<PAGE>
As filed with the Securities and Exchange Commission on May 17, 1999
Registration No. 333-______
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
___________________
Scient Corporation
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 7379 94-3288107
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
One Front Street, 28th Floor
San Francisco, CA 94111
(Address of principal executive offices) (Zip Code)
___________________
SCIENT CORPORATION
1999 EQUITY INCENTIVE PLAN
1997 STOCK PLAN
1999 EMPLOYEE STOCK PURCHASE PLAN
SHARES ACQUIRED UNDER WRITTEN COMPENSATION AGREEMENTS WITH ROBERT H. BECK,
DIANA L. BROWN, DAN FERNANDEZ, SCOTT FRISBIE, JOSEPH GALUSZKA, MATTHEW
GLIDDEN, MICHAEL GLOVER, ANTHONY HILL, HILARY HOEBER, DAVID HUNKINS,
DARLENE JORDAN-FONTAINE, WILLIAM KIM, WILLIAM H. KURTZ, MICHAEL LANFORD,
MICHAEL LENAHAN, JONATHAN LIEBERMAN, MARK MCCORMICK, JAMES MCKEE, STEPHEN
MUCCHETTI, DAN ROSLER, JOSE SANTANA, DARCY STARK, JEFF VAN ZANTEN, DAVID
WOOD AND LIETZE YAO
(Full title of the Plans)
___________________
William H. Kurtz
Chief Financial Officer, Treasurer and Secretary
SCIENT CORPORATION
One Front Street, 28th Floor
San Francisco, CA 94111
(Name and address of agent for service)
____________________
415-733-8200
(Telephone number, including area code, of agent for service)
___________________
CALCULATION OF REGISTRATION FEE
===============================================================================
<TABLE>
<CAPTION> Proposed
Title of Proposed Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered (1) per Share (2) Price (2) Fee
- ----------------------------------- ---------------------- -------------------------- ----------- -------------
1999 Equity Incentive Plan and
- ------------------------------
1997 Stock Plan
---------------
<S> <C> <C> <C> <C>
Options to Purchase Common Stock 6,340,649 N/A N/A N/A
Common Stock (par value $0.0001) 6,340,649 Shares $ 20.00 $ 126,812,980 $ 35,254.01
1999 Employee Stock Purchase Plan
- ---------------------------------
Rights to Purchase Common Stock N/A N/A N/A
Common Stock (par value $0.0001) 1,000,000 shares $ 20.00 $ 20,000,000 $ 5,560.00
</TABLE>
Shares Acquired Under Written Compensation Agreements With Robert H. Beck,
- --------------------------------------------------------------------------
Diana L. Brown, Dan Fernandez, Scott Frisbie, Joseph Galuszka, Matthew Glidden,
- -------------------------------------------------------------------------------
Michael Glover, Anthony Hill, Hilary Hoeber, David Hunkins, Darlene Jordan-
- ---------------------------------------------------------------------------
Fontaine, William Kim, William H. Kurtz, Michael Lanford, Michael Lenahan,
- --------------------------------------------------------------------------
Jonathan Lieberman, Mark McCormick, James McKee, Stephen Mucchetti, Christopher
- -------------------------------------------------------------------------------
Nielsen, Dan Rosler, Jose Santana, Darcy Stark, Jeff Van Zanten, David Wood and
- -------------------------------------------------------------------------------
Lietze Yao
- ----------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Common Stock (par value $0.0001) 1,413,167 shares $ 20.00 $ 28,263,340 $7,857.21
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1999 Equity Incentive Plan,
the 1997 Stock Plan, the 1999 Employee Stock Purchase Plan, the Written
Compensation Agreement with Aron Dutta and the Written Compensation
Agreements with Robert H. Beck, Diana L. Brown, Dan Fernandez, Scott
Frisbie, Joseph Galuszka, Matthew Glidden, Michael Glover, Anthony Hill,
Hilary Hoeber, David Hunkins, Darlene Jordan-Fontaine, William Kim, William
H. Kurtz, Michael Lanford, Michael Lenahan, Jonathan Lieberman, Mark
McCormick, James McKee, Stephen Mucchetti, Dan Rosler, Jose Santana, Darcy
Stark, Jeff Van Zanten, David Wood and Lietze Yao, because of any stock
dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an increase
in the number of the outstanding shares of Common Stock of Scient
Corporation.
(2) Calculated only for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the fair market value
per share of Common Stock of Scient Corporation on May 13, 1999.
<PAGE>
EXPLANATORY NOTE
Under General Instruction C of Form S-8, this Registration Statement
contains a prospectus meeting the requirements of Part I of Form S-3 relating to
the reoffer by a certain individual of shares of COMMON STOCK, PAR VALUE $0.0001
PER SHARE, OF SCIENT CORPORATION ACQUIRED UNDER A WRITTEN AGREEMENT.
2
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SCIENT CORPORATION
FORM S-8 CROSS REFERENCE SHEET SHOWING LOCATION OF INFORMATION
REQUIRED BY PART I OF FORM S-3
<TABLE>
<CAPTION>
Form S-3 Item Number Location/Heading in Prospectus
- -------------------- ------------------------------
<S> <C>
1. Forepart of Registration Statement and Outside Cover page
Front Cover page of Prospectus
2. Inside Front and Outside Back Cover Page of Available Information; Incorporation of Certain
Prospectus Information by Reference
3. Summary Information, Risk Factors and Ratio of Risk Factors
Earnings to Fixed Charges
4. Use of Proceeds Not applicable
5. Determination of Offering Price Not applicable
6. Dilution Not applicable
7. Selling Security Holder Selling Security Holder
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Registered Not Applicable
10. Interests of Named Experts and Counsel Not Applicable
11. Material Changes Not Applicable
12. Incorporation of Certain Information Documents Incorporated by Reference
13. Disclosure of Commission Position on Indemnification
Indemnification for Securities Act Liabilities
</TABLE>
3
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REOFFER PROSPECTUS
Shares of Common Stock
Scient Corporation
This Reoffer Prospectus relates to 1,413,167 shares of the Common
Stock, par value 0.0001 (the "Common Stock"), of Scient Corporation (the
"Company"), which may be offered from time to time by certain key employees
named herein (the "Registered Stockholders"). It is anticipated that the
Registered Stockholders will offer shares for sale at prevailing prices on the
Nasdaq National Market System on the date of sale. The Company will receive no
part of the proceeds of sale made hereunder. All expenses of registration
incurred in connection with this offering are being borne by the Company, but
all selling and other expenses incurred by each of the Registered Stockholders
will be borne by each such Registered Stockholder.
Following the initial public offering of the Common Stock, the Common
Stock will be traded on the Nasdaq National Market System. The price per share
of the Company's Common Stock as offered in its initial public offering of such
Common Stock is expected to be $20.00.
The Registered Stockholders and any broker executing selling orders on
behalf of the Registered Stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in
which event commissions received by such broker may be deemed to be underwriting
commissions under the Securities Act.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED
ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
No person is authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering described herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or any Registered Stockholder. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, nor shall there be any sale of these
securities by any person in any jurisdiction in which it is unlawful for such
person to make such offer, solicitation or sale. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create an
implication that the information contained herein is correct as of any time
subsequent to the date hereof.
The date of this Prospectus is May 13, 1999.
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AVAILABLE INFORMATION
The Company will be subject to the informational reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") upon the first date on which its Common Stock is registered under Section
12(g) of the Exchange Act and in accordance therewith will file reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the Public Reference Room of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices at
219 South Dearborn Street, Chicago, IL 60604; 26 Federal Plaza, New York, NY
10007; and 5757 Wilshire Boulevard, Los Angeles, CA 90036, at prescribed rates.
The Common Stock following the Company's initial public offering will be quoted
on the Nasdaq National Market System. Reports, proxy statements, informational
statements and other information concerning the Company can be inspected at the
offices of the National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington, D.C. 20006.
The Company intends to furnish its stockholders with annual reports
containing additional financial statements and a report thereon by independent
certified public accountants.
A copy of any document incorporated by reference in the Registration
Statement (not including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by reference into
the information that the Registration Statement incorporates) of which this
Reoffer Prospectus forms a part but which is not delivered with this Reoffer
Prospectus will be provided by the Company without charge to any person
(including any beneficial owner) to whom this Reoffer Prospectus has been
delivered upon the oral or written request of such person. Such requests should
be directed to Robin Calhoun, Scient Corporation, One Front Street, 28th Floor,
San Francisco, California 94111. The Company's telephone number at that
location is (415) 733-8200.
TABLE OF CONTENTS
Page
OUR COMPANY..................................................... 6
RISK FACTORS.................................................... 6
REGISTERED STOCKHOLDERS......................................... 17
PLAN OF DISTRIBUTION............................................ 18
DOCUMENTS INCORPORATED BY REFERENCE............................. 19
INDEMNIFICATION................................................. 19
5
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OUR COMPANY
Scient is a leading provider of a new category of professional services
called eBusiness systems innovation. eBusinesses are businesses that combine
the reach and efficiency of the Internet with both emerging and existing
technologies to enable companies to strengthen relationships with customers and
business partners, create new revenue opportunities, reduce costs, improve
operating efficiencies, shorten cycle times and improve communications. As an
eBusiness systems innovator, we provide integrated eBusiness strategy and
technology implementation services to clients who are creating eBusinesses or
are rethinking or expanding their existing businesses to integrate eBusiness
capabilities. These services include strategy consulting, customer experience
design, systems architecture, and application and technology infrastructure
development. Our services are designed to rapidly improve a client's
competitive position through the development of innovative business strategies
enabled by the integration of emerging and existing technologies. We have
developed a methodology, the Scient Approach, that provides a framework for
each stage of a client engagement from helping the client conceive its strategy
to architecting, engineering and extending its eBusiness. We believe that our
integrated methodology allows us to deliver reliable, robust, secure, scalable
and extensible eBusiness systems innovation in rapid timeframes.
We have performed professional services for over 35 clients, including AIG,
Chase Manhattan, eBay, First Union, innoVisions, PlanetRx and RealSelect.
RISK FACTORS
You should carefully consider the following risks before making an
investment decision. The risks described below are not the only ones that we
face. Any of the following risks could seriously harm our business, financial
condition or results of operations. As a result, these risks could cause the
decline of the trading price of our common stock, and you may lose all or part
of your investment. You should also refer to the other information set forth
in this prospectus, including our financial statements and the related notes.
Risks Related to Our Business
We Have a History of Losses and Expect to Incur Losses in the Future
We incurred net losses of $11.7 million during the year ended March 31,
1999. As of March 31, 1999, we had an accumulated deficit of $12.9 million. We
have not had a profitable quarter and may never achieve profitability. We also
expect to continue to incur increasing sales and marketing, infrastructure
development and general and administrative expenses. As a result, we will need
to generate significant revenues to achieve profitability. If we do achieve
profitability, we may not be able to sustain or increase profitability on a
quarterly or annual basis in the future. Although our revenues have grown in
recent quarters, we do not believe that we can sustain our historical growth
rates. Accordingly, you should not view our historical growth rates as
indicative of our future revenues.
Our Quarterly Revenues and Operating Results Are Volatile and May Cause Our
Stock Price to Fluctuate
Our quarterly revenues and operating results are volatile and difficult to
predict. It is likely that in some future quarter or quarters our operating
results will be below the expectations of public market analysts or investors.
In such event, the market price of our common stock may decline significantly.
Our quarterly operating results have varied in the past and are likely to
vary significantly from quarter to quarter. As a result, we believe that
period-to-period comparisons of our results of operations are not a good
indication of our future performance. A number of factors are likely to cause
these variations, including:
. Our ability to obtain new and follow-on client engagements;
. The amount and timing of expenditures by our clients for eBusiness
services;
6
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. Our ability to attract, train and retain skilled management, strategic,
technical, design, sales, marketing and support professionals;
. Our employee utilization rate, including our ability to transition
employees quickly from completed projects to new engagements, for which
we typically receive little or no notice;
. The introduction of new services by us or our competitors;
. Changes in our pricing policies or those of our competitors;
. Our ability to manage costs, including personnel costs and support
services costs; and
. Costs related to the expected opening or expansion of Scient offices.
We derive all of our revenues from professional services, which we
generally provide on a time and materials basis. Revenues pursuant to time and
materials contracts are generally recognized as services are
7
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provided. Since personnel and related costs constitute the substantial
majority of our operating expenses and since we establish these expenses in
advance of any particular quarter, underutilization of our professional
services employees may cause significant reductions in our operating results
for a particular quarter and could result in losses for such quarter. In
addition, we have hired a large number of personnel in core support services,
including knowledge management, technology infrastructure and finance and
administrative, in order to support our anticipated growth. As a result, a
significant portion of our operating expenses are fixed in the short term.
Therefore, any failure to generate revenues according to our expectations in a
particular quarter could result in losses for the quarter.
Although we have limited historical financial data, we have experienced and
expect to continue to experience seasonality in revenues from our electronic
business, or eBusiness, services. These seasonal trends may materially affect
our quarter-to-quarter operating results. Revenues and operating results in
our quarter ending December 31 are typically lower relative to our other
quarters because there are a lower number of billable days in this quarter due
to holidays and vacation days. In addition, operating expenses may increase in
each quarter ending September 30, both on absolute terms and as a percentage
of revenues, due to the potential hiring of large numbers of recent college
graduates each year, which results in increased salary expenses before such
new employees begin to generate substantial revenues for Scient.
Our Ability to Attract, Train and Retain Qualified Employees Is Crucial to
Our Results of Operations and Any Future Growth
Our future success depends in large part on our ability to hire, train and
retain project and engagement managers, technical architects, strategists,
engineers, design professionals, other technical personnel and sales and
marketing professionals of various experience levels. Any inability to hire,
train and retain a sufficient number of qualified employees could hinder the
growth of our business. Skilled personnel are in short supply, and this
shortage is likely to continue for some time. As a result, competition for
these people is intense, and the industry turnover rate for them is high. In
addition, we believe that prospective employees that we target after the
offering may perceive that the stock option component of our compensation
package is not as valuable as that component was prior to this offering.
Consequently, we may have difficulty hiring our desired numbers of qualified
employees after this offering. Moreover, even if we are able to expand our
employee base, the resources required to attract and retain such employees may
adversely affect our operating margins. In addition, some companies have
adopted a strategy of suing or threatening to sue former employees and their
new employers. As we hire new employees from our current or potential
competitors we are likely to become a party to one or more lawsuits involving
the former employment of one of our employees. Any future litigation against
us or our employees, regardless of the outcome, may result in substantial
costs and expenses to us and may divert management's attention away from the
operation of our business.
We Depend on Our Key Personnel, and the Loss of Any Key Personnel May
Adversely Affect Our Business
We believe that our success will depend on the continued employment of our
senior management team and key technical personnel. This dependence is
particularly important to our business because personal relationships are a
critical element of obtaining and maintaining client engagements. If one or
more members of our senior management team or key technical personnel were
unable or unwilling to continue in their present positions, such persons would
be very difficult to replace and our business could be seriously harmed. To
date, a majority of our revenues have been generated by the selling efforts of
our senior management. Accordingly, the loss of one or more members of our
senior management team could have a direct adverse impact on our future sales.
In addition, if any of these key employees joins a competitor or forms a
competing company, some of our clients might choose to use the services of
that competitor or new company instead of our own. Furthermore, clients or
other companies seeking to develop in-house eBusiness capabilities may hire
away some of our key employees. This would not only result in the loss of key
employees but could also result in the loss of a client relationship or a new
business opportunity. Any losses of client relationships could seriously harm
our business.
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We Have a Limited Operating History and a Limited Number of Completed
Engagements that Make an Evaluation of Our Business Difficult
We were incorporated in November 1997 and began providing services to
clients in February 1998. Our limited operating history makes an evaluation of
our business and prospects very difficult. Companies in an early stage of
development frequently encounter enhanced risks and unexpected expenses and
difficulties. These risks, expenses and difficulties apply particularly to us
because our market, eBusiness services, is new and rapidly evolving. Our long-
term success will depend on our ability to achieve satisfactory results for
our clients and to form long-term relationships with core clients. We have not
been in operation long enough to judge whether our clients will perceive our
work as being beneficial to their businesses or to form any long-term business
relationships. Also, because of our limited operating history, our business
reputation is based on a limited number of client engagements. All of our
clients have only limited experience with the electronic business systems we
have developed for them. Accordingly, we cannot assure you that the limited
number of electronic business systems we have implemented will be successful
in the longer term. If the electronic business systems we have implemented are
not successful, our brand will be harmed and we may incur liability to our
clients. If one or more of our clients for whom we have done substantial work
suffers a significant failure or setback in its eBusiness, our business
reputation could be severely damaged, whether or not such failure or setback
was caused by our work or within our control. Our ability to obtain new
engagements, retain clients and recruit and retain highly-skilled employees
could be seriously harmed if our work product or our clients' eBusinesses fail
to meet the expectations of our clients.
Competition from Bigger, More Established Competitors Who Have Greater
Financial Resources Could Result in Price Reductions, Reduced Profitability
and Loss of Market Share
Competition in the eBusiness services market is intense. If we fail to
compete successfully against current or future competitors, our business,
financial condition and operating results would be seriously harmed. We
compete against companies selling electronic commerce software and services,
and the in-house development efforts of companies seeking to engage in
electronic commerce. We expect competition to persist and intensify in the
future. We cannot be certain that we will be able to compete successfully with
existing or new competitors.
Because relatively low barriers to entry characterize our market, we also
expect other companies to enter our market. We expect that competition will
continue to intensify and increase in the future. Some large information
technology consulting firms have announced that they will focus more resources
on eBusiness opportunities. Because we contract with our clients on an
engagement-by-engagement basis, we compete for engagements at each stage of
our methodology. There is no guarantee that we will be retained by our
existing or future clients on later stages of work.
The vast majority of our current competitors have longer operating
histories, a larger client base, larger professional staffs, greater brand
recognition and greater financial, technical, marketing and other resources
than we do. This may place us at a disadvantage in responding to our
competitors' pricing strategies, technological advances, advertising
campaigns, strategic partnerships and other initiatives. In addition, many of
our competitors have well-established relationships with our current and
potential clients and have extensive knowledge of our industry. As a result,
our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements and they may also be able to
devote more resources to the development, promotion and sale of their services
than we can. Competitors that offer more standardized or less customized
services than we do may have a substantial cost advantage, which could force
us to lower our prices, adversely affecting our operating margins.
Current and potential competitors also have established or may establish
cooperative relationships among themselves or with third parties to increase
their ability to address customer needs. Accordingly, it is possible that new
competitors or alliances among competitors may emerge and rapidly acquire
significant market share. In addition, some of our competitors may develop
services that are superior to, or have greater market acceptance than, the
services that we offer.
9
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Failure to Manage Our Growth May Adversely Affect Our Business
We have grown rapidly and expect to continue to grow rapidly both by hiring
new employees and serving new business and geographic markets. Our growth has
placed, and will continue to place, a significant strain on our management and
our operating and financial systems. Our headcount has grown from 27 as of
March 31, 1998 to 260 as of March 31, 1999, and several members of our senior
management team have only recently joined Scient. We do not believe this
growth rate is sustainable for the long-term. In addition, we recently opened
a New York office and expect to open additional offices in the future.
Our personnel, systems, procedures and controls may be inadequate to
support our future operations. In order to accommodate the increased number of
engagements, number of clients and the increased size of our operations, we
will need to hire, train and retain the appropriate personnel to manage our
operations. We will also need to improve our financial and management
controls, reporting systems and operating systems. We are currently
implementing a new enterprise resource planning software system for human
resource functions and some financial functions. We currently plan to redesign
several internal systems, including recruiting and engagement management
systems. We may encounter difficulties in transitioning to the new enterprise
resource planning software system or in developing and implementing other new
systems.
Potential Future Acquisitions Could Be Difficult to Integrate, Disrupt Our
Business, Dilute Stockholder Value and Adversely Affect Our Operating Results
We may acquire other businesses in the future, which may complicate our
management tasks. We may need to integrate widely dispersed operations with
distinct corporate cultures. Such integration efforts may not succeed or may
distract our management from servicing existing clients. Our failure to manage
future acquisitions successfully could seriously harm our operating results.
Also, acquisition costs could cause our quarterly operating results to vary
significantly. Furthermore, our stockholders would be diluted if we finance
the acquisitions by incurring debt or issuing equity securities.
Our Planned International Operations May Be Expensive and May Not Succeed
We have limited experience in marketing, selling and supporting our
services in foreign countries. Development of such skills may be more
difficult or take longer than we anticipate, especially due to language
barriers, currency exchange risks and the fact that the Internet
infrastructure in foreign countries may be less advanced than the United
States' Internet infrastructure. To date, we have not generated significant
revenues from engagements with international clients, although we are
currently negotiating one contract that, if successfully completed, would
involve the delivery of services to a client outside of North America. We
intend to expand our operations internationally in future periods by opening
international offices and hiring international management, strategic,
technical, design, sales, marketing and support personnel.
We may be unable to successfully market, sell, deliver and support our
services internationally. If we are unable to expand our international
operations successfully and in a timely manner, our business, financial
condition and operating results could be seriously harmed. We will need to
devote significant management and financial resources to our international
expansion. In particular, we will have to attract and retain experienced
management, strategic, technical, design, sales, marketing and support
personnel for our international offices. Competition for such personnel is
intense, and we may be unable to attract and retain qualified staff.
Moreover, international operations are subject to a variety of additional
risks that could seriously harm our financial condition and operating results.
These risks include the following:
. Problems in collecting accounts receivable;
. The impact of recessions in economies outside the United States;
. Longer payment cycles;
. Fluctuations in currency exchange rates;
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. Restrictions on the import and export of certain sensitive technologies,
including data security and encryption technologies that we may use; and
. Seasonal reductions in business activity in certain parts of the world,
such as during the summer months in Europe.
We Have Relied and Expect to Continue to Rely on a Limited Number of
Clients for a Significant Portion of Our Revenues
We currently derive and expect to continue to derive a significant portion
of our revenues from a limited number of clients. To the extent that any
significant client uses less of our services or terminates its relationship
with us, our revenues could decline substantially. As a result, the loss of
any significant client could seriously harm our business, financial condition
and operating results. For the year ended March 31, 1999, our five largest
clients accounted for approximately 50% of our revenues, with First Union,
PlanetRx and innoVisions accounting for 13%, 11% and 11%, respectively, of
such revenues. The volume of work that we perform for a specific client is
likely to vary from period to period, and a significant client in one period
may not use our services in a subsequent period.
Our Lack of Long-Term Contracts with Clients Reduces the Predictability of
Our Revenues
Our clients retain us on an engagement-by-engagement basis, rather than
under long-term contracts. As a result, our revenues are difficult to predict.
Because we incur costs based on our expectations of future revenues, our
failure to predict our revenues accurately may seriously harm our financial
condition and results of operations. Although it is our goal to design and
build complete eBusiness systems for our clients, we are generally retained to
design and build discrete segments of an overall eBusiness system on an
engagement-by-engagement basis. Since large client projects involve multiple
engagements or stages, there is a risk that a client may choose not to retain
us for additional stages of a project or that the client will cancel or delay
additional planned projects. Such cancellations or delays could result from
factors unrelated to our work product or the progress of the project, but
could be related to general business or financial conditions of the client.
For example, many of our current or potential clients that are in the early
stages of development may be unable to retain our services because of
financial constraints. In addition, our existing clients can generally reduce
the scope of or cancel their use of our services without penalty and with
little or no notice. If a client defers, modifies or cancels an engagement or
chooses not to retain us for additional phases of a project, we must be able
to rapidly redeploy our employees to other engagements in order to minimize
underutilization of employees and the resulting harm to our operating results.
Our operating expenses are relatively fixed and cannot be reduced on short
notice to compensate for unanticipated variations in the number or size of
engagements in progress.
We May Lose Money on Fixed-Fee Contracts
If we miscalculate the resources or time we need to complete engagements
with capped or fixed fees, our operating results could be seriously harmed.
The risk of such miscalculations for us is high because we work with complex
technologies in compressed timeframes, and therefore it is difficult to judge
the time and resources necessary to complete a project. To date, we have
generally entered into contracts with our clients on a time and materials
basis, though we sometimes work on a fixed-fee basis or cap the amount of fees
we may invoice on time and material contracts without client consent. In the
future our strategy is to increase the percentage of our client engagements
subject to fixed-fee arrangements, because we believe they have the potential
to be more profitable.
We Sometimes Agree Not to Perform Services for Our Clients' Competitors
We sometimes agree not to perform services for competitors of our clients
for limited periods of time, which have been as long as two years. These non-
compete agreements reduce the number of our prospective clients and the number
of potential sources of revenue. In addition, these agreements increase the
significance of our
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client selection process because many of our clients compete in markets where
only a limited number of players gain meaningful market share. If we agree not
to perform services for a particular client's competitors and our client fails
to capture a significant portion of its market, we are unlikely to receive
future revenues in that particular market.
Our Efforts to Develop Brand Awareness of Our Services May Not Be
Successful
An important element of our business strategy is to develop and maintain
widespread awareness of the Scient brand name. To promote our brand name, we
plan to increase our marketing expenses, which may cause our operating margins
to decline. Moreover, our brand may be closely associated with the business
success or failure of some of our high-profile clients, many of whom are
pursuing unproven business models in competitive markets. As a result, the
failure or difficulties of one of our high-profile clients may damage our
brand. If we fail to successfully promote and maintain our brand name or incur
significant related expenses, our operating margins and our growth may
decline.
Our Failure to Meet Client Expectations or Deliver Error-Free Services
Could Result in Losses and Negative Publicity
Our client engagements involve the creation, implementation and maintenance
of eBusiness systems and other applications that are often critical to our
clients' businesses. Any defects or errors in these applications or failure to
meet clients' expectations could result in:
. Delayed or lost revenues due to adverse client reaction;
. Requirements to provide additional services to a client at no charge;
. Negative publicity regarding us and our services, which could adversely
affect our ability to attract or retain clients; and
. Claims for substantial damages against us, regardless of our
responsibility for such failure.
Our contracts generally limit our liability for damages that may arise from
negligent acts, errors, mistakes or omissions in rendering services to our
clients. However, we cannot be sure that these contractual provisions will
protect us from liability for damages in the event we are sued. Furthermore,
our general liability insurance coverage may not continue to be available on
reasonable terms or in sufficient amounts to cover one or more large claims,
or the insurer may disclaim coverage as to any future claim. The successful
assertion of any such large claim against us could seriously harm our
business, financial condition and operating results.
Our Business is Dependent on Our Ability to Keep Pace with the Latest
Technological Changes
Our market and the enabling technologies used by our clients are
characterized by rapid technological change. Failure to respond successfully
to these technological developments, or to respond in a timely or cost-
effective way, will result in serious harm to our business and operating
results. We have derived, and we expect to continue to derive, a substantial
portion of our revenues from creating eBusiness systems that are based upon
today's leading technologies and that are capable of adapting to future
technologies. As a result, our success will depend, in part, on our ability to
offer services that keep pace with continuing changes in technology, evolving
industry standards and changing client preferences. In addition, we must hire,
train and retain technologically knowledgeable professionals so that they can
fulfill the increasingly sophisticated needs of our clients.
Our Business Could Be Affected by Year 2000 Issues
Year 2000 issues may adversely affect our business and our clients'
businesses. Many currently installed computer systems and software products
are coded to accept only two-digit year entries in the date code field.
Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they may not be able to distinguish 21st century dates
from 20th century dates. As a result, computer systems and software used
12
<PAGE>
by many companies, including us, our clients and our potential clients, may
need to be upgraded to comply with such "Year 2000" requirements. Any failure
on the part of our principal internal systems or the systems that we create
for our clients could seriously harm our business, financial condition and
operating results. For a more detailed description of our Year 2000
assessment, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Year 2000 Readiness."
We May Not Be Able to Protect Our Intellectual Property and Proprietary
Rights
We cannot guarantee that the steps we have taken to protect our proprietary
rights will be adequate to deter misappropriation of our intellectual
property. In addition, we may not be able to detect unauthorized use of our
intellectual property and take appropriate steps to enforce our rights. If
third parties infringe or misappropriate our trade secrets, copyrights,
trademarks or other proprietary information, our business could be seriously
harmed. In addition, although we believe that our proprietary rights do not
infringe the intellectual property rights of others, other parties may assert
infringement claims against us or claim that we have violated their
intellectual property rights. Such claims, even if not true, could result in
significant legal and other costs and may be a distraction to management. In
addition, protection of intellectual property in many foreign countries is
weaker and less reliable than in the United States, so if our business expands
into foreign countries, risks associated with protecting our intellectual
property will increase.
A Few Individuals Own Much of Our Stock
Upon completion of this offering and assuming that Sequoia Capital and
Benchmark Capital purchase an aggregate of 220,000 shares which have been
reserved for their purchase in this offering, our directors, executive
officers and their affiliates will beneficially own, in the aggregate,
approximately 67.7% of our outstanding common stock. This percentage will be
approximately 66.8% if the underwriters exercise their over-allotment option
in full. As a result, these stockholders will be able to exercise control over
all matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions, such as
acquisitions, and to block an unsolicited tender offer. Accordingly, this
concentration of ownership could have the effect of delaying or preventing a
third party from acquiring control over us at a premium over the then-current
market price of our common stock. See "Principal Stockholders."
We Have Various Mechanisms in Place to Discourage Takeover Attempts
Certain provisions of our certificate of incorporation and bylaws may
discourage, delay or prevent a change in control of Scient that a stockholder
may consider favorable. These provisions include:
. Authorizing the issuance of "blank check" preferred stock that could be
issued by our board of directors to increase the number of outstanding
shares and thwart a takeover attempt;
. A classified board of directors with staggered, three-year, terms, which
may lengthen the time required to gain control of our board of directors;
. Prohibiting cumulative voting in the election of directors, which would
otherwise allow less than majority of stockholders to elect director
candidates;
. Requiring super-majority voting to effect certain amendments to our
certificate of incorporation and bylaws;
. Limitations on who may call special meetings of stockholders;
. Prohibiting stockholder action by written consent, which requires all
actions to be taken at a meeting of the stockholders; and
. Establishing advance notice requirements for nominations of candidates
for election to the board of directors or for proposing matters that can
be acted upon by stockholders at stockholder meetings.
13
<PAGE>
In addition, Section 203 of the Delaware General Corporation Law and our
stock incentive plans may discourage, delay or prevent a change in control of
Scient.
Risks Related to the eBusiness Systems Innovation Industry
Our Success Will Depend on the Development of a Market for eBusiness Systems
Innovation Services
We cannot be certain that a viable market for eBusiness systems innovation
services will emerge or be sustainable. If a viable and sustainable market for
our eBusiness systems innovation services does not develop, Scient will fail.
Even if an eBusiness systems innovation services market develops, we may not be
able to differentiate our services from those of our competitors. If we are
unable to differentiate our services from those of our competitors, our revenue
growth and operating margins may decline.
Our Success Depends on Increased Adoption of the Internet as a Means for
Commerce
Our future success depends heavily on the acceptance and use of the Internet
as a means for commerce. The widespread acceptance and adoption of the Internet
for conducting business is likely only in the event that the Internet provides
businesses with greater efficiencies and improvements. If commerce on the
Internet does not continue to grow, or grows more slowly than expected, our
growth would decline and our business would be seriously harmed. Consumers and
businesses may reject the Internet as a viable commercial medium for a number
of reasons, including:
. Potentially inadequate network infrastructure;
. Delays in the development of Internet enabling technologies and
performance improvements;
. Delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity;
. Delays in the development of security and authentication technology
necessary to effect secure transmission of confidential information;
. Changes in, or insufficient availability of, telecommunications services
to support the Internet; and
. Failure of companies to meet their customers' expectations in delivering
goods and services over the Internet.
Increasing Government Regulation Could Affect Our Business
We are subject not only to regulations applicable to businesses generally,
but also laws and regulations directly applicable to electronic commerce.
Although there are currently few such laws and regulations, both state, federal
and foreign governments may adopt a number of these laws and regulations. Any
such legislation or regulation could dampen the growth of the Internet and
decrease its acceptance as a communications and commercial medium. If such a
decline occurs, companies may decide in the future not to use our services to
create an electronic business channel. This decrease in the demand for our
services would seriously harm our business and operating results.
Any new laws and regulations may govern or restrict any of the following
issues:
. User privacy;
. The pricing and taxation of goods and services offered over the Internet;
. The content of websites;
. Consumer protection; and
. The characteristics and quality of products and services offered over the
Internet.
14
<PAGE>
For example, the Telecommunications Act of 1996 prohibits the transmission
of certain types of information and content over the Internet. The scope of
the Act's prohibition is currently unsettled. In addition, although courts
recently held unconstitutional substantial portions of the Communications
Decency Act, federal or state governments may enact, and courts may uphold,
similar legislation in the future. Future legislation could expose companies
involved in Internet commerce to liability.
Risks Related to the Securities Markets
We May Need to Raise Additional Capital, Which May Not Be Available
We expect that the net proceeds from this offering will be sufficient to
meet our working capital and capital expenditure needs for at least the next
12 months. After that, we may need to raise additional funds, and we cannot be
certain that we will be able to obtain additional financing on favorable terms
or at all. If we need additional capital and cannot raise it on acceptable
terms, we may not be able to:
. Open new offices, in the United States or internationally;
. Create additional market-specific business units;
. Enhance our infrastructure and leveragable assets;
. Hire, train and retain employees;
. Respond to competitive pressures or unanticipated requirements; or
. Pursue acquisition opportunities.
Our failure to do any of these things could seriously harm our financial
condition.
Our Stock Price May Be Volatile Because Our Shares Have Not Been Publicly
Traded Before
Prior to this offering, you could not buy or sell our common stock
publicly. Accordingly, we cannot assure you that an active public trading
market for our stock will develop or be sustained after this offering. The
market price after this offering may vary significantly from the initial
offering price in response to any of the following factors, some of which are
beyond our control:
. Changes in financial estimates or investment recommendations by
securities analysts relating to our stock;
. Changes in market valuations of other electronic commerce software and
service providers or electronic businesses;
. Announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
. Loss of a major client;
. Additions or departures of key personnel; and
. Fluctuations in the stock market price and volume of traded shares
generally, especially fluctuations in the traditionally volatile
technology sector.
We Are at Risk of Securities Class Action Litigation Due to Our Expected
Stock Price Volatility
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. Due to the potential volatility of our stock price, we may be the
target of similar litigation in the future. Securities litigation could result
in substantial costs and divert management's attention and resources, which
could seriously harm our financial condition and operating results.
15
<PAGE>
Purchasers in this Offering Will Incur Immediate and Substantial Dilution
The initial public offering price of our common stock is substantially
higher than the book value per share of the outstanding common stock. As a
result, if we were liquidated for book value immediately following this
offering, each stockholder purchasing in this offering would receive less than
the price they paid for their common stock. In addition, because our success
is so heavily dependent on our ability to attract and retain talented
personnel, we expect to offer a significant number of stock options to
employees in the future. Such issuances may cause further dilution to
investors.
Shares Becoming Available for Sale Could Affect Our Stock Price
Sales of a substantial number of shares of common stock after this offering
could adversely affect the market price of our common stock and could impair
our ability to raise capital through the sale of additional equity securities.
For a description of the shares of our common stock that are available for
future sale.
16
<PAGE>
REGISTERED STOCKHOLDERS
The Reoffer Prospectus relates to shares of Common Stock which have
been acquired by certain key employees (the "Registered Stockholders") of
Scient. Registered Stockholders acquired shares of Common Stock offered here
by exercising options granted under the 1997 Stock Plan.
The following table sets forth certain information with respect to the
Registered Stockholders as of March 31, 1999:
<TABLE>
<CAPTION>
Number of
Shares Number of Percentage of
Beneficially Number of Shares Shares
Owned Shares to be Beneficially Beneficially
Registered Position with as of Offered Owned After Owned After
Stockholder the Company March 31, 1999 Hereby Offering Offering(1)
- ------------------ --------------------------- -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Robert N. Beck Vice President of People 200,000 25,000 175,000 *
Diana L. Brown Vice President of Financial
Services Business Unit 300,000 200,000 100,000 *
Dan Fernandez Managing Director of Professional
Services 30,000 4,500 25,500 *
Scott Frisbie Chief Technology Officer 180,000 120,000 60,000 *
Joseph Galuszka Vice President of Recruiting 120,000 120,000 0 *
Matthew Glidden Associate of Professional Services 2,500 750 1,750 *
Michael Glover Director of Customer Extend
Innovations Center 10,000 2,500 7,500 *
Anthony Hill Director of Professional Services 11,000 10,000 1,000 *
Hilary Hoeber Associate of Professional Services 2,000 1,000 1,000 *
David Hunkins Leader of Knowledge Management 4,000 1,000 3,000
Darlene Jordan-Fontaine Leader of People 7,000 1,750 5,250 *
William Kim Vice President of Operations 150,250 10,000 140,250 *
William H. Kurtz Chief Financial Officer 550,000 225,000 325,000 *
Michael Lanford Director of Sales 12,000 6,000 6,000 *
Michael Lenahan Director of Architecture 12,000 3,667 8,333 *
Jonathan Lieberman Knowledge Applications in
Knowledge Management 2,000 2,000 0 *
Mark McCormick Director of Professional Services 10,000 3,500 6,500 *
James McKee Vice President of Global Sales 200,000 137,500 62,500 *
Stephen Mucchetti Chief Operating Officer 562,500 437,500 125,000 *
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Dan Rosler Associate of Professional Services 5,000 1,250 3,750 *
Jose Santana Associate of Technical Support 2,500 250 2,250 *
Darcy Stark Associate of Sales 1,500 1,500 0 *
Jeff Van Zanten Controller of Finance 150,000 87,500 62,500 *
David Wood Managing Director of Professional
Services 60,000 10,000 50,000 *
Lietze Yao Associate of Professional Services 2,000 1,000 1,000 *
</TABLE>
* Represents beneficial ownership of less than 1% of the outstanding shares of
our common stock.
(1) Percentage of beneficial ownership is calculated assuming 34,299,560 shares
of Common Stock outstanding following the initial public offering of the Common
Stock. This percentage also includes Common Stock of which such individual has
the right to acquire beneficial ownership within 60 days of March 31, 1999,
including but not limited to, upon the exercise of an option. The number of
shares outstanding after the offering under this Reoffer Prospectus includes the
3,450,000 shares of Common Stock offered for sale by the Company in its initial
public offering.
PLAN OF DISTRIBUTION
The shares of Common Stock covered by this Reoffer Prospectus are
being registered by the Company for the account of the Registered Stockholders.
The Company understands that none of such shares will be offered through
underwriters.
Shares of Common Stock covered by this Reoffer Prospectus may be
offered and sold from time to time by the Registered Stockholders through
brokers through the Nasdaq National Market System or otherwise, at the prices
prevailing at the time of such sales. To the Company's knowledge, no specific
brokers or dealers have been designated by the Registered Stockholders nor has
any agreement been entered into in respect of brokerage commissions or for the
exclusive or coordinated sale of any securities which may be offered pursuant to
this Reoffer Prospectus. The Company will pay all expenses of preparing and
reproducing this Reoffer Prospectus, but will not receive the proceeds from
sales by the Registered Stockholders. The price per share of the Common Stock
as offered in the initial public offering of such Common Stock is expected to be
$20.00.
The Company will not receive any of the proceeds from this offering.
All expenses of registration incurred in connection with this offering are being
borne by the Company, but all selling and other expenses incurred by the
individual Registered Stockholders will be borne by such Registered
Stockholders.
The price per share of Common Stock, as offered in the initial public
offering is expected to be $20.00.
18
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The Company hereby incorporates by reference into this Registration
Statement the following documents previously filed with the Commission:
(a) The Company's prospectus filed with the Commission pursuant to Rule
424(a) of the Securities Act, in connection with the Registration
Statement No. 333-74731 on Form S-1 filed with the Commission on March
19, 1999, together with any amendments thereto, in which there is set
forth Scient's audited financial statements from inception on November
7, 1997 through March 31, 1998 and the fiscal year ended March 31,
1999; and
(b) The Company's Registration Statement No. 0-25893 on Form 8-A filed
with the Commission on April 28, 1999 together with amendments
thereto, pursuant to Section 12 of the Exchange Act, in which there is
described the terms, rights and provisions applicable to the Company's
outstanding Common Stock.
All of such documents are on file with the Commission. All documents
subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act prior to the filing of a post-effective amendment which
indicates that all securities to be offered pursuant hereto have been sold or
which deregisters all such securities then remaining unsold shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such documents.
INDEMNIFICATION
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the 1933 Act. Scient's
Bylaws provide for mandatory indemnification of its directors and officers and
permissible indemnification of employees and other agents to the maximum extent
permitted by the Delaware General Corporation Law. Scient's Certificate of
Incorporation provides that, under Delaware law, its directors shall not be
liable for monetary damages for breach of their fiduciary duty as directors to
Scient and its stockholders. This provision in the Certificate of Incorporation
does not eliminate the fiduciary duty of the directors, and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of non-
monetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to Scient for acts or omissions not in good faith or involving
intentional misconduct, for knowing violations of law, for actions leading to
improper personal benefit to the director and for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Delaware
law. The provision also does not affect a director's responsibilities under any
other law, such as the federal securities laws or state or federal environmental
laws. Scient has entered into Indemnification Agreements with its officers and
directors. The Indemnification Agreements provide Scient's officers and
directors with further indemnification to the maximum extent permitted by the
Delaware General Corporation Law.
19
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
- ------- ---------------------------------------
Scient Corporation ("Scient") hereby incorporates by reference into this
Registration Statement the following documents previously filed with the
Securities and Exchange Commission (the "SEC"):
(a) Scient's prospectus filed with the SEC under Rule 424(b) under the
Securities Act of 1933, as amended (the "1933 Act"), in connection with
Registration Statement No. 333-74731 on Form S-1 filed with the SEC on March 19,
1999, the amendment filed on April 28, 1999, May 10, 1999, May 11, 1999,
May 12, 1999 and the amendment filed on May 13, 1999, which contains Scient's
audited financial statements from inception on November 7, 1997 through
March 31, 1998 and the fiscal year ended March 31, 1999.
(b) The description of Scient's outstanding Common Stock contained in Scient's
Registration Statement No. 0-25893 on Form 8-A filed with the SEC on April 28,
1999, under Section 12 of the 1934 Act, including any amendment or report filed
to update the description.
All reports and definitive proxy or information statements filed under
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall also be incorporated by
reference into this Registration Statement and to be a part of this Registration
Statement from the date of filing of those documents.
Item 4. Description of Securities
- ------- -------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel
- ------- --------------------------------------
Not Applicable.
Item 6. Indemnification of Directors and Officers
- ------- -----------------------------------------
Section 145 of the Delaware General Corporation Law authorizes a court
to award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the 1933 Act. Scient's Bylaws
provide for mandatory indemnification of its directors and officers and
permissible indemnification of employees and other agents to the maximum extent
permitted by the Delaware General Corporation Law. Scient's Certificate of
Incorporation provides that, under Delaware law, its directors shall not be
liable for monetary damages for breach of their fiduciary duty as directors to
Scient and its stockholders. This provision in the Certificate of Incorporation
does not eliminate the fiduciary duty of the directors, and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of non-
monetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to Scient for acts or omissions not in good faith or involving
intentional misconduct, for knowing violations of law, for actions leading to
improper personal benefit to the director and for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Delaware
law. The provision also does not affect a director's responsibilities under any
other law, such as the federal securities laws or state or federal environmental
laws. Scient has entered into Indemnification Agreements with its officers and
directors. The Indemnification Agreements provide Scient's officers and
directors with further indemnification to the maximum extent permitted by the
Delaware General Corporation Law.
20
<PAGE>
Item 7. Exemption from Registration Claimed
- ------- -----------------------------------
Not Applicable.
Item 8. Exhibits
- ------- --------
Exhibit Number Exhibit
- -------------- -------
4 Instrument Defining Rights of Stockholders. Reference is made to
Scient's Registration Statement No. 0-25893 on Form 8-A, which
is incorporated herein by reference under Item 3(b) of this
Registration Statement.
5 Opinion and consent of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian LLP.
23.1 Consent of PricewaterhouseCoopers, Independent Accountants.
23.2 Consent of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Form of Written Compensation Agreement with Robert H. Beck,
Diana L. Brown, Dan Fernandez, Scott Frisbie, Joseph Galuszka,
Matthew Glidden, Michael Glover, Anthony Hill, Hilary Hoeber,
David Hunkins, Darlene Jordan-Fontaine, William Kim, William
H. Kurtz, Michael Lanford, Michael Lenahan, Jonathan
Lieberman, Mark McCormick, James McKee, Stephen Mucchetti, Dan
Rosler, Jose Santana, Darcy Stark, Jeff Van Zanten, David Wood
and Lietze Yao.
Item 9. Undertakings
- ------- ------------
A. Scient hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement
(i) to include any prospectus required by Section 10(a)(3) of
the 1933 Act,
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement; provided,
however, that clauses (1)(i) and (1)(ii) shall not apply
if the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the SEC by
Scient under Section 13 or Section 15(d) of the 1934 Act
that are incorporated by reference in this Registration
Statement;
(2) that for the purpose of determining any liability under the
1933 Act each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered
therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of Scient's 1999 Equity Incentive Plan,
1997 Stock Plan, Employee Stock Purchase Plan, and Written
Compensation Agreements with Robert H. Beck, Diana L. Brown, Dan
Fernandez, Scott Frisbie, Joseph Galuszka, Matthew Glidden,
Michael Glover, Anthony Hill, Hilary Hoeber, David Hunkins,
Darlene Jordan-Fontaine, William Kim, William H. Kurtz, Michael
Lanford, Michael Lenahan, Jonathan
21
<PAGE>
Lieberman, Mark McCormick, James McKee, Stephen Mucchetti, Dan
Rosler, Jose Santana, Darcy Stark, Amanda Van Nuys, Jeff Van
Zanten, David Wood and Lietze Yao.
B. Scient hereby undertakes that, for purposes of determining any
liability under the 1933 Act, each filing of Scient's annual report under
Section 13(a) or Section 15(d) of the 1934 Act that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or controlling persons of Scient
under the indemnification provisions summarized in Item 6 or otherwise, Scient
has been advised that, in the opinion of the SEC, such indemnification is
against public policy as expressed in the 1933 Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Scient of expenses incurred or paid by a
director, officer or controlling person of Scient in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, Scient
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
22
<PAGE>
REOFFER PROSPECTUS
SIGNATURES
The Securities Act of 1933, as amended, requires that Scient certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-8 and has had this Registration Statement signed on its
behalf by the undersigned, who is duly authorized, in the City of San Francisco,
State of California on this 17th day of May, 1999.
SCIENT CORPORATION
By: /s/ Robert M. Howe
------------------
Robert M. Howe
President and Chief Executive Officer
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Scient Corporation, a
Delaware corporation, do hereby constitute and appoint Robert M. Howe and
William H. Kurtz, and either of them, the lawful attorneys-in-fact and agents
with full power and authority to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, and either one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the Securities Act of 1933, as amended, and any rules or
regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or either one of them, shall do or cause to
be done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney on the date indicated.
Under the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Robert M. Howe President, Chief Executive Officer and May 17, 1999
- ---------------------------------------------- Director
Robert M. Howe (Principal Executive Officer)
/s/ William H. Kurtz Chief Financial Officer, Treasurer and May 17, 1999
- ---------------------------------------------- Secretary (Principal Financial and
William H. Kurtz Accounting Officer)
</TABLE>
23
<PAGE>
REOFFER PROSPECTUS
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Eric Greenberg Chairman May 17, 1999
- ----------------------------------------------
Eric Greenberg
/s/ David M. Beirne Director May 17, 1999
- ----------------------------------------------
David M. Beirne
/s/ Frederick W. Gluck Director May 17, 1999
- ----------------------------------------------
Frederick W. Gluck
/s/ Douglas Leone Director May 17, 1999
- ----------------------------------------------
Douglas Leone
</TABLE>
24
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Number Exhibit Numbered Page
- -------------- ------- -------------
4 Instrument Defining Rights of Stockholders. Reference is made to
Scient's Registration Statement No. 0-25893 on Form 8-A, which
is incorporated herein by reference under Item 3(b) of this
Registration Statement.
5 Opinion and consent of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Form of Written Compensation Agreement with Robert H. Beck,
Diana L. Brown, Dan Fernandez, Scott Frisbie, Joseph Galuszka,
Matthew Glidden, Michael Glover, Anthony Hill, Hilary Hoeber,
David Hunkins, Feisal Jaffer, Darlene Jordan-Fontaine, William
Kim, William H. Kurtz, Michael Lanford, Michael Lenahan,
Jonathan Lieberman, Mark McCormick, James McKee, Stephen
Mucchetti, Dan Rosler, Jose Santana, Darcy Stark, Jeff Van
Zanten, David Wood and Lietze Yao.
<PAGE>
May 17, 1999
Scient Corporation
One Front Street, 28th Floor
San Francisco, CA 94111
Re: Scient Corporation ("Scient") Registration Statement
for Offering of 8,753,816 Shares of Common Stock
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration Statement")
under the Securities Act of 1933, as amended, of (i) 6,340,649 shares of
Common Stock under Scient's 1999 Equity Incentive Plan and Scient's 1997 Stock
Plan; (ii) 1,000,000 shares of Common Stock under Scient's Employee Stock
Purchase Plan; (iii) 1,413,167 Shares Acquired Under Written Compensation
Agreements with Robert H. Beck, Diana L. Brown, Dan Fernandez, Scott Frisbie,
Joseph Galuszka, Matthew Glidden, Michael Glover, Anthony Hill, Hilary Hoeber,
David Hunkins, Darlene Jordan-Fontaine, William Kim, William H. Kurtz, Michael
Lanford, Michael Lenahan, Jonathan Lieberman, Mark McCormick, James McKee,
Stephen Mucchetti, Dan Rosler, Jose Santana, Darcy Stark, Jeff Van Zanten,
David Wood and Lietze Yao. We advise you that, in our opinion, when such
shares have been issued and sold under the applicable provisions of the 1999
Equity Incentive Plan, 1997 Stock Plan, the 1999 Employee Stock Purchase Plan
and the Written Compensation Agreements and in accordance with the
Registration Statement, such shares will be validly issued, fully paid and
nonassessable shares of Scient's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
------------------------------------
Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
<PAGE>
Exhibit 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-8 of our report
dated April 26, 1999 appearing on page F-2 of Scient Corporation's
Registration Statement on Form S-1 (Registration No. 333-74731). We also
consent to the references to us under the heading "Experts" in such
Prospectus.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
--------------------------
San Jose, California
May 12, 1999
<PAGE>
EXHIBIT 99.1
Scient Corporation 1997 Stock Plan
Notice of Stock Option Grant
You have been granted the following option to purchase Common Stock of
Scient Corporation (the "Company"):
Name of Optionee: Name
Total Number of Shares Granted: TotalShares
Type of Option: Incentive Stock Option
Exercise Price Per Share: $
Date of Grant: DateGrant
Date Exercisable: This option may be exercised, in
whole or in part, for 100% of the
Shares subject to this option at any
time after the Date of Grant.
Vesting Commencement Date:
Vesting Schedule: The Right of Repurchase shall lapse
with respect to the first 25% of the
Shares subject to this option when
the Optionee completes 12 months of
continuous Service after the Vesting
Commencement Date. The Right of
Repurchase shall lapse with respect
to an additional 2.08333% of the
Share subject to this option when the
Optionee completes each month of
continuous service thereafter.
However, in the event that the
Optionee violates the Proprietary
Information and Inventions Agreement
between the Optionee and the Company,
the Right of Repurchase shall lapse
with respect to 20% of the Shares
subject to this option when the
Optionee completes each 12-month
period of continuous Service after
the Date of Grant.
Expiration Date:
By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the 1997 Stock Plan and the Stock Option Agreement,
both of which are attached to and made a part of this document.
OPTIONEE: SCIENT CORPORATION:
