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Published on: 6/28/2002
Last Visited: 7/2/2002
At that time, one of MANUGISTICS GROUP INC's outside directors, J. Michael Cline, had an indirect ownership interest through various investment vehicles of approximately 22% in New Roads.He controlled a total of approximately 43% of the outstanding New Roads common stock through these investment vehicles.Mr. Cline also served (and continues to serve) on the Board of Directors of New Roads, but does not serve as one of its executive officers.In May 2001, New Roads assigned the software license agreement to an unrelated third party who paid the full amount of the license fee to MANUGISTICS GROUP INC, which reimbursed New Roads for the $300,000 previously paid. Talus Solutions, Inc. MANUGISTICS GROUP INC acquired Talus Solutions, Inc. ("Talus") in a stock-for-stock merger on December 21, 2000.MANUGISTICS GROUP INC and Talus had a common director, J. Michael Cline, on their respective boards. (Mr. Cline continues to serve on MANUGISTICS GROUP INC's Board of Directors and has been renominated for election as a Class I director at the Meeting.) In connection with the merger, Steven A. Denning was appointed to serve on MANUGISTICS GROUP INC's Board of Directors.
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On the effective date of the merger, the options to purchase a total of 25,000 shares of Talus common stock held by Mr. Cline were converted into options to purchase a total of 3,700 shares of Common Stock in accordance with the terms of the merger.In addition, Mr. Cline then owned indirectly approximately 2.2% of the outstanding shares of Talus capital stock as a result of his interest in General Atlantic Partners, LLC and certain of its affiliates, who then were Talus stockholders.These shares were converted into shares of Common Stock in the merger.The shares of MANUGISTICS GROUP INC's Common Stock which he then owned indirectly had a value of approximately $6.57 million based on the closing price of $42.61 per share of MANUGISTICS GROUP INC's common stock on December 21, 2000. At the effective time of the merger, MANUGISTICS GROUP INC deposited with an escrow agent 15% of the shares of Common Stock which were otherwise issuable to each of the Talus stockholders.A total of 1,053,730 escrowed shares are being held to secure the indemnification obligations of Talus and its former stockholders for certain losses incurred by MANUGISTICS GROUP INC as a result of any breach of the representations, warranties, covenants or agreement of Talus which are contained in the merger agreement and as a result of certain identified contingencies.MANUGISTICS GROUP INC has asserted certain claims for indemnification against these shares.The representatives of the former Talus shareholders have disputed these claims. Each of Messrs.Cline and Denning has an indirect economic interest in the escrowed shares of Common Stock.
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