As filed with the Securities and Exchange Commission on August 4, 1997
Registration Number 333-*****
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Computer Management Sciences, Inc.
(Exact name of registrant as specified in its charter)
Florida 59-2264633
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8133 Baymeadows Way
Jacksonville, Florida 32256
(904) 737-8955
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Jerry W. Davis
Chief Executive Officer
Computer Management Sciences, Inc.
8133 Baymeadows Way
Jacksonville, Florida 32256
(904) 737-8955
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of the Registration Statement and from time
to time thereafter.
If the only securities being registered on this 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 as interest
reinvestment plans, check the following box. [X]
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 the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Title of Shares to be Amount to be Proposed Maximum Proposed Maximum Amount of
Registered Registered Offering Price per Aggregate Offering Registration Fee
Share(1) Price
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Common Stock 291,924 $20.1875 $5,893,215.75 $1,785.82
- ------------------------ ---------------------- ---------------------- ---------------------- ======================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee on the
basis of the average of the high and low sale prices for the Common Stock
of the Registrant on July 29, 1997, as reported by the National Association
of Securities Dealers Automated Quotation System, National Market System.
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, as amended, or until the Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 4, 1997
PROSPECTUS
291,924 Shares
Computer Management Sciences, Inc.
Common Stock
This Prospectus relates to the offering of up to 291,924 shares (the
"Shares") of common stock, par value $0.01 per share (the "Common Stock"), of
Computer Management Sciences, Inc. (the "Company"). All of the Shares offered
hereby are being sold by the Selling Shareholders named herein. See "Selling
Shareholders" and "Plan of Distribution." The Company will not receive any of
the proceeds from the sale of the Shares offered hereby. See "Use of Proceeds."
The Common Stock is traded in the over-the-counter market, and price
quotations therefor are reported on the National Association of Securities
Dealers Automated Quotation System, National Market System ("Nasdaq NMS") under
the symbol "CMSX." The last reported sale price of the Common Stock on July 29,
1997 was $20.25 per share.
See "Risk Factors" beginning on page 3 for a discussion of certain factors
that should be considered by prospective purchasers of the Shares offered
hereby.
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.
The distribution of the Shares by the Selling Shareholders is not subject
to any underwriting agreement. The Selling Shareholders may sell the Shares
covered by this Prospectus through the Nasdaq NMS, at prices and terms then
prevailing, through customary brokerage channels, in privately negotiated
transactions or otherwise, on a delayed or continuous basis from time to time,
either through broker-dealers acting as agents or brokers for such seller, or
through broker-dealers acting as principals. Such sales will be effected by the
Selling Shareholders for their own account. The Selling Shareholders may pay
such broker-dealers compensation in the form of underwriting discounts,
concessions, or commissions, which compensation may be in excess of customary
commissions. To the extent required, the purchase price, the names of any such
agent, dealer or underwriter, and any applicable commission or discount with
respect to a particular offering, will be set forth in an accompanying
Prospectus Supplement. The aggregate net proceeds to the Selling Shareholders
from the sale of any of the Shares will be the sales price thereof less the
aggregate agent's commission or underwriter's discount, if any. See "Plan of
Distribution." The Company will not receive any of the proceeds from the sale of
the Shares offered hereby. See "Use of Proceeds."
The Selling Shareholders and any dealer, agent or underwriter that
participates with the Selling Shareholders in the distribution of the Shares may
be deemed to be an "underwriter" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), and any commission or profit may be
deemed to be underwriting commissions or discounts under the Securities Act. See
"Plan of Distribution."
No person has been authorized in connection with any offering made hereby
to give any information or to make any representations other than those
contained in this Prospectus or any Prospectus Supplement, and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company, the Selling Shareholders, or any underwriter, dealer
or agent. This Prospectus or any Prospectus Supplement does not constitute an
offer to sell or the solicitation of an offer to buy any securities other than
the securities to which it relates or any offer to sell or the solicitation of
an offer to buy such securities in any circumstances in which such offer or
solicitation is unlawful.
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.
The date of this Prospectus is August 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Copies of such reports,
proxy statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional
Offices of the Commission: Seven World Trade Center, 13th Floor, New York, NY
10048 and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago,
Illinois 60661. Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a Worldwide Web site at
http://www.sec.gov which contains reports, proxy statements and other
information regarding registrants, such as the Company, that file electronically
with the Commission. The Common Stock is traded on the Nasdaq NMS (Symbol:
CMSX). In addition, material filed by the Company can be inspected at the
offices of Nasdaq NMS, Reports Section, 1735 K Street N.W., Washington, D.C.
20006.
This Prospectus constitutes part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") and does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the securities offered hereby, reference is made to
the Registration Statement and to the exhibits and schedules thereto. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed with the Commission by the
Company pursuant to the Exchange Act (Commission File No. 0-26622) are
incorporated by reference in this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "Annual Report");
(2) The Company's Quarterly Report on Form 10-Q dated May 15, 1997; and
(3) The Company's Current Report on Form 8-K dated January 31, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Shares made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in this Prospectus or
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 subsequently filed
document, which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
A copy of any documents incorporated by reference (not including exhibits
to such documents other than exhibits specifically incorporated by reference
into such documents) are available without charge to any person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request. Requests for such documents should be directed to the Secretary,
Computer Management Sciences, Inc., 8133 Baymeadows Way, Jacksonville, Florida
32256, telephone number (904) 737-8955.
2
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus and the information incorporated by reference herein
contain certain information and trend statements that constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, which involve risks and uncertainties. Actual
results may differ materially from the results described in the forward-looking
statements. When used in this Prospectus, the words "anticipate", "believe",
"estimate", "expect", "intend", "project", "target" and other similar
expressions, as they relate to the Company, are intended to 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 that include, but are not limited to, growth
through business combinations and internal expansion, the Company's ability to
attract and retain qualified consultants, dependence on significant
relationships and the absence of long-term contracts, project risk, the
Company's ability to effectively manage a large and rapidly changing business,
pricing and margin pressures, and competition. Please refer to discussions of
these and other important factors in this Prospectus under the section entitled
"Risk Factors" and in other Company reports and forms on file with the
Commission. The Company disclaims any intent or obligation to update publicly
these forward-looking statements, whether as a result of new information, future
events or otherwise.
THE COMPANY
The Company provides information technology consulting and custom software
development services to a diverse group of clients, primarily Fortune 1000
companies, other large organizations and state and local governments located
throughout the U.S. The Company's services are generally an outside resource
supplementing a client's internal information technology ("IT") capabilities,
and include a broad range of technical services, such as technology support
services, IT solutions services and strategic IT consulting. Technology support
services include systems support and maintenance and contract programming.
Solutions services include software application design, development and
implementation, as well as outsourcing and systems integration. Strategic
consulting services include planning and designing enterprise-wide information
systems and business process re-engineering, which allow clients to maximize the
strategic value of business information.
The Company was formed as a Florida corporation in January 1983. The
Company's principal executive offices are located at 8133 Baymeadows Way,
Jacksonville, Florida 32256, and its telephone number is (904) 737-8955.
Shareholders and interested investors may obtain information and make inquiries
regarding the Company at the following Internet address: http://www.cmsx.com.
RISK FACTORS
Prospective investors should consider carefully the following factors, in
addition to the other information set forth in this Prospectus, in connection
with an investment in the Shares offered hereby.
Management of Growth. The Company is currently experiencing rapid growth
that could strain the Company's managerial and other resources. From June 30,
1995 through June 30, 1997, the size of the Company's professional consulting
staff increased from 247 to 596 full-time employees, and further increases are
anticipated during the balance of 1997. In addition, since December 1995, the
Company has opened two new branch offices in Detroit and Winston-Salem and has
established three new locations in Charlotte, Denver and Washington, D.C.
through strategic acquisitions. Since October 1995, the Company has opened
Systems Outsourcing Centers ("SOCs") in Jacksonville, Florida, Greenville, South
Carolina, Tallahassee and Atlanta, and expects to open two additional SOCs by
the end of 1997. The Company intends to open additional domestic and, possibly,
international offices and SOCs and to staff such facilities as needed. The
Company's ability to manage its staff and facilities growth effectively will
require it to continue to improve its operational, financial and other internal
systems, and to attract, train, motivate, manage and retain its employees. If
the Company's management is unable to manage growth effectively and new
employees are unable to achieve anticipated performance levels, the Company's
results of operations could be adversely affected.
3
<PAGE>
Possible Acquisitions. An important element of the Company's future growth
strategy involves the acquisition of businesses engaged in activities compatible
with the Company's business. There can be no assurance that the Company will be
able to identify suitable acquisition candidates, consummate any acquisition, or
successfully integrate any acquired businesses into the Company's operations.
There also can be no assurances that future acquisitions will not have an
adverse effect upon the Company's operating results and earnings per share,
particularly in the fiscal quarters immediately following consummation of such
transactions while the operations of the acquired business are being integrated
into the Company's operations. As a result of acquisitions, the Company could
encounter unexpected liabilities and contingencies associated with acquired
businesses. The Company expects to finance future acquisitions with the
remaining proceeds of its 1995 initial public offering of Common Stock, as well
as possible debt financing, the issuance of equity securities (common or
preferred stock) of the Company or a combination of the foregoing. The use of
significant debt financing to fund acquisitions could reduce the Company's
liquidity. Furthermore, there can be no assurance that the Company will be able
to arrange adequate financing on acceptable terms.
Attraction and Retention of Employees. The Company's business involves the
delivery of professional services and is labor-intensive. The Company's success
will depend in large part upon its ability to attract, develop, motivate and
retain highly skilled technical employees, particularly project managers and
other senior personnel. Qualified project managers are in particularly great
demand and are likely to remain a limited resource for the foreseeable future.
Although the Company expects to continue to be able to attract and retain
sufficient numbers of highly skilled technical employees and project managers
for the foreseeable future, there can be no assurance that the Company will be
able to do so. The loss of some or all of the Company's project managers and
other senior personnel could have a material adverse impact on the Company,
including its ability to secure and complete engagements. No project managers or
other senior personnel have entered into employment agreements obligating them
to remain in the Company's employ for any specific term; however, substantially
all key employees of the Company are parties to nonsolicitation and
confidentiality agreements with the Company.
Emphasis on Fixed-Bid Projects. Since 1993, the Company has pursued a
strategy of seeking to improve its gross margins by, among other things,
undertaking more fixed-bid engagements. Revenue attributable to fixed-bid
projects was approximately 3%, 4% and 7% (after restatement to account for
acquisitions accounted for as poolings of interests) of revenue in 1994, 1995
and 1996, respectively. With the recent awards of some significant fixed-bid
projects, the Company anticipates that revenue attributable to fixed-bid
projects in 1997 will increase to approximately 9% of revenue. The Company bears
the risk of cost overruns and inflation in connection with fixed-bid projects,
and any individual fixed-bid project can be unprofitable. There can be no
assurance that such risk in the future will not negatively impact the Company's
gross margins.
Concentration of Revenues. The Company in the past has derived, and may in
the future derive, a significant portion of its revenue from a relatively
limited number of customers. For example, during the first six months of 1997,
the Company's top five customers (in terms of revenue to the Company) accounted
for approximately 25% of its revenue and its top twenty customers accounted for
approximately 49% of the Company's revenue, with no single client accounting for
more than 7% of revenue. During 1996, such concentration of revenue among the
Company's top five and top twenty customers was approximately 29% and 59%,
respectively, with no single client accounting for more than 11% of revenue. If
the Company is successful in seeking to obtain larger fee engagements, it is
anticipated that an even greater concentration of revenue will result.
Project Risks. Many of the Company's engagements involve projects that are
critical to the operations of its clients' businesses and provide benefits that
may be difficult to quantify. The Company's failure to meet a client's
expectations in the performance of its services could result in a financial loss
to the Company and could damage the Company's reputation, adversely affecting
its ability to attract new business. In addition, unanticipated difficulty in
completing a project could have an adverse effect on the Company's business and
results of operations.
4
<PAGE>
Variability of Quarterly Operating Results. Variations in the Company's
revenue and operating results occur from time to time as a result of a number of
factors, such as the significance of client engagements commenced and completed
during a quarter, the number of business days in a quarter (particularly in the
fourth quarter) and employee hiring and utilization rates. The timing of revenue
is difficult to forecast because the Company's sales cycle can be relatively
long in the case of new clients and may depend on factors such as the size and
scope of assignments and general economic conditions. Revenue from fixed-bid
engagements is recognized on a percentage of completion basis, requiring
management's judgment and the client's concurrence as to the status of each
pending project at the end of each month, thereby adding an additional element
of variability to the timing of revenue. Because a high percentage of the
Company's expenses are relatively fixed, a variation in the timing of the
initiation or the completion of client assignments, particularly at or near the
end of any quarter, can cause significant variations in operating results from
quarter to quarter and could result in losses. In addition, as is customary in
the industry, the Company's engagements generally are terminable without client
penalty. An unanticipated termination of a major project could require the
Company to retain or terminate under-utilized employees, resulting in either a
higher than expected number of unassigned persons or higher severance expenses.
While its professional staff must be adjusted to correspond to active projects,
the Company must maintain a sufficient number of senior professionals to oversee
existing client projects and participate with the Company's sales force in
securing new client assignments.
Technological Advances. The Company's success will depend in part on its
ability to develop strategic IT skills that keep pace with continuing changes in
information processing technology, evolving industry standards and changing
client preferences. There can be no assurance that the Company will be
successful in addressing these developments on a timely basis or that, if
addressed, the Company will be successful in the marketplace. The Company's
delay or failure to address these developments could have a material adverse
effect on the Company's business and operations.
Competition. The market for IT support, IT solutions development and
implementation, and strategic IT consulting services includes a large number of
participants, is subject to rapid changes and is highly competitive. The Company
competes with, and faces potential competition for client assignments and
experienced personnel from, a number of companies that have significantly
greater financial, technical and marketing resources and that have greater name
recognition than the Company. The Company also faces competition from
organizations that provide complete, turn-key management of data centers and
management information systems ("MIS") departments of existing and potential
clients. In addition, the custom application software development and systems
integration market is highly fragmented and served by numerous firms, many of
which serve only their respective local markets. The Company's client focus
primarily consists of Fortune 1000 companies, other large organizations,
financial institutions and state and local governments, and there is an
increasing number of professional services firms seeking IT consulting and
custom application software development engagements from that client group. The
Company believes that its ability to compete also depends in part on a number of
factors outside its control, including the ability of its competitors to
attract, develop, motivate and retain project managers and other senior
personnel, the price at which others offer comparable services and the extent of
its competitor's responsiveness to customer needs.
Dependence Upon Key Executives. The success of the Company has depended,
and its continued success is expected to depend largely upon the efforts and
abilities of Mr. Jerry W. Davis, who is a founder and director of the Company
and its Chief Executive Officer, and certain other key officers. The loss of the
services of any of these key executives for any reason could have a material
adverse effect upon the Company.
Intellectual Property Rights. The Company's operations could be materially
and adversely affected if it were not able to adequately protect its application
software development methodology and other proprietary intellectual property
rights. The Company relies upon a combination of trade secret, nondisclosure and
other contractual arrangements and technical measures to protect its proprietary
rights. The Company presently holds no patents or registered copyrights. The
Company generally enters into confidentiality agreements with its employees,
consultants, clients and potential clients and limits access to, and
distribution of, its proprietary information. There can be no assurance that the
steps taken by the Company in this regard will be adequate to deter
misappropriation of its proprietary information or that the Company will be able
to detect unauthorized use and take appropriate steps to enforce its
intellectual property rights. The Company's business includes the development of
custom application software in connection with specific client engagements.
Ownership of such software is generally assigned to the client. The Company also
develops object-oriented software components that can be reused in application
software development, certain foundation and application software products, or
software "tools", most of which remain the property of the Company. Although the
Company believes that its services and products do not infringe on the
intellectual property rights of others, there can be no assurance that such a
claim will not be asserted against the Company in the future.
5
<PAGE>
Possible Volatility of Stock Price. The Company's Common Stock, which is
traded on the Nasdaq NMS, may be subject to wide fluctuations in price in
response to variations in quarterly operating results and other factors,
including acquisitions, technological innovations and general economic or market
conditions. In addition, broad market trading and valuation fluctuations have
adversely affected the valuation of industry participants and may adversely
affect the market price of the Company's Common Stock.
No Anticipated Cash Dividends. The Company has never declared or paid any
cash dividends on the Common Stock. The Company does not intend to pay any cash
dividends on the Common Stock for the foreseeable future, but rather intends to
retain all earnings for the future development, operation and expansion of the
Company's business.
Certain Anti-takeover Provisions. The Company's Articles of Incorporation
and Bylaws and Florida law contain provisions that may have the effect of
delaying, deferring or preventing a non-negotiated merger or other business
combination involving the Company. These provisions are intended to encourage
any person interested in acquiring the Company to negotiate with and obtain the
approval of the Company's Board of Directors in connection with the transaction.
Certain of these provisions may, however, discourage a future acquisition of the
Company not approved by the Board of Directors in which shareholders might
receive an attractive value for their shares or that a substantial number or
even a majority of the Company's shareholders might believe to be in their best
interests. As a result, shareholders who desire to participate in such a
transaction may not have the opportunity to do so. Such provisions could also
discourage bids for the shares of Common Stock at a premium, as well as create a
depressive effect on the market price of the shares of Common Stock.
Possible Issuance of Preferred Stock. In addition to the Common Stock, the
Articles of Incorporation authorize the issuance of up to 5,000,000 shares of
preferred stock. Currently, no shares of preferred stock of the Company are
outstanding, and the Company has no current plans to issue any shares of
preferred stock. However, because the rights and preferences for any series of
preferred stock may be set by the Board of Directors in its sole discretion,
those rights and preferences may be superior to the rights of holders of the
Common Stock and thus may adversely affect the rights of holders of Common
Stock.
Shares Eligible for Future Sale. As of June 30, 1997, the Company had
13,485,685 shares of Common Stock outstanding, of which approximately 5.9
million shares are freely tradeable without restriction or further registration
under the Securities Act of 1933, as amended (the "Securities Act"). Holders of
the remaining 7.6 million shares will be eligible to sell such shares pursuant
to Rule 144 ("Rule 144") under the Securities Act at prescribed times and
subject to the manner of sale, volume, notice and information restrictions of
Rule 144. In addition, 2,138,204 shares are issuable upon the exercise of
outstanding stock options. Sales of substantial amounts of such shares in the
public market, or the availability of such shares for future sale, could
adversely affect the market price of the shares of Common Stock and the
Company's ability to raise additional capital at a price favorable to the
Company.
USE OF PROCEEDS
All proceeds from the sale of the Shares offered hereby will go to the
Selling Shareholders. The Company will not receive any proceeds from the sale of
Shares registered hereunder.
6
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock by the Selling Shareholders listed below
and the number of shares that may be offered for the account of each Selling
Shareholder pursuant to this Prospectus.
<TABLE>
<S> <C> <C> <C>
Name and Address Shares Beneficially Maximum Number of Shares Beneficially
Owned Prior to Shares Offered Owned After
Offering Hereby Offering
- ------------------------------------------ ---------------------- ---------------------- ----------------------
Shari G. Leigh 290,765 160,969 129,796
Miaco Corporation
6300 S. Syracuse Way, Suite 415
Englewood, CO 80011.................
Martin B. Greer
Miaco Corporation
6300 S. Syracuse Way, Suite 415
Englewood, CO 80011................. 227,959 113,979 113,980
John D. Karen
7150 E. Gray Fox Lane
Highlands Ranch, CO 80126........... 9,304 4,650 4,654
Daniel P. Dunlap, Jr.
1301 St. Pauls Way
Crownsville, MD 20132............... 51,174 10,000 41,174
Richard C. Blakeman
5408 S. Idalia Way
Aurora, CO 80015.................... 4,652 2,326 2,326
</TABLE>
PLAN OF DISTRIBUTION
The distribution of the Shares is not subject to any underwriting
agreement. Any or all of the Shares offered hereby may be offered and sold to
purchasers directly by or on behalf of the Selling Shareholders, acting for
their own account independently of each other and the Company, from time to time
in the over-the-counter market, in privately negotiated transactions, or
otherwise at prices prevailing in such market or as may be negotiated at the
time of the sale, either through broker-dealers acting as agents or brokers for
the seller, or through broker-dealers acting as principals. The Selling
Shareholders may also pledge the Shares as collateral for margin accounts and
such shares could be resold pursuant to the terms of such accounts. In effecting
sales, broker-dealers engaged by the Selling Shareholders may arrange for other
broker-dealers to participate. In order to comply with the securities laws of
certain states, sales of the Shares to the public in such states may be made
only through broker-dealers who are registered or licensed in such states. Sales
of the Shares must also be made by the Selling Shareholders in compliance with
other applicable state securities laws and regulations.
The Selling Shareholders may pay broker-dealers who participate in the
distribution of Common Stock hereunder compensation in the form of underwriting
discounts, concessions, or commissions, which compensation may be in excess of
customary commissions. The aggregate net proceeds to the Selling Shareholders
from the sale of any of the Shares will be the sales price thereof less the
aggregate agent's commission or underwriter's discount, if any. At the time a
particular offer of the Shares is made, to the extent required, a supplement to
this Prospectus will be distributed, which will set forth the aggregate number
of the Shares being offered, and the terms of the offering, the name or names of
any agents, any underwriting discounts or commissions and other items
constituting compensation from, and the resulting net proceeds to, the Selling
Shareholders, any discounts, commissions or concessions allowed or re-allowed or
paid to dealers.
7
<PAGE>
The Selling Shareholders and agents that participate in the distribution of
the Shares may be deemed to be underwriters, and any profit on the sale of the
Shares by them and any commissions received by them may be deemed to be
underwriting discounts and commissions under the Securities Act. The agents may
also engage in other transactions with, and perform services for, the Selling
Shareholders.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed on for the Company
by Holland & Knight LLP, 50 North Laura Street, Suite 3900, Jacksonville,
Florida 32202.
EXPERTS
The consolidated financial statements of Computer Management Sciences,
Inc., as of December 31, 1996 and 1995, and for each of the years in the
three-year period ended December 31, 1996, included in its Annual Report on Form
10-K for the year ended December 31, 1996, have been incorporated by reference
herein and in the registration statement in reliance upon the reports of KPMG
Peat Marwick LLP, Williams, Cox, Weidner and Cox, and Dellinger & Deese, L.L.P.,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firms as experts in accounting and auditing. To the
extent that KPMG Peat Marwick LLP audits and reports on financial statements of
Computer Management Sciences, Inc., issued at future dates, and consents to the
use of their reports thereon, such financial statements also will be
incorporated by reference in the registration statement in reliance upon their
report and said authority.
8
<PAGE>
<TABLE>
<S> <C>
====================================================== ============================================================
No dealer, salesman, or any other person has been
authorized to give any information or to make any
representations or projections of future performance
other than those contained in this Prospectus, and
any such other information, projections or 291,924 Shares
representations if given or made must not be relied Common Stock
upon as having been so authorized. The delivery of
this Prospectus of any sale hereunder at any time
does not imply that the information herein is correct
as of any time subsequent to its date. This Prospectus
does not constitute an offer to sell or a solicitation
of any offer to buy any of the securities offered Computer Management Sciences, Inc.
hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation.
Table of Contents
Page
Available Information...............................2 PROSPECTUS
Incorporation of Certain Documents by Reference.....2
Forward-Looking Statements..........................3
The Company.........................................3
Risk Factors........................................3
Use of Proceeds.....................................6
Selling Shareholders................................7
Plan of Distribution................................7
Legal Matters.......................................8
Experts.............................................8 August, 1997
====================================================== ============================================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Expenses in connection with the issuance of the securities being registered
hereby are estimated as follows:
SEC registration fee..................$1,786
Accounting fees and expenses ..........4,000
Legal fees and expenses ..............15,000
Miscellaneous..........................1,000
Total............................$21,786
Item 15. Indemnification of Directors and Officers
The Florida Business Corporation Act, as amended (the "Florida Act"),
provides that, in general, a business corporation may indemnify any person who
is or was a party to any proceeding (other than an action by, or in the right
of, the corporation) by reason of the fact that he or she is or was a director
or officer of the corporation, against liability incurred in connection with
such proceeding, including any appeal thereof, provided certain standards are
met, including that such officer or director acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best interests of
the corporation, and provided further that, with respect to any criminal action
or proceeding, the officer or director had no reasonable cause to believe his or
her conduct was unlawful. In the case of proceedings by or in the right of the
corporation, the Florida Act provides that, in general, a corporation may
indemnify any person who was or is a party to any such proceeding by reason of
the fact that he or she is or was a director or officer of the corporation
against expenses and amounts paid in settlement actually and reasonably incurred
in connection with the defense or settlement of such proceeding, including any
appeal thereof, provided that such person acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made in respect of any
claim as to which such person is adjudged liable unless a court of competent
jurisdiction determines upon application that such person is fairly and
reasonably entitled to indemnity. To the extent that any officers or directors
are successful on the merits or otherwise in the defense of any of the
proceedings described above, the Florida Act provides that the corporation is
required to indemnify such officers or directors against expenses actually and
reasonably incurred in connection therewith. However, the Florida Act further
provides that, in general, indemnification or advancement of expenses shall not
be made to or on behalf of any officer or director if a judgment or other final
adjudication establishes that his or her actions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (i) a violation
of the criminal law, unless the director or officer had reasonable cause to
believe his or her conduct was lawful or had no reasonable cause to believe it
was unlawful; (ii) a transaction from which the director or officer derived an
improper personal benefit; (iii) in the case of a director, a circumstance under
which the director has voted for or assented to a distribution made in violation
of the Florida Act or the corporation's articles of incorporation; or (iv)
willful misconduct or a conscious disregard for the best interests of the
corporation in a proceeding by or in the right of the corporation to procure a
judgment in its favor or in a proceeding by or in the right of a shareholder.
Article X of the Company's Amended and Restated Articles of Incorporation
provides that the Company shall indemnify any director or officer or any former
director or officer to the fullest extent not prohibited by law.
II-1
<PAGE>
Item 16. Exhibits
The following exhibits are filed herewith.
Exhibit Description Method of Filing
Number
4.1 Specimen of Common Stock Certificate Incorporated by reference to
the Exhibits to the Company's
Registration Statement on Form
S-1, as amended (Reg. Num.33-
95544), declared effective as
of September 27, 1995
4.2 Restricted Stock and Registration Rights Filed herewith
Agreement between the Registrant
and the Selling Shareholders
5.1 Opinion of Holland & Knight LLP Filed herewith
23.1 Consent of Holland & Knight LLP
(contained in Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP Filed herewith
23.3 Consent of Dellinger & Deese, L.L.P. Filed herewith
23.4 Consent of Williams, Cox, Weidner and Cox Filed herewith
24.1 Power of Attorney Included on signature page
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; or
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
II-2
<PAGE>
(b) 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 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 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 Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Jacksonville, State of Florida, on August 1, 1997.
COMPUTER MANAGEMENT SCIENCES, INC.
By: /s/ Jerry W. Davis
Jerry W. Davis
Chief Executive Officer and
Chairman of the Board of Directors
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jerry W. Davis and Anthony Colaluca, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and revocation, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to sign any Registration
Statement (and any and all amendments thereto) related to this Registration
Statement and filed pursuant to Rule 462(b) promulgated by the Securities and
Exchange Commission, and to file the same with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
Signatures Title Date
/s/ Jerry W. Davis Chief Executive Officer (Principal August 1, 1997
Jerry W. Davis Executive Officer) and Director
/s/ Anthony Colaluca Chief Financial Officer (Principal August 1, 1997
Anthony Colaluca Financial and Accounting Officer)
/s/ Anthony V. Weight Senior Vice President and Director August 1, 1997
Anthony V. Weight
/s/ Larry A. Longhi Senior Vice President and Director August 1, 1997
Larry A. Longhi
/s/ Edward W. Fishback, Jr. Group Vice President and Director August 1, 1997
Edward W. Fishback, Jr.
/s/ Harry C. Stonecipher Director August 1, 1997
Harry C. Stonecipher
<PAGE>
EXHIBIT INDEX
Exhibit Description Method of Filing
Number
4.1 Specimen of Common Stock Certificate Incorporated by reference to
the Exhibits to the Company's
Registration Statement on Form
S-1, as amended (Reg. Num.33-
95544), declared effective as
of September 27, 1995
4.2 Restricted Stock and Registration Rights Filed herewith
Agreement between the Registrant
and the Selling Shareholders
5.1 Opinion of Holland & Knight LLP Filed herewith
23.1 Consent of Holland & Knight LLP
(contained in Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP Filed herewith
23.3 Consent of Dellinger & Deese, L.L.P. Filed herewith
23.4 Consent of Williams, Cox, Weidner and Cox Filed herewith
24.1 Power of Attorney Included on signature page
EXHIBIT 4.2
RESTRICTED STOCK AND REGISTRATION RIGHTS AGREEMENT
THIS RESTRICTED STOCK AND REGISTRATION RIGHTS AGREEMENT is made this 16th
day of January, 1997, by and among COMPUTER MANAGEMENT SCIENCES, INC., a Florida
corporation ("Company"), Shari G. Leigh, Martin B. Greer, Daniel P. Dunlap, Jr.,
John D. Karen and Richard C. Blakeman, being all of the beneficial shareholders
(collectively, "Target Shareholders") of MIACO CORPORATION, a Colorado
corporation ("Target").
Recitals:
A. Company and Target Shareholders are parties to that certain Agreement
and Plan of Merger, dated as of January 16, 1997, by and among Bronco
Acquisition, Inc., a Florida corporation wholly-owned by Company ("Subsidiary"),
Target, Company and Target Shareholders (the "Merger Agreement") (capitalized
terms used herein, but not otherwise defined herein, shall have the meanings
assigned to them in the Merger Agreement);
B. Pursuant to the Merger Agreement, Subsidiary will be merged with and
into Target, which will continue as the surviving corporation (the "Merger");
C. Target Shareholders beneficially own all of the issued and outstanding
shares of common stock of Target (collectively, the "Target Shares");
D. In connection with the Merger, Target Shareholders will receive from
Company the number of shares of Company common stock, par value $0.01 per share
(the "Common Stock"), necessary to effectuate the Merger, as provided in the
Merger Agreement; and
E. Company and Target Shareholders desire to set forth in writing their
understandings and agreements with respect to (i) the issuance by Company and
acquisition by Target Shareholders of the Company Shares (as defined below),
(ii) the transfer restrictions applicable to the Company Shares, and (iii) the
rights and obligations of Target Shareholders and Company regarding the
registration, at the election of Target Shareholders, of Company Shares under
the Securities Act of 1933, as amended (the "Securities Act"), and applicable
state securities or Blue Sky laws (the "State Laws").
Agreements:
In consideration of the premises, the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
<PAGE>
1. Issuance of Company Shares Pursuant to Merger.
1.1 Pursuant to the Merger Agreement and upon consummation of the
Merger, Company will issue to Target Shareholders and reserve for issuance
pursuant to Target Stock Options assumed by Company pursuant to the Merger
Agreement an aggregate of 602,163 shares of Common Stock (collectively, the
"Company Shares"), divided among Target Shareholders pro rata according to their
respective equity interests in Target, as more precisely set forth on Schedule
1.1 attached hereto.
1.2 The Company Shares have not been registered under the Securities
Act in reliance upon the exemption provided by Section 4(2) thereof and
Regulation D promulgated by the Securities and Exchange Commission
("Commission") thereunder, nor have such shares been registered under the State
Laws in reliance upon comparable exemptions therein for limited offerings. As a
consequence thereof, the Company Shares are subject to certain transfer
restrictions described herein.
2. Disclosure of Information Regarding the Common Stock.
2.1 The Company's class of Common Stock is registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the Company
is subject to the periodic reporting and other requirements of the Exchange Act.
Copies of reports, proxy statements and other information filed by the Company
with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. The Common Stock is listed on the NASDAQ/NMS ("NASDAQ"), where
reports, proxy statements and other information concerning the Company can also
be inspected.
2.2 The Company has delivered to each of the Target Shareholders true
and complete copies of all prospectuses, reports and definitive proxy statements
filed by it (together with any amendments required to be made with respect
thereto) with the Commission under the Securities Act of 1933, as amended (the
"Securities Act") and under Securities Exchange Act of 1934, as amended (the
"Exchange Act") on or after September 29, 1995, all in the form so filed (all of
the foregoing, together with all exhibits and schedules thereto and documents
incorporated by reference therein, being collectively referred to as the
"Disclosure Documents").
2.3 The Target Shareholders have been afforded the opportunity
directly, or through their Purchaser Representative (as defined below), to make
inquiry of the President and the Chief Financial Officer of the Company with
regard to the business, operations and financial condition of the Company and
the terms and conditions of the Merger.
3. Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to each of the Target Shareholders that:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on its business or properties.
3.2 Capitalization. The authorized capital stock of the Company
immediately prior to the issuance of the Company Shares pursuant to the Merger
Agreement consists of 20,000,000 shares of Common Stock and 5,000,000 shares of
preferred stock, par value $0.01 per share. As of November 30, 1996, 12,413,043
shares of Common Stock were issued and outstanding and no shares of preferred
stock had been issued. All of the issued and outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable. As of November 30, 1996, there were outstanding options to
purchase a total of 2,095,030 additional shares of Common Stock pursuant to the
Company's 1985 Non-Qualified Stock Option Plan (the "Non-Qualified Plan") and
the Company's Incentive Stock Option Plan (the "ISO Plan"). The Non-Qualified
Plan and the ISO Plan were terminated by the Company effective as of August 31,
1995. As of November 30, 1996, additional options to purchase 316,375 and 33,750
shares of Common Stock had been granted pursuant to the Company's 1995 Stock
Incentive Plan (the "1995 Plan") and 1995 Non-Employee Director Stock Option
Plan ("Director Plan"), respectively. The 1995 Plan and the Director Plan were
adopted by the Company on September 1 and September 6, 1995, respectively. Each
<PAGE>
of the Non-Qualified Plan, the ISO Plan, the 1995 Plan and the Director Plan is
fully described in the Prospectus. Except as disclosed above, (i) no
subscription, warrant, option, convertible security or other right (contingent
or otherwise) to purchase or acquire any shares of capital stock of the Company
is authorized or outstanding, (ii) there is not any commitment of the Company to
issue any subscription, warrant, option, convertible security or other such
right or to issue or distribute to holders of any shares of its Common Stock any
evidences of indebtedness or assets of the Company, and (iii) the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any shares of its Common Stock or any interest therein or to pay any dividend or
make any other distribution in respect thereof. No person or entity is entitled
to any preemptive or similar right with respect to the issuance of any capital
stock of the Company.
3.3 Authorization. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement and the performance of all obligations of the
Company hereunder, has been taken or will be taken prior to the Closing, and
this Agreement constitutes a valid and legally binding obligation of the
Company, enforceable in accordance with its terms.
3.4 Valid Issuance of Company Shares. The Common Stock that is being
issued to the Target Shareholders pursuant to the Merger and reserved for
issuance pursuant to the exercise of the Target Stock Options assumed by Company
pursuant to the Merger Agreement, when issued, sold and delivered in accordance
with the terms thereof for the consideration expressed therein, will be duly and
validly issued, fully paid and nonassessable. Based in part upon the
representations of the Target Shareholders in this Agreement, the Common Stock
will be issued in compliance with the Securities Act and State Laws.
3.5 SEC Documents; Company Financial Statements. As of their respective
filing dates, the Disclosure Documents complied in all material respects with
the requirements of the Securities Act or the Exchange Act as applicable and the
rules and regulations of the Commission promulgated thereunder, and none of the
Disclosure Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent corrected by a document
subsequently filed with the Commission. The Disclosure Documents constitute all
prospectuses, reports, proxy statements and other filings required to be made by
Company pursuant to the Securities Act and the Exchange Act on or after
September 29, 1995. All material contracts and other documents of Company and
its subsidiaries required to be filed as exhibits to the Disclosure Documents
have been filed as required. The financial statements of Company including the
notes thereto, included in the Disclosure Documents (the "Company Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
Commission with respect thereto, have been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto) and
present fairly in all material respects the consolidated financial position of
Company at the dates thereof and of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
audit adjustments which are not material in amount or significance). There has
been no change in Company accounting policies except as described in the notes
to the Company Financial Statements.
<PAGE>
3.6 Nasdaq National Market Listing. Company shall cause the Company
Shares issuable in connection with the Merger and the assumed Target Stock
Options to be listed on the Nasdaq National Market System effective as of the
Closing Date of the Merger.
3.7 Rule 144. Company shall use its best efforts to ensure that it
satisfies all of the eligibility requirements of Rule 144, as promulgated by the
Commission under the Securities Act, in order that Rule 144 is available for use
by the Target Shareholders in connection with certain sales of the Company
Shares by such shareholders.
3.8 Full Disclosure. The Company has fully provided each of the Target
Shareholders with (i) all of the information which such shareholder has
requested in connection with his evaluation of the Company and decision whether
to acquire the Common Stock and (ii) all information which the Company believes
is reasonably necessary to enable such shareholder to make such investment
decision. In addition, the Company has provided the Target Shareholders with the
opportunity to ask questions of, and receive answers from, the President and the
Chief Financial Officer of the Company concerning the business, operations and
financial condition of the Company, the terms and conditions of the Merger and
this Agreement. Neither this Agreement, the Disclosure Documents nor any other
statements made by the Company in the Merger Agreement contain any untrue
statement of a material fact or omit to state a material fact (about the Company
or the Common Stock) necessary to make the statements made herein or therein not
misleading in light of the circumstances then existing.
3.9 Material Adverse Change. Since September 30, 1996, the Company has
conducted its business in the ordinary course and there has not occurred: (a)
any material adverse change in the financial condition, liabilities, assets or
business of Company; (b) any amendment or change in the Articles of
Incorporation or Bylaws of Company; or (c) any damage to, destruction or loss
of, any assets of (whether or not covered by insurance) that materially and
adversely affects the financial condition or business of Company.
4. Representations, Warranties and Covenants of Target Shareholders. Each
Target Shareholder hereby severally represents, warrants and covenants to the
Company that:
4.1 Authorization. This Agreement constitutes a valid and legally
binding obligation of such shareholder, enforceable against such shareholder in
accordance with its terms.
4.2 Ownership of Target Shares. The Target Shares shown opposite each
Target Shareholder's name on Schedule 1.1 are owned beneficially and (except as
set forth on Schedule 1.1) of record solely by such shareholders, in each case
free and clear of all Liens. There are no outstanding or authorized options,
warrants, rights, contracts, calls, puts, rights to subscribe, conversion
rights, or other agreements or commitments to which such Target Shareholder is a
party or by which such Target Shareholder is bound providing for the issuance,
disposition, or acquisition of any of the Target Shares or unissued shares of
Target's capital stock. Such Target Shareholder is not a party to any voting
trusts, proxies or any other agreements or understandings with respect to the
voting of the Target Shares.
4.3 Purchase Entirely for Own Account. This Agreement is made with such
shareholder in reliance upon his or her representation to the Company, which by
his or her execution of this Agreement such shareholder hereby confirms, that
the Common Stock will be acquired for investment for such shareholder's own
account, not as a nominee or agent, and not with a view to or for resale or
distribution of any part thereof, and that such shareholder has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, such shareholder further represents that
such shareholder does not presently have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person any of the Common Stock. Such shareholder
represents that it has full power and authority to enter into this Agreement.
<PAGE>
4.4 Receipt of Information Regarding Company. Such shareholder confirms
that he or she has received all the information he or she considers necessary or
desirable with respect to his or her evaluation of the Company and his or her
decision whether to acquire the Common Stock. Such shareholder further
represents that he or she has been offered the opportunity to ask questions of,
and receive answers from, the President and the Chief Financial Officer of the
Company regarding the business, operations and financial condition of the
Company, the terms and conditions of the Merger and this Agreement. Such
shareholder acknowledges receipt of the Disclosure Documents and copies of any
exhibits heretofore filed by the Company with the Commission, which shareholder
may have requested from the Company.
4.5 Investment Experience and Qualifications. Either alone or with the
assistance of such shareholder's Purchaser Representative (as defined below) and
professional advisors, such shareholder has such knowledge and experience in
financial and business matters that he or she is capable of evaluating the
merits and risks of the prospective investment in the Common Stock. Such
shareholder has obtained, to the extent he or she deems necessary, his or her
own personal professional advice with respect to assessing the risks inherent in
an investment in the Common Stock, and the suitability of an investment in the
Common Stock in light of such shareholder's financial condition and investment
needs.
4.6 Information Regarding Target; Purchaser Representative. Such
shareholder is fully informed of all material facts relating to the business,
operations, assets, liabilities, financial condition, prospects and fair
valuation of Target, and he or she has had full and unrestricted access to all
aspects of Target's operations and its books and records. Moreover, such
shareholder hereby acknowledges that Shari G. Leigh, has served as the
"Purchaser Representative" (within the meaning ascribed to that term under the
Securities Act and the rules and regulations promulgated thereunder) of such
shareholder in connection with the negotiation of the Merger Agreement and this
Agreement.
4.7 Restricted Securities. Such shareholder represents that it
understands that the shares of Common Stock being issued to it under the Merger
Agreement are characterized as "restricted securities" under the Securities Act
inasmuch as they are being acquired from the issuer (Company) in a transaction
not involving a public offering and, accordingly, that under the Securities Act
and applicable regulations the Company Shares may be resold without registration
under the Securities Act and the State Laws only in certain limited
circumstances. In this connection, such shareholder represents that it is
familiar with Commission's Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act.
4.8 Further Limitations on Disposition. Without in any way limiting the
foregoing, such shareholder hereby agrees not to make any disposition (including
any sale, assignment, transfer, conveyance, encumbrance or gift, as well as any
other voluntary disposition) of all or any portion of the Common Stock unless
and until:
(a) Company has published to the general public financial results
covering at least 30 days of post-Merger combined operations of Company and
Target; and
(b) either:
(i) There is then in effect a registration statement under the
Securities Act (and the State Laws, if required) covering such proposed
disposition and such disposition is made in accordance with such registration
statement; or
<PAGE>
(ii)Such shareholder shall have furnished the Company with (A)
a detailed statement of the circumstances surrounding the proposed disposition
and (B) an opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration under the Securities Act or the State
Laws. It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
4.9 Legends. It is understood that the stock certificates issued to the
Target Shareholders with respect to the Common Stock will bear the following
legend (in addition to any legend required by the State Laws):
"These securities have not been registered under the Securities Act of 1933
(the "Act"). They may not be sold, offered for sale, pledged or
hypothecated in the absence of a Registration Statement in effect with
respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or
unless sold pursuant to Rule 144 of such Act."
5. Demand Registration Rights.
5.1 On one (1) occasion during the Term, upon the written request of
one or more Target Shareholders, Company will prepare and file, as promptly
after such request as practicable and in no case more than 60 days after receipt
of such notice, and thereafter use its best efforts to cause to become effective
a registration statement ("Registration Statement") on a form to be selected by
Company under and complying with the Securities Act, covering such number of
shares of Common Stock as shall be specified in the Shareholder's request,
subject to the limitations contained in Section 5.2. Upon receipt of any such
request, Company shall notify the other Target Shareholders of such request and
provide them the opportunity to join in the request for a period of 10 days
following such notice. All Target Shareholders participating in a request for
the registration of Company Shares under either Section 5 or Section 6 hereafter
shall be referred to collectively as the "Participating Shareholders" and any
Company Shares eligible for registration under either Section 5 or Section 6
shall be referred to collectively as the "Registrable Shares".
5.2 Company shall not be obligated to honor a demand to register any
Registrable Shares made pursuant to Section 5.1 unless the aggregate number of
Registrable Shares to be registered pursuant to such demand is greater than or
equal to twenty percent (20%) of the aggregate number of Company Shares issued
to the Target Shareholders in the Merger. Moreover, the aggregate number of
Registrable Shares registered pursuant to Sections 5 and 6 shall in no event
exceed fifty percent (50%) of the aggregate number of Company Shares issued to
the Target Shareholders in the Merger.
5.3 If the Participating Shareholders so request, the offering or
distribution of Registrable Shares under Section 5 shall be pursuant to a firm
underwriting. The managing underwriter shall be a nationally recognized
investment banking firm selected by the Participating Shareholders, but subject
to Company's approval, which approval shall not be unreasonably withheld.
Company will enter into an underwriting agreement containing representations,
warranties and agreements not substantially different from those customarily
included by an issuer in underwriting agreements with respect to secondary
distributions; provided, however, that the Participating Shareholders shall be
entitled to negotiate the underwriting discounts and commission and other fees
of such underwriter.
5.4 No securities to be sold by Company or any security holder of
Company other than a Target Shareholder shall be included in any Registration
Statement filed pursuant to Section 5 unless (i) the Participating Shareholders
shall have consented to the inclusion of such other securities, (ii) the
offering is pursuant to a firm underwriting and the managing or principal
underwriter shall have consented to the inclusion of such other securities, and
(iii) all the Registrable Shares requested to be included by the Participating
Shareholder shall be so included.
<PAGE>
5.5 Company shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by it
pursuant to Section 5 if, at the time it receives a request for registration,
counsel for Company is reasonably of the opinion (which opinion shall be
expressed in writing) that any material pending transaction of, or event
affecting, Company or any of its subsidiaries render the effecting of such
Registration Statement inappropriate at the time; provided, however, Company
shall be entitled to postpone the filing of such Registration Statement only
once during the Term. The duration of such delay shall not exceed 60 days from
the date Company receives such registration request. Company shall promptly make
such filing as soon as the conditions which permit it to delay such filing no
longer exist. In the event of any such deferral, the Participating Shareholders
shall have the right to withdraw the request for registration, and such
withdrawn request shall not be considered the Participating Shareholders' one
permitted request for registration under Section 5, and Company shall reimburse
the Participating Shareholders for all costs and expenses incurred in connection
with such registration through the date of withdrawal.
6. Piggy-Back Registration Rights.
6.1 If at any time Company shall propose to file a registration
statement for the purpose of a public offering of Common Stock under the
Securities Act on Form S-1, S-2 or S-3 or any equivalent general form for
registration of equity securities (a "Piggy-Back Registration Statement"),
Company shall as promptly as practicable, but in no event later than 30 days
prior to the proposed filing date, give notice of such intention to the Target
Shareholders and provide them the opportunity to include such number of Company
Shares in the Piggy-Back Registration Statement as such Target Shareholders who
chose to participate shall request, for a period of 10 days following such
notice, subject to the limitations contained in Section 6.2.
6.2 Company shall not be obligated to honor a request to register any
Registrable Shares made pursuant to Section 6.1 unless the aggregate number of
Registrable Shares to be registered pursuant to such request is greater than or
equal to twenty percent (20%) of the aggregate number of Company Shares issued
to the Target Shareholders in the Merger. Moreover, the aggregate number of
Registrable Shares registered pursuant to Sections 5 and 6 shall in no event
exceed fifty percent (50%) of the aggregate number of Company Shares issued to
the Target Shareholders in the Merger. The inclusion of such Registrable Shares
may be conditioned or restricted if, in the good faith opinion of the principal
investment banker acting on behalf of Company in effecting such sale, such
inclusion will have a material adverse impact on the offering of the securities
being so registered. If the number of Registrable Shares is so restricted, no
shares or securities of other securityholders shall be included in the offering
unless all securities being sold by Company are included therein, and any
reduction required thereafter shall be made pro rata among the selling
securityholders based upon the number of shares requested for inclusion in such
transaction.
6.3 Company may, without the consent of the Participating Shareholders,
withdraw any Piggy-Back Registration Statement filed pursuant to Section 6 and
abandon any such proposed offering in which the Participating Shareholders
requested to participate. The Participating Shareholders may withdraw any or all
of the Registrable Shares held by the Participating Shareholders from a
Piggy-Back Registration Statement filed or proposed to be filed pursuant to
Section 6 at any time prior to the effectiveness of such Piggy-Back Registration
Statement.
<PAGE>
6.4 The Notice from Company to the Participating Shareholders under
Section 6 shall specify whether the securities to be included in such
registration for sale by Company are to be sold through underwriters in a firm
commitment offering. If Registrable Shares of the Participating Shareholders are
included in such an offering, they shall be included on the same terms including
the same underwriting discount or commission applicable to the securities of
Company.
7. Covenants of the Participating Shareholders. Any request for
registration made by the Participating Shareholders pursuant to Sections 5 or 6
hereof shall specify the number of Registrable Shares as to which such request
relates, express the Participating Shareholders' intention to offer such shares
for distribution and contain an undertaking to provide all such information and
materials and take all such actions and execute all such documents as may be
required in order to permit Company to comply with all applicable requirements
of the Commission and to obtain acceleration of the effective date of the
Registration Statement or Piggy-Back Registration Statement, as the case may be.
8. Costs and Expenses. With respect to the registration of any Registrable
Shares pursuant to Section 5, the Participating Shareholders in such
registration shall bear the entire cost and expense relating thereto (except
that no allocation of Company overhead shall be charged to the Participating
Shareholders), including, without limitation, all registration and filing fees,
printing expenses, the fees and expenses of its counsel and its independent
accountants and all its other out-of-pocket expenses incident to the
preparation, printing and filing under the Act of the Registration Statement and
all amendments and supplements thereto, the cost of furnishing copies of each
preliminary prospectus, each final prospectus and each amendment or supplement
thereto to underwriters, brokers and dealers and other purchasers of the
securities so registered, and the costs and expenses incurred in connection with
the qualification of the securities so registered under the State Laws. With
respect to the registration of any Registrable Shares pursuant to Section 6, the
Participating Shareholders shall be liable or responsible only for (i) the fees
and expenses of counsel and accountants of Participating Shareholders, and (ii)
all underwriting discounts and commission attributable to Registrable Shares
registered at the request of the Participating Shareholders; provided, however,
in the event selling securityholders (rather than the Company) are obligated to
pay the entire cost and expense of any Piggy-Back Registration Statement
(because Company is not including any primary shares in such registration)
proposed to be filed by the Company, the entire cost and expense of such
registration shall be prorated among all selling securityholders based upon the
number of shares registered, including, but not limited to, any Participating
Shareholders who request the registration of any Registrable Shares in such an
offering. Notwithstanding the foregoing, the Participating Shareholders shall
not be liable for the costs and expenses of any such Piggy-Back Registration
Statement (for the sole benefit of the selling shareholders) which cannot be
consummated because the other shareholders participating in such transaction
determine not to proceed with the proposed offering, although the Participating
Shareholders are willing to proceed with the transaction on the terms proposed.
9. Indemnification.
9.1 Indemnity to the Participating Shareholders. Company will indemnify
the Participating Shareholders and each underwriter of Common Stock as well as
any person who controls such underwriters against all claims, losses, damages,
liabilities and expenses resulting from any untrue statement or alleged untrue
statement of a material fact contained in any prospectus or in any related
Registration Statement or Piggy-Back Registration Statement, notification or
similar filing under securities laws of any jurisdiction or from any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
the same may have been based upon information furnished in writing to Company by
the Participating Shareholders expressly for use therein and used in accordance
with such writing.
<PAGE>
9.2 Indemnity to Company. Each of the Participating Shareholders, by
requesting any such registration, agrees to furnish to Company such information
concerning it as may be requested by Company and which is necessary in
connection with any registration or qualification of the Common Stock and to
indemnify Company against all claims, losses, damages, liabilities and expenses
resulting from the utilization of such information furnished in writing by it to
Company expressly for use therein and used in accordance with such writing.
9.3 Indemnification Procedures. If any action is brought or any claim
is made against a party indemnified pursuant to Section 9 in respect of which
indemnity may be sought against the indemnitor pursuant to Section 9 hereof,
such party shall promptly notify the indemnitor in writing of the institution of
such action or the making of such claim and the indemnitor shall assume the
defense of such action or claim, including the employment of counsel reasonably
acceptable to the indemnified party and the payment of expenses. Such party
shall have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of such party
unless the employment of such counsel shall have been authorized in writing by
the indemnitor in connection with the defense of such action or claim or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to the indemnitor (in which case the indemnitor shall not have the
right to direct any different or additional defense of such action or claim on
behalf of the indemnified party or parties), in any of which events such fees
and expenses of not more than one additional counsel for the indemnified parties
shall be borne by the indemnitor. Except as expressly provided above, in the
event that the indemnitor shall not previously have assumed the defense of any
such action or claim, at such time as the indemnitor does not assume the defense
of such action or claim, the indemnitor shall thereafter be liable to any person
indemnified pursuant to this Agreement for any legal or other expenses
subsequently incurred by such person in investigating, preparing or defending
against such action or claim. Anything in Section 9 to the contrary
notwithstanding, the indemnitor shall not be liable for any settlement of any
such claim or action effected without its written consent.
9.4 Contribution. If the indemnification provided for in this Section 9
is unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable to such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties, on the one hand, and the indemnified party, on the other, in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. 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 indemnifying party or parties, on the one hand, or
the indemnified party, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission; provided, however, that, in any such case, (i) no
Participating Shareholder will be required to contribute any amount in excess of
the net proceeds received by such Participating Shareholder from all such
Registrable Shares offered and sold by such Participating Shareholder pursuant
to a Registration Statement or a Piggy-Back Registration Statement unless the
Company is not participating in such registered offering and the application of
this provision would cause any selling shareholder who was not guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) to contribute an amount in excess of his or her pro rata share
of the net proceeds of the offering, and (ii) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
is not guilty of such fraudulent misrepresentation.
10. Assignment, Term and Termination of Registration Rights.
10.1 Assignability. The registration rights (together with the
ancillary rights provided in Sections 5 through 9 hereof) of the Participating
Shareholders hereunder may be assigned by them subject to their obligations
hereunder.
<PAGE>
10.2 Term and Termination. The registration obligations provided herein
shall remain in effect for a three (3)-year period beginning on the Closing Date
of the Merger (the "Term"). In addition, the obligations of Company to register
any particular Registrable Shares covered by this Agreement shall terminate at
such time as such Registrable Shares are sold pursuant to a Registration
Statement, a Piggy-Back Registration Statement or Rule 144, or any similar rule
promulgated by the Commission or in such other transaction which, in the written
opinion of counsel for Company, would enable such Registrable Shares to be
publicly offered thereafter without such registration
11. Miscellaneous.
11.1 Succeeding Securities. If the Common Stock of Company covered by
this Agreement is converted into any other security for Company or any other
corporation, the terms of this Agreement shall apply with full force and effect
to any such other security.
11.2 Survival of Warranties. The representations and warranties of the
Company and the Target Shareholders contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing (as defined in the Merger Agreement) and shall in no way be affected by
any investigation of the subject matter thereof made by or on behalf of the
Target Shareholders or the Company.
11.3 Transfer; Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
11.4 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Florida.
11.5 Counterparts. 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.
11.6 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11.7 Notices. Notices given under this Agreement shall be deemed given
when received at the addresses for the parties set forth below or to such other
address for a party supplied by that party and may be delivered by facsimile
transmission or other telecommunications device producing a document setting
forth such notice.
<PAGE>
If to Parent or Subsidiary (or Surviving Corporation):
Computer Management Sciences, Inc.
8133 Baymeadows Way
Jacksonville, FL 32256
Attn: Jerry W. Davis, President
With a copy to:
Holland & Knight LLP
50 North Laura Street
Suite 3900
Jacksonville, FL 32202
Attn: L. Kinder Cannon III, Esq.
If to Target:
MIACO Corporation
The Cascades
6300 S. Syracuse Way, Suite 415
Englewood, CO 80111
Attn: Shari G. Leigh, President
If to Target Shareholders or to any of Target Shareholders,
individually:
Shari G. Leigh
5233 S. Hanover Street
Englewood, CO 80111
With a copy to:
Cooley Godward LLP
2595 Canyon Boulevard, Suite 250
Boulder, Colorado 80302
Attn: James H. Carroll, Esq.
11.8 Amendments and Waivers. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of a majority of the
then-outstanding Company Shares issued hereunder. Any amendment or waiver
effected in accordance with Section 11.8 shall be binding upon each transferee
of any Company Shares, each future holder of such Company Shares, and the
Company.
11.9 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
<PAGE>
11.10 Entire Agreement. This Agreement and the Merger Agreement
together constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto are expressly cancelled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY
COMPUTER MANAGEMENT SCIENCES, INC.
By:/s/ Anthony V. Weight
Anthony V. Weight, Senior Vice President
TARGET SHAREHOLDERS
/s/ Shari G. Leigh
Shari G. Leigh
/s/ Martin B. Greer
Martin B. Greer
/s/ Daniel P. Dunlap, Jr.
Daniel P. Dunlap, Jr.
/s/ John D. Karen
John D. Karen
/s/ Richard C. Blakeman
Richard C. Blakeman
<PAGE>
Schedule 1.1
to Restricted Stock and
Registration Rights Agreement
TARGET SHAREHOLDERS
Company Shares
Target Shares Issued in
Owned Merger
Shari G. Leigh 6,250,000 290,765
Martin B. Greer 4,900,000 227,959
Daniel P. Dunlap, Jr. 1,100,000 51,174
John D. Karen 200,000(1) 9,304
Richard C. Blakeman 100,000 4,652
Total Target Shares Outstanding 12,550,000
Total Company Shares Issued in Merger 583,854
(1) The record holder of such shares is Resources Trust, FBO John D. Karen
EXHIBIT 5.1
August 1, 1997
Computer Management Sciences, Inc.
8133 Baymeadows Way
Jacksonville, Florida 32256
Re: Registration Statement on Form S-3
Gentlemen:
We refer to the Registration Statement (the "Registration Statement")
on Form S-3, filed today by Computer Management Sciences, Inc. (the "Company"),
with the Securities and Exchange Commission, for the purpose of registering
under the Securities Act of 1933 an aggregate of 291,924 shares (the "Shares")
of the authorized common stock, par value $0.01 per share (the "Common Stock"),
of the Company being offered by certain shareholders of the Company.
In connection with the foregoing registration, we have acted as counsel
for the Company and have examined originals, or copies certified to our
satisfaction, of such corporate records of the Company, certificates of public
officials and representatives of the Company, and other documents as we deemed
necessary to deliver the opinion expressed below.
Based upon the foregoing, and having regard for legal considerations
that we deem relevant, it is our opinion that the Shares have been duly
authorized and are validly issued and fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement.
Very truly yours,
HOLLAND & KNIGHT LLP
By:/s/L. Kinder Cannon III
L. Kinder Cannon III
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Computer Management Sciences, Inc.
We consent to the use of our report incorporated by reference herein and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Jacksonville, Florida
July 31, 1997
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
To: The Board of Directors
Computer Management Sciences, Inc.
We consent to the use of our report incorporated by reference herein and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ Dellinger & Deese, LLP
Dellinger & Deese, LLP
Charlotte, North Carolina
July 25, 1997
Exhibit 23.4
INDEPENDENT AUDITORS' CONSENT
To: The Board of Directors
Computer Management Sciences, Inc.
We consent to the use of our report incorporated by reference herein and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ Williams, Cox, Weidner and Cox
Williams, Cox, Weidner and Cox
Tallahassee, Florida
July 24, 1997
