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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE TO/A
Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
(Amendment No. 2)
 
Progress Software Corporation
(Name of Subject Company (Issuer))
Progress Software Corporation
(Name of Filing Person (Issuer and Offeror))
Options to Purchase Shares of Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
Not applicable
(CUSIP Number of Class of Securities)
Joseph W. Alsop
Progress Software Corporation
14 Oak Park
Bedford, Massachusetts 01730
(781) 280-4000

(Name, address, and telephone numbers of person authorized
to receive notices and communications on behalf of filing persons
)
with copies to:
Robert W. Sweet, Jr., Esq.
John D. Hancock, Esq.
Foley Hoag
llp
155 Seaport Boulevard
Boston, Massachusetts 02210
Calculation of Filing Fee
           
 
  Transaction valuation*     Amount of filing fee**  
 
$17,875,505
    $1,912.68***  
 
*   Estimated for purposes of calculating the filing fee only. This amount is based on the Black-Scholes option valuation model, and assumes that all eligible existing options to purchase 1,836,887 shares of common stock of Progress Software Corporation will be amended pursuant to this offer, which may not occur.
 
**   The amount of the filing fee, calculated in accordance with Rule 0-11 of the Securities Exchange Act of 1934, as amended, as modified by Fee Rate Advisory No. 5 for fiscal year 2006, equals $107 per $1,000,000 of the value of the transaction.
 
***   Previously paid in connection with the filing person’s Schedule TO filed with the Securities and Exchange Commission on December 22, 2006.
o   Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
     
Amount Previously Paid:
   
 
   
Form or Registration No.:
   
 
   
Filing Party:
   
 
   
Date Filed:
   
 
   
o   Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the statement relates:
o   third-party tender offer subject to Rule 14d-1.
 
þ   issuer tender offer subject to Rule 13e-4.
 
o   going-private transaction subject to Rule 13e-3.
 
o   amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results of the tender offer: o
 
 

 


TABLE OF CONTENTS

INTRODUCTORY STATEMENT
Item 12. Exhibits.
SIGNATURE
EX-(a)(5)(e) - Form of Communication to Eligible Participants


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INTRODUCTORY STATEMENT
     This Amendment No. 2 amends and supplements the Tender Offer Statement on Schedule TO filed with the Securities and Exchange Commission (the “SEC”) on December 22, 2006, as amended by Amendment No. 1 filed with the SEC on January 4, 2007 (as amended, the “Schedule TO”), by Progress Software Corporation, a Massachusetts corporation (the “Company”). The Schedule TO relates to the issuer tender offer by the Company to amend outstanding “Eligible Options” (as defined in the Offer to Amend, dated December 22, 2006 (the “Offer to Amend”), filed as Exhibit (a)(1)(A) to the Schedule TO) held by individuals subject to taxation in the United States so they may avoid potential adverse tax consequences under Section 409A of the Internal Revenue Code of 1986, as amended, upon the terms and subject to the conditions set forth in the Offer to Amend and in the related Letter of Transmittal (the “Letter of Transmittal” which, together with the Offer to Amend, as each may be amended or supplemented from time to time, constitute the “Offer”), filed as Exhibit (a)(1)(C) to the Schedule TO. Each eligible participant in the Offer may elect to amend each of his or her Eligible Options to increase the exercise price per share of the Company’s common stock, par value $0.01 per share, purchasable thereunder and to receive from the Company a special Cash Bonus (as defined in the Offer to Amend), upon the terms and subject to the conditions set forth in the Offer to Amend and in the Letter of Transmittal.
Item 12. Exhibits.
     Item 12 of the Schedule TO is hereby amended and supplemented to add the following:
     
(a)(5)(E)
  Form of Communication to each Eligible Participant regarding Estimated Cash Payment Amounts and Scheduled Cash Payment Dates.

-2-


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SIGNATURE
     After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
         
  Progress Software Corporation
 
 
  By:   /s/ Norman R. Robertson    
    Norman R. Robertson   
    Senior Vice President, Finance and Administration and Chief Financial Officer   
 
Date: January 16, 2007

 


Table of Contents

     
Exhibit Number   Description
 
   
(a)(1)(A)
  Offer to Amend, dated December 22, 2006 (incorporated by reference to Exhibit (a)(1)(A) to the Company’s Tender Offer Statement on Schedule TO dated December 22, 2006).
 
   
(a)(1)(B)
  Announcement of Offer to Amend (incorporated by reference to Exhibit (a)(1)(B) to the Company’s Tender Offer Statement on Schedule TO dated December 22, 2006).
 
   
(a)(1)(C)
  Letter of Transmittal (incorporated by reference to Exhibit (a)(1)(C) to the Company’s Tender Offer Statement on Schedule TO dated December 22, 2006).
 
   
(a)(1)(D)
  Withdrawal Form (incorporated by reference to Exhibit (a)(1)(D) to the Company’s Tender Offer Statement on Schedule TO dated December 22, 2006).
 
   
(a)(2)
  Not applicable.
 
   
(a)(3)
  Not applicable.
 
   
(a)(4)
  Not applicable.
 
   
(a)(5)(A)
  Form of Reminder of Expiration Date (incorporated by reference to Exhibit (a)(5)(A) to the Company’s Tender Offer Statement on Schedule TO dated December 22, 2006).
 
   
(a)(5)(B)
  Form of Notice of Amendment of Eligible Options and Eligibility for Cash Bonus (incorporated by reference to Exhibit (a)(5)(B) to the Company’s Tender Offer Statement on Schedule TO dated December 22, 2006).
 
   
(a)(5)(C)
  Form of Option Summary (incorporated by reference to Exhibit (a)(5)(C) to the Company’s Tender Offer Statement on Schedule TO dated December 22, 2006).
 
   
(a)(5)(D)
  Presentation by Ernst & Young LLP to eligible participants in the Offer on January 4, 2007, entitled “Progress Software Corporation’s Offer to Amend Certain Stock Options” (incorporated by reference to Exhibit (a)(5)(D) to Amendment No. 1 dated January 4, 2007 to the Company’s Tender Offer Statement on Schedule TO dated December 22, 2006).
 
   
(a)(5)(E)
  Form of Communication to each Eligible Participant regarding Estimated Cash Payment Amounts and Scheduled Cash Payment Dates.
 
   
(b)
  Not applicable.

 


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Exhibit Number   Description
 
   
(d)(1)
  Progress Software Corporation 1992 Incentive and Nonqualified Stock Option Plan (incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 1992).
 
   
(d)(2)
  Progress Software Corporation 1994 Stock Incentive Plan (incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q for the quarter ended August 31, 1994).
 
   
(d)(3)
  Progress Software Corporation 1997 Stock Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2000).
 
   
(d)(4)
  Progress Software Corporation 2002 Nonqualified Stock Plan (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2002).
 
   
(d)(5)
  Progress Software Corporation 2004 Inducement Stock Plan (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2004).
 
   
(d)(6)
  Employee Retention and Motivation Agreement executed by each Executive Officer of the Company (incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 1998).
 
   
(d)(7)
  First amendment to Employee Retention and Motivation Agreement executed by each Executive Officer of the Company (incorporated by reference to Exhibit 10.10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended August 31, 1999).
 
   
(d)(8)
  Letter agreement dated November 15, 2005 with Joseph W. Alsop regarding Fiscal 2005 Stock Option Grant (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K dated as of November 15, 2005).
 
   
(d)(9)
  Form of Option Amendment Agreement, with payment to the Company, executed by certain executive officers of the Company (incorporated by reference to Exhibit (d)(9) to the Company’s Tender Offer Statement on Schedule TO dated December 22, 2006).
 
   
(d)(10)
  Form of Option Amendment Agreement, with payment to the Company, executed by certain non-employee directors of the Company (incorporated by reference to Exhibit (d)(10) to the Company’s Tender Offer Statement on Schedule TO dated December 22, 2006).
 
   
(d)(11)
  Form of Option Amendment Agreement, with cash bonus, executed by certain executive officers of the Company (incorporated by reference to

 


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Exhibit Number   Description
 
   
 
  Exhibit (d)(11) to the Company’s Tender Offer Statement on Schedule TO dated December 22, 2006).
 
   
(g)
  Not applicable.
 
   
(h)
  Not applicable.

 

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Exhibit (a)(5)(e)

To [name]:
As you know, we have determined that certain Progress Software options you hold were granted with a below-market exercise price, and that to the extent these options vested after December 31, 2004 or may vest in the future, they may be subject to taxation as nonqualified deferred compensation under Section 409A of the U.S. Internal Revenue Code. We have commenced a tender offer to amend the affected options to increase the exercise price to the fair market value of our common stock on the corrected measurement date. Based on current IRS proposals, we believe that if you accept the offer to amend, this amendment will prevent any adverse tax consequences under Section 409A associated with past or future vesting of these options.
In order to compensate for the higher exercise price, the holder of each amended option will be eligible to receive one or more cash payments equal to the increase in the aggregate exercise price. You previously received a list of the options that you hold that may be subject to Section 409A. That list included, for each such option, the aggregate amount of the cash payment you will be eligible to receive if you accept the offer to amend with respect to each such option.
Your Anticipated Cash Payments
The following table provides the estimated amounts and scheduled payment dates of the cash payments that you will be eligible to receive, assuming that you elect to amend all of your affected options. If you have exercised any of your affected options or you exercise any of them before the expiration of the tender offer, the amount and timing of the cash payments listed below will change.
           
 
        Estimated  
  Payment Date (approximate)     Amount Payable  
 
 
January 20, 2008
    $ [amount]  
 
April 5, 2008
    $ [amount]  
 
October 5, 2008
    $ [amount]  
 
April 5, 2009
    $ [amount]  
 
October 5, 2009
    $ [amount]  
 
The estimated amounts assume that the tender offer will not be extended. If the tender offer is extended, the number of vested and unvested option shares may change, which would affect these estimates.
The amount payable on or about January 20, 2008 represents the cash payment that you will receive with respect to amended option shares that are vested at the expiration date of the tender offer (January 24, 2007, unless extended), regardless of whether you are employed by us on the date of payment. The amounts payable thereafter represent the cash payment(s) that you will be eligible to receive with respect to amended option shares that are scheduled to vest after the expiration date of the tender offer. In order to receive these payments, you must remain employed by us on the applicable payment date. The number of installments was determined on

 


 

the basis of the date when the latest to vest of your amended options will become fully vested, as described more fully in the Offer to Amend.
In connection with the tender offer, you previously received (1) the Offer to Amend dated December 22, 2006, (2) a related Letter of Transmittal and (3) a Withdrawal Form. If you did not receive these documents please contact Susan Goida of Ernst & Young LLP at (800) 425-4425 (domestic) or (201) 872-5840 (international) to request a free copy of these documents. You should read these tender offer documents carefully because they contain important information about the tender offer. We have filed these and related tender offer documents with the SEC, and you can obtain them for free at the SEC’s web site (www.sec.gov).