<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1997
REGISTRATION NO. 333-31949
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MANUGISTICS GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
<TABLE>
<S> <C>
DELAWARE 52-1469385
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
2115 EAST JEFFERSON STREET
ROCKVILLE, MARYLAND 20852
(301) 984-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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WILLIAM M. GIBSON
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD
MANUGISTICS GROUP, INC.
2115 EAST JEFFERSON STREET
ROCKVILLE, MARYLAND 20852
(301) 984-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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Copies to:
JOSEPH H. JACOVINI, ESQUIRE
MERRITT A. COLE, ESQUIRE
DILWORTH, PAXSON, KALISH & KAUFFMAN LLP
3200 MELLON BANK CENTER
1735 MARKET STREET
PHILADELPHIA, PENNSYLVANIA 19103-7595 (215) 575-7000
ELIZABETH GRIEB, ESQUIRE
PIPER & MARBURY L.L.P.
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(410) 539-2530
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable following the date on which this Registration Statement
becomes effective.
If the only securities being registered on the Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
AUGUST 12, 1997
2,200,000 SHARES
[MANUGISTICS GROUP LOGO]
COMMON STOCK
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Of the shares of Common Stock offered hereby (the "Offering"), 1,800,000
shares are being sold by Manugistics Group, Inc. ("Manugistics" or the
"Company") and 400,000 shares are being sold by a stockholder of the Company
(the "Selling Stockholder"). The Company's Common Stock is listed on the Nasdaq
National Market ("Nasdaq") under the symbol "MANU." On July 30, 1997, the last
reported sale price for the Common Stock on Nasdaq was $41.75 per share. See
"Price Range of Common Stock and Dividend Policy."
------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 7 HEREOF FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON
STOCK OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<CAPTION>
================================================================================================
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO DISCOUNTS AND TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........... $ $ $ $
- ------------------------------------------------------------------------------------------------
Total(3)............ $ $ $ $
================================================================================================
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(1) See "Underwriting" for information relating to indemnification of the
Underwriters.
(2) Before deducting expenses of the Offering payable by the Company estimated
at $500,000.
(3) The Selling Stockholder and certain other stockholders have granted the
Underwriters a 30-day option to purchase up to a total of 330,000
additional shares of Common Stock solely to cover over-allotments, if any.
To the extent that the option is exercised, the Underwriters will offer the
additional shares at the Price to Public shown above. If the option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions, Proceeds to Company and Proceeds to Selling Stockholder will
be $ , $ , $ and $ , respectively. See
"Underwriting."
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The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about ,
1997.
ALEX. BROWN & SONS
INCORPORATED
MORGAN STANLEY DEAN WITTER
ROBERTSON, STEPHENS & COMPANY
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 3
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF COMMON STOCK TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). SEE "UNDERWRITING."
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files 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 facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the public reference
facilities maintained by the Commission at 7 World Trade Center, Suite 1300, New
York, New York 10048, and at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such materials can also be obtained
from the Public Reference Section of the Commission, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy
statements and other information can also be inspected at the offices of Nasdaq,
1735 K Street, N.W., Washington, D.C. 20006, on which the Company's Common Stock
is listed. The Commission maintains an Internet Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission, located at http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement, copies of which are available from the
Public Reference Section of the Commission at prescribed rates as described
above. Statements contained herein concerning the provisions of documents filed
with, or incorporated by reference in, the Registration Statement as exhibits
are necessarily summaries of such provisions and documents and each such
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Commission by the Company, are
incorporated in this Prospectus by reference: (i) the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1997 ("1997 Form 10-K"); (ii)
the Company's Quarterly Report on Form 10-Q for the three months ended May 31,
1997; (iii) the Company's Current Report on Form 8-K dated May 12, 1997; and
(iv) the description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A filed under Section 12 of the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering 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. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus has been delivered, on
written or oral request, a copy of any and all of the documents incorporated in
this Prospectus by reference, other than exhibits to such documents not
specifically incorporated by reference therein. Requests for such copies should
be directed to Manugistics Group, Inc., at its principal executive offices
located at 2115 East Jefferson Street, Rockville, Maryland 20852, Attention:
Investor Relations (telephone: (301) 984-5000).
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements included elsewhere or incorporated by
reference in this Prospectus. Except as set forth in the financial statements or
otherwise noted herein, the information in this Prospectus assumes that there
will be no exercise of the Underwriters' over-allotment option and stock options
held by employees and directors of the Company. Also, unless otherwise indicated
herein, all information with regard to the capital stock of the Company,
including share and per share data, has been restated to reflect a two-for-one
split of the Company's Common Stock effected by means of a stock dividend paid
on June 11, 1997 to stockholders of record as of May 23, 1997. In addition,
effective July 29, 1997, the Company's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") was amended to increase the
number of authorized shares of Common Stock from 30,000,000 shares to
100,000,000 shares.
THE COMPANY
Manugistics Group, Inc. develops, markets and supports software products
for synchronized supply chain management(TM) and provides related services.
Synchronized supply chain management refers to managing the complex interactions
involved in the flows of products through a supply chain, and involves
forecasting product demand and coordinating the timing of distribution,
manufacturing, procurement and transportation activities to meet this demand,
not only across an entire enterprise, but also among an enterprise and its
suppliers and customers. The Company believes it is the only provider of an
integrated suite of strategic, tactical and operational supply chain planning
tools and products that address the four key operational areas of supply chain
management: demand planning, supply planning, manufacturing scheduling and
transportation management.
Many companies have faced increased competition and more demanding customer
service requirements in recent years. Customers have had the leverage to demand
better service from suppliers, partially because bargaining power has shifted to
retailers and consumers from manufacturers and distributors over the past
decade. Also, many companies have contended with shorter product life cycles in
recent years. In addition, manufacturing companies in a number of industries
have incurred substantial costs to build, acquire, maintain and operate plants
and equipment. Given these costs and increased competition, many companies have
sought ways to increase the returns from their significant investments in
manufacturing assets.
Supply chain management software enables companies to plan their supply and
manufacturing activities to meet anticipated customer demand, while considering
capacity and materials constraints and other factors. Supply chain management
software complements Enterprise Resource Planning ("ERP") systems and provides
companies with information not only about their own enterprise, but also about
demand from customers and other information relating to suppliers and
transportation providers. Because of the potential for significant returns on
investment from supply chain management software and the rapid payback period
relative to ERP systems, one industry research firm has recently recommended
that, rather than implementing ERP systems first, companies should implement
their supply chain planning solution first or simultaneously with ERP
applications so that they can begin capturing the benefits of managing their
supply chains sooner. Companies in many different industries now recognize that
effective supply chain management is a source of competitive advantage, and
these companies are seeking software that can help them achieve these benefits.
The Company's supply chain management software provides strategic, tactical
and operational supply chain planning tools and includes the Supply Chain
Navigator(TM), the Manugistics Integrator for SAP(R) and four major families:
Demand Planning, Supply Planning, Manufacturing Scheduling and Transportation
Management. The software operates in most major operating environments and
supports database software from leading relational database software vendors.
The United States list price for the Company's supply chain management software
products ranges from $200,000 for a single product to several million dollars
for the complete product suite. The Company has installed various combinations
of its supply chain
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management software products at more than 1,000 locations worldwide. The
Company's customers include E.I. du Pont de Nemours and Company, Frito-Lay,
Inc., General Motors Service Parts Operations, Hewlett-Packard Company, Lever
Brothers Company, Levi Strauss & Co., Wal-Mart Stores, Inc. and Warner Lambert
Company.
The Company also offers a wide range of product-related services, including
business operations consulting, change management consulting, end-user and
system administrator education and training, and customer support to help
clients reengineer their operations to take maximum advantage of the Company's
software and effective supply chain management. Customers may obtain support
services and maintenance for an annual fee that is approximately 18% of the
then-current license fee.
The Company licenses its supply chain management solutions in North and
South America through a direct sales organization and in various regions outside
of the Americas primarily through subsidiaries. The Company has also begun using
indirect sales channels, such as complementary software vendors, third-party
alliances and distributorships.
The Company's principal executive offices are located at 2115 East
Jefferson Street, Rockville, Maryland 20852, and its telephone number is (301)
984-5000.
THE OFFERING
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<S> <C>
Common Stock offered by the Company................ 1,800,000 shares
Common Stock offered by the Selling Stockholder.... 400,000 shares
Common Stock to be outstanding after the
Offering......................................... 23,655,010 shares(1)
Use of proceeds by the Company..................... For working capital and other general
corporate purposes, including possible
acquisitions. See "Use of Proceeds."
Nasdaq symbol...................................... MANU
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(1) Based upon 21,855,010 shares outstanding on May 31, 1997.
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SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED FEBRUARY 28 OR 29, MAY 31,
--------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1996 1997
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<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................. $28,284 $37,961 $49,410 $62,322 $94,722 $18,441 $ 34,180
Income from operations.... 5 3,466 4,318 6,060 8,286 (2,070) 2,997
Net income (loss)......... (275) 2,152 3,221 4,448 4,342 (2,578) 2,040
Earnings (loss) per
share(1)................ (0.02) 0.12 0.16 0.21 0.19 (0.12) 0.09
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1997
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ACTUAL AS ADJUSTED(2)
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<S> <C> <C>
BALANCE SHEET DATA:
Net working capital......................................................... $30,850 $ 101,743
Total assets................................................................ 82,439 153,332
Stockholders' equity........................................................ 56,472 127,365
</TABLE>
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(1) Net income for fiscal 1997 and for the three months ended May 31, 1996
included a non-recurring charge to operations in the amount of $3,697,000,
or $0.16 and $0.17 per share, respectively. This charge, which was not
deductible for income tax purposes, was incurred in connection with the
write-off of purchased in-process research and development costs as a
result of the acquisition of Avyx, Inc. in May 1996.
(2) Adjusted to give effect to the 23,655,010 shares of Common Stock to be
outstanding after the Offering and the receipt by the Company of
approximately $70,892,500 of net proceeds from the sale by the Company of
1,800,000 shares of Common Stock pursuant to the Offering, at an assumed
offering price of $41.75 per share.
5
<PAGE> 7
CERTAIN FORWARD-LOOKING STATEMENTS
This Prospectus (including the documents incorporated herein by reference)
contains or may contain certain forward-looking statements and information that
are based on beliefs of, and information currently available to, the Company's
management as well as estimates and assumptions made by the Company's
management. When used in this Prospectus, words such as "anticipate," "believe,"
"estimate," "expect," "future," "intend," "plan" and similar expressions as they
relate to the Company or the Company's management, identify forward-looking
statements. Such statements reflect the current views of the Company with
respect to future events and are subject to certain risks, uncertainties and
assumptions relating to the Company's operations and results of operations,
shifts in market demand, the timing of product releases, economic conditions in
foreign countries, competitive products and pricing and other risks and
uncertainties including, in addition to any uncertainties specifically
identified in the text surrounding such statements, uncertainties with respect
to changes or developments in social, economic, business, industry, market,
legal and regulatory circumstances and conditions and actions taken or omitted
to be taken by third parties, including the Company's stockholders, customers,
suppliers, business partners, competitors, and legislative, regulatory, judicial
and other governmental authorities and officials. Should one or more of these
risks or uncertainties materialize, or should the underlying estimates or
assumptions prove incorrect, actual results or outcomes may vary significantly
from those anticipated, believed, estimated, expected, intended or planned.
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.
Potential Fluctuations in Quarterly Results; Seasonality. The Company's
quarterly operating results have varied in the past and might vary significantly
in the future because of factors such as business conditions or the general
economy, the timely availability and acceptance of the Company's products,
technological change, the effect of competitive products and pricing, changes in
Company strategy, the mix of direct and indirect sales, changes in operating
expenses, personnel changes and foreign currency exchange rate fluctuations. The
Company has experienced and might continue to experience from time to time very
large, individual license sales which can cause significant variations in
quarterly license revenues. For example, a total of approximately 60% of the
Company's software license revenues for the first quarter of fiscal 1998 were
derived from five licensing contracts.
The Company typically ships software products shortly after license
agreements are signed and, therefore, does not maintain any material contract
backlog. Furthermore, the Company has typically recognized a substantial portion
of its revenues in the last month of a quarter. As a result, software products
revenues in any quarter are substantially dependent on orders booked and shipped
in that quarter, and the Company cannot predict software products revenues for
any future quarter with any significant degree of certainty.
The Company's software products revenues are also difficult to forecast
because the market for business application software products is evolving
rapidly, and the Company's sales cycles vary substantially from customer to
customer. Because the licensing of the Company's products generally involves a
significant capital expenditure by the customer, the Company's sales process is
subject to the delays and lengthy approval processes that are typically involved
in such expenditures. In addition, the Company expects that sales derived
through indirect channels, the timing of which is harder to predict than for
direct sales because there is less direct contact with the prospective customer,
will increase as a percentage of total revenues. For these and other reasons,
the sales cycle associated with the licensing of the Company's products varies
substantially from customer to customer and typically lasts between four and six
months, during which time the Company might devote significant time and
resources to a prospective customer, including costs associated with multiple
site visits, product demonstrations and feasibility studies, and might
experience a number of significant delays, over which the Company has no
control.
The Company determines its expense levels based, at least in part, on its
expectations as to future revenues. A substantial portion of the Company's
revenues in any quarter are typically derived from a limited number of large
contracts. Therefore, if revenues in a period are below expectations, operating
results are likely to be adversely affected. Net income might be
disproportionately affected by a reduction in revenues because a proportionately
smaller amount of the Company's expenses varies directly with revenues. As a
result of the foregoing factors, it is likely that in some quarters, the
Company's operating results will be below the published expectations of
financial research analysts. In that event, the price of the Company's Common
Stock would likely be materially adversely affected.
The Company has generally realized lower revenues in its first fiscal
quarter (ending in May) than in the immediately preceding quarter. The Company
believes that these fluctuations are caused primarily by customer budgeting and
purchasing patterns and by the Company's sales commission policies, which
compensate personnel for meeting or exceeding annual performance quotas.
Competition. The market for business applications software is highly
competitive and subject to rapid change. Many application software vendors offer
products that are directly competitive with some of the software products
marketed by the Company. Some of the Company's current and potential competitors
have significantly greater financial, marketing, technical and other competitive
resources than the Company. As a result, they may be able to adapt more quickly
to new or emerging technologies and changes in customer requirements, or to
devote greater resources to the promotion and sale of their
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products than can the Company. In addition, certain ERP system vendors have
announced plans to develop new products or to incorporate additional
functionality into their current products that, if successfully developed and
marketed, could compete with the products offered by the Company. Furthermore,
current and potential competitors may make acquisitions of other competitors or
may establish cooperative relationships among themselves or with third parties
to increase the ability of their products to address the supply chain management
needs of the Company's prospective customers. Accordingly, it is possible that
new competitors may emerge and rapidly acquire significant market share. If this
were to occur, the business, operating results, financial condition and cash
flows of the Company could be materially adversely affected.
Dependence on New Products and Rapid Technological Change; Risk of Product
Defects. The market for the Company's products is characterized by rapidly
changing technologies, frequent new product introductions, rapid changes in
customer requirements and evolving industry standards. The Company believes that
its future financial performance will depend in large part on its ability to
maintain and enhance its current product line, develop new products that achieve
market acceptance, maintain technological competitiveness and meet an expanding
range of customer requirements. There can be no assurance, however, that the
Company will be successful in developing and marketing new products or product
enhancements that respond to technological change or evolving industry
standards, that the Company will not experience difficulties that could delay or
prevent the successful development, introduction and marketing of these
products, or that its new products and product enhancements will adequately meet
the requirements of prospective customers and achieve market acceptance. If the
Company is unable, for technological or other reasons, to successfully develop
and introduce new products or product enhancements, the Company's business,
operating results, financial condition and cash flows would be materially
adversely affected.
In addition, software products as complex as those offered by the Company
might contain undetected errors or failures when first introduced or when new
versions are released. There can be no assurance, despite testing by the Company
and by current and prospective customers, that errors will not be found in new
products or product enhancements after commercial release, resulting in loss of
or delay in market acceptance, which could have a material adverse effect upon
the Company's business, operating results, financial condition and cash flows.
Management of Growth. The Company has recently experienced a period of
rapid growth in revenues that has placed a significant strain upon its
management systems and resources. The Company's ability to compete effectively
and to manage future growth, if any, will require the Company to continue to
improve its financial and management controls, reporting systems and procedures
on a timely basis. The Company has recently hired a significant number of
employees, and in order to maintain its ability to grow in the future, the
Company will be required to increase significantly its total number of employees
and to train and manage its employee work force. There can be no assurance that
the Company will be able to do so successfully. The Company's failure to do so
could have a material adverse effect upon the Company's business, operating
results, financial condition and cash flows.
International Operations. The Company is currently conducting operations
in a number of countries in Europe, Asia and South America and plans to conduct
operations in additional regions outside the United States, which will require
significant management attention and financial resources and could adversely
affect the Company's operating margins. The Company plans to accelerate the
growth of, and increase its investment in, its international operations. There
can be no assurance that the Company will be able to generate, maintain or
increase demand for the Company's products in new geographic markets. Certain
risks are inherent in international operations. The majority of the Company's
contracts are denominated in U.S. currency. Most of the revenues from sales
outside the United States have been denominated in foreign currencies, typically
the local currency of Manugistics' business unit. The Company anticipates that
the proportion of its revenues denominated in foreign currencies will increase.
A decrease in the value of foreign currencies relative to the U.S. dollar could
result in losses from foreign currency translations. In connection with
transactions denominated in foreign currency, the Company has taken steps to
minimize the risks associated with such foreign currency in the past and might
take such steps in
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similar circumstances in the future. With respect to the Company's international
sales that are U.S. dollar-denominated, currency fluctuations could make the
Company's products and services less price competitive. The Company's
international sales and operations might be adversely affected by the imposition
of government controls, political and economic instability, difficulties in
staffing and managing international operations and general economic conditions
in foreign countries.
Expansion of Indirect Channels. The Company is building and maintaining
significant working relationships with ERP system vendors and consulting firms
that the Company believes can play important roles in marketing the Company's
products. The Company is currently investing, and intends to continue to invest,
significant resources to develop these relationships, which could adversely
affect the Company's operating margins. There can be no assurance that the
Company will be able to attract organizations that will be able to market the
Company's products effectively or that will be qualified to provide timely and
cost-effective customer support and service. In addition, the Company's
arrangements with these organizations are not exclusive and, in many cases, may
be terminated by either party without cause, and many of these organizations are
also involved with competing products. Certain ERP system vendors have announced
plans to develop new products or to incorporate additional functionality into
their current products. Therefore, there can be no assurance that any
organization will continue its involvement with the Company and its products,
and the loss of important organizations could materially adversely affect the
Company's results of operations. In addition, if the Company is successful in
selling products as a result of these relationships, any material increase in
the Company's indirect sales as a percentage of total revenues would be likely
to adversely affect the Company's average selling prices and gross margins
because of the lower unit prices that the Company receives when selling through
indirect channels.
Lack of Product Diversification. The Company's future results depend on
continued market acceptance of supply chain management software and services as
well as the Company's ability to continue to adapt and modify this software to
meet the evolving needs of its prospects and customers. Any reduction in demand
or increase in competition in the market for supply chain management software
products could have a material adverse effect on the Company's business,
operating results, financial condition and cash flows.
Dependence Upon Key Personnel. The loss of the services of one or more of
the Company's executive officers could have a material adverse effect on the
Company's business, operating results and financial condition. The Company does
not have employment contracts with any of its executive officers and does not
maintain key person insurance. There can be no assurance that the Company will
be able to retain its key personnel. The Company's future success also depends
on its continuing ability to attract, assimilate and retain highly qualified
sales, technical and managerial personnel. Competition for such personnel is
intense, and there can be no assurance that the Company can attract, assimilate
or retain such personnel in the future.
Intellectual Property and Proprietary Rights. The Company regards its
software as proprietary and relies on a combination of trade secret, copyright
and trademark laws, license agreements, nondisclosure and other contractual
provisions, technical measures and other methods to protect its proprietary
rights in its products. There can be no assurance that these protections will be
adequate to protect its proprietary rights or that the Company's competitors
will not independently develop products that are substantially equivalent or
superior to the Company's products. In addition, the laws of certain countries
in which the Company's products are or may be licensed do not protect the
Company's products and intellectual property rights to the same extent as the
laws of the United States. Although the Company believes that its products,
trademarks and other proprietary rights do not infringe upon the proprietary
rights of third parties, there can be no assurance that third parties will not
assert infringement claims against the Company.
Possible Volatility of Stock Price. Factors such as announcements of new
products or technological innovations by the Company or its competitors, as well
as quarterly variations in the Company's operating results, may cause the market
price of the Common Stock to fluctuate significantly. In addition, the stock
market in recent years has experienced price and volume fluctuations which have
particularly affected the
9
<PAGE> 11
market prices of many high technology stock issues and which have often been
unrelated or disproportionate to the operating performance of such companies.
These broad market fluctuations, as well as general economic conditions, may
adversely affect the market price of the Common Stock.
Anti-Takeover Protections. The Company's Certificate of Incorporation and
Amended and Restated By-Laws (the "By-Laws") contain provisions which may be
deemed to be "anti-takeover" in nature or effect in that such provisions may
deter, discourage or make more difficult the assumption of control of the
Company by another person by means of a tender offer, merger, proxy contest or
similar transaction. The Certificate of Incorporation authorizes the issuance,
without shareholder approval, of up to 4,620,253 shares of "blank check"
preferred stock, with such designations, rights, preferences, privileges and
restrictions, including voting rights, of such shares as may be determined from
time to time by the Company's Board of Directors. Accordingly, the Board is
empowered, without shareholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could materially adversely
affect the voting power or other rights of the holders of the Common Stock
(including those of the purchasers in the Offering). Holders of the Common Stock
issued and sold in the Offering will have no preemptive rights to subscribe for
a pro rata portion of preferred stock or any other capital stock which may be
issued by the Company. In the event of issuance, such preferred stock could be
utilized, under certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the Company. Although the Company has no
present intention to issue any shares of preferred stock, there can be no
assurance that the Company will not do so in the future. See "Description of
Capital Stock-- Delaware Law and Certain Charter and By-Law Provisions."
The By-Laws provide that the Board of Directors is divided into three
classes and for the staggered election of directors to serve for three-year
terms. Each director is subject to removal only for cause upon the vote of at
least 67% of the outstanding shares of Common Stock. Furthermore, the Company is
subject to certain anti-takeover provisions of the General Corporation Law of
Delaware. The existence of these provisions would be expected to have an
anti-takeover effect, including possibly discouraging takeover attempts that
might result in a premium over the market price for the Common Stock. See
"Description of Capital Stock--Delaware Law and Certain Charter and By-Law
Provisions.
Shares Eligible for Future Sale. Sales of a substantial amount of the
Company's Common Stock in the public market after the Offering could adversely
affect the market price of the Common Stock. Upon completion of the Offering,
the Company will have 23,655,010 shares of Common Stock outstanding (based upon
21,855,010 shares outstanding on May 31, 1997). All of the shares sold in this
Offering will be available for resale in the public market without restriction,
except for any such shares which may be purchased by affiliates of the Company.
The Company's directors, executive officers and certain stockholders have
agreed, subject to certain limitations, not to offer, sell or otherwise dispose
of any shares of Common Stock for a period of 90 days after the date of this
Prospectus. At May 31, 1997, such persons beneficially owned an aggregate of
9,497,920 shares of Common Stock (including 567,326 shares issuable upon
exercise of options) that may be resold in accordance with Rule 144 under the
Securities Act following the expiration of this 90-day period.
At May 31, 1997, there were a total of approximately 6,641,017 registered
shares of Common Stock reserved for issuance upon exercise of outstanding stock
options and options that may be granted in the future under the Company's stock
option plans or for issuance under the Company's Employee Stock Purchase Plan.
10
<PAGE> 12
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock offered
by the Company hereby are estimated to be approximately $70,892,500, assuming an
offering price of $41.75 per share, after deducting the estimated underwriting
discounts and commissions and estimated offering expenses payable by the
Company. The net proceeds will be used for working capital and other general
corporate purposes, including financing the Company's growth through further
expansion into international markets, acceleration of product releases and
possible acquisitions. The Company investigates potential candidates for
acquisition, joint venture opportunities or other relationships on an ongoing
basis. However, the Company is not presently conducting discussions or
negotiations with respect to any such specific transactions. The allocation of
the net proceeds of this Offering will be influenced by such factors as the
needs of clients, market factors and the international economic climate.
Accordingly, the Company cannot predict the allocation of the net proceeds of
this Offering among the foregoing uses. Pending such uses, the net proceeds will
be invested in short-term investment grade and government securities. The
Company will not receive any proceeds from the sale of shares of Common Stock
offered by the Selling Stockholder.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of May
31, 1997, and as adjusted to reflect the sale of the 1,800,000 shares of Common
Stock offered by the Company hereby at an assumed offering price of $41.75 per
share and the application of the estimated net proceeds therefrom. See "Use of
Proceeds." This table should be read in conjunction with the Company's financial
statements and the other information included and incorporated by reference in
this Prospectus.
<TABLE>
<CAPTION>
MAY 31, 1997
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt......................................................... $ 188 $ 188
Stockholders' equity:
Preferred Stock, $.01 par value; 4,620,253 shares authorized...... -- --
Common Stock, $.002 par value; 30,000,000 shares authorized(1);
shares issued, 22,607,520; 24,407,520, as adjusted; shares
outstanding, 21,855,010; 23,655,010, as adjusted................. 45 49
Additional paid-in capital........................................ 39,635 110,524
Retained earnings................................................. 17,002 17,002
Translation adjustment............................................ 507 507
Treasury stock -- 752,510 shares, at cost......................... (717) (717)
------- -----------
Total stockholders' equity................................... 56,472 127,365
------- -----------
Total capitalization.................................... $56,660 $ 127,553
======= =========
</TABLE>
- ---------------
(1) Effective July 29, 1997, the Company's Certificate of Incorporation was
amended to increase the number of authorized shares of Common Stock from
30,000,000 shares to 100,000,000 shares.
11
<PAGE> 13
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock trades on Nasdaq under the symbol "MANU." The
following table sets forth, for each quarterly period indicated, the high and
low sales prices for the Common Stock as reported by Nasdaq.
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
Fiscal Year 1996:
First Quarter........................................................... 7 1/4 5 1/8
Second Quarter.......................................................... 8 1/4 5 3/8
Third Quarter........................................................... 10 1/4 7
Fourth Quarter.......................................................... 8 3/4 4 3/4
Fiscal Year 1997:
First Quarter........................................................... 8 1/2 5 5/8
Second Quarter.......................................................... 14 1/2 7 1/4
Third Quarter........................................................... 24 1/8 13 13/16
Fourth Quarter.......................................................... 26 7/8 15 5/8
Fiscal Year 1998:
First Quarter........................................................... 33 5/8 16 1/4
Second Quarter (June 1 through July 30)................................. 48 1/2 30 3/4
</TABLE>
On July 30, 1997, the closing sales price of the Common Stock on Nasdaq was
$41 3/4 per share.
The Company has never declared or paid any cash dividends on its Common
Stock and does not intend to do so in the foreseeable future. The Company's
present intention is to retain any future earnings to provide funds for the
operation and expansion of its business. The Company has an unsecured committed
revolving credit facility with a commercial bank that will expire on September
30, 1997, unless it is renewed. During the term of the facility, the Company is
prohibited from declaring or paying cash dividends to holders of Common Stock.
12
<PAGE> 14
SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in conjunction
with the Company's financial statements and the other information included or
incorporated by reference in this Prospectus. The Statement of Operations Data
for the years ended February 28 or 29, 1995, 1996 and 1997 and the Balance Sheet
Data as of February 28 or 29, 1996 and 1997 have been derived from the audited
financial statements included in the 1997 Form 10-K incorporated by reference in
this Prospectus. See "Incorporation of Certain Documents by Reference." The
Statement of Operations Data for the years ended February 28, 1993 and 1994 and
the Balance Sheet Data as of February 28, 1993, 1994 and 1995 have been derived
from audited financial statements of the Company. The data for the three months
ended May 31, 1996 and 1997 have been derived from unaudited interim financial
statements of the Company included in the Quarterly Report on Form 10-Q, for the
quarter ended May 31, 1997, incorporated by reference in this Prospectus. The
unaudited financial statements have been prepared by the Company on a basis
consistent with the Company's audited financial statements and, in the opinion
of management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such data.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED FEBRUARY 28 OR 29, MAY 31,
--------------------------------------------------- ------------------
1993 1994 1995 1996 1997 1996 1997
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Software products.................................. $14,731 $19,590 $24,758 $29,494 $50,778 $ 8,732 $19,840
Consulting, maintenance and other services......... 13,553 18,371 24,652 32,828 43,944 9,709 14,340
-------- ------- ------- ------- ------- -------- -------
Total revenues................................. 28,284 37,961 49,410 62,322 94,722 18,441 34,180
Operating expenses:
Cost of software sold.............................. 2,357 2,878 2,842 2,974 4,532 1,344 2,181
Cost of consulting, maintenance and other
services......................................... 7,850 9,518 12,990 14,614 19,101 4,042 6,571
Sales and marketing................................ 10,538 13,374 16,580 21,365 32,909 6,134 13,152
Product development................................ 4,097 5,011 7,550 11,229 17,380 3,557 6,225
General and administrative......................... 3,437 3,714 5,130 6,080 8,817 1,737 3,054
Purchased research and development................. -- -- -- -- 3,697 3,697 --
-------- ------- ------- ------- ------- -------- -------
Total operating expenses....................... 28,279 34,495 45,092 56,262 86,436 20,511 31,183
-------- ------- ------- ------- ------- -------- -------
Income from operations............................... 5 3,466 4,318 6,060 8,286 (2,070) 2,997
Other income (expense)............................... (92) 146 643 1,097 1,016 216 324
-------- ------- ------- ------- ------- -------- -------
Income (loss) before income taxes.................... (87) 3,612 4,961 7,157 9,302 (1,854) 3,321
Provision for income taxes........................... 188 1,460 1,740 2,709 4,960 724 1,281
-------- ------- ------- ------- ------- -------- -------
Net income (loss).................................... $ (275) $ 2,152 $ 3,221 $ 4,448 $ 4,342 $(2,578) $ 2,040
======== ======= ======= ======= ======= ======== =======
Earnings (loss) per share(1)......................... $ (0.02) $ 0.12 $ 0.16 $ 0.21 $ 0.19 $ (0.12) $ 0.09
======== ======= ======= ======= ======= ======== =======
Weighted average number of shares outstanding........ 14,926 18,442 20,574 21,628 22,964 20,980 23,705
</TABLE>
<TABLE>
<CAPTION>
MAY 31,
FEBRUARY 28 OR 29, 1997
--------------------------------------------------- -------
1993 1994 1995 1996 1997 ACTUAL
------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net working capital.................................... $ 240 $21,274 $30,484 $29,201 $32,499 $30,850
Total assets........................................... 14,046 34,665 49,759 60,431 84,323 82,439
Long-term debt, less current portion................... 795 528 337 182 220 188
Total stockholders' equity(3).......................... 2,374 24,899 36,512 42,942 53,593 56,472
<CAPTION>
MAY 31,
1997
-----------
AS
ADJUSTED(2)
-----------
<S> <C>
BALANCE SHEET DATA:
Net working capital.................................... $ 101,743
Total assets........................................... 153,332
Long-term debt, less current portion................... 188
Total stockholders' equity(3).......................... 127,365
</TABLE>
- ---------------
(1) Net income for fiscal 1997 and for the three months ended May 31, 1996
included a non-recurring charge to operations in the amount of $3,697,000,
or $0.16 and $0.17 per share, respectively. This charge, which was not
deductible for income tax purposes, was incurred in connection with the
write-off of purchased in-process research and development costs as a
result of the acquisition of Avyx, Inc. in May 1996.
(2) Adjusted to give effect to the 23,655,010 shares of Common Stock to be
outstanding after the Offering (based on 21,855,010 shares outstanding on
May 31, 1997), and the receipt by the Company of approximately $70,892,500
of net proceeds from the sale by the Company of 1,800,000 shares of Common
Stock pursuant to the Offering at an assumed offering price of $41.75 per
share.
(3) Total stockholders' equity for 1993 is adjusted to give effect to the
conversion of all outstanding shares of Series A and Series B Preferred
Stock into shares of Common Stock.
13
<PAGE> 15
QUARTERLY RESULTS OF OPERATION
The following tables set forth the Company's Statement of Operations Data
for each of the five quarters in the period ended May 31, 1997, including such
amounts expressed as a percentage of total revenues. This unaudited quarterly
information has been prepared on the same basis as the Company's audited
consolidated financial statements included in the 1997 Form 10-K incorporated by
reference in this Prospectus and, in the opinion of management, reflects all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the information for the periods presented. The operating
results for any quarter are not necessarily indicative of results for any future
period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------
MAY 31, AUG. 31, NOV. 30, FEB. 28, MAY 31,
1996 1996 1996 1997 1997
------- -------- -------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Software products........................................... $ 8,732 $10,376 $12,281 $19,389 $19,840
Consulting, maintenance and other services.................. 9,709 10,559 11,407 12,269 14,340
------- ------- ------- ------- -------
Total revenues.......................................... 18,441 20,935 23,688 31,658 34,180
Operating expenses:
Cost of software sold....................................... 1,344 893 1,053 1,242 2,181
Cost of consulting, maintenance and other services.......... 4,042 4,621 4,915 5,523 6,571
Sales and marketing......................................... 6,134 7,287 8,237 11,251 13,152
Product development......................................... 3,557 3,996 4,432 5,395 6,225
General and administrative.................................. 1,737 2,014 2,161 2,905 3,054
Purchased research and development.......................... 3,697 -- -- -- --
------- ------- ------- ------- -------
Total operating expenses................................ 20,511 18,811 20,798 26,316 31,183
------- ------- ------- ------- -------
Income from operations........................................ (2,070) 2,124 2,890 5,342 2,997
Other income (expense)........................................ 216 244 277 279 324
------- ------- ------- ------- -------
Income (loss) before income taxes............................. (1,854) 2,368 3,167 5,621 3,321
Provision for income taxes.................................... 724 921 1,220 2,095 1,281
------- ------- ------- ------- -------
Net income (loss)(1).......................................... $(2,578) $ 1,447 $ 1,947 $ 3,526 $ 2,040
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------
MAY 31, AUG. 31, NOV. 30, FEB. 28, MAY 31,
1996 1996 1996 1997 1997
------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
PERCENTAGE OF REVENUES:
Revenues:
Software products........................................... 47.4% 49.6% 51.8% 61.2% 58.0%
Consulting, maintenance and other services.................. 52.6 50.4 48.2 38.8 42.0
------ ------ ------ ------ ------
Total revenues.......................................... 100.0 100.0 100.0 100.0 100.0
Costs and operating expenses:
Cost of software sold....................................... 7.3 4.3 4.4 3.9 6.4
Cost of consulting, maintenance and other services.......... 21.9 22.1 20.7 17.4 19.2
Sales and marketing......................................... 33.4 34.8 34.9 35.6 38.5
Product development......................................... 19.3 19.1 18.7 17.0 18.2
General and administrative.................................. 9.4 9.6 9.1 9.2 8.9
Purchased research and development.......................... 20.0 -- -- -- --
------ ------ ------ ------ ------
Total operating expenses................................ 111.3 89.9 87.8 83.1 91.2
Income from operations........................................ (11.2) 10.1 12.2 16.9 8.8
Other income (expense)........................................ 1.2 1.2 1.2 0.9 0.9
------ ------ ------ ------ ------
Income (loss) before income taxes............................. (10.1) 11.3 13.4 17.8 9.7
Provision for income taxes.................................... 3.9 4.4 5.2 6.7 3.7
------ ------ ------ ------ ------
Net income (loss)(1).......................................... (14.0)% 6.9% 8.2% 11.1% 6.0%
====== ====== ====== ====== ======
</TABLE>
- ---------------
(1) Net income for the three months ended May 31, 1996 included a non-recurring
charge to operations in the amount of $3,697,000, or 20.0% of revenues, in
connection with the write-off of purchased in-process research and
development costs taken as a result of the acquisition of Avyx, Inc. in May
1996. This charge was not deductible for income tax purposes.
14
<PAGE> 16
BUSINESS
Manugistics Group, Inc. develops, markets and supports software products
for synchronized supply chain management and provides related services.
Synchronized supply chain management refers to managing the complex interactions
involved in the flows of products through a supply chain and involves
forecasting product demand and coordinating the timing of distribution,
manufacturing, procurement and transportation activities to meet this demand,
not only across an entire enterprise, but also among an enterprise and its
suppliers and customers. The Company believes it is the only provider of an
integrated suite of strategic, tactical and operational supply chain planning
tools including a high-level optimizer and products that address the four key
operational areas of supply chain management: demand planning, supply planning,
manufacturing scheduling and transportation management. The Company was
incorporated in Delaware in 1986 and completed its initial public offering in
August 1993.
INDUSTRY BACKGROUND
Many companies have faced increased competition and more demanding customer
service requirements in recent years. Customers have had the leverage to demand
better service from suppliers, partially because bargaining power has shifted to
retailers and consumers from manufacturers and distributors over the past
decade. This shift followed the consolidation of significant portions of the
retail industry into large, powerful department store chains, the advent of
"superstores" and specialty category stores, and the rapid proliferation in the
number and variety of products. Also, many companies have contended with shorter
product life cycles in recent years. During the short window of market demand
for a product, insufficient supply could result in lost sales, while excess
inventories after demand declines could result in write-downs. In addition,
manufacturing companies in a number of industries have incurred substantial
costs to build, acquire, maintain and operate plants and equipment. Given these
costs and increased competition, many companies have sought ways to increase the
returns from their significant investments in manufacturing assets.
As business conditions have become more challenging, the processes for
manufacturing products and bringing them to market have become more complex.
Many companies conduct manufacturing and distribution operations at multiple
sites around the world. Their supply chains frequently involve suppliers,
warehouses, plants and customers on different continents. These operations have
traditionally been managed by various functional departments, and there has
often been incomplete coordination among them. There has also frequently been
imperfect communication, both within a single enterprise and among a company and
its suppliers and customers.
In response to these business conditions, and in an attempt to manage the
complexity of their own operations and supply chains, many companies are seeking
to improve customer service, lower operating costs and increase returns on
assets through more effective management of their supply chains. Some of the
first companies to recognize the need for effective supply chain management were
companies that were significantly affected by the increase in competition and
the shift in market power from manufacturers to retailers: consumer packaged
goods and food and beverage firms. These companies generally make product to
stock in inventory ("make to stock"). Many of these companies produce their
finished goods using process manufacturing, and sell their products through
retail channels. Also, because their customers began demanding better service
and lower prices, these consumer packaged goods and other companies began
working more closely with their suppliers and customers as part of their efforts
to manage their supply chains. Thus, suppliers to consumer-oriented process
manufacturers, such as chemical companies, which generally use process
manufacturing and sell to industrial customers, have also been significantly
affected by the changed business environment.
Companies in the apparel and consumer electronics industries, among others,
have also contended with more difficult business conditions and have been
particularly affected by shorter product life cycles and the associated
difficulty of forecasting product demand. Companies such as these manufacture
products for consumers in discrete or high volume repetitive manufacturing
environments, and generally make or assemble their products upon receipt of a
customer order ("make to order"). These companies, as well as discrete
manufacturers that sell to industrial customers, have begun to recognize that
they can
15
<PAGE> 17
provide better service to their customers, have lower operating costs and
increase their return on assets by effective management of their supply chains.
According to a recent study of 225 chemical, computers/electronic
equipment, consumer packaged goods and other companies, the top 20% of these
companies, as measured by several supply chain management benchmarks, recovered
expenses equal to as much as 7% of their annual revenues from managing their
supply chains more effectively. When compared to the median of surveyed
companies, these top companies used 60% fewer days' supply in inventory, had up
to a 60% advantage in cash-to-cash cycle time (i.e., from the payment of cash
for raw materials until the receipt of cash for finished goods) and spent 50%
less on material acquisition. As the study shows, companies in many different
industries now recognize that effective supply chain management is a source of
competitive advantage and is critical to delivering the right product to the
right place at the right time at the lowest possible cost. As a result, many
companies are seeking software that can help them achieve these benefits.
The advent of sophisticated software to address the complex issues of
supply chain management was preceded by software designed to address the
information needs of manufacturing and distribution companies, which first came
into widespread use in the 1970s. Many large manufacturers used Material
Requirements Planning ("MRP") and later Manufacturing Resource Planning
("MRP-II") systems in individual plants to initiate inventory withdrawals and to
generate the necessary manufacturing orders, for example. Distribution Resource
Planning ("DRP") software managed the transactions involved in ordering,
receiving, warehousing and delivering goods. More recently, ERP systems have
evolved that connect the MRP, MRP-II and DRP systems with purchasing,
accounting, financial and human resources systems. ERP systems provide managers
with the ability to access, for example, inventory levels and locations for a
product throughout an enterprise. Because ERP systems were specifically designed
to generate and maintain detailed records of transactions, however, they are
limited in their ability to assist managers in making supply chain planning and
scheduling decisions.
The data created and maintained by these ERP systems can serve as input for
a variety of analytical tools contained in supply chain management software, the
development of which the Company helped pioneer. Supply chain management
software enables companies to plan their supply and manufacturing activities to
meet anticipated customer demand, while considering capacity and materials
constraints and other factors. Supply chain software complements ERP systems and
provides companies with information not only about their own enterprise, but
also about demand from customers and other information relating to suppliers and
transportation providers. Because of the potential for significant returns on
investment from supply chain management software and the rapid payback period
relative to ERP systems, one industry research firm has recently recommended
that, rather than implementing ERP systems first, companies should implement
their supply chain planning solution first or simultaneously with ERP
applications so that they can begin capturing the benefits of managing their
supply chains sooner.
As companies have pursued these benefits, they have increasingly recognized
that the information technology that they choose to support their efforts must
enable them to take into account the effects of various events, such as an
unexpected customer order, in real time, so that they can instantly adjust their
distribution and manufacturing activities accordingly. Many companies have also
recognized that in order to capture the advantages of effective supply chain
management, it is critical that the chosen technology provide capabilities
covering all levels of supply chain issues, including strategic and operational,
and that it contain functionality addressing all of the key aspects of supply
chain planning, including demand forecasting, planning of supply and production
activities, scheduling of manufacturing operations and transportation
management. In addition, many companies have realized that the information
technology they choose as their tool for supply chain management must provide
users around the world with current, common information, so that all planners
throughout an enterprise are basing their decisions on the same set of facts,
rather than old or inconsistent data. Lastly, companies have increasingly
realized the advantages of choosing best-in-class vendors for different types of
applications and integrating the applications of these vendors, rather than
selecting a single vendor to provide a wide range of generally less robust
functionality. In particular, for companies evaluating supply chain management
software, there are important benefits available if the supply chain planning
application contains technology enabling integration with ERP and other systems.
16
<PAGE> 18
THE MANUGISTICS SOLUTION
Manugistics develops, markets and supports software products for
synchronized supply chain management and provides related services. Synchronized
supply chain management refers to managing the complex interactions involved in
the flows of products through a supply chain, and involves forecasting product
demand and coordinating the timing of distribution, manufacturing, procurement
and transportation activities to meet this demand, not only across an entire
enterprise, but also among an enterprise and its suppliers and customers. The
Company's solutions consider and balance relevant demand, customer service,
production, constraints, cost and profitability information within and across
these extended supply chains. Manugistics' integrated suite of supply chain
management software includes (i) strategic tools, such as Supply Chain
Navigator's functionality for determining the initial setup of a supply chain
network, (ii) tactical capabilities, such as Constrained Production Planning's
functionality for performing production planning across multiple facilities, and
(iii) operational capabilities, such as Advanced Manufacturing Scheduling's
functionality for producing specified quantities of product within given time
parameters. See "--Products." The Company's solution provides the following key
benefits:
Synchronized Supply Chain Management. The Company's software immediately
alerts planners to changes that occur along the supply chain, enabling them to
evaluate and incorporate the effects of the changes and rapidly adjust the
appropriate components of the supply chain planning process. This software thus
enables them to synchronize their companies' supply planning and manufacturing
scheduling activities with the revised forecast of customer demand. For example,
after an unexpected event leads to an increase in anticipated product demand,
Manugistics' supply chain software incorporates the expected effect of the event
into the forecast and assists planners in quickly re-optimizing the supply chain
network and coordinating the timing of manufacturing and distribution operations
to meet the revised demand forecast. The software immediately updates inventory
levels throughout the network and revises manufacturing schedules.
End-to-End Supply Chain Functionality. Manugistics' integrated supply
chain software suite includes strategic, tactical and operational
decision-making tools and includes demand forecasting, supply planning,
manufacturing scheduling and transportation management capabilities. This
software provides planners with a picture of their company's entire supply chain
and its links to suppliers and customers. This picture of the whole supply chain
provides critical real-time information about all of the effects of supply chain
actions, which empowers users to make superior decisions.
Rapid Time-to-Benefit. The Company's supply chain management software
products frequently deliver cost savings and improvements in customer service
within one year after implementation. (Implementation typically requires three
to twelve months, depending on the products licensed and the complexity and
geographic scope of the project.) As a result, customers typically receive a
quick payback on their investment.
Constantly-Updated Supply Chain Information Common to All
Users. Manugistics' Supply Chain Architecture(TM) is a distributed
client/server architecture that enables users throughout a company, regardless
of their location, to access the same, constantly-updated supply chain
information at the same time. This architecture connects the distributed user
interface (client), the application server and the database, enabling global
access, a single view of the supply chain and rapid communication of information
and decisions. The architecture can also enable users to take advantage of the
communication capabilities available through the Internet and the World Wide
Web, capabilities which the Company believes will foster more collaborative
supply chain activities. In addition, this architecture and the Company's
advanced integration technology extend the availability of a company's view of
the supply chain to its suppliers and customers, which is becoming a critical
component of effective inter-enterprise supply chain management.
Tight Integration with Complementary ERP Systems. Manugistics'
architecture, its object-oriented foundation (which enables sophisticated
communication between applications) and its mutual interest with ERP vendors in
enabling clients to derive the maximum benefits from both their Manugistics and
ERP systems, permits tight integration of the Manugistics software to the ERP
systems of leading vendors. See "--Strategy," "--Products," and "--Alliances and
Partnering." These offerings enable customers to select
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the Company's supply chain suite and leading ERP solutions with the knowledge
that there is tight integration between the products.
STRATEGY
The Company's objective is to be the leading provider of supply chain
management solutions to companies worldwide. The Company's strategy to achieve
its objective includes the following elements:
Provide Comprehensive Solutions. As more companies recognize the potential
for significant and rapidly achievable benefits from effective supply chain
management, Manugistics' strategy is to deliver comprehensive solutions that
enable customers to fully realize these benefits. The Company delivers a robust
supply chain planning software suite and continuously seeks to expand and
enhance its product offerings. The Company also provides consulting and
implementation services, education and training, and product support and other
services. Through Manugistics' unique supply chain management experience and its
collaboration with customers in a variety of industries for more than a decade,
the Company has developed extensive knowledge of supply chain management issues
and solutions. Based on this knowledge, the Company is continuing to define
comprehensive supply chain solutions and is delivering these solutions to the
market.
At the core of these solutions is the Company's software. The Company has
introduced, and plans to continue to introduce, new applications and
functionality in order to address specific aspects of supply chain planning more
completely. An important aspect of these solutions is the Company's ability to
deliver new features and functions to the market rapidly in response to emerging
market opportunities and requirements. During fiscal 1997, the Company
introduced Advanced Manufacturing Scheduling, which creates superior production
schedules for a wide variety of manufacturing environments, and Supply Chain
Navigator, a strategic and tactical optimizer to support decision-making about
the entire supply chain network, within 10 months after embarking on these
development projects. The Company also emphasizes reliability in its schedule of
releases because of the importance of predictability to customers. Based in part
on its ISO 9001-certified product development processes, the Company believes
that it has a relatively high degree of reliability in its schedule of planned
releases. This reliability and rapid product development are important aspects
of the Company's solutions.
Customers have increasingly demanded the services offered by the Company.
To reduce the need to hire additional professional services employees necessary
to meet maximum anticipated demand for services, the Company offers an extensive
education and training program to third-party consultants from firms such as
Andersen Consulting LLP, Booz Allen & Hamilton, Inc., Ernst & Young LLP and
Price Waterhouse LLP. The availability of these third-party consultants to
provide implementation services will assist the Company to ensure that, during
periods of increased demand, customers will continue to receive effective and
timely professional services.
Capitalize on Leadership Position. The Company seeks to take advantage of
its leadership position in the market for supply chain management software by
expanding its business to include new geographic markets, new industries and
mid-sized companies.
New geographic markets. The Company believes that companies
outside North America face similar supply chain management
issues as North American companies, and, accordingly, the
Company plans to take advantage of its knowledge of these issues
to provide solutions to companies in other geographic markets.
The Company believes that, although they trail their North
American counterparts in terms of the rate of their adoption of
supply chain management practices, companies in South America,
Europe, Australia and Asia, as well as international
subsidiaries of North American companies, are increasingly
seeking the benefits of effective supply chain management. To
position itself to meet anticipated demand, the Company
maintains offices in Australia, Brazil, France, Germany,
Ireland, Japan, The Netherlands and the United Kingdom. The
Company believes that companies in these and other geographic
markets will increasingly demand supply chain management
solutions.
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New industries. The Company believes it can capitalize on its
experience with, and operational knowledge of, certain types of
customers to attract others. The Company's current customers are
primarily process manufacturers that target consumers (such as
consumer packaged goods and food and beverage firms) and process
manufacturers that target the industrial sector (such as
chemical companies). The Company intends to further penetrate
other industries, including discrete and high-volume repetitive
manufacturers that target consumers (such as firms that make
apparel and consumer durables) or the industrial sector.
Mid-sized companies. The Company believes it can capitalize on
its supply chain management knowledge and the price/performance
profile of client/server products to provide solutions to
mid-sized companies that recognize the benefits available from
effective supply chain management. Client/server product
offerings have enabled the Company to expand its target market
to include mid-sized companies with annual revenues ranging from
$250 million to $1 billion.
Expand Product Distribution Through Alliances and Partnering. The Company
is building and maintaining strong working relationships with organizations that
the Company believes can play important roles in marketing the Company's
products. These include: (i) ERP system vendors, such as The Baan Company, N.V.
("Baan"), Marcam Corporation ("Marcam"), Oracle Corporation ("Oracle") and SAP
AG ("SAP"), whose solutions maintain the data used by the Company's supply chain
planning products; (ii) consulting firms, such as Andersen Consulting LLP, Booz
Allen & Hamilton, Inc., Ernst & Young LLP and Price Waterhouse LLP, that are
active in the selection and implementation of large information systems; (iii)
point-of-sale data providers, such as Information Resources, Inc. ("IRI"), whose
current or planned products also complement those of the Company; (iv) other
complementary solution providers, such as Microsoft Corporation; and (v)
hardware vendors, such as Hewlett-Packard, IBM, Digital Equipment Corporation
and Sun Microsystems, that offer hardware products on which the Company's
products run. See "--Alliances and Partnering."
The Company believes that these relationships will enable prospective
customers to select various hardware systems, operating environments, ERP or
transaction systems and databases that can be easily integrated and rapidly
implemented with the Company's products, and that these relationships will
provide benefits to customers, the Company and these partners, including
enhanced potential for increased market penetration.
Provide Advanced Technological Leadership. Manugistics' technology
strategy is to offer products based on the Company's unique set of software
objects developed specifically to support the business processes involved in
supply chain planning and scheduling. The Company's software provides customers
with highly accurate models of their supply chains and superior flexibility,
scalability and performance. Manugistics' applications incorporate a variety of
advanced decision sciences, including constraint-based optimization, heuristics
and linear programming, providing customers with the most appropriate solver
techniques for different types of supply chain problems. The Company's user
interface technology provides a state-of-the-art "look and feel" to enhance user
productivity and support visualization of the supply chain. The Company's
leading-edge integration technology enables seamless interchange among
Manugistics applications, ERP systems, and suppliers and customers.
The Company offers products for distributed, open systems enabling
customers to use the Company's supply chain management software with various
combinations of hardware systems, operating environments, complementary software
and databases. Open operating systems such as Windows NT and UNIX enable
customers to take advantage of portability, scalability and interoperability of
operating environments. Distributed computing such as that associated with
client/server architectures moves the Company's decision-making capabilities
closer to the user by providing a distributed user interface, distributed
processing (rather than more centralized processing) and distributed database
access. As more companies expand their operations and supply chains globally,
the Company's distributed approach supports customers in their global supply
chain planning activities.
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The Company's products incorporate standards-based technologies, which
provide a flexible foundation and leverage the technology investments of
customers. The Company's use of object-oriented technology for product
development enables it to develop new software program code with modular
components, which permits and encourages developers to re-use these components
and improves quality while shortening the time required to develop or enhance
products.
PRODUCTS
During the fourth quarter of fiscal 1997, the Company released the fifth
version of its client/server software, Manugistics5. The Company's supply chain
management software provides strategic, tactical and operational supply chain
planning tools and includes the Supply Chain Navigator, the Manugistics
Integrator for SAP and four major families: Demand Planning, Supply Planning,
Manufacturing Scheduling and Transportation Management. The software operates in
most major environments and supports database software from leading relational
database software vendors.
SUPPLY CHAIN NAVIGATOR. Manugistics Supply Chain Navigator ("SCN")
features a graphical representation of a company's entire supply chain network
and enables executives to make longer-term business planning decisions about the
configuration of the supply chain network and network-wide capacity, production,
inventory and distribution, as well as shorter-term tactical planning decisions.
SCN can produce an optimized network or an optimized plan for the ideal mix of
products to be produced at each plant and distributed to each warehouse over
multiple time periods that maximizes the profitability of a portfolio of
products or minimizes the costs of raw materials, manufacturing, inventory and
distribution. The strategic and tactical planning functionality of SCN is fully
integrated with the other tactical and operational products in Manugistics'
suite, giving users the ability to implement immediately the strategic supply
chain decisions that SCN supports. The Company introduced SCN during the fourth
quarter of fiscal 1997.
Supply Chain Navigator is a strategic and tactical optimizer of the flows
of materials through a supply chain which uses detailed, constraint-based
models. By simultaneously evaluating both manufacturing-related and
distribution-related constraints, and using powerful optimization routines, SCN
generates the optimal solution given user-defined goals (such as maximizing
product profitability or minimizing costs), and can be used to solve a wide
array of strategic and tactical supply chain problems.
For example, at the strategic level, SCN can be used to determine the
overall setup of a supply chain network or to rationalize an existing setup. By
either simultaneously constraining both manufacturing and distribution, or only
one, SCN can evaluate the addition, removal or relocation of a plant or
distribution center. SCN can also be used to rationalize capacity, including the
addition or removal of facilities space at a plant or distribution center, the
number of shifts, shipping capacity or the introduction or removal of new
suppliers. Another use of SCN is to generate the optimal allocation of capacity
during periods of severe shortage, including cost-minimized outsourcing, or to
generate optimal sourcing, through dynamic updating of sourcing relationships.
For tactical level issues, SCN can be used to choose the optimal production
method from among multiple choices, and can determine which machine or
manufacturing line to use for which product. SCN can also optimize inventory
levels and locations given manufacturing, materials and distribution
constraints, and can optimize inventory prebuilds based on constraints including
product shelf life and materials expiration life.
DEMAND PLANNING. Manugistics Demand Planning addresses a key element of
successful supply chain planning: forecasting demand with a high degree of
accuracy. There are two products in the Demand Planning family: Demand Planning
and Demand Planning Extended Edition.
Demand Planning. Using advanced statistical techniques, Demand Planning
develops sophisticated demand forecasts for specific products at specific
locations. Users can adjust forecasts for market intelligence, financial
projections, sales promotion impact, or other information about expected demand
at any level of aggregation, and the software automatically disaggregates this
information to individual
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products. The resulting demand forecasts are critical to meeting customers'
service expectations and become the basis for inventory, distribution,
production and transportation plans. In addition, the software provides the
capability to track and manage forecast accuracy.
Demand Planning Extended Edition. Demand Planning Extended Edition
("DP/EE") utilizes advanced forecasting methods developed at Manugistics' Demand
Management Center of Expertise in Essen, Germany to extend the capabilities of
the Company's Demand Planning product. DP/EE produces a forecast that
incorporates causal factors, such as the effects of changes in price and the
effects of non-seasonal holidays. To improve precision, DP/EE also recognizes
both long-term and short-term trends in product demand and selects an
appropriate technique to forecast demand more accurately. To simplify
forecasting demand for a new product over the course of its life cycle, DP/EE
can synthesize and analyze life-cycle information from other, similar products
to produce a forecast for the new product. This capability is very important in
industries that conduct some discrete and high-volume repetitive manufacturing
operations, such as apparel or consumer durables, in which product life cycles
are short and life-cycle management is crucial to the success of new products.
The Company is also developing a new capability in its Demand Planning
product family to incorporate point-of-sale ("POS") checkout scanner data. As
part of its agreements with Information Resources, Inc. ("IRI") signed during
the first quarter of fiscal 1998, the Company is working to enhance its Demand
Planning products to be able to use IRI's daily, store-level POS data. With its
exclusive rights (except as against IRI) among supply chain software vendors to
this more detailed and timely census data, the Company is seeking to enhance
Demand Planning to incorporate these data. The Company believes that using these
POS data will provide more accurate forecasts, thereby helping companies make
superior planning decisions, particularly in demand-sensitive,
consumer-oriented, process manufacturing industries.
SUPPLY PLANNING. Manugistics Supply Planning provides managers with the
ability to plan supply activities across multiple facilities to meet demand
requirements, and contains extensive continuous replenishment and Vendor Managed
Inventory capabilities. The software considers the interdependencies between
distribution and manufacturing activities and uses this information as the basis
for decisions about stocking levels, sourcing, location, movement and use of
available materials and inventory. As a result, customer service can be improved
while inventories and cycle times are reduced. The software also facilitates
effective management of production, considering constraints such as capacity,
raw materials, components and labor. Supply Planning enables managers to review
planned manufacturing activities at all manufacturing facilities for time
periods up to several years long, and allows them to analyze the ability of
their companies to meet demand and supply requirements and customer service
goals given aggregate capacity and materials constraints.
Supply Planning synthesizes demand planning, inventory planning and
distribution network data to produce a distribution plan--a schedule of shipping
requirements for each source and destination to meet the demand for every
product at every location in each planning period. Supply Planning constructs a
daily operational plan recommending a schedule of shipments to implement the
distribution plan that makes the best use of available inventory.
To satisfy the distribution plan, Supply Planning assists managers in
developing long-term and short-term enterprise-wide production plans and
detailed daily production schedules while calculating materials needs. In
addition, this software assists managers in making cost-effective decisions
regarding the use of manufacturing and materials resources.
The Supply Planning family includes Constrained Production Planning
("CPP"), a tool for longer-term, aggregate planning across multiple facilities
that produces a master supply plan considering aggregate capacity and materials
constraints. CPP uses inputs from several sources, including the unconstrained,
planned orders that are produced by Supply Planning, to develop a feasible
master production plan (for multiple weeks or months) that fits within capacity
and materials constraints. This master production plan then provides input for
production planning and manufacturing scheduling. If CPP indicates that product
should be manufactured at an alternate plant, appropriate adjustments are made
throughout Supply Planning. CPP can also identify capacity constraints and
materials shortages at times in the future, enabling
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planners to take corrective action, such as leveling production load over time
or across lines, before problems develop.
During fiscal 1997, the Company released the critical materials allocation
feature of Constrained Production Planning, which, for companies such as
personal computer makers, determines the highest profit or lowest cost mix of
products to produce based on longer-term materials availability. The Company
also released the critical constrained materials feature, which addresses
short-term materials shortages for process manufacturing companies with
restricted capacity or with projected materials shortages in future periods.
Supply Planning links customer requirements and production capabilities by
producing a master schedule for each plant or contract producer which best meets
demand while considering multiple constraints, such as capacity, materials and
labor, and minimizing inventory levels. The software translates that master
schedule into time-phased materials requirements schedules for raw materials and
intermediate or component products. The software produces an enterprise-wide
replenishment schedule of time-phased requirements for each vendor, listing the
planned and firm orders for each item. In addition, the software can recommend
the optimal source for raw materials or components, and contains
"available-to-promise" functionality which provides managers who are responsible
for sourcing or supplying raw materials or components (both within and outside
an enterprise) with information about the ability to satisfy production plans
based on anticipated future levels of raw materials or components. This
capability enables these managers to work proactively to find alternate
materials or components or alternative production cycles to minimize the effect
of any anticipated shortages.
ADVANCED MANUFACTURING SCHEDULING. Manugistics Advanced Manufacturing
Scheduling ("AMS") delivers realistic, executable manufacturing schedules for
producing specified quantities of product within the time parameters contained
in the production plan. AMS is integrated with the rest of the Manugistics
supply chain planning software suite, giving users the same constantly updated
demand and supply information available to planners throughout an organization.
Correspondingly, planners elsewhere in the organization have current information
about manufacturing schedules. AMS optimizes production schedules given certain
user-defined constraints for multiple process, high-volume repetitive and
discrete manufacturing environments, enabling schedulers to maximize customer
service and asset utilization, minimize cost and reduce cycle time. AMS
incorporates the advanced manufacturing scheduling technologies acquired from
Avyx, Inc. during the first quarter of fiscal 1997. Users can configure AMS to
model the unique manufacturing environments of their enterprises for various
short- to medium-term time periods, including large, complex processes,
production of either small or large numbers of products, a range of constraints
including materials, labor, machine and storage capacity and environmental
restrictions. AMS generates a manufacturing schedule meeting defined objectives
while respecting constraints.
AMS enables users to employ a range of methods to respond to the frequent
changes to the manufacturing schedule, from regenerative scheduling to
incremental rescheduling. A key feature of AMS is its rescheduling capability.
AMS identifies the best location and time period to schedule a job. For example,
when a company receives a new order, AMS searches in real time for the optimal
plant and date to run the job, preserving the existing schedule and enabling the
scheduler to quote a delivery date immediately. AMS also addresses floating
capacity-constrained resources or bottlenecks, again by leveraging the existing
schedule, preserving the parts that are unaffected by the change and revising
other elements as necessary to meet the updated requirements. The Company
believes that the evolutionary nature of AMS's rescheduling capability enables
users to have greater control, because the schedule remains stable, and greater
speed, because the software reschedules only the necessary portion of the entire
schedule.
TRANSPORTATION MANAGEMENT. Manugistics Transportation Management provides
managers with decision-making and optimization tools to determine how to assign
transportation resources so as to minimize costs while meeting customer service
requirements. This software allows for the coordination of material and product
movements on an enterprise-wide basis.
Transportation Management enables companies to plan and integrate inbound,
outbound and inter-company moves in a coordinated way and to build feasible,
cost-effective, consolidated loads that meet
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customer service and business operating requirements and minimize
enterprise-wide transportation costs. This product also assists managers to
determine the best available mix of transportation modes and common carriers. In
addition, Transportation Management enables managers to integrate private fleet
operations into the shipment planning process to optimize transportation asset
utilization and customer service.
Communication among trading partners, particularly communication about the
status of transportation activities, is essential to effective supply chain
management. During fiscal 1997, the Company introduced Manugistics Intelligent
Messenger, which provides electronic commerce capabilities by collecting and
distributing supply chain data among trading partners. The Manugistics
Intelligent Messenger evaluates messages from the supply chain planning
applications, recognizes key business events, determines required action and
sends timely notification messages to appropriate decision makers. This product
was developed in partnership with Frontec AMT, Inc., a leading provider of
intelligent messaging solutions.
The Company's Transportation Management family also includes the Routing
and Scheduling product, which provides automated daily routing and is designed
for private fleet managers whose main concern is developing the best possible
distribution routes in order to maximize customer service and minimize operating
costs such as fuel, equipment and personnel.
The Company has recently released the Manugistics Bulk Distribution
Planning product, which addresses the needs of the bulk chemical, petroleum and
industrial gas industries. Bulk Distribution Planning includes extensive
transportation management capabilities, as well as specialized demand planning,
unique inventory management features and dynamic sourcing to meet demand,
enabling companies in these industries to improve customer service and reduce
inventory and transportation costs.
MANUGISTICS INTEGRATOR FOR SAP. During the third quarter of fiscal 1997,
the Company released the Manugistics Integrator for SAP, a software application
that integrates SAP's R/3(R) ERP application with several Manugistics supply
chain planning products. Developed jointly by Manugistics and SAP, the
Integrator enables customers to implement an integrated supply chain software
and ERP solution that uses functionality from both applications without the need
to develop custom interface programming. The Integrator reduces companies'
integration costs, which can shorten the payback period on their investments in
supply chain planning and ERP systems, and it is fully supported and maintained
by Manugistics and SAP, which reduces the risk of problems with forward
compatibility of future versions.
Rather than simply transferring flat files, the Manugistics Integrator for
SAP facilitates true "communication" between the two applications about what
information each application needs and, when an event occurs, the effects of the
event. Using "publish/subscribe" object-based messaging, when a triggering event
occurs, data that are needed by both applications are "published" by the source
application using a message-based integration architecture. The target
application "subscribes" to events, processes the data associated with them, and
then publishes the results. For example, SAP's R/3 stores information about
items and stockkeeping units (SKUs) in the material master tables. Additions,
deletions and updates to the material master tables can be communicated to
Demand Planning for processing. Correspondingly, Manugistics Supply Planning
generates a feasible, cost-effective distribution requirements plan, which is
expressed as a set of planned orders. These orders can be communicated to SAP's
R/3 Production Planning as independent requirements.
STATGRAPHICS SOFTWARE. Additionally, the Company markets and supports
STATGRAPHICS, a software application containing a comprehensive set of
statistical tools to control, manage and improve the quality of production
processes in manufacturing companies. It utilizes statistical quality control
and design of experiments to implement quality management in individual
locations throughout an enterprise or plant. In response to decreased demand,
the Company has decreased the resources dedicated to marketing STATGRAPHICS.
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CUSTOMERS
The Company's supply chain management software historically has been
licensed by large organizations in the process manufacturing industries, such as
the consumer packaged goods, food, beverage, chemicals and pharmaceuticals
industries. More recently, the Company has licensed its software to customers in
the discrete and high-volume repetitive industries, including the paper,
apparel, electronics/high technology, automotive and consumer durables
industries. The Company has installed various combinations of its supply chain
management software products at more than 1,000 locations worldwide. The
following customers are representative of the Company's customer base in terms
of their size and the magnitude of revenues generated by their license
agreements with the Company. All of these customers have licensed software
products from the Company (or from Oracle pursuant to the Company's arrangement
with Oracle) or these customers have purchased maintenance, consulting or other
services from the Company within the last twelve months. See "--Sales and
Marketing."
CONSUMER PACKAGED GOODS
Eveready Battery Co.
General Electric Company
The Gillette Company
Lever Brothers Company
The Procter & Gamble Company
Revlon Consumer Products
Corporation
FOOD & BEVERAGE
Frito-Lay, Inc.
Nabisco Brands Inc.
Ocean Spray Cranberries, Inc.
PepsiCo, Inc.
Starbucks Corporation
PHARMACEUTICALS
Bristol-Myers Squibb Company
Eli Lilly and Company
Glaxo Wellcome
Schering-Plough HealthCare
Products, Inc.
Warner Lambert Company
RETAIL DRUG/MASS
MERCHANDISE/SPECIALTY
RETAIL
Dayton Hudson Corporation
Kmart Corporation
Revco D.S., Inc.
Rite Aid Corporation
Toys 'R' Us, Inc.
Wal-Mart Stores, Inc.
GROCERY
Food Lion, Inc.
Giant Eagle, Inc.
The Kroger Co.
Richfood, Inc.
Safeway Stores, Inc.
Winn-Dixie Stores, Inc.
CHEMICALS AND
PETROCHEMICALS
BASF Corporation
Dow Chemical Company, Limited
E. I. du Pont de Nemours and
Company
Exxon Company, International
Mobil Oil Corporation
Rohm & Haas Company
CONSUMER ELECTRONICS/
HIGH TECHNOLOGY
Analog Devices, Inc.
Hewlett-Packard Company
IBM
Lucent Technologies, Inc.
Xilinx, Inc.
AUTOMOTIVE
Automobile Products plc
BMW AG
General Motors Service Parts
Operations
Harley-Davidson, Inc.
Deere & Co.
Tenneco Automotive-Monroe
Auto Equipment
APPAREL
Fruit of the Loom, Inc.
Levi Strauss & Co.
NIKE, Inc.
Russell Corporation
The Timberland Company
PAPER
Georgia-Pacific Corporation
James River Corporation
Mead Corp.
Sweetheart Cup Company, Inc.
OTHER
Baxter Healthcare Corporation
Black & Decker (U.S.) Inc.
Bridgestone/Firestone, Inc.
British Airways
Eastman Kodak Company
Owens & Minor Medical, Inc.
PRODUCT-RELATED SERVICES
A key element of the Company's business is to provide clients with
comprehensive solutions to their supply chain planning problems by combining
software with professional services that enable clients to derive the maximum
benefit from Manugistics' supply chain products. Typically, a client will make
many changes to its overall operations, including its planning functions, while
implementing the Company's software. To assist clients in making these changes,
the Company offers a wide range of product-related services, including business
operations consulting, change management consulting, end-user and system
administrator education and training, and, in certain circumstances, software
product modification. These services help clients reengineer their operations to
take maximum advantage of the Company's software and of effective supply chain
management. These product-related services generally are not included in the
Company's software license fees and are provided on a time and materials basis.
CUSTOMER SUPPORT
Another element of the Company's comprehensive solution is to provide
on-going support to existing customers. Substantially all of the Company's
supply chain management customers enter into annual product maintenance
agreements entitling them to receive product support, including access to a
hotline
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and an electronic bulletin board, and to receive product revisions and
enhancements. The Company also uses its customer support function to collect
information to assist in focusing future product development efforts and
identifying market demand.
In June 1997, the Company acquired all of the outstanding capital stock of
Synchronology Group Limited ("SGL"), a closely-held firm that provides
manufacturing planning and scheduling consulting services. SGL maintains offices
at its headquarters in the United Kingdom and in Belgium. SGL is continuing to
operate as an independent consulting group that helps clients identify
production planning needs, reengineer production control processes, select
software and systems (including offerings by vendors other than the Company) and
implement and project manage the selected solution. SGL will provide the Company
with additional domain knowledge about manufacturing planning and scheduling and
additional resources to serve clients in Europe and other regions.
PRODUCT DEVELOPMENT
The Company directs its current product development efforts toward the
development of new, complementary products, the enhancement of the features and
functions of existing products (including new Internet/Intranet capabilities,
enhancements for use in foreign countries and foreign language translations),
and the development of products tailored to particular industries. To date, most
of the Company's supply chain products have been developed by its internal
staff. Product documentation is generally created internally.
In developing new products or enhancements, the Company works closely with
current and prospective customers, as well as with other industry leaders, to
determine their requirements. The Company believes that these collaborative
efforts will lead to improved software functionality and will result in superior
products likely to have greater market demand. The Company maintains committees
of users and developers for its products. Among other things, these committees
discuss product enhancement priorities and directions and define and rank issues
associated with products.
Since its inception, the Company has made substantial investments in
product development. The Company believes that getting products to market
quickly, without compromising quality, is critical to the success of the
products. The Company is continuing to make significant product development
expenditures that it believes are necessary for it to deliver new product
features and functions rapidly.
The Company conducts a Product Launch Program for new applications and
major enhancements which allows customers to review design specifications and
prototypes and participate in product testing. The Company has also established
channels for customer feedback which include periodic surveys and focus groups.
In addition, the Company's product development staff works closely with the
Company's marketing, sales, support and services groups to develop supply chain
management software products that meet the needs of its current and prospective
customers.
The Company's research and development expenses were approximately $17.4
million, $11.2 million and $7.6 million for fiscal years 1997, 1996 and 1995,
representing 18.3%, 18.0% and 15.4%, respectively, of total revenues. In
addition, the Company capitalized software development costs of $6.8 million,
$4.9 million and $2.4 million for fiscal years 1997, 1996 and 1995. The Company
amortizes capitalized software development costs over a product's estimated
economic life, generally two years, commencing when a product is available for
general commercial release.
SALES AND MARKETING
The Company's supply chain management sales operation for North and South
America is headquartered at the Company's offices in Rockville, Maryland and
includes field sales personnel in the Atlanta, Boston, Charlotte, Chicago,
Cleveland, Columbus, Dallas, Houston, Los Angeles, Milwaukee, Philadelphia and
San Francisco metropolitan areas. The Company's direct sales organization
focuses on sales of supply chain management software to large, global companies,
as well as mid-sized companies with significant supply chain issues.
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The Company markets its products in regions outside of North and South
America primarily through subsidiaries. The Company's British subsidiary, with
offices in the London and Dublin metropolitan areas, provides direct sales and
customer support primarily to customers and prospective customers in the United
Kingdom and Ireland. The Company's German, French and Dutch subsidiaries,
located in Essen, Germany, Paris, France, and Utrecht, The Netherlands,
respectively, provide direct sales of supply chain management software primarily
to customers located in continental Europe. The Company also maintains offices
in Australia for sales and support to customers in the Pacific Rim and has
recently established operations in Brazil and, through a subsidiary, in Japan.
The Company adapts its software for use in international markets by addressing
different languages, different standards of weights and measures and other
operational considerations. In fiscal 1997, approximately 23.4% of the Company's
total revenues were attributable to sales outside the United States and Canada.
The Company has also begun using indirect sales channels, such as
complementary software vendors, third-party alliances and distributorships. See
"--Alliances and Partnering." Using these channels, Manugistics seeks to
increase the market penetration of its supply chain management products by
leveraging the installed base and prospective customers of these parties. During
fiscal 1997, the Company joined an initiative by Oracle, a large database and
enterprise application software vendor, under which Oracle has the nonexclusive
right to conduct marketing and sales activities on behalf of Manugistics (and on
behalf of a small number of other complementary vendors) to potential customers
in the consumer packaged goods industry. With this initiative, these companies
are seeking to provide a more complete offering that incorporates many
capabilities and satisfies many of the supply chain planning, ERP and other
needs of customers and prospective customers in that industry.
The Company supports its supply chain management sales activities by
conducting a variety of marketing activities, including an annual clients'
conference, product "steering committees," appearances at industry conferences
such as those organized by the American Production and Inventory Control
Specialists (APICS) organization and the North American Wholesale Grocers
Association, client conferences hosted by complementary software vendors and
product demonstration seminars. In addition, the Company conducts lead
generation programs including public relations, direct mail, telemarketing,
advertising, seminars and ongoing customer and dealer communication programs.
ALLIANCES AND PARTNERING
The Company continues to implement its strategy of establishing business
alliances or partnering with leading software companies, consulting firms and
other complementary vendors. During fiscal 1997, in addition to joining the
Oracle initiative, the Company entered into an agreement with SAP, a large ERP
application software vendor. Manugistics and SAP have jointly developed, and
Manugistics has released, the Manugistics Integrator for SAP, which enables
customers to implement an integrated supply chain software solution that uses
functionality from both Manugistics' suite and SAP's R/3 without the need to
develop custom interface programming. See "--Products."
The Company has also entered into joint marketing agreements with Baan and
Marcam, which generally provide that Manugistics and these companies will
conduct joint marketing activities.
The Company continues to develop relationships with leading consulting
firms in order to provide marketing leverage to the Company's own marketing
efforts. For example, Andersen Consulting LLP in North America displays the
Company's supply chain management software at Logistics 2020, its logistics
Center of Excellence in Atlanta, Georgia, and at its SAP Center of Excellence in
Cincinnati, Ohio. Similarly, the Company works closely with Ernst & Young LLP,
Booz Allen & Hamilton, Inc. and Price Waterhouse LLP. In addition to formal
programs, the Company cooperates with professional services firms informally on
a client-by-client basis, which involves cooperation at the field level.
LICENSE AGREEMENTS AND PRICING
Software product revenues consist principally of fees generated from
licenses of software products. In consideration of the payment of license fees,
the Company generally grants nonexclusive, nontransferable,
26
<PAGE> 28
perpetual licenses which are primarily computer, site or user specific. License
fee arrangements vary depending upon the type of software product being licensed
and the computer environment. License fees are based primarily on which products
are licensed and on the number of users or locations in the case of
client/server implementations and on a per CPU basis in the case of mainframe
installations. The United States list price for the Company's supply chain
management software products ranges from $200,000 for a single product to
several million dollars for the complete product suite.
Customers may obtain support services and maintenance for an annual fee
that is approximately 18% of the then-current license fee. The support and
maintenance fee is billed monthly or annually and is subject to changes in
software license list prices. The Company also provides pre-installation
assistance, systems administration, training and other product-related services,
generally on a time and materials basis. This allows the customer to determine
the level of support appropriate for its needs.
COMPETITION
The market for supply chain management software is highly competitive.
However, the Company believes that no single competitor markets an integrated
set of products that provides strategic, tactical and operational capabilities
and covers demand planning, supply planning, manufacturing scheduling and
transportation management like the Company. In certain functional areas, other
applications software vendors and certain professional services organizations,
including such vendors as American Software, Inc., InterTrans Logistics
Solutions, i2 Technologies, Inc., Logility, Inc., Numetrix, Inc. and Weseley
Software Development Corp., offer products that are directly competitive with
some of the software applications marketed by the Company. The principal
competitive factors in the supply chain management software market served by the
Company include product functionality and quality, product suite integration,
ease of use, customer service and satisfaction, product support, product-related
services, compliance with industry standards, vendor reputation and, in
international markets, availability in foreign languages. The Company believes
that it currently competes favorably with respect to these factors, and that its
principal competitive advantages are its comprehensive, integrated solution, its
substantial investment in product development, its client support and its
extensive knowledge of supply chain planning and scheduling.
PROPRIETARY RIGHTS AND LICENSES
The Company regards its software as proprietary and relies on a combination
of trade secret, copyright and trademark laws, license agreements, nondisclosure
and other contractual provisions and technical measures to protect its
proprietary rights in its products. The Company distributes its supply chain
management software under software license agreements which typically grant
customers nonexclusive, nontransferable licenses to the Company's products and
have perpetual terms unless terminated for breach. Under these license
agreements, the Company retains all rights to market its products. Use of the
licensed software is usually restricted to the customer's internal operations on
designated computers at specified sites unless the customer obtains a site
license for use of the software that is restricted to designated users. Use is
subject to terms and conditions prohibiting unauthorized reproduction or
transfer of the software. The Company also seeks to protect the source code of
its software as a trade secret and as an unpublished, copyrighted work.
EMPLOYEES
As of May 31, 1997, the Company had 693 full-time regular employees. None
of the Company's employees is represented by a labor union. The Company has
experienced no work stoppages and believes that its employee relations are
generally good. In addition, the Company utilizes consultants, independent
contractors and temporary employees to meet its staffing needs.
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<PAGE> 29
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The name, age and position held by each of the executive officers and
directors of the Company or Manugistics, Inc., its principal operating
subsidiary, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------- --- ------------------------------------------------------------
<S> <C> <C>
William M. Gibson...... 52 President, Chief Executive Officer and Chairman of the Board
of Directors
Joseph E. Broderick.... 52 Executive Vice President, Client Sales and Services
Kenneth S. Thompson.... 41 Executive Vice President, Supply Chain Products
Keith J. Enstice....... 46 Senior Vice President, Field Operations Division, Americas
Mary Lou Fox........... 54 Senior Vice President, Consumer Products Marketing Division
and Professional Services Division
Peter Q. Repetti....... 36 Vice President, Finance and Administration and Chief
Financial Officer
Jack A. Arnow.......... 69 Director
J. Michael Cline....... 37 Director
Lynn C. Fritz.......... 55 Director
Joseph H. Jacovini..... 56 Director
William G. Nelson...... 63 Director
Thomas A. Skelton...... 50 Director
</TABLE>
Mr. Gibson has served as President, Chief Executive Officer and Chairman of
the Board of Directors of the Company since its formation in 1986. From 1983
until 1986, when it was purchased by the Company, Mr. Gibson served as
President, Chief Executive Officer and Chairman of the Board of Directors of
STSC, Inc. (now Manugistics, Inc.). He joined STSC, Inc. as Executive Vice
President and Chief Operating Officer in 1982.
Mr. Broderick has served as Executive Vice President, Client Sales and
Services, since December 1995. From 1991 to 1995, Mr. Broderick served as
President and Chief Operating Officer of Netwise, Inc., a communications systems
software company. From 1990 to 1991, Mr. Broderick served as Vice President of
Sales and Marketing for XA Systems, a productivity tools software company.
Mr. Thompson has served as Executive Vice President, Supply Chain Products,
since January 1996. From 1990 to 1996, Mr. Thompson served as Senior Vice
President, Supply Chain Products. Mr. Thompson joined the Company in 1990 upon
the Company's acquisition of The ROVER Technology Company, a transportation
software products and services company, of which Mr. Thompson had served as
Chief Executive Officer.
Mr. Enstice has served as Senior Vice President, Field Operations Division,
Americas, since October 1995. From 1994 to 1995, he served as Senior Vice
President, Channels and Alliances Division, and from 1991 to 1994, Mr. Enstice
served as Vice President, Worldwide Sales. From 1989 until 1991, he served as
Vice President, Marketing. Mr. Enstice joined STSC, Inc. in 1983.
Ms. Fox has served as Senior Vice President, Consumer Products Marketing
Division and Professional Services Division, since April 1993. She joined the
Company in 1982 as a Senior Systems Analyst and subsequently served in various
technical and professional services roles and as Vice President, Professional
Services, from March 1990 through March 1993.
Mr. Repetti has served as Vice President, Finance and Administration and
Chief Financial Officer since April 1996. From 1994 to 1996, Mr. Repetti served
as Vice President, Finance. From 1990 to 1994, he served as Director of
Financial Planning and Analysis for USAir Group, Inc.
Mr. Arnow has served as a director of the Company since 1986. Mr. Arnow is
an independent investor.
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<PAGE> 30
Mr. Cline was elected to serve as a director of the Company in July 1996.
Since 1989, Mr. Cline has been a managing member of General Atlantic Partners,
LLC ("GAP LLC") (or its predecessor in interest), a private investment firm with
a primary focus on software and related information technologies. Mr. Cline was
nominated as a director to the Company's Board of Directors pursuant to the
request of GAP LLC, which acquired an 8.8% ownership interest in the Company in
1996. Prior to 1989, Mr. Cline was an associate with McKinsey & Company, Inc., a
global strategic consulting firm. Mr. Cline serves on a number of boards,
including Scopus Technology, Inc., a company that specializes in client server
customer service management systems; FICS, the leading company in electronic
banking, electronic services delivery and reporting systems; SQRIBE Technologies
Corp., a company that focuses on reporting tools; and Richter Systems
International Inc., a company that engages in the retail systems business.
Mr. Fritz has served as a director of the Company since January 1995. Since
1965, Mr. Fritz has been Chairman and Chief Executive Officer of Fritz
Companies, Inc., a publicly-held company that specializes in freight forwarding
and customhouse brokerage on a global basis.
Mr. Jacovini has served as a director of the Company since 1986. He is a
partner in Dilworth, Paxson, Kalish & Kauffman LLP based in Philadelphia,
Pennsylvania, where he has practiced law since 1965. He has served as
Co-Chairman of that firm since 1995 and as Chairman of that firm's Corporate
Department since 1993. Mr. Jacovini has been a Trustee of Drexel University
since 1990. He also served as a member of the Board of the Philadelphia Regional
Port Authority from 1992 to early 1995 and as its Chairman, as well as Vice
Chairman of the Ports of Philadelphia and Camden, Inc., during 1994-95.
Mr. Nelson has served as a director of the Company since 1986. Since
September 1996, Mr. Nelson has served as the President, Chief Executive Officer
and Chairman of the Board of Directors of Geac Computer Corporation, Limited. He
also serves as a director to HRP Inc. and Project Software & Development, Inc.
From December 1991 to December 1994, Mr. Nelson was President and Chief
Executive Officer of Pilot Software, Inc. From April 1990 to December 1991, Mr.
Nelson served in several executive capacities at OnLine Software International,
Inc., including President, Chief Operating Officer and Chief Executive Officer.
Mr. Skelton has served as a director of the Company since April 1992. Mr.
Skelton served as President of Knowledge Systems Corporation from April 1996 to
April 1997. From January 1995 to March 1996, he was the Division President of
Global Software, Inc. in Raleigh, North Carolina. From 1983 to 1994, Mr. Skelton
worked in various management capacities with Manugistics, Inc., the principal
operating subsidiary of the Company. In May 1983, he joined STSC, Inc. (now
Manugistics, Inc.) as Vice President of Sales; he became Senior Vice President
in 1986, Executive Vice President in March 1991 and Chief Operating Officer in
March 1992.
There are no family relationships among any of the executive officers or
directors of the Company. Executive officers of the Company are elected by the
Board of Directors on an annual basis and serve at the discretion of the Board
of Directors.
BOARD OF DIRECTORS
The By-Laws provide that the Company's Board of Directors shall consist of
not less than five and not more than nine directors, with the number of
directors to be fixed by the Board of Directors from time to time. The Board of
Directors has fixed the number of directors which shall constitute the entire
Board of Directors at seven.
The By-Laws also provide that the Company's Board of Directors is divided
into three classes, with members of each class serving for staggered terms of
three years. The term of office of one class of directors expires each year in
rotation so that one class is elected at each annual meeting of shareholders for
a three year term. The Board of Directors presently consists of three Class I
directors (Messrs. Arnow, Cline and Fritz), two Class II directors (Messrs.
Jacovini and Skelton) and two Class III directors (Messrs. Gibson and Nelson),
whose current terms shall expire at the 1999, 2000 and 1998 annual meetings of
shareholders, respectively.
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<PAGE> 31
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of May 31, 1997, and as adjusted to give effect
to the sale of the shares offered hereby, (i) by each stockholder known by the
Company to be the beneficial owner of more than five percent of the Company's
Common Stock, (ii) by the Selling Stockholder, (iii) by each director and each
executive officer of the Company, and (iv) by all directors and executive
officers as a group. Except as indicated in the footnotes to the table, the
persons and entities named in the table have sole voting and investment power
with respect to all shares which they respectively beneficially owned.
The address of each person who is an executive officer or director of the
Company is 2115 East Jefferson Street, Rockville, MD 20852.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PRIOR TO SHARES BENEFICIALLY
OFFERING(1) OWNED AFTER OFFERING(1)
----------------------- -----------------------
NUMBER PERCENT SHARES NUMBER PERCENT
NAME OF SHARES OF CLASS OFFERED OF SHARES OF CLASS
- --------------------------------- --------- -------- ------- --------- --------
<S> <C> <C> <C> <C> <C>
William M. Gibson(2)............. 5,794,530 26.5 400,000 5,394,530 22.8
Kenneth S. Thompson(3)........... 681,846 3.1 -- 681,846 2.9
Joseph E. Broderick(4)........... 60,300 * -- 60,300 *
Keith J. Enstice(5).............. 151,162 * -- 151,162 *
Mary Lou Fox(6).................. 187,900 * -- 187,900 *
Peter Q. Repetti(7).............. 27,356 * -- 27,356 *
Jack A. Arnow(8)................. 112,000 * -- 112,000 *
J. Michael Cline(9).............. 10,000 * -- 10,000 *
Lynn C. Fritz(10)................ 25,000 * -- 25,000 *
Joseph H. Jacovini(11)........... 62,000 * -- 62,000 *
William G. Nelson(12)............ 266,000 1.2 -- 266,000 1.1
Thomas A. Skelton(13)............ 681,826 3.1 -- 681,826 2.9
General Atlantic Partners,
LLC(14)........................ 1,838,000 8.4 -- 1,838,000 7.8
All directors and executive
officers as a group (12
persons)....................... 8,059,920 35.9% 400,000 7,659,920 31.6
</TABLE>
- ------------------------------
*Less than 1% of the outstanding Common Stock.
(1) Based on 21,855,010 outstanding shares of Common Stock and shares of Common
Stock deemed beneficially owned as of May 31, 1997. Under applicable rules
of the Commission, a person is deemed to be the beneficial owner of shares
of Common Stock if, among other things, he or she directly or indirectly
has or shares voting power or investment power with respect to such shares.
A person is also considered to beneficially own shares of Common Stock
which he or she does not actually own but has the right to acquire
presently or within the next 60 days, by exercise of stock options or
otherwise.
(2) Includes 6,130 shares issuable upon exercise of options, 581,000 shares of
Common Stock held by his wife and 200,000 shares held in a non-profit
corporation, with respect to which Mr. Gibson shares voting and dispositive
control. Mr. Gibson has served as President, Chief Executive Officer and
Chairman of the Board of Directors of the Company since its formation in
1986. See "Management."
(3) Includes 18,780 shares issuable upon exercise of options. Excludes 6,408
shares of Common Stock held by Mr. Thompson's wife of which he disclaims
beneficial ownership.
(4) Includes 41,254 shares issuable upon exercise of options.
(5) All shares issuable upon exercise of options.
(6) Includes 153,900 shares issuable upon exercise of options.
(7) Includes 23,100 shares issuable upon exercise of options.
(8) Includes 44,000 shares issuable upon exercise of options.
(9) All shares issuable upon exercise of options. Excludes shares beneficially
owned by General Atlantic Partners, LLC ("GAP LLC"), of which Mr. Cline is
a managing member.
(10) All shares issuable upon exercise of options.
(11) Includes 4,000 shares held by his wife and 38,000 shares of Common Stock
held of record by Prudential Bank & Trust Co. in a retirement savings plan
for Mr. Jacovini. Excludes 20,000 shares issuable upon exercise of options
beneficially owned by Dilworth, Paxson, Kalish & Kauffman LLP of which Mr.
Jacovini is Co-Chairman and a partner, as to which shares Mr. Jacovini has
disclaimed any beneficial interest; subsequent to May 31, 1997, Mr.
Jacovini acquired beneficial ownership of currently exercisable options
relating to 12,664 of such shares.
(12) Includes 68,000 shares issuable upon exercise of options.
(13) Includes 26,000 shares issuable upon exercise of options, 27,288 shares
held by his wife and 17,244 shares held by his wife for his children.
(14) The address of GAP LLC is 3 Pickwick Plaza, Greenwich, CT 06830. Share
amounts include 1,583,314 shares of Common Stock held by General Atlantic
Partners 26, L.P., of which GAP LLC is the general partner and 254,686
shares of Common Stock held by GAP Coinvestment Partners, L.P. ("GAPCO").
The managing members of GAP LLC are the general partners of GAPCO. J.
Michael Cline disclaims beneficial ownership of all such shares of Common
Stock except to the extent of his pecuniary interest therein.
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<PAGE> 32
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $.002 per share, and 4,620,253 shares of Preferred
Stock, par value $.01 per share.
COMMON STOCK
As of May 31, 1997, there were 21,855,010 shares of Common Stock issued and
outstanding and a total of approximately 6,641,017 shares of Common Stock
reserved for issuance upon exercise of outstanding stock options and options
that may be granted in the future under the Company's stock option plans or for
issuance under the Company's Employee Stock Purchase Plan. Based upon the number
of shares outstanding as of that date and after giving effect to the issuance of
the 1,800,000 shares of Common Stock offered by the Company hereby, there will
be 23,655,010 shares of Common Stock outstanding.
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor, subject to any preferential dividend rights of
outstanding Preferred Stock. Upon the liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive ratably the net
assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred Stock.
Holders of Common Stock, as such, have no preemptive, subscription, redemption
or conversion rights. The outstanding shares of Common Stock are, and the shares
offered by the Company in the Offering will be, when issued and paid for, fully
paid and nonassessable. The rights, preferences and privileges of holders of
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue from time to time.
PREFERRED STOCK
The Board of Directors is authorized, subject to certain limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to an aggregate of 4,620,253 shares of Preferred Stock in one or more
series and to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions on the shares of each such series
thereof, including the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption (including sinking fund provisions),
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designations of such series. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change of control of the Company.
There are no shares of Preferred Stock issued and outstanding. The Company
has no plans to issue any shares of Preferred Stock.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware, as amended (the "Delaware GCL"). Section 203
prohibits a publicly-held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
"Business combination" includes mergers, asset sales and other transactions
either caused by the interested stockholder or resulting in a financial benefit
to the interested stockholder which is not shared pro rata with the other
stockholders of the Company. Subject to certain exceptions, an "interested
stockholder" is a person who, together with affiliates and associates, owns, or
within three years did own, 15% or more of the corporation's voting stock. The
statute contains provisions enabling a corporation to avoid the statute's
restrictions if stockholders holding a majority of the corporation's voting
stock approve an amendment to the corporation's certificate of incorporation or
31
<PAGE> 33
by-laws to avoid the restrictions. The Company has not and does not currently
intend to "elect out" of the application of this statute.
The Certificate of Incorporation contains certain provisions permitted
under the Delaware GCL which eliminate the personal liability of directors for
monetary damages for a breach of the director's fiduciary duty, except for: (i)
breach of a director's duty of loyalty, (ii) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) the
unlawful payment of dividends, stock purchase or stock redemption, or (iv) any
transaction from which the director derives any improper personal benefit. The
Certificate of Incorporation and By-Laws also contain provisions indemnifying
the Company's directors, officers and employees to the fullest extent permitted
by the Delaware GCL. The Company believes that these provisions will assist the
Company in attracting and retaining qualified individuals to serve as directors,
officers and employees. The Certificate of Incorporation provides that a
director's liability shall be eliminated or limited to the fullest extent
permitted by the Delaware GCL, as amended from time to time.
The By-Laws provide for the division of the Board of Directors into three
classes as nearly equal in number as possible with staggered three-year terms.
The classification of the Board of Directors could make it more difficult for a
third party to acquire, or discourage a third party from attempting to acquire,
control of the Company. Any director may be removed only for cause and only by
the vote of at least 67% of the shares entitled to vote for the election of
directors.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Boston EquiServe,
Canton, Massachusetts.
32
<PAGE> 34
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), through their Representatives,
Alex. Brown & Sons Incorporated, Morgan Stanley & Co. Incorporated and
Robertson, Stephens & Company LLC (collectively, the "Representatives"), have
severally agreed to purchase from the Company the following respective number of
shares of Common Stock at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
------------------------------------------------------------------------- ---------
<S> <C>
Alex. Brown & Sons Incorporated..........................................
Morgan Stanley & Co. Incorporated........................................
Robertson, Stephens & Company LLC........................................
----------
Total.......................................................... 2,200,000
==========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the shares of Common Stock offered hereby, if
any of such shares are purchased.
The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession not in excess of $ per share. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of $ per
share to certain other dealers. After the public offering, the offering price
and other selling terms may be changed by the Representatives.
The Selling Stockholder and certain other stockholders have granted to the
Underwriters an option, exercisable not later than 30 days after the date of
this Prospectus, to purchase up to 330,000 additional shares of Common Stock at
the public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof that the number of shares of
Common Stock to be purchased by it in the above table bears to the total number
of shares offered hereby, and the Company will be obligated, pursuant to the
option, to sell such shares to the Underwriters. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the Common Stock offered hereby. If purchased, the Underwriters will offer such
additional shares on the same terms as those on which the 2,200,000 shares are
being offered hereby.
In connection with the Offering, certain Underwriters may engage in passive
market making transactions in the Common Stock on Nasdaq immediately prior to
the commencement of sales in the Offering in accordance with Rule 103 of
Regulation M under the Exchange Act. Passive market making consists of
displaying bids on Nasdaq limited by the bid prices of independent market makers
and making purchases limited by such prices and effected in response to order
flow. Net purchases by a passive market maker on each day are limited to a
specified percentage of the passive market maker's average daily trading volume
in the Common Stock during a specified period and must be discontinued when such
limit is reached. Passive market making may stabilize the market price of the
Common Stock at a level above that which might otherwise prevail and, if
commenced, may be discontinued at any time.
Subject to applicable limitations, the Underwriters, in connection with the
Offering, may place bids for or make purchases of the Common Stock in the open
market or otherwise, for long or short account, or
33
<PAGE> 35
cover short positions incurred, to stabilize, maintain or otherwise affect the
price of the Common Stock, which may be higher than the price that might
otherwise prevail in the open market. There can be no assurance that the price
of the Common Stock will be stabilized, or that stabilizing, if commenced, will
not be discontinued at any time. Subject to applicable limitations, the
Underwriters may also place bids or make purchases on behalf of the underwriting
syndicate to reduce a short position created in connection with the Offering.
The Underwriters are not required to engage in these activities and may end
these activities at any time.
The Underwriting Agreement contains covenants of indemnity and contribution
between the Underwriters and the Company regarding certain liabilities,
including liabilities under the Securities Act.
The Company has agreed that until 90 days after the date of this
Prospectus, it will not, without the prior written consent of Alex. Brown & Sons
Incorporated, sell, offer to sell, issue, or otherwise distribute any shares of
Common Stock or any options, rights or warrants with respect to any Common
Stock, except for options granted under the Company's stock option plans and
shares of Common Stock issued upon exercise of such options or pursuant to the
Company's Employee Stock Purchase Plan. In addition, during the 90-day period,
the Company may offer to issue (but may not issue) shares of Common Stock in
connection with then-proposed acquisitions. Further, the directors, the
executive officers, the Selling Stockholder and certain other stockholders of
the Company have agreed not to directly or indirectly sell or offer for sale or
otherwise dispose of any Common Stock which they own for a period of 90 days
after the date of this Prospectus without the prior written consent of Alex.
Brown & Sons Incorporated. See "Risk Factors--Shares Eligible for Future Sale."
The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock offered
hereby will be passed upon for the Company and the Selling Stockholder by
Dilworth, Paxson, Kalish & Kauffman LLP, Philadelphia, Pennsylvania. Certain
legal matters will be passed upon for the Underwriters by Piper & Marbury
L.L.P., Baltimore, Maryland.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended February 28, 1997 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
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<PAGE> 36
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Prospectus Summary.................... 3
Certain Forward-Looking Statements.... 6
Risk Factors.......................... 7
Use of Proceeds....................... 11
Capitalization........................ 11
Price Range of Common Stock and
Dividend Policy..................... 12
Selected Financial Data............... 13
Business.............................. 15
Management............................ 28
Principal and Selling Stockholders.... 30
Description of Capital Stock.......... 31
Underwriting.......................... 33
Legal Matters......................... 34
Experts............................... 34
</TABLE>
2,200,000 SHARES
[MANUGISTICS GROUP LOGO]
COMMON STOCK
------------------------
P R O S P E C T U S
------------------------
ALEX. BROWN & SONS
INCORPORATED
MORGAN STANLEY DEAN WITTER
ROBERTSON, STEPHENS & COMPANY
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 37
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a list of the estimated expenses to be incurred by the
Registrant in connection with the issuance and distribution of the shares of
Common Stock being registered hereby, other than underwriting discounts and
commissions. See "Underwriting."
<TABLE>
<S> <C>
SEC Registration Fee.............................................. $ 36,034
NASD Filing Fee................................................... 12,391
Nasdaq National Market Listing Fee................................ 17,500
Printing Expenses................................................. 150,000*
Legal Fees and Expense............................................ 150,000*
Accountants' Fees and Expenses.................................... 75,000*
Blue Sky Filing Fees and Expenses................................. 10,000*
Transfer Agent.................................................... 25,000*
Miscellaneous..................................................... 24,075*
--------
Total................................................... $500,000
========
</TABLE>
- ---------------
* Represents the Company's estimate of such expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has adopted the provisions of Section 102(b)(7) of the Delaware
General Corporation Law (the "Delaware GCL"), which eliminate or limit the
personal liability of a director to the Company or its stockholders for monetary
damages for breach of fiduciary duty under certain circumstances. Furthermore,
under Section 145 of the Delaware GCL, the Company shall indemnify each of its
directors and officers against expenses (including reasonable costs,
disbursements and counsel fees) in connection with any proceeding involving such
person by reason of having been an officer or director, to the extent such
person acted in good faith and in a manner reasonably believed to be in, or not
opposed to, the best interest of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such person's conduct
was unlawful. The determination of whether indemnification is proper under the
circumstances, unless made by a court, shall be made by a majority of a quorum
of disinterested members of the Board of Directors, independent legal counsel or
the stockholders of the Company.
The Company's Certificate of Incorporation states that a director of the
Company shall not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except that this
provision shall not eliminate or limit a director's liability for any breach of
the director's duty of loyalty to the Company or its stockholders, for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, under Section 174 of the Delaware GCL, or for any transaction
from which the director derived an improper personal benefit.
The Company's By-Laws further provide that the Company shall indemnify its
officers, directors and employees to the fullest extent permitted by law. The
By-Laws also permit the Company to purchase insurance on behalf of any such
person against any liability asserted against such person and incurred by such
person in any such capacity, or arising out of such person's status as such,
whether or not the Company would have the power to indemnify such person against
such liability under the foregoing provision of the By-Laws. The Company
maintains such insurance.
Under Section 8 of the Underwriting Agreement filed as Exhibit 1 to this
Registration Statement, the Underwriters agree to indemnify, under certain
conditions, the Company, its officers and directors, and persons who control the
Company within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), against certain liabilities.
II-1
<PAGE> 38
ITEM 16. EXHIBITS.
Exhibits marked with a (+) are filed as part of Amendment No. 2 to this
Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------------
<C> <S>
+1 Form of Underwriting Agreement
4.1 Amended and Restated Certificate of Incorporation of the Company(1)
4.1(a) Certificate of Retirement and Elimination of the Company
4.1(b) Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Company (effective July 29, 1997)
4.2 Amended and Restated By-Laws of the Company(2)
+5 Opinion of Dilworth, Paxson, Kalish & Kauffman LLP
23.1 Consent of Deloitte & Touche LLP dated July 29, 1997
23.2 Consent of Dilworth, Paxson, Kalish & Kauffman LLP(3)
24 Powers of Attorney of certain officers and directors of the Company(4)
</TABLE>
--------------------
(1) Incorporated by reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-65312).
(2) Incorporated by reference to Exhibit 3.2 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-65312).
(3) Included in Exhibit 5.
(4) Included in the signature page to this Registration Statement.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
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.
The undersigned Registrant hereby further undertakes that:
(i) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
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, the Registrant 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 Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 39
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Rockville, State of Maryland, on
August 12, 1997.
MANUGISTICS GROUP, INC.
By: /s/ PETER Q. REPETTI
------------------------------------
PETER Q. REPETTI
Vice President, Finance and
Administration
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------- ----------------
<C> <S> <C>
* Chief Executive Officer, President August 12, 1997
- ------------------------------------- and Chairman of the Board of
WILLIAM M. GIBSON Directors (Principal executive
officer)
/s/ PETER Q. REPETTI Vice President, Finance and August 12, 1997
- ------------------------------------- Administration and Chief Financial
PETER Q. REPETTI Officer (Principal financial officer
and principal accounting officer)
* Director August 12, 1997
- -------------------------------------
JACK A. ARNOW
* Director August 12, 1997
- -------------------------------------
J. MICHAEL CLINE
* Director August 12, 1997
- -------------------------------------
LYNN C. FRITZ
* Director August 12, 1997
- -------------------------------------
JOSEPH H. JACOVINI
* Director August 12, 1997
- -------------------------------------
WILLIAM G. NELSON
* Director August 12, 1997
- -------------------------------------
THOMAS A. SKELTON
*By: /s/ PETER Q. REPETTI
- -------------------------------------
PETER Q. REPETTI
AS ATTORNEY-IN-FACT
</TABLE>
II-3
<PAGE> 40
INDEX TO EXHIBITS
Exhibits marked with a (+) are filed as part of Amendment No. 2 to this
Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------------
<C> <S>
+1 Form of Underwriting Agreement
4.1 Amended and Restated Certificate of Incorporation of the Company(1)
4.1(a) Certificate of Retirement and Elimination of the Company
4.1(b) Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Company (effective July 29, 1997)
4.2 Amended and Restated By-Laws of the Company(2)
+5 Opinion of Dilworth, Paxson, Kalish & Kauffman LLP
23.1 Consent of Deloitte & Touche LLP dated July 29, 1997
23.2 Consent of Dilworth, Paxson, Kalish & Kauffman LLP(3)
24 Powers of Attorney of certain officers and directors of the Company(4)
</TABLE>
--------------------
(1) Incorporated by reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-65312).
(2) Incorporated by reference to Exhibit 3.2 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-65312).
(3) Included in Exhibit 5.
(4) Included in the signature page to this Registration Statement.
<PAGE> 1
2,200,000 Shares
MANUGISTICS GROUP, INC.
Common Stock
($.002 Par Value)
UNDERWRITING AGREEMENT
August 13, 1997
ALEX. BROWN & SONS INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
ROBERTSON, STEPHENS & COMPANY LLC
As Representatives of the
Several Underwriters
c/o Alex. Brown & Sons Incorporated
One South Street
Baltimore, Maryland 21202
Gentlemen:
Manugistics Group, Inc., a Delaware corporation (the "Company"), and
William M. Gibson, a stockholder of the Company ("Gibson") propose to sell to
the several underwriters (the "Underwriters") named in Schedule I hereto for
whom you are acting as representatives (the "Representatives") an aggregate of
2,200,000 shares of the Company's Common Stock, $.002 par value (the "Firm
Shares"), of which 1,800,000 shares will be sold by the Company (the "Company
Shares") and 400,000 shares will be sold by Gibson. The respective amounts of
the Firm Shares to be so purchased by the several Underwriters are set forth
opposite their names in Schedule I hereto, and the amount to be sold by Gibson
is set forth opposite his name on Schedule II hereto. The Company and Gibson
are sometimes referred to herein collectively as the "Sellers." Gibson,
together with certain other stockholders of the Company (collectively, the
"Selling Stockholders"), also propose to sell to the Underwriters, at the
Underwriters' option (the "Over-Allotment Option"), an aggregate of up to
330,000 additional shares of the Company's Common Stock (the "Option Shares")
as set forth below.
As the Representatives, you have advised the Company and the Selling
Stockholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro
<PAGE> 2
rata portion of the Option Shares if you elect to exercise the Over-allotment
Option in whole or in part for the accounts of the several Underwriters. The
Firm Shares and the Option Shares (to the extent the aforementioned option is
exercised) are herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SELLING STOCKHOLDERS.
(a) The Company represents and warrants to each of the Underwriters as
follows:
(i) A registration statement on Form S-3 (File No. 333-31949)
with respect to the Shares has been carefully prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended, and
the rules and regulations of the Securities and Exchange Commission (the
"Commission") thereunder (the "Act") and has been filed with the Commission
under the Act. The Company has complied with the conditions for the use of Form
S-3. Copies of such registration statement, including any amendments thereto,
the preliminary prospectuses (meeting the requirements of the Act) contained
therein and the exhibits, financial statements and schedules, as finally
amended and revised, have heretofore been delivered by the Company to you. Such
registration statement, together with any registration statement filed by the
Company pursuant to Rule 462 (b) of the Act, herein referred to as the
"Registration Statement," which shall be deemed to include all information
omitted therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, has become effective under the Act and no post-effective
amendment to the Registration Statement has been filed as of the date of this
Agreement. "Prospectus" means (a) the form of prospectus first filed with the
Commission pursuant to Rule 424(b) or (b) the last preliminary prospectus
included in the Registration Statement filed prior to the time it becomes
effective or filed pursuant to Rule 424(a) under the Act that is delivered by
the Company to the Underwriters for delivery to purchasers of the Shares,
together with the term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary
prospectus included in the Registration Statement prior to the time it becomes
effective is herein referred to as a "Preliminary Prospectus." Any reference
herein to the Registration Statement, any Preliminary Prospectus or to the
Prospectus shall be deemed to refer to and include any documents respectively
incorporated by reference therein, and any supplements or amendments thereto,
filed with the Commission after the date of filing of the Prospectus under
Rules 424(b) or 430A, and prior to the termination of the offering of the
Shares by the Underwriters hereunder.
(ii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. Each of the
subsidiaries of the Company as listed in Exhibit A hereto (collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation or limited
-2-
<PAGE> 3
liability company in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration Statement.
The Subsidiaries are the only subsidiaries, direct or indirect, of the Company.
The Company and each of the Subsidiaries are duly qualified to transact
business in all jurisdictions in which the conduct of their business requires
such qualification and in which the failure to qualify would have a materially
adverse effect upon the business of the Company and the Subsidiaries taken as a
whole. The outstanding shares of capital stock of each of the Subsidiaries have
been duly authorized and validly issued, are fully paid and non-assessable and
to the extent shown in Exhibit A hereto are owned by the Company or another
Subsidiary free and clear of all liens, encumbrances and claims, at law or in
equity; and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests in the Subsidiaries are
outstanding.
(iii) The outstanding shares of Common Stock of the Company,
including all shares to be sold by the Selling Stockholders, have been duly
authorized and validly issued and are fully paid and non-assessable; the
portion of the Shares to be issued and sold by the Company have been duly
authorized and when issued and paid for as contemplated herein will be validly
issued, fully paid and non-assessable; and no preemptive rights of stockholders
exist with respect to the issue and sale of any of the Shares. Neither the
filing of the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration under the
Act of any shares of Common Stock.
(iv) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. All of the Shares
conform to the description thereof contained in the Registration Statement. The
form of certificates for the Shares conforms to the corporate law of the
jurisdiction of the Company's incorporation.
(v) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Shares nor instituted proceedings for that purpose. The Registration Statement
contains, and the Prospectus and any amendments or supplements thereto will
contain, all statements which are required to be stated therein by, and will
conform, to the requirements of the Act. The documents incorporated by
reference in the Prospectus, at the time filed with the Commission, conformed
in all material respects to the then applicable requirements of the Securities
Exchange Act of 1934, as amended, as applicable, and the rules and regulations
thereunder (the "Exchange Act"), or the Act. The Registration Statement and any
amendments thereto do not contain, and will not contain, any untrue statement
of a material fact and do not omit, and will not omit, to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Prospectus and any amendments and supplements thereto do
not contain, and will not contain as of the date of such Prospectus, any untrue
statement of material fact; and do not omit, and will not omit as of the date
of such Prospectus, to state any material fact required to be stated therein or
necessary to
-3-
<PAGE> 4
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from
the Registration Statement or the Prospectus, or any such amendment or
supplement, in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives, specifically for use in the preparation thereof.
(vi) The consolidated financial statements of the Company and
the Subsidiaries, together with related notes and schedules as set forth or
incorporated by reference in the Registration Statement, present fairly the
financial position and the results of operations and cash flows of the Company
and the consolidated Subsidiaries, at the indicated dates and for the indicated
periods. Such financial statements and related schedules have been prepared in
accordance with generally accepted principles of accounting, consistently
applied throughout the periods involved, except as disclosed herein, and all
adjustments necessary for a fair presentation of results for such periods have
been made. The summary financial and statistical data included or incorporated
by reference in the Registration Statement presents fairly the information
shown therein and such data has been compiled on a basis consistent with the
financial statements presented therein and the books and records of the
Company.
(vii) Deloitte & Touche LLP, who have certified certain of
the financial statements filed with the Commission as part of, or incorporated
by reference in, the Registration Statement, are independent public accountants
as required by the Act.
(viii) There is no action, suit, claim or proceeding pending
or, to the knowledge of the Company, threatened against the Company or any of
the Subsidiaries before any court or administrative agency or otherwise which,
if determined adversely to the Company or any of its Subsidiaries, might result
in any material adverse change in the earnings, business, management,
properties, assets, operations, condition (financial or otherwise) or prospects
of the Company and of the Subsidiaries taken as a whole or to prevent the
consummation of the transactions contemplated hereby, except as set forth in
the Registration Statement.
(ix) The Company and the Subsidiaries have good and
marketable title to all of the properties and assets reflected in the financial
statements (or as described in the Registration Statement) hereinabove
described, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except those reflected in such financial statements (or as described in
the Registration Statement) or which are not material in amount to the Company
and the Subsidiaries taken as a whole. The Company and the Subsidiaries occupy
their leased properties under valid and binding leases conforming in all
material respects to the description thereof set forth in the Registration
Statement.
(x) The Company and the Subsidiaries have filed all Federal,
State, local and foreign income tax returns which have been required to be
filed and have paid all taxes indicated by said returns and all assessments
received by them or any of them to the extent that such taxes
-4-
<PAGE> 5
have become due and are not being contested in good faith. All tax liabilities
have been adequately provided for in the financial statements of the Company.
(xi) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented,
there has not been any material adverse change or any development known to the
Company involving a prospective material adverse change in or affecting the
earnings, business, management, properties, assets, operations, condition
(financial or otherwise), or prospects of the Company and its Subsidiaries
taken as a whole, whether or not occurring in the ordinary course of business,
and there has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company or the
Subsidiaries, other than transactions in the ordinary course of business and
changes and transactions described in the Registration Statement, as it may be
amended or supplemented. The Company and the Subsidiaries have no material
contingent obligations which are not disclosed in the Company's financial
statements which are set forth or incorporated by reference in the Registration
Statement.
(xii) Neither the Company nor any of the Subsidiaries is or
with the giving of notice or lapse of time or both, will be, in violation of or
in default under its Amended and Restated Certificate of Incorporation, as
currently in effect (the "Charter"), or its Amended and Restated Bylaws, as
currently in effect (the "By-Laws") (or in the case of an entity that is not a
corporation, such entity's governing documents) or under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a party or
by which it, or any of its properties, is bound and which default is of
material significance in respect of the business, management, properties,
assets, operations, condition (financial or otherwise) or prospects of the
Company and the Subsidiaries taken as a whole. The execution and delivery of
this Agreement and the consummation of the transactions herein contemplated and
the fulfillment of the terms hereof will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to which
the Company or any Subsidiary is a party, or of the Charter or By-Laws of the
Company or any order, rule or regulation applicable to the Company or any
Subsidiary of any court or of any regulatory body or administrative agency or
other governmental body having jurisdiction.
(xiii) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary to be made by or on behalf of the Company in
connection with the execution and delivery by the Company of this Agreement and
the consummation of the transactions herein contemplated (except such
additional steps as may be required by the Commission under the Act, the
National Association of Securities Dealers, Inc. (the "NASD") or as may be
necessary to qualify the Shares for public offering by the Underwriters under
state securities or Blue Sky laws) has been obtained or made and is in full
force and effect.
-5-
<PAGE> 6
(xiv) The Company and each of the Subsidiaries holds all
material licenses, certificates and permits from governmental authorities which
are necessary to the conduct of their businesses; and, to the best of the
Company's knowledge, neither the Company nor any of the Subsidiaries has
infringed any patents, patent rights, trade names, trademarks or copyrights,
which infringement is material to the business of the Company and the
Subsidiaries taken as a whole. The Company knows of no material infringement by
others of patents, patent rights, trade names, trademarks or copyrights owned
by or licensed to the Company.
(xv) Neither the Company, nor to the Company's best
knowledge, any of its affiliates (as defined in Rule 144 under the Act), has
taken or will take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be expected to
constitute, the manipulation or unlawful stabilization of the price of the
shares of Common Stock to facilitate the sale or resale of the Shares. The
Company acknowledges that the Underwriters may engage in passive market making
transactions in shares of the Common Stock on The Nasdaq Stock Market in
accordance with Rule 103 of Regulation M under the Exchange Act.
(xvi) Neither the Company nor any Subsidiary is an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended and the rules and regulations thereunder (the
"1940 Act").
(xvii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xviii) The Company and each of its Subsidiaries carry, or
are covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in similar
industries.
(xix) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company would have any liability; the Company has not incurred
and does not expect to incur liability under (A) Title IV of ERISA with respect
to termination of, or withdrawal from, any "pension plan" or (B) Sections 412
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the
-6-
<PAGE> 7
"Code"); and each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.
(xx) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-198,
An Act Relating to Disclosure of doing Business with Cuba, and the Company
further agrees that if it commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the Commission or
with the Florida Department of Banking and Finance (the "Department"),
whichever date is later, or if the information reported or incorporated by
reference in the Prospectus, if any, concerning the Company's business with
Cuba or with any person or affiliate located in Cuba changes in any material
way, the Company will provide the Department notice of such business or change,
as appropriate, in a form acceptable to the Department.
(b) Each of the Selling Stockholders severally and not jointly
represents and warrants as follows (except that General Atlantic Partners 26,
L.P., GAP Coinvestment Partners, L.P. and Kenneth S. Thompson do not make the
representations and warranties contained in subparagraph (iv) of this section):
(i) Such Selling Stockholder now has and at the Closing Date
and the Option Closing Date, as the case may be (as such dates are hereinafter
defined) will have good and marketable title to the Firm Shares and/or the
Option Shares to be sold by such Selling Stockholder, free and clear of any
liens, encumbrances and claims, at law or in equity, and full right, power and
authority to effect the sale and delivery of such Firm Shares and/or Option
Shares; and upon the delivery of, against payment for, such Firm Shares and/or
Option Shares pursuant to this Agreement, the Underwriters will acquire good
and marketable title thereto, free and clear of any liens, encumbrances and
claims, at law or in equity.
(ii) Such Selling Stockholder has full right, power and
authority to execute and deliver this Agreement, the Power of Attorney, and the
Custodian Agreement referred to below and to perform its obligations under such
Agreements. The execution and delivery of this Agreement, the Power of
Attorney, the Custodian Agreement and the consummation by such Selling
Stockholder of the transactions herein contemplated and the fulfillment by such
Selling Stockholder of the terms hereof will not require any consent, approval,
authorization, or order of any court, regulatory body, administrative agency or
other governmental body (except as may be required under the Act, state
securities laws or Blue Sky laws) and will not result in a breach of any of the
terms and provisions of, or constitute a default under, the organizational
documents of such Selling Stockholder, if not an individual, or any indenture,
mortgage, deed of trust or other agreement or instrument to which such Selling
Stockholder is a party, or of any order, rule or
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regulation applicable to such Selling Stockholder of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction.
(iii) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to, or which has constituted,
or which might reasonably be expected to cause or result in the manipulation or
unlawful stabilization of the price of the Common Stock of the Company and,
other than as permitted by the Act, the Selling Stockholder will not distribute
any prospectus (as defined in the Act) or other offering material in connection
with the offering of the Shares.
(iv) Without having undertaken to determine independently the
accuracy or completeness of either the representations and warranties of the
Company contained herein or the information contained in the Registration
Statement, such Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in this Section 1 are
not true and correct, is familiar with the Registration Statement and has no
actual knowledge of any material fact, condition or information not disclosed
in the Registration Statement which has adversely affected or is likely to
adversely affect the business of the Company or any of the Subsidiaries; and
the sale of the Firm Shares and/or the Option Shares by such Selling
Stockholder pursuant hereto is not prompted by any information concerning the
Company or any of the Subsidiaries which is not set forth in the Registration
Statement or the documents incorporated by reference therein. The information
pertaining to such Selling Stockholder under the caption "Principal and Selling
Stockholders" in the Prospectus is complete and accurate in all material
respects as of the date of such Prospectus.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, each Seller
agrees to sell to the Underwriters and each Underwriter agrees, severally and
not jointly, to purchase, at a price of $_____ per share, the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereof,
subject to adjustments in accordance with Section 9 hereof. The number of Firm
Shares to be purchased by each Underwriter from each Seller shall be as nearly
as practicable in the same proportion to the total number of Firm Shares being
sold by each Seller as the number of Firm Shares being purchased by each
Underwriter bears to the total number of Firm Shares to be sold hereunder. The
obligations of the Sellers shall be several and not joint.
(b) Certificates in negotiable form for the total number of the Shares
to be sold hereunder by the Selling Stockholders have been placed in custody
with BankBoston, N.A. d/b/a Boston EquiServe as custodian (the "Custodian")
pursuant to the Custodian Agreement executed by each Selling Stockholder for
delivery of all Firm Shares and any Option Shares to be sold hereunder by the
Selling Stockholders. Each of the Selling Stockholders specifically agrees that
the Firm Shares and any Option Shares represented by the certificates held in
custody for the Selling Stockholders under the Custodian Agreement are subject
to the interests of the Underwriters
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<PAGE> 9
hereunder, that the arrangements made by the Selling Stockholders for such
custody are to that extent irrevocable, and that the obligations of the Selling
Stockholders hereunder shall not be terminable by any act or deed of the
Selling Stockholders (or by any other person, firm or corporation including the
Company, the Custodian or the Underwriters) or by operation of law (including
the death of an individual Selling Stockholder or the dissolution of a
corporate Selling Stockholder) or by the occurrence of any other event or
events, except as set forth in the Custodian Agreement. If any such event
should occur prior to the delivery to the Underwriters of the Firm Shares or
the Option Shares hereunder, certificates for the Firm Shares or the Option
Shares, as the case may be, shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such event has not
occurred. The Custodian is authorized to receive and acknowledge receipt of the
proceeds of sale of the Shares held by it against delivery of such Shares.
(c) Payment for the Firm Shares to be sold hereunder is to be made in
same day funds via wire transfer to the order of the Company for the shares to
be sold by it and to the order of "BankBoston, N.A. d/b/a Boston EquiServe, as
Custodian" for the shares to be sold by the Selling Stockholders, in each case
against delivery of certificates therefor to the Representatives for the
several accounts of the Underwriters. Such delivery is to be made at the
offices of Alex. Brown & Sons Incorporated, 1 South Street, Baltimore,
Maryland, at 10:00 a.m., Baltimore time, on the third business day after the
date of this Agreement or at such other time and date not later than five
business days thereafter as you and the Company shall agree upon, such time and
date being herein referred to as the "Closing Date." (As used herein, "business
day" means a day on which the New York Stock Exchange is open for trading and
on which banks in New York are open for business and not permitted by law or
executive order to be closed.) The certificates for the Firm Shares will be
delivered in such denominations and in such registrations as the
Representatives request in writing not later than the second full business day
prior to the Closing Date, and will be made available for inspection by the
Representatives at least one business day prior to the Closing Date.
(d) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
certain Selling Stockholders listed on Schedule III hereto hereby collectively
grant an option to the several Underwriters to purchase the Option Shares at
the price per share as set forth in the first paragraph of this Section 2. The
maximum number of Option Shares to be sold by each Selling Stockholder is set
forth opposite such Selling Stockholder's name on Schedule III hereto. The
obligations of the Selling Stockholders under this Section 2(d) are several and
not joint. The option granted hereby may be exercised in whole or in part by
giving written notice (i) at any time before the Closing Date and (ii) only
once thereafter within 30 days after the date of this Agreement, by you, as
Representatives of the several Underwriters, to the Company, the
Attorney-in-Fact, and the Custodian setting forth the number of Option Shares
as to which the several Underwriters are exercising the option, the names and
denominations in which the Option Shares are to be registered and the time and
date at which such certificates are to be delivered. If the option
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<PAGE> 10
granted hereby is exercised in part, the respective number of Option Shares to
be sold by each of the Selling Stockholders listed in Schedule III hereto shall
be determined on a pro rata basis in accordance with the percentages set forth
opposite their names on Schedule III hereto, adjusted by you in such manner as
to avoid fractional shares. The time and date at which certificates for Option
Shares are to be delivered shall be determined by the Representatives but shall
not be earlier than three nor later than 10 full business days after the
exercise of such option, nor in any event prior to the Closing Date (such time
and date being herein referred to as the "Option Closing Date"). If the date of
exercise of the option is three or more days before the Closing Date, the
notice of exercise shall set the Closing Date as the Option Closing Date. The
number of Option Shares to be purchased by each Underwriter shall be in the
same proportion to the total number of Option Shares being purchased as the
number of Firm Shares being purchased by such Underwriter bears to the total
number of Firm Shares, adjusted by you in such manner as to avoid fractional
shares. The option with respect to the Option Shares granted hereunder may be
exercised only to cover over-allotments in the sale of the Firm Shares by the
Underwriters. You, as Representatives of the several Underwriters, may cancel
such option at any time prior to its expiration by giving written notice of
such cancellation to the Company and the Attorney-in-Fact. To the extent, if
any, that the option is exercised, payment for the Option Shares shall be made
on the Option Closing Date in same day funds via wire transfer to the order of
"BankBoston, N.A. d/b/a Boston EquiServe, as Custodian" for the Option Shares
to be sold by the Selling Stockholders against delivery of certificates
therefor at the offices of Alex. Brown & Sons Incorporated, 1 South Street,
Baltimore, Maryland.
(e) If on the Closing Date or Option Closing Date, as the case may be,
any Selling Stockholder fails to sell the Firm Shares or Option Shares which
such Selling Stockholder has agreed to sell on such date as set forth in
Schedule II or Schedule III hereto, the Company agrees that it will sell or
arrange for the sale of that number of shares of Common Stock to the
Underwriters which represents Firm Shares or the Option Shares which such
Selling Stockholder has failed to so sell, as set forth in Schedule II or
Schedule III hereto, or such lesser number as may be requested by the
Representatives.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are purchased pursuant
to Section 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
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<PAGE> 11
4. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS.
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Act is followed, to prepare and timely file with the Commission under Rule
424(b) of the Act a Prospectus in a form approved by the Representatives
containing information previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A of the Act, (B) not file any
amendment to the Registration Statement or supplement to the Prospectus or
document incorporated by reference therein of which the Representatives shall
not previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Act or Exchange Act and (C) file on a timely basis all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission subsequent to the date of the Prospectus and
prior to the termination of the offering of the Shares by the Underwriters.
(ii) The Company will advise the Representatives promptly (A)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments thereon from the
Commission, (C) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any
additional information, and (D) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the use of
the Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop
order preventing or suspending the use of the Prospectus and to obtain as soon
as possible the lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the
Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction where it is not now
so qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representatives may reasonably request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period when
delivery of a Prospectus is required under the Act, as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representatives may reasonably request. The Company will deliver to the
Representatives at or before the Closing
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<PAGE> 12
Date, four signed copies of the Registration Statement and all amendments
thereto including all exhibits filed therewith, and will deliver to the
Representatives such number of conformed copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), including documents incorporated by reference
therein, and of all amendments thereto, as the Representatives may reasonably
request.
(v) The Company will comply with the Act and the Exchange Act
so as to permit the completion of the distribution of the Shares as
contemplated in this Agreement and the Prospectus. If during the period in
which a prospectus is required by law to be delivered by an Underwriter or
dealer, any event shall occur as a result of which, in the judgment of the
Company or in the reasonable opinion of the Underwriters, it becomes necessary
to amend or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances existing at the time the Prospectus is
delivered to a purchaser, not misleading, or, if it is necessary at any time to
amend or supplement the Prospectus to comply with any law, the Company promptly
will either (i) prepare and file with the Commission an appropriate amendment
to the Registration Statement or supplement to the Prospectus or (ii) prepare
and file with the Commission an appropriate filing under the Exchange Act which
shall be incorporated by reference in the Prospectus so that the Prospectus as
so amended or supplemented will not, in the light of the circumstances when it
is so delivered, be misleading, or so that the Prospectus will otherwise comply
with the Act.
(vi) The Company will make generally available to its
security holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration Statement, an
earning statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earning statement shall satisfy the
requirements of Section 11(a) and Rule 158 of the Act and will advise you in
writing when such statement has been so made available.
(vii) The Company will, for a period of five years from the
Closing Date, deliver to the Representatives copies of annual reports and
copies of all other documents, reports and information furnished by the Company
to its stockholders generally or filed with any securities exchange pursuant to
the requirements of such exchange or with the Commission pursuant to the Act or
the Exchange Act. The Company will deliver to the Representatives similar
reports with respect to significant subsidiaries, as that term is defined in
the Act, if any, which are not consolidated in the Company's financial
statements.
(viii) No offering, sale, short sale, issuance or other
disposition of any shares of Common Stock of the Company or other securities
convertible into or exchangeable or exercisable for shares of Common Stock or
derivative of Common Stock (or agreement for such) will be made for a period of
90 days after the date of this Agreement, directly or indirectly, by the
Company otherwise than hereunder or with the prior written consent of Alex.
Brown &
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<PAGE> 13
Sons Incorporated, except for options granted under the Company's stock option
plans and shares of Common Stock issued upon exercise of such options or
pursuant to the Company's Employee Stock Purchase Plan. In addition, during the
90-day period, the Company may offer to issue (but may not issue) shares of
Common Stock in connection with then-proposed acquisitions.
(ix) The Company will use its best efforts to list, subject
to notice of issuance, the Company Shares on The Nasdaq Stock Market.
(x) The Company has caused each executive officer and
director of the Company and each Selling Stockholder to furnish to you, on or
prior to the date of this agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such person shall
agree not to make or cause any offering, sale or other disposition, directly or
indirectly, of any shares of Common Stock of the Company owned of record or
beneficially by such person (or as to which such person has the right to direct
the disposition of) for a period of 90 days after the date of the Prospectus,
except with the prior written consent of Alex. Brown & Sons Incorporated
("Lockup Agreements").
(xi) The Company shall apply the net proceeds of its sale of
the Company Shares as set forth in the Prospectus and shall file such reports
with the Commission with respect to the sale of the Shares and the application
of the proceeds therefrom as may be required in accordance with Rule 463 of the
Act.
(xii) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Company Shares in such a
manner as would require the Company or any of the Subsidiaries to register as
an investment company under the 1940 Act.
(xiii) The Company will continue to maintain a transfer agent
and, if necessary under the jurisdiction of incorporation of the Company, a
registrar for the Common Stock.
(xiv) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the manipulation or unlawful
stabilization of the price of any securities of the Company.
(b) Each of the Selling Stockholders covenants and agrees with the
several Underwriters that:
(i) No offering, sale or other disposition, directly or
indirectly, of any shares of Common Stock of the Company owned of record or
beneficially by the Selling Stockholder (or as to which such person has the
right to direct the disposition of) will be made for a period of 90 days after
the date of the Prospectus, except with the prior written consent of Alex.
Brown & Sons Incorporated.
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<PAGE> 14
(ii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of
1983 with respect to the transactions herein contemplated, each Selling
Stockholder agrees to deliver to you prior to or at the Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
(iii) Such Selling Stockholder will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the manipulation or unlawful
stabilization of the price of any securities of the Company.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company and Selling Stockholders under
this Agreement, including, without limiting the generality of the foregoing,
the following: accounting fees of the Company; the fees and disbursements of
counsel for the Company and the Selling Stockholders; the cost of printing and
delivering to, or as requested by, the Underwriters copies of the Registration
Statement, Preliminary Prospectuses, the Prospectus, this Agreement, the
Underwriters' Invitation Letter, filing fees of the Commission; the filing fee
of the NASD terms of the sale of the Shares; and the listing fee of The Nasdaq
Stock Market relating to the Company Shares. To the extent, if at all, that any
of the Selling Stockholders engage special legal counsel to represent them in
connection with this offering, the fees and expenses of such counsel shall be
borne by such Selling Stockholder. Any transfer taxes imposed on the sale of
the Shares to the several Underwriters will be paid by the Company and the
Selling Stockholders pro rata. Neither the Company, nor any of the Selling
Stockholders, however, shall be required to pay for any of the Underwriter's
expenses (other than those related to qualification under NASD regulation of
the underwriting compensation) except that, if this Agreement shall not be
consummated because the conditions in Section 6 hereof are not satisfied, or
because this Agreement is terminated by the Representatives pursuant to Section
11 hereof, or by reason of any failure, refusal or inability on the part of the
Company or the Selling Stockholders to perform any undertaking or satisfy any
condition of this Agreement or to comply with any of the terms hereof on their
part to be performed, unless such failure to satisfy said condition or to
comply with said terms be due to the default or omission of any Underwriter,
then the Company shall reimburse the several Underwriters for reasonable
out-of-pocket expenses, including fees and disbursements of counsel, reasonably
incurred in connection with investigating, marketing and proposing to market
the Shares or in contemplation of performing their obligations hereunder; but
the Company and the Selling Stockholders shall not in any event be liable to
any of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares.
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<PAGE> 15
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option Closing
Date are subject to the accuracy, as of the Closing Date or the Option Closing
Date, as the case may be, of the representations and warranties of the Company
and the Selling Stockholders contained herein, and to the performance by the
Company and the Selling Stockholders of their respective covenants and
obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule
424 and Rule 430A of the Act shall have been made, and any request of the
Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time,
shall have been issued and no proceedings for that purpose shall have been
taken or, to the knowledge of the Company or the Selling Stockholders, shall be
contemplated by the Commission and no injunction, restraining order, or order
of any nature by a Federal or state court of competent jurisdiction shall have
been issued as of the Closing Date which would prevent the issuance of the
Shares.
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Dilworth, Paxson,
Kalish & Kauffman LLP, counsel for the Company and the Selling Stockholders,
dated the Closing Date or the Option Closing Date, as the case may be,
addressed to the Underwriters (and stating that it may be relied upon by
counsel to the Underwriters) to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; each of the
Subsidiaries has been duly organized and is validly existing as a corporation
or limited liability company in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority to own or
lease its properties and conduct its business as described in the Registration
Statement; the Company and each of the Subsidiaries are duly qualified to
transact business in all jurisdictions in which the conduct of their business
requires such qualification and in which the failure to qualify would have a
materially adverse effect upon the business of the Company and the Subsidiaries
taken as a whole; and the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued and are fully paid
and non-assessable and are owned by the Company or a Subsidiary, except as set
forth in Exhibit A to the Underwriting Agreement with respect to Manugistics
France S.A.; and, to the best of such counsel's knowledge, the outstanding
shares of capital stock of each of the Subsidiaries is owned free and clear of
all liens, encumbrances and
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<PAGE> 16
claims, at law or in equity, and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to convert
any obligations into any shares of capital stock or of ownership interests in
the Subsidiaries are outstanding.
(ii) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus; the
authorized shares of the Company's Common Stock have been duly authorized; the
outstanding shares of the Company's Common Stock, including the Shares to be
sold by the Selling Stockholders, have been duly authorized and validly issued
and are fully paid and non-assessable; all of the Shares conform to the
description thereof contained in the Prospectus; the certificates for the
Shares, assuming they are in the form filed with the Commission, are in due and
proper form; the Company Shares have been duly authorized and will be validly
issued, fully paid and non-assessable when issued and paid for as contemplated
by this Agreement; and are not subject to any preemptive or other similar
rights arising by operation of law, under the Charter or By-Laws, under any
resolution adopted by the board of directors of the Company or any committee
thereof or, to the best of such counsel's knowledge, otherwise.
(iii) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company
and there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock or
any securities convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of such stock. Except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of
the Company or any other person has the right, contractual or otherwise, which
has not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of
the Shares or the right to have any Common Stock or other securities of the
Company included in the Registration Statement or the right, as a result of the
filing of the Registration Statement, to require registration under the Act of
any shares of Common Stock or other securities of the Company.
(iv) The Registration Statement has become effective under
the Act and, to the best of the knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending or
threatened under the Act.
(v) The Registration Statement, the Prospectus and each
amendment or supplement thereto and document incorporated by reference therein
comply as to form in all material respects with the requirements of the Act or
the Exchange Act, as applicable (except that such counsel need express no
opinion as to the financial statements, including the notes thereto, and
related schedules or other financial, statistical or operating information set
forth or incorporated by reference therein). The conditions for the use of Form
S-3, set forth in the
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<PAGE> 17
General Instructions thereto in connection with the offer and sale of the
Shares as contemplated hereunder, have been satisfied.
(vi) The statements under the caption "Description of Capital
Stock" in the Prospectus, insofar as such statements constitute a summary of
documents referred to therein or matters of law, accurately summarize in all
material respects the information required to be set forth thereunder under the
Act with respect to such documents and matters.
(vii) Such counsel does not know of any contracts or
documents required under the Act to be filed as exhibits to or incorporated by
reference in the Registration Statement or described in the Registration
Statement or the Prospectus which are not so filed, incorporated by reference
or described as required, and such contracts and documents as are summarized in
the Registration Statement or the Prospectus are fairly summarized in all
material respects.
(viii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company or any of
the Subsidiaries except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated by the Company or the
Selling Stockholders do not and will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, the Charter
or By-Laws of the Company, or any agreement or instrument known to such counsel
to which the Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries may be bound.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary to have been made in connection with the
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated by the Company or the Selling Stockholders
(other than as may be required by the NASD or as required by State securities
and Blue Sky laws as to which such counsel need express no opinion) except such
as have been obtained or made, specifying the same.
(xii) The Company is not, and will not become, solely as a
result of the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
(xiii) This Agreement has been duly authorized, executed and
delivered on behalf of each of the Selling Stockholders.
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<PAGE> 18
(xiv) Each Selling Stockholder has full legal right, power
and authority, and any approval required by law (other than as may be required
by the NASD or as required by State securities and Blue Sky laws as to which
such counsel need express no opinion), to sell, assign, transfer and deliver
the portion of the Shares to be sold by such Selling Stockholder hereunder.
(xv) Each of the Custodian Agreement and the Power of
Attorney executed and delivered by each Selling Stockholder is valid and
binding on such Selling Stockholder.
(xvi) Upon the delivery of and payment for the Shares being
sold by each Selling Stockholder on the Closing Date, and/or the Option Closing
Date, as the case may be, each of the Underwriters who have acquired such
Shares in good faith and without notice of any adverse claim within the meaning
of the Uniform Commercial Code will acquire good and marketable title to such
Shares free and clear of all liens, encumbrances and claims, at law or in
equity.
In rendering such opinion, Dilworth, Paxson, Kalish & Kauffman LLP may
rely as to matters governed by the laws of states or jurisdictions other than
Delaware or Federal laws on local counsel in such jurisdictions and as to the
matters set forth in subparagraphs (ix), (xi), (xiii), (xiv), (xv) and (xvi) on
opinions of other counsel representing the respective Selling Stockholders,
provided that in each case Dilworth, Paxson, Kalish & Kauffman LLP shall state
that they believe that they and the Underwriters are justified in relying on
such other counsel. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to the
attention of such counsel which leads them to believe that (i) the Registration
Statement, at the time it became effective under the Act (but after giving
effect to any modifications incorporated therein pursuant to Rule 430A under
the Act) and as of the Closing Date or the Option Closing Date, as the case may
be, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Prospectus, or any supplement thereto, on
the date it was filed pursuant to the Act and as of the Closing Date or the
Option Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make
the statements, in the light of the circumstances under which they are made,
not misleading (except that such counsel need express no view as to financial
statements, including the notes thereto, schedules or other financial,
statistical or operating information set forth or incorporated by reference
therein). With respect to such statement, Dilworth, Paxson, Kalish & Kauffman
LLP may state that their belief is based upon the procedures set forth therein,
but is without independent check and verification.
(c) The Representatives shall have received from Piper & Marbury
L.L.P., counsel for the Underwriters, an opinion dated the Closing Date or the
Option Closing Date, as the case may be, substantially to the effect specified
in subparagraphs (ii), (iii), (iv), (x) and (xi) of Paragraph (b) of this
Section 6, and that the Company is a duly organized and validly existing
corporation under the laws of the State of Delaware. In rendering such opinion,
Piper & Marbury L.L.P. may
-18-
<PAGE> 19
rely as to all matters governed other than by the laws of the State of Maryland
or Federal laws on the opinion of counsel referred to in Paragraph (b) of this
Section 6. In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of
such counsel which leads them to believe that (i) the Registration Statement,
or any amendment thereto, as of the time it became effective under the Act (but
after giving effect to any modifications incorporated therein pursuant to Rule
430A under the Act) as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Act and as of the Closing
Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact, necessary in
order to make the statements, in the light of the circumstances under which
they are made, not misleading (except that such counsel need express no view as
to financial statements, including the notes thereto, schedules or other
financial, statistical or operating information therein). With respect to such
statement, Piper & Marbury L.L.P. may state that their belief is based upon the
procedures set forth therein, but is without independent check and
verification.
(d) You shall have received, on each of the dates hereof, the Closing
Date and the Option Closing Date, as the case may be, a letter dated the date
hereof, the Closing Date or the Option Closing Date, as the case may be, in
form and substance satisfactory to you, of Deloitte & Touche LLP confirming
that they are independent public accountants within the meaning of the Act and
stating that in their opinion the financial statements and schedules examined
by them and included in the Registration Statement comply in form in all
material respects with the applicable accounting requirements of the Act; and
containing such other statements and information as is ordinarily included in
accountants' "comfort letters" to Underwriters with respect to the financial
statements and certain financial and statistical information contained in the
Registration Statement and Prospectus.
(e) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of the
Chief Executive Officer and the Chief Financial Officer of the Company to the
effect that, as of the Closing Date or the Option Closing Date, as the case may
be, each of them severally represents as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registration
Statement has been issued, and, to their knowledge, no proceedings for such
purpose have been taken or are contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or
the Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to
Rules 424 or 430A under the Act have been made;
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<PAGE> 20
(iv) He has carefully examined the Registration Statement and
the Prospectus and, to such officer's knowledge, as of the effective date
of the Registration Statement, the statements contained in the Registration
Statement were true and correct in all material respects and such
Registration Statement and Prospectus did not omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, and since the effective date of the Registration
Statement, no event has occurred which should have been set forth in a
supplement to or an amendment of the Prospectus which has not been so set forth
in such supplement or amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been any
material adverse change or any development known to him involving a prospective
material adverse change in or affecting the condition, financial or otherwise,
of the Company and its Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, operations, condition (financial or otherwise)
or prospects of the Company and the Subsidiaries taken as a whole, whether or
not arising in the ordinary course of business.
(f) The Company and the Selling Stockholders shall have furnished to
the Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested in
writing.
(g) The Company Shares have been approved as additional shares of
Common Stock for listing upon notice of issuance on The Nasdaq Stock Market.
(h) The Lockup Agreements described in Section 4(a)(x) are in full
force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Piper & Marbury
L.L.P., counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company and the Selling Stockholders of
such termination in writing or by telegram at or prior to the Closing Date or
the Option Closing Date, as the case may be.
In such event, the Selling Stockholders, the Company and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY AND THE SELLING
STOCKHOLDERS.
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<PAGE> 21
The obligations of the Company and the Selling Stockholders to sell
and deliver the portion of the Shares respectively required to be delivered by
each of them as and when specified in this Agreement are subject to the
conditions that at the Closing Date or the Option Closing Date, as the case may
be, no stop order suspending the effectiveness of the Registration Statement
shall have been issued and in effect or proceedings therefor initiated or
threatened.
8. INDEMNIFICATION.
(a) The Company and Gibson, jointly and severally, agree to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act, against any losses, claims, damages
or liabilities to which such Underwriter or any such controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made; and will reimburse each
Underwriter and each such controlling person upon demand for any legal or other
expenses reasonably incurred by such Underwriter or such controlling person in
connection with investigating or defending any such loss, claim, damage or
liability, action or proceeding or in responding to a subpoena or governmental
inquiry related to the offering of the Shares, whether or not such Underwriter
or controlling person is a party to any action or proceeding; provided,
however, that the Company and Gibson will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement, or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof. In no event,
however, shall the liability of Gibson for indemnification under this Section
8(a) exceed the lesser of (A) that proportion of the total of such losses,
claims, damages or liabilities indeminified against equal to the proportion of
the total Shares sold hereunder which is being sold by Gibson, or (B) the
proceeds received by Gibson from the Underwriters in the offering. This
indemnity agreement will be in addition to any liability which the Company or
Gibson may otherwise have.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Selling Stockholders, and each person,
if any, who controls the Company or the Selling Stockholders within the meaning
of the Act, against any losses, claims, damages or liabilities to which the
Company or any such director, officer, Selling Stockholder or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
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<PAGE> 22
or (ii) the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made; and
will reimburse any legal or other expenses reasonably incurred by the Company
or any such director, officer, Selling Stockholder or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that each Underwriter will
be liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made in the Registration Statement, any Preliminary Prospectus, the Prospectus
or such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution
or otherwise than on account of the provisions of Section 8(a) or (b). In case
any such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred (or within 30 days of
presentation) the fees and expenses of the counsel retained by the indemnified
party in the event (i) the indemnifying party and the indemnified party shall
have mutually agreed to the retention of such counsel, (ii) the named parties
to any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them or (iii) the indemnifying party shall have failed to
assume the defense and employ counsel acceptable to the indemnified party
within a reasonable period of time after notice of commencement of the action.
It is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by you in the
case of parties indemnified pursuant to Section 8(a) and by the Company and the
Selling Stockholders in
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<PAGE> 23
the case of parties indemnified pursuant to Section 8(b). The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. In addition, the indemnifying party will not, without
the prior written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding of which indemnification may be sought hereunder (whether or not
any indemnified party is an actual or potential party to such claim, action or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
Gibson on the one hand and the Underwriters on the other from the offering of
the Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and Gibson on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and Gibson on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and Gibson bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or
Gibson on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company, Gibson and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall
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<PAGE> 24
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter, (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation, and (iii)
Gibson shall not be required to contribute any amount in excess of the lesser
of (A) that proportion of the total of such losses, claims, damages or
liabilities indemnified or contributed against equal to the proportion of the
total Shares sold hereunder which is being sold by Gibson, or (B) the proceeds
received by Gibson from the Underwriters in the offering. The Underwriters'
obligations in this Section 8(d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Except as otherwise provided above in this Section 8, any losses,
claims, damages, liabilities or expenses for which an indemnified party is
entitled to indemnification or contribution under this Section 8 shall be paid
by the indemnifying party to the indemnified party as such losses, claims,
damages, liabilities or expenses are incurred (or within 30 days of
presentation). The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Company, its directors or officers or any
persons controlling the Company, (ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may be,
any Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or a
Selling Stockholder), you, as Representatives of the Underwriters, shall use
your reasonable best efforts to procure within 36 hours thereafter one or more
of the other Underwriters, or any
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<PAGE> 25
others, to purchase from the Company and the Selling Stockholders such amounts
as may be agreed upon and upon the terms set forth herein, the Firm Shares or
Option Shares, as the case may be, which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as such
Representatives, shall not have procured such other Underwriters, or any
others, to purchase the Firm Shares or Option Shares, as the case may be,
agreed to be purchased by the defaulting Underwriter or Underwriters, then (a)
if the aggregate number of shares with respect to which such default shall
occur does not exceed 10% of the Firm Shares or Option Shares, as the case may
be, covered hereby, the other Underwriters shall be obligated, severally, in
proportion to the respective numbers of Firm Shares or Option Shares, as the
case may be, which they are obligated to purchase hereunder, to purchase the
Firm Shares or Option Shares, as the case may be, which such defaulting
Underwriter or Underwriters failed to purchase, or (b) if the aggregate number
of shares of Firm Shares or Option Shares, as the case may be, with respect to
which such default shall occur exceeds 10% of the Firm Shares or Option Shares,
as the case may be, covered hereby, the Company and the Selling Stockholders or
you as the Representatives of the Underwriters will have the right, by written
notice given within the next 36-hour period to the parties to this Agreement,
to terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Company or of the Selling Stockholders except to the
extent provided in Section 8 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section 9, the Closing Date
or Option Closing Date, as the case may be, may be postponed for such period,
not exceeding seven days, as you, as Representatives, may determine in order
that the required changes in the Registration Statement or in the Prospectus or
in any other documents or arrangements may be effected. The term "Underwriter"
includes any person substituted for a defaulting Underwriter. Any action taken
under this Section 9 shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to Alex. Brown & Sons
Incorporated, 101 Federal Street, 15th Floor, Boston, Massachusetts 02110-1846,
Attention: R. William Burgess, Jr., Managing Director; with a copy to Alex.
Brown & Sons Incorporated, 1 South Street, Baltimore, Maryland 21202.
Attention: General Counsel; if to the Company or the Selling Stockholders, to
Manugistics Group, Inc., 2115 East Jefferson Street, Rockville, Maryland 20852,
with a copy to Dilworth, Paxon, Kalish & Kauffman LLP, 3200 Mellon Bank Center,
1735 Market Street, Philadelphia, PA 19103, Attention: Joseph H. Jacovini, Esq.
and Merritt A. Cole, Esq.
11. TERMINATION.
This Agreement may be terminated by you by notice to the Company and
each Selling Stockholder as follows:
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<PAGE> 26
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m. on
the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change or
any development involving a prospective material adverse change in or affecting
the condition, financial or otherwise, of the Company and its Subsidiaries
taken as a whole or the earnings, business, management, properties, assets,
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries taken as a whole, whether or not arising in the ordinary
course of business; (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or
change on the financial markets of the United States would, in your reasonable
judgment, make it impracticable to market the Shares or to enforce contracts
for the sale of the Shares; (iii) suspension of trading in securities on the
New York Stock Exchange or The Nasdaq Stock Market or limitation on prices
(other than limitations on hours or numbers of days of trading) for securities
on such exchange or market; (iv) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of any court or other
governmental authority which in your reasonable opinion materially and
adversely affects or presents a material possibility that it would materially
and adversely affect the business or operations of the Company; (v) declaration
of a banking moratorium by United States or New York State authorities; (vi)
the suspension of trading of the Company's common stock on The Nasdaq Stock
Market or (vii) the taking of any action by any governmental body or agency in
respect of its monetary or fiscal affairs which in your reasonable opinion has
a material adverse effect on the securities markets in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Selling Stockholders and the Underwriters acknowledge
and agree that the only information furnished or to be furnished by any
Underwriter to the Company for inclusion in any Prospectus or the Registration
Statement consists of the information set forth in the last paragraph on the
front cover page (insofar as such information relates to the
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<PAGE> 27
Underwriters), legends required by Item 502(d) of Regulation S-K under the Act
and the information under the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants
in this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of
any Underwriter or controlling person thereof, or by or on behalf of the
Company or its directors or officers and (c) delivery of and payment for the
Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Stockholders,
the Company and the several Underwriters in accordance with its terms.
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<PAGE> 28
Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Stockholder represents by so doing that he has been duly
appointed as Attorney-in-Fact by such Selling Stockholder pursuant to a validly
existing and binding Power of Attorney which authorizes such Attorney-in-Fact
to take such action.
Very truly yours,
MANUGISTICS GROUP, INC.
By:
--------------------------------
Name: William M. Gibson
Title: President, Chief Executive Officer
and Chairman of the Board of Directors
Selling Stockholders listed on Schedules II
and III
By:
--------------------------------
Attorney-in-Fact
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
ALEX. BROWN & SONS INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
ROBERTSON, STEPHENS & COMPANY LLC
As Representatives of the several
Underwriters listed on Schedule I
By: Alex. Brown & Sons Incorporated
By:
---------------------------
Authorized Officer
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<PAGE> 29
SCHEDULE I
SCHEDULE OF UNDERWRITERS
<TABLE>
<CAPTION>
Number of Firm Shares
Underwriter to be Purchased
- ----------- ---------------------
<S> <C>
Alex. Brown & Sons Incorporated
Morgan Stanley & Co. Incorporated
Robertson, Stephens & Company LLC
----------
Total 2,200,000
==========
</TABLE>
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<PAGE> 30
SCHEDULE II
SCHEDULE OF SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
Number of Firm Shares
Selling Stockholder to be Sold
- ------------------- ---------------------
<S> <C> <C>
William M. Gibson 400,000
-------
Total 400,000
=======
</TABLE>
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<PAGE> 31
SCHEDULE III
SCHEDULE OF OPTION SHARES
<TABLE>
<CAPTION>
Maximum Number of Percentage of Total
Name of Seller Option Shares to be Sold Number of Option Shares
- -------------- ------------------------ -----------------------
<S> <C> <C>
William M. Gibson 100,000 30.3%
General Atlantic Partners 26, L.P. 172,287 52.2%
Kenneth S. Thompson 30,000 9.1%
GAP Coinvestment Partners, L.P. 27,713 8.4%
------- ----
Total 330,000 100%
======= ====
</TABLE>
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<PAGE> 32
EXHIBIT A
SCHEDULE OF SUBSIDIARIES
<TABLE>
<CAPTION>
State or
Jurisdiction
of Incorporation Name Under Which
Name or Organization Subsidiary Does Business
- ---- --------------- ------------------------
<S> <C> <C>
Manugistics Colorado, Inc. Delaware Manugistics, Inc.
Manugistics, Inc. Delaware Manugistics, Inc.
Manugistics France S.A. France Manugistics France S.A.
Manugistics, Inc. Foreign Sales Corporation Virgin Islands Manugistics, Inc.
Manugistics U.K. Ltd. United Kingdom Manugistics U.K. Ltd.
Manugistics Canada Ltd. Ontario Manugistics Canada Ltd.
Manugistics (Deutschland) GmbH Germany Manugistics (Deutschland) GmbH
Manugistics European Holding Company B.V. Netherlands Manugistics European Holding Company B.V.
Manugistics Services, Inc. Delaware Manugistics, Inc.
Manugistics Japan K.K. Japan Manugistics Japan K.K.
Synchronology Manufacturing Group Limited United Kingdom Synchronology Manufacturing Group Limited
Synchronized Manufacturing Limited United Kingdom Synchronized Manufacturing Limited
Synchronology Limited United Kingdom Synchronology Limited
Synchronized Manufacturing S.A. (Belgium) Belgium Synchronized Manufacturing S.A. (Belgium)
</TABLE>
With the exception of Manugistics France S.A., all subsidiaries on
this Exhibit A are wholly-owned, directly or indirectly, by Manugistics Group,
Inc. With respect to Manugistics France S.A., of 100,000 shares of capital
stock outstanding, 99,994 shares are owned by a subsidiary of Manugistics
Group, Inc.
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<PAGE> 1
EXHIBIT 5
August 11, 1997
Manugistics Group, Inc.
2115 East Jefferson Street
Rockville, Maryland 20852
Re: Issuance of Common Stock pursuant to
Registration Statement on Form S-3
Dear Sirs:
We have acted as counsel for Manugistics Group, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-3 (Reg. No. 333-31949) filed by the Company
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, relating to the public offering of up to a total of 2,530,000
shares (including 330,000 shares issuable upon exercise of an over-allotment
option) (the "Shares"), of the Company's Common Stock, par value $.002 per
share. (Said Registration Statement, as amended, including all exhibits thereto
and all documents incorporated therein by reference, is referred to below as the
"Registration Statement.") The Shares consist of: (i) 1,800,000 Shares to be
sold by the Company (the "Primary Shares"); (ii) a total of 400,000 presently
outstanding Shares to be sold by the Selling Stockholder named in the
Registration Statement (the "Secondary Shares") and (iii) up to a total of
330,000 presently outstanding Shares subject to sale by certain other selling
stockholders named in the Underwriting Agreement (the "Over-allotment Shares"),
which the Underwriters have an option to purchase solely for the purpose of
covering over-allotments.
In this connection, we have examined: (i) the Company's Amended and
Restated Certificate of Incorporation and Amended and Restated By-laws; (ii) the
resolutions and related minutes of the Company's Board of Directors authorizing
the issuance of the Primary Shares and the preparation and filing of the
Registration Statement; (iii) the Registration Statement; and (iv) certain
officers' certificates, corporate records and such other documents as we have
deemed appropriate or necessary for purposes of rendering the opinions
hereinafter expressed.
In rendering the opinions expressed below, we have assumed the authenticity
of all documents and records examined, the conformity with the original
documents of all documents submitted to us as copies and the genuineness of all
signatures.
Based upon the subject to the foregoing, we are of the opinion that:
1. The Primary Shares have been duly authorized for issuance and, when
sold, paid for and delivered to the Underwriters in accordance with the
terms of the Underwriting Agreement, will be legally issued, fully paid and
non-assessable;
2. The Secondary Shares are duly authorized, legally issued, fully
paid and non-assessable.
3. The Over-allotment Shares which are subject to sale by certain
selling stockholders to the Underwriters are duly authorized, legally
issued, fully paid and non-assessable.
We are admitted to practice in the Commonwealth of Pennsylvania. We have
made such investigation of the General Corporation Law of the State of Delaware
(the "Delaware GCL") as we have considered appropriate for the purpose of
rendering the opinions expressed above. This opinion is limited to the Federal
law of the United States and the Delaware GCL.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference made to this firm under the caption
"Legal Matters" in the Prospectus constituting a part of the Registration
Statement.
Very truly yours,
DILWORTH, PAXSON, KALISH & KAUFFMAN LLP
