qualify as "incentive stock options" under Section 422 of the Code. Since
February 28, 1998, no additional options could be granted pursuant to the LLC
Option Plan.
As of December 31, 1998, we had outstanding options to purchase 2,863,916
shares of common stock under the LLC Option Plan at a weighted average exercise
price of $4.55 per share.
Stock Incentive Plan. Manhattan's 1998 Stock Incentive Plan (the "Stock
Incentive Plan") was adopted by the Board of Directors and approved by our
shareholders in February 1998. As adopted, up to 5,000,000 shares of common
stock (subject to adjustment in the event of stock splits and other similar
events), less the number of shares issued under the LLC Option Plan, could be
issued pursuant to stock options and other stock incentives granted under the
Stock Incentive Plan. In August 1998, the Board of Directors amended the Stock
Incentive Plan, subject to approval by our shareholders, to increase by
1,000,0000 the number of shares which can be issued pursuant to stock options
and other stock incentives granted under the Stock Incentive Plan. As of
December 31, 1998, we had outstanding options or other stock incentives to
acquire 2,385,270 shares of common stock under the Stock Incentive Plan at a
weighted average exercise price of $13.46 per share.
The Stock Incentive Plan provides for the grant of incentive stock options
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), nonstatutory stock options, restricted stock awards and
stock appreciation rights ("SARs", and, together with the other options and
incentives, "Awards"). Officers, employees, directors, advisors and consultants
of Manhattan and any of its subsidiaries are eligible to be granted Awards under
the Stock Incentive Plan. Under present law, however, incentive stock options
may be granted only to employees. The granting of Awards under the Stock
Incentive Plan is discretionary. We will be required to recognize compensation
expense over the vesting period of any SARs granted.
Optionees receive the right to purchase a specified number of shares of
common stock at a specified option price and subject to such other terms and
conditions as are specified in connection with the option grant. Options may be
granted at an exercise price that may be less than, equal to or greater than the
fair market value of the common stock on the date of grant. Under present law,
incentive stock options may not be granted at an exercise price less than the
fair market value of the common stock on the date of grant (or less than 110% of
the fair market value in the case of incentive stock options granted to
optionees holding more than 10% of the voting power of Manhattan). The Stock
Incentive Plan permits the payment of the exercise price of options to be in the
form of cash, or if the individual option agreement so provides, by surrender to
us of shares of common stock or by a cashless exercise through a brokerage
transaction.
The Stock Incentive Plan is administered by the Compensation Committee of
the Board of Directors. The committee has the authority to adopt, amend and
repeal the administrative rules, guidelines and practices relating to the Stock
Incentive Plan generally and to interpret the provisions thereof. The committee
may amend, modify or terminate any outstanding Award and with respect to new
Awards will determine:
. the number of shares of common stock covered by options, restricted
stock awards or SARs, the dates upon which such options or SARs become
exercisable and the restrictions on restricted stock lapse;
. the exercise price of options and SARs and the purchase price, if any,
of restricted stock;
. the duration of options and SARs; and
. the conditions and duration of restrictions on restricted stock.
9
<PAGE>
No Award may be made under the Stock Incentive Plan after February 2008,
but Awards previously granted may extend beyond that time. The Board of
Directors may at any time terminate the Stock Incentive Plan. Any such
termination will not affect outstanding options, restricted stock or SARs.
Other Options. In addition to options issued under the LLC Option Plan and
the Stock Incentive Plan, as of December 31, 1998, we have outstanding options
to purchase an aggregate of 719,784 shares of common stock to employees outside
of the LLC Option Plan and the Stock Incentive Plan at weighted average exercise
price of $1.21 per share.
Deferred Compensation Plans
401(k) Profit Sharing Plan. We maintain a 401(k) Profit Sharing Plan (the
"401(k) Plan") that is intended to be a tax-qualified contribution plan under
Section 401(k) of the Code. Pursuant to the 401(k) Plan, participants may
contribute, subject to certain Code limitations, up to 10% of eligible
compensation, as defined, to the 401(k) Plan. Employees are eligible for this
arrangement upon completion of their first calendar month of employment. We will
match contributions made by employees pursuant to the 401(k) Plan at a rate of
50% of the participant's contributions, up to 6% of the eligible compensation
being contributed after the participant's first year of employment, subject to
certain Code limitations. All of our employees who have completed one year of
service consisting of at least 1,000 hours of employment are eligible for the
matching contribution. We may make an additional contribution to participants'
401(k) accounts each year at the discretion of the Board of Directors. The
portion of a participant's account attributable to his or her own contributions
is 100% vested. The portion of the account attributable to our contributions
(including matching contributions) vests over 5 to 7 years of service with
Manhattan. Distributions from the 401(k) Plan may be made in the form of a
lump-sum cash payment or in installment payments.
Defined Contribution Plan. We sponsored a defined contribution pension
plan (the "Pension Plan") covering substantially all of our employees. Under the
Pension Plan, we contributed up to 8% of a participant's eligible compensation,
as defined, to the Pension Plan after the participant's first year of
employment. There was no contribution to the Plan during 1998 as the Plan was
terminated.
PAC 401(k) Profit Sharing Plan. Performance Analysis Corporation, a
wholly-owned subsidiary of Manhattan, sponsors a 401(k) Profit Sharing Plan (the
"PAC 401(k) Plan"), covering substantially all employees of PAC. Under the PAC
401(k) Plan's deferred compensation arrangement, eligible employees who elect to
participate in the PAC 401(k) Plan may contribute up to 15% of eligible
compensation, as defined, to the PAC 401(k) Plan. The PAC 401(k) Plan may allow
for a matching contribution that is determined by the Board of Directors of PAC
each plan year.
Limitation of Liability and Indemnification of Officers and Directors
Our Articles of Incorporation provide that the liability of the directors
to the shareholders for monetary damages shall be limited to the fullest extent
permissible under Georgia law. This limitation of liability does not affect the
availability of injunctive relief or other equitable remedies.
10
<PAGE>
Our Bylaws provide that we will indemnify each of our officers, directors,
employees and agents to the extent that he or she is or was a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
because he or she is or was a director, officer, employee or agent of Manhattan,
against reasonable expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with such action, suit or proceeding;
provided, however, that no indemnification shall be made for:
. any appropriation, in violation of his or her duties, of any business
opportunity of Manhattan;
. acts or omissions that involve intentional misconduct or a knowing
violation of law;
. any liability under Section 14-2-832 of the GBCC, which relates to
unlawful payments of dividends and unlawful stock repurchases and
redemptions; or
. any transaction from which he or she derived an improper personal
benefit.
We have entered into indemnification agreements with certain officers and
directors providing indemnification similar to that provided in the Bylaws.
Compensation Committee Interlocks and Insider Participation
The following non-employee directors were the members of the Compensation
Committee of the Board of Directors during 1998: Brian J. Cassidy and Charles
W. McCall. Neither of the members of the Compensation Committee has any direct
or indirect material interest in the Company outside of his position as a
director.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own beneficially more than 10%
of the Company's Common Stock to file reports of ownership and changes in
ownership of such stock with the Securities and Exchange Commission. To the
Company's knowledge, its directors, executive officers and 10% shareholders
complied during 1998 with all applicable Section 16(a) filing requirements.
11
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General
The Compensation Committee of the Company's Board of Directors has
furnished the following report on Executive Compensation in accordance with the
rules and regulations of the Securities and Exchange Commission. This report
outlines the duties of the Committee with respect to executive compensation, the
various components of the Company's compensation program for executive officers
and other key employees, and the basis on which the 1998 compensation was
determined for the executive officers of the Company, with particular detail
given to the 1998 compensation for the Company's Chief Executive Officer.
Compensation of Executive Officers Generally
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for establishing compensation levels for the executive officers of
the Company, including the annual bonus plan for executive officers and for
administering the Company's Stock Option Plan. The Committee is comprised of
three non-employee directors: Messrs. Cassidy (Chair), Huntz and Noonan. The
Committee's overall objective is to establish a compensation policy that will
(i) attract, retain and reward executives who contribute to achieving the
Company's business objectives; (ii) motivate executives to obtain these
objectives; and (iii) align the interests of executives with those of the
Company's long-term investors. The Company compensates executive officers with
a combination of salary and incentives designed to focus their efforts on
maximizing both the near-term and long-term financial performance of the
Company. In addition, the Company's compensation program rewards individual
performance that furthers Company goals. The executive compensation program
includes the following: (i) base salary; (ii) incentive bonuses; (iii) long-term
equity incentive awards in the form of stock option grants; and (iv) other
benefits. Each executive officer's compensation package is designed to provide
an appropriately weighted mix of these elements, which cumulatively provide a
level of compensation roughly equivalent to that paid by companies of similar
size and complexity.
Base Salary. Base Salary levels for each of the Company's executive
officers, including the Chief Executive Officer, are generally set within a
range of base salaries that the Committee believes are paid to similar executive
officers at companies deemed comparable based on the similarity in revenue
level, industry segment and competitive employment market to the Company. In
addition, the Committee generally takes into account the Company's past
financial performance and future expectations, as well as the performance of the
executives and changes in the executives' responsibilities.
Incentive Bonuses. The Committee recommends the payment of bonuses to
provide an incentive to executive officers to be productive over the course of
each fiscal year. These bonuses are awarded only if the Company achieves or
exceeds certain corporate performance objectives. The incentive bonus to each
executive officer is based on the individual executive's performance as it
relates to the Company's performance.
Equity Incentives. Stock options are used by the Company for payment of
long-term compensation to provide a stock-based incentive to improve the
Company's financial performance and to assist in the recruitment, retention and
motivation of professional, managerial and other personnel. Generally, stock
options are granted to executive officers from time to time based primarily upon
the individual's actual and/or potential contributions to the Company and the
Company's financial performance. Stock options are designed to align the
interests of the Company's executive officers with those of its shareholders by
encouraging executive officers to enhance the value of the Company, the price of
the common stock, and hence, the shareholder's return. In addition, the vesting
of stock options over a period of time is designed to create an incentive for
the individual to remain with the Company. The Company has granted options to
the executives on an ongoing basis to provide continuing incentives to the
executives to meet future performance goals and to remain with the Company.
During the fiscal year ended December 1998, options to purchase an aggregate of
805,000 shares of common stock were granted to the Company's executive officers.
12
<PAGE>
Other Benefits. Benefits offered to the Company's executive officers are
provided to serve as a safety net of protection against the financial
catastrophes that can result from illness, disability, or death. Benefits
offered to the Company's executive officers are substantially the same as those
offered to all of the Company's regular employees. In 1995, the Company
established a tax-qualified deferred compensation 401(k) Savings Plan (the
"Plan") covering all of the Company's eligible full-time employees. Under the
Plan, participants may elect to contribute, through salary reductions, up to 18%
of their annual compensation subject to a statutory maximum. The Company
provides additional matching contributions in the amount of 50% up to the first
6% contributed under the Plan. The Plan is designed to qualify under Section
401 of the Internal Revenue Code so that the contributions by employees or by
the Company to the Plan, and income earned on plan contributions, are not
taxable to employees until withdrawn from the Plan, and so that contributions by
the Company will be deductible by the Company when made.
Compensation of the Chief Executive Officer
The Committee annually reviews the performance and compensation of the
Chief Executive Officer based on the assessment of his past performance and its
expectation of his future contributions to the Company's performance. Alan J.
Dabbiere has served as the Company's Chief Executive Officer since 1990. In
1998, Mr. Dabbiere's base salary was set at $150,000, which the Committee
believes to be a reasonable salary.
Policy with Respect to Qualifying Compensation for Deductibility
Section 162(m) of the Internal Revenue Code imposes a limit on tax
deductions for annual compensation (other than performance-based compensation)
in excess of one million dollars paid by a corporation to its Chief Executive
Officer and the other four most highly compensated executive officers of a
corporation. The Company has not established a policy with regard to Section
162(m) of the Code, since the Company has not and does not currently anticipate
paying cash compensation in excess of one million dollars per annum to any
employee. None of the compensation paid by the Company in 1998 was subject to
the limitations on deductibility. The Board of Directors will continue to
assess the impact of Section 162(m) on its compensation practices and determine
what further action, if any, is appropriate.
Compensation Committee
Brian J. Cassidy, Chairman
John J. Huntz, Jr.
Thomas E. Noonan
13
<PAGE>
STOCK PERFORMANCE GRAPH
The following line-graph provides a comparison of the cumulative total
shareholder return on the Company's Common Stock for the period from the date of
the Company's initial public offering on April 23, 1998 through December 31,
1998, against the cumulative shareholder return during such period achieved by
The Nasdaq Stock Market (U.S. Companies) ("Nasdaq US") and the Index for Nasdaq
Computer and Data Processing Stocks (the "Nasdaq Computer Index"). The graph
assumes that $100 was invested on April 23, 1998 in the Company's Common Stock
and in each of the comparison indices, and assumes reinvestment of dividends.
Comparison of Cumulative Total Returns
<TABLE>
<CAPTION>
Index for
Nasdaq Stock Nasdaq Computer
Measurement Period Manhattan Market (US and Data
(Fisical Year Covered) Associates Companies) Processing Stocks
---------------------- ---------- ------------ -----------------
<S> <C> <C> <C>
4/23/98 $100.00 $100.00 $100.00
12/31/98 181.67 120.14 51.41
</TABLE>
The Stock Performance Graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (collectively, the "Acts"), except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
CERTAIN TRANSACTIONS
LLC Distribution and Restructuring
In April 1998, Manhattan Associates LLC ("Manhattan LLC") contributed all
of its assets and liabilities, including the stock of Performance Analysis
Corporation, to Manhattan in exchange for common stock of Manhattan (the
"Restructuring"). Immediately prior to the Restructuring, Manhattan LLC
distributed all undistributed earnings, calculated on a tax basis, at December
31, 1997, or approximately $9.2 million, and all undistributed earnings from
December 31, 1997 through the date of the Restructuring, or approximately $2.5
million, to Manhattan LLC's shareholders.
Tax Indemnification Agreements
We have entered into tax indemnification agreements (the "Tax
Indemnification Agreements") with Pegasys Systems Incorporated ("Pegasys"), a
corporation controlled by Alan J. Dabbiere; Alan J. Dabbiere; Deepak Raghavan,
our Chief Technology Officer; two other founders of the Company, Deepak M.J. Rao
and Ponnambalam Muthiah; and certain entities affiliated with such individuals.
Each of the Tax Indemnification Agreements provide for, among other things, the
indemnification of Manhattan by these persons for any federal and state income
taxes (including interest and penalties) incurred by us if for any reason
Manhattan LLC were to be taxable as a "C" corporation during the period prior to
the Restructuring and for any tax liabilities incurred by us by reason of the
Restructuring. The liability of each of such persons to us may not exceed the
amount of any distributions received (directly or indirectly) by such persons
from Manhattan LLC, net of any taxes attributable to his distributed share of
Manhattan LLC's income. The Tax Indemnification Agreements also provide for the
indemnification by us of each party for certain additional taxes, interest and
penalties resulting from Manhattan LLC being taxed as a partnership.
14
<PAGE>
Related Party Transactions
On December 31, 1995, we entered into a Grid Promissory Note (the "1995
Note") with Alan J. Dabbiere. Pursuant to the 1995 Note, Mr. Dabbiere loaned us
$1,000,000 on December 31, 1995 at an interest rate of 5% per year, payable on
demand. The balance of the 1995 Note, including accrued interest, was
$1,019,000 as of December 31, 1997. On February 6, 1998, we borrowed an
additional $900,000 under the 1995 Note. The proceeds of the 1995 Note were used
for working capital. We repaid the 1995 Note with a portion of the proceeds of
our initial public offering in April 1998.
On February 16, 1998, Deepak Raghavan, our Chief Technology Officer,
invested $1,000,000 in us to purchase 100,000 shares of common stock. The
proceeds of Mr. Raghavan's investment were used for working capital.
During 1998, Peter V. Dabbiere, a brother of Alan J. Dabbiere, was employed
by us as director of hardware sales and received an aggregate payment of
$111,460.
During 1998, Joel D. Dabbiere, a brother of Alan J. Dabbiere, was employed
by us as a senior account executive and received an aggregate payment of
$391,875.
During 1998, David K. Dabbiere, a brother of Alan J. Dabbiere, provided
legal and management consulting services to us and received an aggregate payment
for consulting services of $17,000. David Dabbiere was employed by us as Vice
President, General Counsel and Secretary beginning in March 1998. David
Dabbiere was granted an option on February 28, 1998, pursuant to the LLC Option
Plan, to purchase 160,000 shares of our common stock at $10.00 per share. David
Dabbiere was also granted options by Pegasys on February 28, 1998 to purchase
130,000 shares of our common stock at $9.50 per share. These options were
exercised on February 28, 1998.
All cash compensation paid to Alan Dabbiere's brothers was comparable to
compensation that would have been paid to unaffiliated persons. All options
were granted with an exercise price equal to fair market value at the time of
grant as determined by our Board of Directors.
On November 2, 1998, we entered into a Settlement Agreement and Release
with Oliver M. Cooper, our former Chief Operating Officer. Pursuant to this
agreement, in which Mr. Cooper terminated his employment with us, we must pay
Mr. Cooper his monthly salary of $14,583.33 for up to six months after the date
of this agreement unless he becomes otherwise employed in this six month period.
In addition, we paid Mr. Cooper a bonus of $56,250 for 1998. In return, Mr.
Cooper agreed to release us from any claims related to his employment, not to
share or use any of our trade secrets, not to disclose any of our confidential
information for a period of five years, and not to work for certain of our
competitors or to solicit our customers for a period of two years.
Our Board of Directors has adopted a resolution whereby all future
transactions, including any loans from us to our officers, directors, principal
shareholders or affiliates, will be approved by a majority of the Board of
Directors, including a majority of the independent and disinterested members of
the Board of Directors, if required by law, or a majority of the disinterested
shareholders, and will be on terms no less favorable to us than could be
obtained from unaffiliated third parties.
15
<PAGE>
PROPOSAL 2
AMENDMENTS TO THE STOCK INCENTIVE PLAN
The Board has approved and recommends to the shareholders that they approve
proposals to amend the Company's 1998 Stock Incentive Plan (the "Plan") to
increase the number of shares of Common Stock available for grant under such
plan from 5,000,000 to 7,000,000, an increase of 2,000,000 shares of Common
Stock. As of March 31, 1999, there were approximately 5,870,449 outstanding
options to purchase shares of Common Stock under the Plan. Therefore, in the
event that the proposed amendments are approved, approximately 833,088 options
would be available for grant under the Plan. Amendment No. 1 to the Plan, which
was approved by the Board of Directors in August 1998, increases the number of
shares that may be granted under the Plan from 5,000,000 to 6,000,000.
Amendment No. 3 to the Plan, which was approved by the Board of Directors in
March 1999, increases the number of shares that may be granted under the Plan
from 6,000,000 to 7,000,000. In addition, Amendment No. 3 to the Plan
authorizes the Company to automatically adjust the number of shares of Common
Stock available for issuance under the Plan on the first day of each fiscal
year, beginning with the 1999 fiscal year, by a number of shares such that the
total number of shares reserved for issuance under the Plan equals the sum of
(i) the aggregate number of shares previously issued under the Plan and the LLC
Option Plan; (ii) the aggregate number of shares subject to outstanding options
granted under the Plan and the LLC Option Plan; and (iii) 5% of the number of
shares outstanding on the last day of the preceding fiscal year.
Notwithstanding the foregoing, the proposed amendment provides that not more
than 1,000,000 of the shares available for grant each year shall be available
for "incentive stock options" under Section 422 of the Code.
The text of the proposed amendments to the Plan is set forth in "Annex A"
to this Proxy Statement. The Plan is described above under "Proposal 1-Election
of Directors-Stock Option Plans" and is qualified in its entirety by reference
to the text of the Plan.
The proposed amendments to the Plan will be adopted upon receiving the
affirmative vote of holders of a majority of the shares present or represented
by proxy at the Annual Meeting. Proxies will be voted in accordance with the
specifications marked thereon, and if no specifications is made, will be voted
"FOR" adoption of the proposed amendments to the Plan. The Board has determined
that the amendments to the Plan are in the best interest of the Company and its
shareholders. The proposed amendments would provide a stable pool of additional
shares for grant to officers, directors, consultants and key employees of the
Company. The Board believes that grants of stock options are an effective
method to attract and retain officers, directors, consultants and key employees
and that the availability of shares for future grants under the plan is
important to the Company's business prospects and operations.
The Board of Directors recommends a vote FOR the approval of the Amendments
to the Plan.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
In January 1999, the Board of Directors appointed the accounting firm of
Arthur Andersen LLP to serve as its independent auditor for the fiscal year
ending December 31, 1999. The appointment of this firm was recommended to the
Board by its Audit Committee. A proposal to ratify that appointment will be
presented at the Annual Meeting. Representatives of Arthur Andersen LLP are
expected to be present at the meeting. They will have an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions from shareholders.
The Board of Directors recommends a vote FOR ratification of selection of
independent auditors.
16
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SHAREHOLDER PROPOSALS
Rules of the Securities and Exchange Commission require that any proposal
by a shareholder of the Company for consideration at the 2000 Annual Meeting of
Shareholders must be received by the Company no later than December 3, 1999 if
any such proposal is to be eligible for inclusion in the Company's proxy
materials for its 2000 Annual Meeting. Under such rules, the Company is not
required to include shareholder proposals in its proxy materials unless certain
other conditions specified in such rules are met.
In order for a shareholder to bring any business or nominations before the
1999 Annual Meeting of Shareholders, certain conditions set forth in Sections
16 and 17 of the Company's Bylaws must be complied with, including, but not
limited to, delivery of notice to the Company not less than 30 days prior to the
meeting as originally scheduled.
OTHER MATTERS
Management of the Company is not aware of any other matter to be presented
for action at the Annual Meeting other than those mentioned in the Notice of
Annual Meeting of Shareholders and referred to in this Proxy Statement.
However, should any other matter requiring a vote of the shareholders arise, the
representatives named on the accompanying Proxy will vote in accordance with
their best judgment as to the interests of the Company and shareholders.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Alan J. Dabbiere
Alan J. Dabbiere,
Chairman of the Board, Chief Executive Officer and
President
17
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ANNEX A
TEXT OF PROPOSED AMENDMENT NO. 1 TO
MANHATTAN ASSOCIATES, INC. STOCK INCENTIVE PLAN
The Manhattan Associates, Inc. Stock Incentive Plan (the "Plan") is hereby
amended as follows:
1. Amendment Regarding Option Replenishment. Section 3 of the Plan is
----------------------------------------
hereby amended by deleting the first sentence of Section 3 of the Plan in its
entirety and substituting in lieu thereof the following:
Section 3.
Shares Subject to Stock Incentives
"The total number of Shares that may be issued pursuant to Stock Incentives
under this Plan shall not exceed six million (6,000,000), as adjusted pursuant
to Section 11, less the number of Shares subject to options issued under the
Manhattan Associates, LLC Option Plan."
TEXT OF PROPOSED AMENDMENT NO. 3 TO
MANHATTAN ASSOCIATES, INC. STOCK INCENTIVE PLAN
The Manhattan Associates, Inc. Stock Incentive Plan (the "Plan") is hereby
amended as follows:
1. Amendment Regarding Option Replenishment. Section 3 of the Plan is
----------------------------------------
hereby amended by deleting Section 3 in its entirety and substituting the
following new Section 3:
Section 3.
Shares Subject to Stock Incentives
"The initial number of Shares reserved for issuance under this Plan shall
be 7,000,000, as adjusted pursuant to Section 11, less the number of Shares
subject to options issued under the Manhattan Associates, LLC Option Plan (the
"LLC Plan"). The number of Shares of available for issuance under the Plan shall
be automatically adjusted on the first day of each fiscal year, beginning with
the 2000 fiscal year, by a number of Shares such that the total number of Shares
reserved for issuance under this Plan equals the sum of (i) the aggregate number
of Shares previously issued under this Plan and the LLC Plan; (ii) the aggregate
number of Shares subject to then outstanding Stock Incentives granted under this
Plan and the LLC Plan; and (iii) 5% of the number of Shares of Common Stock
outstanding on the last day of the preceding fiscal year. Notwithstanding the
foregoing, not more than 1,000,000 of the Shares available for grant each year
shall be available for issuance pursuant to ISOs, such that not more than
10,000,000 Shares resulting from such automatic adjustments may ever be issued
pursuant to ISOs during the term of the Plan.
Such Shares shall be reserved, to the extent that the Company deems
appropriate, from authorized but unissued Shares, and from Shares which have
been reacquired by the Company. Furthermore, any Shares subject to a Stock
Incentive which remain after the cancellation, expiration or exchange of such
Stock Incentive thereafter shall again become available for use under this Plan,
but any Surrendered Shares which remain after the surrender of an ISO or a Non-
ISO under Section 8 shall not again become available for use under this Plan."
A-1
<PAGE>
Manhattan Associates, Inc.
2300 Windy Ridge Parkway
Suite 700
Atlanta, Georgia 30339
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alan J. Dabbiere and David K. Dabbiere, Esq.,
and each of them, with full power of substitution, as Proxy, to represent and
vote all the shares of Common Stock of Manhattan Associates, Inc. held of record
by the undersigned on March 31, 1999, at the annual meeting of Shareholders to
be held on May 15, 1999 or any adjournment thereof, as designated on the reverse
side hereof and in their discretion as to other matters.
Please sign exactly as name appears on the reverse side. When shares are
held by joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.
(Please date and sign on reverse)
(Continued on reverse side)
<PAGE>
The shares represented by this proxy will be voted as directed by the
Shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR" all nominees in Proposal 1 and "FOR" Proposals 2
and 3.
I PLAN TO ATTEND
MEETING
[ ]
The Board of Directors Recommends a vote "FOR all nominees" in Proposal 1 and
"FOR" Proposals 2 and 3.
Proposal 1 - Election of the following Nominees as Directors:
Nominees: Alan J. Dabbiere Brian J. Cassidy
Gregory Cronin John J. Huntz, Jr.
Thomas E. Noonan
FOR all Nominees WITHHELD
listed at right (except for all Nominees
as marked to the contrary) listed at right
[ ] [ ]
(Instruction: To withhold authority to vote for any
individual nominee, strike a line through the
nominee's name as listed above.)
_______________________________________________________________________________
Proposal 2 - Approval of amendments to the Company's Stock Incentive Plan:
For Against Abstain
[ ] [ ] [ ]
_______________________________________________________________________________
Proposal 3 - Approval of the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31, 1999:
For Against Abstain
[ ] [ ] [ ]
_______________________________________________________________________________
PLEASE MARK YOUR CHOICE LIKE THIS X IN BLUE OR
BLACK INK.
Date
______________________________________________
Signature
______________________________________________
Signature if held jointly
________________________________________
Please mark, date and sign as your name appears
above and return in the enclosed envelope.
_______________________________________________________________________________
