1
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Progress Software Corporation
-----------------------------
(Exact Name of Registrant as Specified in Its Charter)
Massachusetts 04-2746201
------------- ----------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14 Oak Park, Bedford, Massachusetts 01730
----------------------------------- -----
(Address of Principal Executive Offices) (Zip code)
N/A
---
(Full Title of the Plan)
Joseph W. Alsop
President and Treasurer
Progress Software Corporation
14 Oak Park
Bedford, Massachusetts 01730
----------------------------
(Name and Address of Agent for Service)
(781) 280-4000
--------------
(Telephone Number, Including Area Code, of Agent For Service)
WITH COPIES TO:
Robert W. Sweet, Jr., Esquire
Foley, Hoag & Eliot LLP
One Post Office Square
Boston, Massachusetts 02109
(617) 832-1000
-------------------------------
CALCULATION OF REGISTRATION FEE
=======================================================================================================
Title of Proposed Proposed
Securities Amount Maximum Maximum Amount of
to be to be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
- -------------------------------------------------------------------------------------------------------
Common Stock,
$0.01 par value 25,596 shares $20.5625(1) $526,318 $155.26
-------- -------- -------
=======================================================================================================
(1) Pursuant to Rule 457(c), $20.5625 represents the average of the high and
low prices of the Common Stock as reported in the National Association of
Securities Dealers Automated Quotation National Market
System on November 28, 1997.
2
REOFFER PROSPECTUS
The material which follows, up to but not including the page beginning
Part II of this registration statement, constitutes a prospectus prepared in
accordance with the applicable requirements of Part I of Form S-3 under General
Instruction C to Form S-8. The reoffer prospectus is to be used in connection
with resales of securities outstanding as of the date hereof and issued to
certain former holders of common stock of Apptivity Corporation, a California
corporation ("Apptivity"), pursuant to a merger agreement under which Apptivity
merged with and into Arbela Acquisition Corp., a Massachusetts corporation and
wholly-owned subsidiary of Progress Software Corporation. The shares of
Apptivity common stock were originally issued pursuant to stock purchase
agreements between Apptivity and the selling stockholders named herein, each of
whom served as an employee or director of or consultant to Apptivity and was
permitted to purchase the shares as a benefit incident to his or her employment
by or services to Apptivity.
2
3
PROGRESS SOFTWARE CORPORATION
REOFFER PROSPECTUS
25,596 Shares
Common Stock, $0.01 par value per share
THIS DOCUMENT CONSTITUTES PART OF A REGISTRATION STATEMENT
COVERING SECURITIES THAT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933
INTRODUCTION
This Prospectus relates to the resale, by the holders thereof (the
"Selling Stockholders"), of 25,596 shares (the "Shares") of common stock, $0.01
par value per share ("Common Stock"), of Progress Software Corporation
("Progress" or the "Company"), issued to the Selling Stockholders in exchange
for shares of common stock, $0.01 par value per share, of Apptivity Corporation,
a California corporation ("Apptivity California"), in connection with the merger
(the "Merger") of Apptivity California with and into Arbela Acquisition Corp., a
Massachusetts corporation and a wholly-owned subsidiary of Progress which
changed its name to Apptivity Corporation upon the consummation of the Merger
("Apptivity"). The shares of Apptivity California common stock were originally
issued pursuant to stock purchase agreements between Apptivity California and
the selling stockholders named herein, each of whom served as an employee or
director of or consultant to Apptivity California and was permitted to purchase
the shares as a benefit incident to his or her employment by or services to
Apptivity California.
------------------
The Company will not receive any of the proceeds from the offering. The
Company will bear the costs relating to the registration of the shares offered
hereby (other than selling commissions).
The Selling Stockholders named herein or any pledgees, donees, transferees
or other successors in interest, may offer the Shares, from time to time during
the effectiveness of this registration, for sale through the Nasdaq National
Market, in the over-the-counter market, in one or more negotiated transactions,
or through a combination of methods of sale, at prices and on terms then
prevailing or at negotiated prices. Sales may be effected to or through
broker-dealers, who may receive compensation in the form of discounts,
concessions or commissions in connection therewith. See "Plan of Distribution."
The Common Stock is traded on the Nasdaq National Market under the symbol
"PRGS." On December 1, 1997, the closing price for the Common Stock, as reported
on the Nasdaq National Market, was $20.625 per share.
------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING AT PAGE 4.
------------------
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 date of this Prospectus is December 3, 1997.
1
4
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 and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information may be
inspected and copies may be obtained (at prescribed rates) at the Commission's
Public Reference Section, 450 Fifth Street, N.W., Room 1024, Washington D.C.
20549, and at the Commission's Regional Offices at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World
Trade Center, Suite 1300, New York, New York 10048. In addition, the Commission
maintains a Web site (at http://www.sec.gov) that contains reports, proxy
statements, information statements and other information regarding Progress.
Reports and information concerning the Company may also be inspected at the
offices of the Nasdaq Stock Market, 1735 K Street, N.W., Washington D.C.
20006-1500.
This Prospectus constitutes part of a Registration Statement on Form S-8
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
does not contain all of the information contained in the Registration Statement,
and reference is hereby made to the Registration Statement and related exhibits
for further information with respect to the Company and the securities offered
hereby. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and, where a statement is made regarding
any document, reference is made to the copy of such document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission pursuant to the Securities Act and the Exchange Act are incorporated
herein by reference: (1) the Company's Annual Report on Form 10-K for the fiscal
year ended November 30, 1996 (file number 0-19417); (2) the Company's Quarterly
Report on Form 10-Q for the Quarterly Period ended February 28, 1997 (file
number 0-19417); (3) the Company's Quarterly Report on Form 10-Q for the
Quarterly Period ended May 31, 1997 (file number 0-19417); (4) the Company's
Quarterly Report on Form 10-Q for the Quarterly Period ended August 31, 1997
(file number 0-19417); and (5) the description of the Company's Common Stock
contained in the Company's Registration Statement on Form 8-A filed with the
Commission on July 22, 1991.
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering made hereby shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of the
filing of such reports and documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein 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 the Registration Statement or this
Prospectus.
Any person to whom a copy of this Prospectus is delivered may obtain,
without charge, upon written or oral request, a copy of any of the documents
incorporated by reference herein, except for the exhibits to such documents
(other than exhibits expressly incorporated by reference into such documents).
Requests for such documents should be addressed to Norman R. Robertson, Vice
President, Finance and Chief Financial Officer, Progress Software Corporation,
14 Oak Park, Bedford, Massachusetts 01730, (781) 280-4000.
2
5
SUMMARY INFORMATION
Progress provides products and services that enable organizations
throughout the world to rapidly and cost-effectively develop, deploy and
maintain computer software applications. The Company develops, markets and
supports cross-platform, database-independent application development tools and
a database management system. The Company's principal product line, marketed as
PROGRESS, consists of a fourth generation language ("4GL") -based visual
development environment, a transaction-oriented Structured Query Language
("SQL") relational data base management system ("RDBMS") and capabilities that
enable the deployment of applications across hardware platforms, operating
systems, networks and other database management systems. The Company's WebSpeed
product line enables developers to build and deploy Internet Transaction
Processing ("ITP") applications. The Company also markets add-on application
development tools for Microsoft's Visual Basic and Visual J++.
The principal executive offices of Progress are located at 14 Oak Park,
Bedford, Massachusetts 01730, and its telephone number is (781) 280-4000.
3
6
RISK FACTORS
This Prospectus contains and incorporates by reference forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. The Company's actual results could differ materially
from the results contemplated in the forward-looking statements as a result of a
number of factors, including the risk factors set forth below.
The Company operates in a rapidly changing environment that involves
certain risks and uncertainties, some of which are beyond the Company's control.
The following discussion highlights some of those risks.
The Company may experience significant fluctuations in future quarterly
operating results that may be caused by many factors, including changes in
demand for the Company's products, introduction, enhancement or announcement of
products by the Company and its competitors, market acceptance of new products,
size and timing of significant orders, budgeting cycles of customers, mix of
distribution channels, mix of products and services sold, mix of international
and North American revenues, changes in the level of operating expenses, changes
in the Company's sales incentive plans, customer order deferrals in anticipation
of new products announced by the Company or its competitors and general economic
conditions. Revenue forecasting is uncertain, in large part, because the Company
generally ships its products upon receipt of orders. This uncertainty is
compounded because each quarter's revenue is derived disproportionately from
orders booked and shipped during the third month, and disproportionately in the
latter half of that month. In contrast, most of the Company's expenses are
relatively fixed, including costs of personnel and facilities, and are not
easily reduced. Thus, an unexpected reduction in the Company's revenue, or a
decrease in the rate of growth of such revenue, would have a material adverse
effect on the profitability of the Company.
The Company develops, markets and supports its core product line, the PROGRESS
Application Development Environment, the PROGRESS RDBMS and the PROGRESS
Dataserver Architecture (collectively, "PROGRESS"). In May 1997, the Company
began shipping the latest major enhancement to the PROGRESS product line,
PROGRESS Version 8.2. In October 1996, the Company began shipments of WebSpeed,
an open development and deployment environment that enables organizations to
build transaction processing applications on the Internet and corporate
intranets. In July 1997, the Company began shipments of WebSpeed Version 2.0.
The Company also develops and markets a collection of advanced tools and
components to Visual Basic and Visual J++ development teams.
Progress, through the Apptivity product unit, creates and markets
development tools in the Java computer programming language. Apptivity's tools
are used to build scalable, multi-tier, database applications for the Internet
and corporate intranets. Apptivity focuses on delivering tools that improve
productivity and reduce application development costs. Apptivity enables
developers to build applications that can connect to popular client/server
databases such as those from Informix Corporation, Oracle Corporation, Microsoft
Corporation, Sybase, Inc. and International Business Machines Corporation's DB2
database servers.
Although the Company believes that PROGRESS, WebSpeed and the Crescent and
Apptivity product lines have features and functionality which enable the Company
to compete effectively with other vendors of application development products,
ongoing enhancements to PROGRESS, WebSpeed and the Crescent and Apptivity
product lines will be required to enable the Company to maintain its competitive
position. There can be no assurance that the Company will be successful in
developing and marketing enhancements to its products on a timely basis, or that
the enhancements will adequately address the changing needs of the marketplace.
Delays in the release of enhancements may negatively affect results.
The Company has derived most of its revenue from PROGRESS and other
products which complement PROGRESS and are generally licensed only in
conjunction with PROGRESS. Accordingly, the Company's future results depend on
continued market acceptance of PROGRESS and any factor adversely affecting the
market for PROGRESS could have a material adverse effect on the Company's
business and its financial results. Future results may also depend upon the
Company's continued successful distribution of PROGRESS through its Application
4
7
Partner channel and may be impacted by downward pressure on pricing, which may
not be offset by increases in volume. Application Partners resell PROGRESS along
with their own applications and any adverse effect on their business related to
competition, pricing and other factors could have a material adverse effect on
the Company.
The Company experiences significant competition from a variety of sources
with respect to the marketing and distribution of its products. Some of these
competitors have greater financial, marketing or technical resources than the
Company and may be able to adapt more quickly to new or emerging technologies
and changes in customer requirements or to devote greater resources to the
promotion and sale of their products than can the Company. Increased competition
could make it more difficult for the Company to maintain its market presence.
In addition, current and potential competitors may make strategic
acquisitions or establish cooperative relationships among themselves or with
third parties, thereby increasing their ability to deliver products which
address the needs of the Company's prospective customers. Current and potential
competitors also may be more successful than the Company in having their
products or technologies widely accepted. There can be no assurance that the
Company will be able to compete successfully against current and future
competitors and their failure so to do could have a material adverse affect upon
the Company's business, prospects, financial condition and results of
operations.
The Company hopes that the WebSpeed and Apptivity products as well as
other new products will contribute positively to the Company's future results.
The market for the Apptivity product line and internet transaction processing
products, such as WebSpeed, is highly competitive and will depend in large part
on the commercial acceptance of the Internet as a medium for all types of
commerce. Because global commerce and online exchange of information on the
Internet and other similar open wide area networks are new and evolving, it is
difficult to predict with any assurance that the infrastructure or complementary
products necessary to make the Internet a viable medium for all types of
commerce will be developed.
Overlaying the risks associated with the Company's existing products and
enhancements are ongoing technological developments and rapid changes in
customer requirements. The Company's future success will depend upon its ability
to develop and introduce in a timely manner new products that take advantage of
technological advances and respond to new customer requirements. The Company is
currently developing new products intended to help organizations meet the future
needs of application developers. The development of new products is increasingly
complex and uncertain, which increases the risk of delays. There can be no
assurance that the Company will be successful in developing new products
incorporating new technology on a timely basis, or that its new products will
adequately address the changing needs of the marketplace. The marketplace for
these new products is intensely competitive and characterized by low barriers to
entry. As a result, new competitors possessing technological, marketing or other
competitive advantages may emerge and rapidly acquire market share.
Approximately 50% of the Company's total revenue in the first nine months
of fiscal 1997 was attributable to international sales made through
international subsidiaries. Because a substantial portion of the Company's total
revenue is derived from such international operations which are conducted in
foreign currencies, changes in the value of these foreign currencies relative to
the United States dollar may affect the Company's results of operations and
financial position. The Company engages in certain currency-hedging transactions
intended to reduce the effect of fluctuations in foreign currency exchange rates
on the Company's results of operations. However, there can be no assurance that
such hedging transactions will materially reduce the effect of fluctuation in
foreign currency exchange rates on such results. If for any reason exchange or
price controls or other restrictions on the conversion of foreign currencies
were imposed, the Company's business could be adversely affected. Other
potential risks inherent in the Company's international business generally
include longer payment cycles, greater difficulties in accounts receivable
collection, unexpected changes in regulatory requirements, export restrictions,
tariffs and other trade barriers, difficulties in staffing and managing foreign
operations, political instability, fluctuations in currency exchange rates,
reduced protection for intellectual property rights in some countries, seasonal
reductions in business activity during the summer months in Europe and certain
other parts of the world, and potentially adverse tax consequences, any of which
could adversely impact the success of the Company's international operations.
There can be no assurance that one or more of such factors will not have a
material adverse effect on the Company's future international operations,
5
8
if any, and, consequently, on the Company's business, financial condition, and
operating results.
The Company's future success will depend in large part upon its ability to
attract and retain highly skilled technical, managerial and marketing personnel.
Competition for such personnel in the software industry is intense. There can be
no assurance that the Company will continue to be successful in attracting and
retaining the personnel it requires to successfully develop new and enhanced
products and to continue to grow and operate profitably.
The Company's success is heavily dependent upon its proprietary software
technology. The Company relies principally on a combination of contract
provisions and copyright, trademark and trade secret laws to protect its
proprietary technology. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy aspects of the Company's
products or to obtain and use information that the Company regards as
proprietary. Policing unauthorized use of the Company's products is difficult.
There can be no assurance that the steps taken by the Company to protect its
proprietary rights will be adequate to prevent misappropriation of its
technology or independent development by others of similar technology. In
addition, litigation may be necessary in the future to enforce the Company's
intellectual property rights, to protect the Company's trade secrets, to
determine the validity and scope of the proprietary rights of others, or to
defend against claim of infringement or invalidity. Although the Company
believes that its products and technology do not infringe on any existing
proprietary rights of others, there can be no assurance that third parties will
not assert infringement claims in the future. Such litigation could result in
substantial costs and diversion of resources and could have a material adverse
effect on the Company's business, operating results or financial condition.
The Company also utilizes certain technology which it licenses from third
parties, including software which is integrated with internally developed
software and used in the Company's products to perform key functions. There can
be no assurance that functionally similar technology will be available on
commercially reasonable terms in the future.
The market price of the Company's Common Stock, like that of other
technology companies, is highly volatile and is subject to wide fluctuations in
response to quarterly variations in operating results, announcements of
technological innovations or new products by the Company or its competitors,
changes in financial estimates by securities analysts, or other events or
factors. The Company's stock price may also be affected by broader market trends
unrelated to the Company's performance.
6
9
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders, nor will any such proceeds be available for use
by the Company or otherwise for the Company's benefit. See "Selling
Stockholders."
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by each of the Selling
Stockholders as of December 2, 1997 and as adjusted to reflect the sale of the
shares of Common Stock offered hereby for all Selling Stockholders.
SHARES NUMBER OF SHARES SHARES TO BE
BENEFICIALLY OWNED BEING REGISTERED BENEFICIALLY OWNED
PRIOR TO OFFERING (1) FOR SALE HEREBY(2) AFTER OFFERING(3)
--------------------- ------------------ -----------------
NAME NUMBER PERCENT NUMBER PERCENT
- ---- ------ ------- ------ -------
Gopi Reddy 7,529 * 7,529 0 *
Dennis Cook 7,529 * 7,529 0 *
Tsuyoshi Taira 3,764 * 3,764 0 *
Alexander G. Bootman 3,764 * 3,764 0 *
Anu R. Pareek 1,882 * 1,882 0 *
Rajesh Pandia 752 * 752 0 *
Banwari L. Joshi 376 * 376 0 *
================================================================================
* Less than 1%.
(1) The number of shares beneficially owned by each stockholder is determined in
accordance with the rules promulgated by the Securities and Exchange
Commission, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership
includes any shares as to which the person has sole or shared voting or
investment power and also any shares which the person has the right to
acquire within 60 days after December 2, 1997. The inclusion of such shares
herein, however, does not constitute an admission that the named stockholder
is a direct or indirect beneficial owner of such shares. To the Company's
knowledge, each person named in the table has sole voting and investment
power (or shares such power with his spouse) with respect to all shares of
Common Stock shown as beneficially owned by such person. Solely for the
purpose of computing the percentage of shares beneficially owned by a
person, shares of Common Stock which the person has the right to acquire
within 60 days of December 2, 1997 are deemed outstanding.
(2) The registration statement of which this Prospectus forms a part shall also
cover any additional shares of Common Stock that become issuable in
connection with the shares registered for sale hereby by reason of any stock
dividend, stock split, recapitalization, or other similar transaction
effected without the receipt of consideration that results in an increase in
the number of the Company's outstanding shares of Common Stock.
(3) Assumes that all shares of Common Stock offered hereby are sold.
7
10
PLAN OF DISTRIBUTION
The shares offered hereby may be sold from time to time by the Selling
Stockholders, the pledgees, donees, transferees or other successors in interest
of the Selling Stockholders and by certain unnamed non-affiliates of the
Company, each of whom holds less than 10,000 shares issued in connection with
the merger of Apptivity with and into Arbela. Such sales may be made on the
Nasdaq National Market, or otherwise, at prices and on terms then prevailing or
at prices related to the then-current market prices, or in negotiated
transactions at negotiated prices. The shares may be sold by one or a
combination of the following: (a) a block trade in which the broker or dealer so
engaged will attempt to sell the shares as agent, but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) an exchange distribution in accordance
with the rules of such exchange; and (d) ordinary brokerage transactions and
transactions in which the broker solicits purchasers. In effecting sales,
brokers or dealers engaged by the Selling Stockholders may arrange for other
brokers or dealers to participate. Brokers or dealers will receive commissions
or discounts from Selling Stockholders in amounts to be negotiated immediately
prior to the sale. The Selling Stockholders and any broker-dealers that
participate in the distribution may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commission received by
them and any profit on the resale of shares sold by them may be deemed to be
underwriting discounts and commissions. In addition, any securities covered by
this Prospectus that qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to the Prospectus.
Upon the Company being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplemented prospectus will
be filed, if required, pursuant to Rule 424(c) under the Securities Act, setting
forth (a) the name of such Selling Stockholder and the name of each of the
participating broker-dealers, (b) the number of shares involved, (c) the price
at which such shares were sold, (d) the commissions paid or discounts or
concessions allowed to such broker-dealers, where applicable, (e) a statement to
the effect that such broker-dealers did not conduct any investigation to verify
the information set out or incorporated by reference in this Prospectus and (f)
other facts material to the transaction.
The Company has agreed to pay the expenses incurred in connection with
preparing and filing the Registration Statement and this Reoffer Prospectus
(other than selling commissions).
RIGHTS OF REPURCHASE
Pursuant to certain stock restriction agreements, a number of the Shares
held by the following Selling Stockholders are subject to rights of repurchase
in favor of Progress at the original purchase price of those Shares: Gopi Reddy,
Dennis Cook, Alexander G. Bootman and Anu R. Pareek. Such rights may be
exercised only within the sixty day time period after the termination for any
reason of a Selling Stockholder's employment with Apptivity, and, in any event,
rights of repurchase lapse over time. Shares subject to rights of repurchase are
held in escrow with the Company.
Progress may exercise its rights of repurchase by delivering a written
notice to a Selling Stockholder that sets forth the date on which the repurchase
is to be effected (which may not be more than thirty days after the date of
notice) and the number of Shares to be repurchased. Payment may be made by
either cash, cash equivalents and/or cancellation of certain types of a Selling
Stockholder's indebtedness to Progress. Rights of repurchase expire if they are
not timely exercised.
Any new, substituted or additional securities or other property (including
cash paid other than as a regular cash dividend) issued without receipt of
consideration in connection with a stock split, stock dividend,
recapitalization, stock combination, exchange of shares or other change
affecting the Company's outstanding securities are immediately subject to rights
of repurchase but only to the extent a Selling Stockholder's Shares are subject
to such rights at the time of such transaction. In connection with any such
transaction, appropriate adjustments will be made to the number and kind of
securities subject to rights of repurchase, as well as the exercise
8
11
price of such rights, but the aggregate exercise price of rights of repurchase
shall remain the same.
Selling Stockholders or any other holder of Shares subject to rights of
repurchase may not transfer, assign, encumber or otherwise dispose of such
Shares unless they do so (a) gratuitously with the Company's written consent,
(b) pursuant to the Selling Stockholder's will or the laws of intestate
succession or (c) as security for indebtedness incurred by a Selling Stockholder
to Apptivity in order to acquire Shares.
In general, rights of repurchase lapse if Progress becomes subject to
either (a) a merger or consolidation in which more than 50% of the combined
voting power of the Company's outstanding securities is transferred to a person
or persons who were not shareholders of Progress immediately prior to such
transaction or (b) the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete liquidation or dissolution
of Progress and if the rights of repurchase are not assigned to a successor
corporation or parent thereof. To the extent rights of repurchase remain in
effect after either of the foregoing types of transactions, such rights shall
apply to any capital stock or other property received by Selling Stockholders in
connection with the transaction, such stock and other property will be held in
escrow and appropriate adjustments will be made to the exercise price of the
rights (without, however, changing their aggregate exercise price).
Each person who acquires Shares subject to rights of repurchase must
agree, in writing, to be bound by those rights and to execute a form of
assignment of such shares in favor of Progress.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Foley, Hoag & Eliot LLP, Boston, Massachusetts.
9
12
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Article 6 of the Company's Restated Articles of Organization eliminates
the personal liability of a director to the Company or its stockholders for
monetary damages arising out of such director's breach of fiduciary duty as a
director of the Company to the maximum extent permitted by Massachusetts law.
Section 13(b)(1-1/2) of Chapter 156B of the Massachusetts Business Corporation
Law provides that the articles of organization of a corporation may state a
provision eliminating the personal liability of a director to a corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; provided, however, that such provision shall not eliminate or limit
the liability of a director (a) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (b) for acts of commission not in good
faith or which involve intentional misconduct or knowing violation of law, (c)
under section 61 or 62 of the Massachusetts Business Corporation Law dealing
with liability for unauthorized distributions and loans to insiders,
respectively, or (d) for any transaction from which the director derived an
improper personal benefit.
Article VII of the company's By-Laws provides that the Company shall
indemnify its officers and directors, and directors, officers, trustees,
employees and other agents of any organization in which the Company owns shares
or of which it is a creditor, against all liabilities and expenses reasonably
incurred by such officers, directors, employees and other agents in connection
with the defense or disposition of any action, suit or proceeding in which they
may be involved by reason of having been a director, officer of employee or
other agent, except with respect to any matter as to which they shall have been
adjudicated not to have acted in good faith and reasonably believe that their
action was in the best interests of the Company. Section 67 of the Massachusetts
Business Corporation Law authorizes a corporation to indemnify its directors,
officers, employees and other agents unless such person shall have been
adjudicated in any proceeding not to have acted in good faith in the reasonable
belief that such action was in the best interests of the corporation.
The effect of these provisions would be to permit such indemnification by
the Company for liabilities arising out of the Securities Act. However, insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling the registrant pursuant
to the foregoing provisions, the registrant has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
The Company also maintains an officers and directors liability insurance
policy.
10
13
TABLE OF CONTENTS
No broker, dealer or any other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any Selling Stockholder. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any securities other than
the shares of Common Stock to which it relates or an offer to, or a solicitation
of, any person in any jurisdiction where such an offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that information
contained herein is correct as of any time subsequent to its date.
TABLE OF CONTENTS
Page
----
Available Information................................................ 2
Incorporation of Certain Documents by Reference...................... 2
Summary Information.................................................. 3
Risk Factors......................................................... 4
Use of Proceeds...................................................... 7
Selling Stockholders................................................. 7
Plan of Distribution................................................. 8
Legal Matters........................................................ 9
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities.................................................... 10
PROGRESS SOFTWARE CORPORATION
25,596 Shares of Common Stock
----------------
PROSPECTUS
----------------
December 3, 1997
11
14
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
(the "Commission") are incorporated in this Registration Statement by reference:
(a) Progress Software Corporation's (the "Company's" or the
"Registrant's") Annual Report on Form 10-K for the fiscal year ended November
30, 1996 (file number 0-19417) as filed with the Commission on February 20,
1997;
(b) the Company's Quarterly Reports on Form 10-Q for the Quarterly Periods
ended February 28, 1997, May 31, 1997 and August 31, 1997 (file number 0-19417);
(c) the description of the Company's Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on July 22, 1991
under Section 12 of the Securities Exchange Act of 1934 (the "Exchange Act"),
including any amendment or description filed for the purpose of updating such
description; and
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be part
hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the securities registered hereby is being passed upon for
the Company by Foley, Hoag & Eliot LLP, Boston, Massachusetts.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 6 of the Company's Restated Articles of Organization eliminates
the personal liability of a director to the Company or its stockholders for
monetary damages arising out of such director's breach of fiduciary duty as a
director of the Company to the maximum extent permitted by Massachusetts law.
Section 13(b)(1-1/2) of Chapter 156B of the Massachusetts Business Corporation
Law provides that the articles of organization of a corporation may state a
provision eliminating the personal liability of a director to a corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; provided, however, that such provision shall not eliminate or limit
the liability of a director (a) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (b) for acts of commission not in good
faith or which involve intentional misconduct or knowing violation of law, (c)
under section 61 or 62 of the Massachusetts Business Corporation Law dealing
with liability for unauthorized distributions and loans to insiders,
respectively, or (d) for any transaction from which the director derived an
improper personal benefit.
1
15
Article VII of the company's By-Laws provides that the Company shall
indemnify its officers and directors, and directors, officers, trustees,
employees and other agents of any organization in which the Company owns shares
or of which it is a creditor, against all liabilities and expenses reasonably
incurred by such officers, directors, employees and other agents in connection
with the defense or disposition of any action, suit or proceeding in which they
may be involved by reason of having been a director, officer of employee or
other agent, except with respect to any matter as to which they shall have been
adjudicated not to have acted in good faith and reasonably believe that their
action was in the best interests of the Company. Section 67 of the Massachusetts
Business Corporation Law authorizes a corporation to indemnify its directors,
officers, employees and other agents unless such person shall have been
adjudicated in any proceeding not to have acted in good faith in the reasonable
belief that such action was in the best interests of the corporation.
The effect of these provisions would be to permit such indemnification by
the Company for liabilities arising out of the Securities Act of 1933, as
amended (the "Securities Act").
The Company also maintains an officers and directors liability insurance
policy.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 Form of Stock Restriction Agreement
5.1 Opinion of Counsel
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (contained on the signature page)
ITEM 9. UNDERTAKINGS.
1. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at all time shall be deemed to be the initial bona
fide offering thereof.
2. The undersigned Registrant hereby undertakes that,
(a) 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;
(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; and
(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
16
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference herein.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) 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.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
2
17
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Bedford, Commonwealth of Massachusetts, on the second
day of December, 1997.
Progress Software Corporation
By: /s/ JOSEPH W. ALSOP
-----------------------
Joseph W. Alsop,
President and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Joseph W. Alsop, Chadwick H. Carpenter,
Jr. and Norman R. Robertson, and each of them, true and lawful attorneys-in-fact
and agents with full power of substitution, for and in 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 file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing which
they, or any of them, may deem necessary or advisable to be done in connection
with this Registration Statement, as fully to all intents and purposes as he or
she might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or any substitute or substitutes
for him, any or all of them, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and as of
the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ JOSEPH W. ALSOP President, Treasurer and December 2, 1997
- ------------------------ Director (Principal Executive
Joseph W. Alsop Officer)
3
18
Signature Title Date
- --------- ----- ----
/s/ NORMAN R. ROBERTSON Vice President, Finance and December 2, 1997
- ------------------------ Chief Financial Officer
Norman R. Robertson (Principal Financial Officer)
/s/ DAVID H. BENTON, JR. Corporate Controller December 2, 1997
- ------------------------ (Principal Accounting Officer)
David H. Benton, Jr.
/S/ LARRY R. HARRIS Director December 2, 1997
- ------------------------
Larry R. Harris
/s/ ROBERT J. LEPKOWSKI Director December 2, 1997
- ------------------------
Robert J. Lepkowski
/s/ MICHAEL L. MARK Director December 2, 1997
- ------------------------
Michael L. Mark
/s/ ARTHUR J. MARKS Director December 2, 1997
- ------------------------
Arthur J. Marks
/s/ AMRAM RASIEL Director December 2, 1997
- ------------------------
Amram Rasiel
/s/ JAMES W. STOREY Director December 2, 1997
- ------------------------
James W. Storey
4
19
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
4.1 Form of Stock Restriction Agreement
5.1 Opinion of Counsel
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (contained on the signature page)
5
1
Exhibit 4.1
Form of Stock Restriction Agreement
APPTIVITY CORPORATION
STOCK RESTRICTION AGREEMENT
THIS AGREEMENT is made as of this 2nd day of July, 1997, by and
between Apptivity Corporation, a California corporation (the "Company"), and
__________________ ("Holder").
RECITALS
WHEREAS, the parties entered into that certain Stock Purchase
Agreement dated as of __________, 1996 (the "Stock Purchase Agreement") pursuant
to which Holder purchased _______ shares of Common Stock of the Company (the
"Purchased Shares") at an aggregate purchase price of $_______ (the "Aggregate
Purchase Price");
WHEREAS, pursuant to the Stock Purchase Agreement, the Purchased
Shares were fully vested and not subject to repurchase by the Company;
WHEREAS, Holder hereby agrees to the imposition of contractual
restrictions with respect to the Purchased Shares and Holder and the Company
hereby agree that this Agreement shall govern the rights of the Company to
repurchase the Purchased Shares according to the vesting schedule defined
herein; and
WHEREAS, it is a condition to the merger between the Company and
a wholly-owned subsidiary of Progress Software Corporation (the "Merger") that
Holder enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein and the consideration to be received by Holder
pursuant to the Merger, the parties hereby agree as follows:
RESTRICTIONS ON PURCHASED SHARES AND STOCK CERTIFICATE
STOCK RESTRICTIONS AND DELIVERY OF CERTIFICATE. Holder has
previously purchased from the Company the Purchased Shares and Holder now hereby
agrees to the imposition of certain contractual restrictions on the Purchased
Shares. Holder shall deliver to the Company, subject to the terms hereof, at the
time of the execution of this Agreement, the previously issued stock certificate
representing the Purchased Shares and shall deliver to the Company concurrently
therewith a duly-executed blank Assignment Separate from Certificate (in the
form attached hereto as Exhibit I) with respect to the Purchased Shares.
6
2
LEGENDING OF CERTIFICATE AND DEPOSIT INTO ESCROW. Upon receipt by
the Company of the items in Section A.1 above, the Company shall legend the
stock certificate representing the Purchased Shares pursuant to the terms of
Section A.3 below and shall hold such stock certificate in escrow in accordance
with the provisions of this Agreement.
RESTRICTIVE LEGENDS. The stock certificate for the Purchased
Shares shall be endorsed with the following restrictive legend (in addition to
any previously existing legends):
"The shares represented by this certificate are subject
to certain repurchase rights granted to the Company and accordingly may not be
sold, assigned, transferred, encumbered, or in any manner disposed of except in
conformity with the terms of a written agreement between the Company and the
registered holder of the shares (or the predecessor in interest to the shares).
A copy of such agreement is maintained at the Company's principal corporate
offices."
SHAREHOLDER RIGHTS. Until such time as the Company exercises the
Repurchase Right, Holder (or any successor in interest) shall have all the
rights of a shareholder (including voting, dividend and liquidation rights) with
respect to the Purchased Shares, including the Purchased Shares held in escrow
hereunder, subject, however, to the transfer restrictions of Article B.
TRANSFER RESTRICTIONS
RESTRICTION ON TRANSFER. Except for any Permitted Transfer,
Holder shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares that are subject to the Repurchase Right (as hereinafter
defined). In addition, Purchased Shares that are released from the Repurchase
Right shall not be transferred, assigned, encumbered or otherwise disposed of in
contravention of the first refusal right or the market stand-off provisions of
the Stock Purchase Agreement.
TRANSFEREE OBLIGATIONS. Each person (other than the Company) to
whom the Purchased Shares are transferred by means of a Permitted Transfer must,
as a condition precedent to the validity of such transfer, (i) agree in writing
on a form prescribed by the Company that such person is bound by the provisions
of this Agreement and the Stock Purchase Agreement and that the transferred
shares are subject to the Repurchase Right to the same extent such shares would
be so subject if retained by Holder, and (ii) execute and deliver to the Company
a blank Assignment Separate from Certificate (in the form attached hereto as
Exhibit I).
REPURCHASE RIGHT
GRANT. The Company is hereby granted the right (the "Repurchase
Right"), exercisable at any time during the sixty (60) day period following the
date Holder ceases for any reason, with or without cause, including (without
limitation) death or disability, to remain in Service, to repurchase at the
Purchase Price all or any portion of the Purchased Shares in which Holder is
not, at the time of his cessation of Service, vested in accordance with the
Vesting
7
3
Schedule set forth in Paragraph C.3 or Paragraph C.5 herein (such shares to be
hereinafter referred to as the "Unvested Shares").
EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be
exercisable by written notice delivered to each Owner prior to the expiration of
the sixty (60) day exercise period. The notice shall indicate the number of
Unvested Shares to be repurchased and the date on which the repurchase is to be
effected, such date to be not more than thirty (30) days after the date of such
notice. The certificates representing the Unvested Shares to be repurchased
shall be delivered to the Company prior to the close of business on the date
specified for the repurchase. Concurrently with the receipt of such stock
certificates, the Company shall pay to Owner, in cash or cash equivalents
(including the cancellation of any purchase-money indebtedness), an amount equal
to the Purchase Price previously paid for the Unvested Shares that are to be
repurchased from Owner.
TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph C.2 herein. In addition, the Repurchase Right shall
terminate and cease to be exercisable with respect to any and all Purchased
Shares in which Holder vests in accordance with the following vesting schedule
(the "Vesting Schedule"):
Holder shall acquire a vested interest in and the
Company's Repurchase Right will accordingly lapse with respect to the Purchased
Shares in successive equal monthly installments upon Holder's completion of each
of the forty-eight (48) months of Service measured from and after __________,
1996 (the "Vesting Date").
All Purchased Shares as to which the Repurchase Right lapses shall, however,
remain subject to any first refusal right and/or market stand-off provisions of
the Stock Purchase Agreement.
RECAPITALIZATION. Any new, substituted or additional securities
or other property (including cash paid other than as a regular cash dividend),
which is by reason of any Recapitalization distributed with respect to the
Purchased Shares, shall be immediately subject to the Repurchase Right, but only
to the extent the Purchased Shares are at the time covered by such right.
Appropriate adjustments to reflect such distribution shall be made to the number
and/or class of Purchased Shares subject to this Agreement and to the price per
share to be paid upon the exercise of the Repurchase Right in order to reflect
the effect of any such Recapitalization upon the Company's capital structure;
provided, however, that the Aggregate Purchase Price shall remain the same.
CORPORATE TRANSACTION.
Immediately prior to the consummation of any Corporate
Transaction, the Repurchase Right shall automatically lapse in its entirety,
except to the extent the Repurchase Right is to be assigned to the successor
corporation (or parent thereof) in connection with the Corporate Transaction.
To the extent the Repurchase Right remains in effect
following a Corporate Transaction, such right shall apply to the new capital
stock or other property (including any cash
8
4
payment) received in exchange for the Purchased Shares in consummation of the
Corporate Transaction, but only to the extent the Purchased Shares are at the
time covered by such right. Appropriate adjustments shall be made to the price
per share payable upon exercise of the Repurchase Right to reflect the effect of
the Corporate Transaction upon the Company's capital structure; PROVIDED,
however, that the Aggregate Purchase Price shall remain the same.
ESCROW
DEPOSIT. Upon receipt by the Company, the certificates for the
Purchased Shares that are subject to the Repurchase Right shall be deposited in
escrow with the Company to be held in accordance with the provisions of this
Article D. Each deposited certificate shall be accompanied by a duly-executed
Assignment Separate from Certificate in the form of Exhibit I. The deposited
certificates, together with any other assets or securities from time to time
deposited with the Company pursuant to the requirements of this Agreement, shall
remain in escrow until such time or times as the certificates (or other assets
and securities) are to be released or otherwise surrendered for cancellation in
accordance with Paragraph D.3. Upon delivery of the certificates (or other
assets and securities) to the Company, Holder shall be issued a receipt
acknowledging the number of Purchased Shares (or other assets and securities)
delivered in escrow.
RECAPITALIZATION/REORGANIZATION. Any new, substituted or
additional securities or other property which is by reason of any
Recapitalization or Reorganization distributed with respect to the Purchased
Shares shall be immediately delivered to the Company to be held in escrow under
this Article D, but only to the extent the Purchased Shares are at the time
subject to the escrow requirements hereunder. However, all regular cash
dividends on the Purchased Shares (or other securities at the time held in
escrow) shall be paid directly to Owner and shall not be held in escrow.
RELEASE/SURRENDER. The Purchased Shares, together with any other
assets or securities held in escrow hereunder, shall be subject to the following
terms relating to their release from escrow or their surrender to the Company
for repurchase and cancellation:
Should the Company elect to exercise the Repurchase Right
with respect to any Unvested Shares, then the escrowed certificates for those
Unvested Shares (together with any other assets or securities attributable
thereto) shall be surrendered to the Company concurrently with the payment to
Owner of an amount equal to the aggregate Purchase Price for such Unvested
Shares, and Owner shall cease to have any further rights or claims with respect
to such Unvested Shares (or other assets or securities attributable thereto).
Should the Company elect to exercise its first refusal
right under the Stock Purchase Agreement with respect to any Purchased Shares
held at the time in escrow hereunder, then the escrowed certificates for such
shares (together with any other assets or securities attributable thereto) shall
be surrendered to the Company concurrently with the payment of the purchase
price (as determined under the terms of the Stock Purchase Agreement) for such
shares to Owner, and Owner shall cease to have any further rights or claims with
respect to such shares (or other assets or securities attributable thereto).
9
5
As the Purchased Shares (or any other assets or
securities attributable thereto) vest in accordance with the Vesting Schedule,
the certificates for those vested shares (as well as all other vested assets and
securities) shall be released from escrow upon Owner's request, but not more
frequently than once every six (6) months.
After Holder's cessation of Service, all Purchased Shares
that vest (and any other vested assets and securities attributable thereto)
shall be released upon the earlier of request or as soon as reasonably
practicable thereafter and in any event within thirty (30) days of such
cessation of Service.
All Purchased Shares (or other assets or securities)
released from escrow shall nevertheless remain subject to (i) the Company's
first refusal right under the Stock Purchase Agreement, to the extent such right
has not otherwise lapsed, and (ii) the market stand-off provisions of the Stock
Purchase Agreement, until such provisions terminate.
SPECIAL TAX ELECTION
The imposition of the Repurchase Right under this Agreement on
the Purchased Shares may result in adverse tax consequences that may be avoided
or mitigated by filing an election under Code Section 83(b). Such election must
be filed within thirty (30) days after the date of this Agreement. A description
of the tax consequences applicable to the imposition of the Repurchase Right on
the Purchased Shares and the form for making the Code Section 83(b) election are
set forth in Exhibit II and Exhibit III, respectively. HOLDER SHOULD CONSULT
WITH ITS TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF EXECUTING THIS
AGREEMENT AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(b)
ELECTION. HOLDER ACKNOWLEDGES THAT IT IS HOLDER'S SOLE RESPONSIBILITY, AND NOT
THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF
HOLDER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS
BEHALF.
GENERAL PROVISIONS
NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement
shall confer upon Holder any right to continue in Service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining Holder) or of
Holder, which rights are hereby expressly reserved by each, to terminate
Holder's Service at any time for any reason, with or without cause.
NOTICES. Any notice required or permitted to be given under this
Agreement shall be given in writing and shall be deemed effective upon personal
delivery, upon delivery by confirmed facsimile or electronic transmission (with
duplicate original sent by U.S. mail) or upon deposit in the U.S. mail,
registered or certified, postage prepaid and properly addressed to the party to
be notified at the address indicated below such party's signature line on this
Agreement or at such other address as such party may designate by ten (10) days
advance written notice (under the terms of this paragraph) to the other party to
this Agreement.
10
6
NO WAIVER. The failure of the Company in any instance to exercise
the Repurchase Right shall not constitute a waiver of any other repurchase
rights and/or rights of first refusal that may subsequently arise under the
provisions of this Agreement, the Stock Purchase Agreement or any other
agreement between the Company and Holder or Holder's spouse. No waiver of any
breach or condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of like or different nature.
CANCELLATION OF SHARES. If the Company shall make available, at
the time and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such shares shall be deemed
purchased in accordance with the applicable provisions hereof, and the Company
shall be deemed the owner and holder of such shares, whether or not the
certificates therefor have been delivered as required by this Agreement.
MISCELLANEOUS PROVISIONS
FURTHER ACTIONS. The parties hereby agree to take whatever
additional actions and execute whatever additional documents they may deem
necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either of them or on the Purchased Shares
pursuant to the provisions of this Agreement.
AMENDMENTS AND WAIVERS. This Agreement represents the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all previous understandings, whether written or oral. This Agreement
may only be amended with the written consent of Holder and the President or
Chief Executive Officer of the Company, or the successors or assigns of the
foregoing, and no oral waiver or amendment shall be effective under any
circumstances whatsoever.
GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California without resort to that
State's conflict-of-laws rules.
COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
SUCCESSORS AND ASSIGNS. The terms and provisions of this
Agreement shall inure to the benefit of, and be binding upon, the Company and
its successors and assigns and upon Holder, Holder's permitted assigns and legal
representatives, heirs and legatees of Holder's estate, whether or not any such
person shall have become a party to this Agreement and have agreed in writing to
join herein and be bound by the terms hereof.
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
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.
12
8
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first indicated above.
APPTIVITY CORPORATION
By:
----------------------------------------
Purna Pareek, President
Address: 39899 Balentine Drive, #380
Newark, California 94560
HOLDER: 1
--------------------------------------------
[Insert Name]
Address:
--------------------------------------------
- ---------------------
1 I have received, completed, executed and retained the Section 83(b)
election that was attached hereto as Exhibit III. I understand that I, and
not the Company, will be responsible for completing the form and filing the
election with the appropriate office of the federal and state tax
authorities and that if such filing is not completed within thirty (30)
days after the date of this Agreement, I will forfeit the significant tax
benefits of Section 83(b). I understand further that such filing should be
made by registered or certified mail, return receipt requested, and that I
must retain two (2) copies of the completed form for filing with my state
and federal tax returns for the current tax year and an additional copy for
my records.
9
INSTRUCTIONS TO EXHIBIT I:
Please do not fill in any blanks other than the signature line. Please sign
exactly as you would like your name to appear on the issued stock certificate.
The purpose of this assignment is to enable the Company to exercise the
Repurchase Right without requiring additional signatures on the part of Holder.
10
EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _____________________ hereby sells, assigns
and transfers unto Apptivity Corporation, its successors and assigns (the
"Company") _________________________________ (______________) shares of the
Common Stock of the Company standing in his name on the books of the Company
represented by Certificate Number(s) _____________ herewith and does hereby
irrevocably constitute and appoint _____________________ his attorney-in-fact to
transfer such stock on the books of the Company with full power of substitution
in the premises.
Dated: _______________
___________________________________
Signature
This Assignment Separate from Certificate was executed in
conjunction with the terms of the Stock Restriction Agreement by and between the
above assignor and Apptivity Corporation dated June __, 1997.
11
EXHIBIT II
FEDERAL INCOME TAX CONSEQUENCES AND SECTION 83(b) TAX ELECTION
I. FEDERAL INCOME TAX CONSEQUENCES AND SECTION 83(b) ELECTION.
Under Section 83 of the Internal Revenue Code of 1986, as amended (the "Code"),
the excess of the Fair Market Value of the Purchased Shares, on the date any
forfeiture restrictions applicable to such shares lapse, over the Purchase Price
paid for such shares will be reportable as ordinary income on the lapse date.
For this purpose, the term "forfeiture restrictions" includes the right of the
Company to repurchase the Purchased Shares pursuant to the Repurchase Right.
However, Holder may elect under Code Section 83(b) to be taxed at the time the
Purchased Shares become subject to forfeiture restrictions, rather than when and
as such Purchased Shares cease to be subject to such forfeiture restrictions.
Such election must be filed with the Internal Revenue Service within thirty (30)
days after the date of this Agreement. Even if the Fair Market Value of the
Purchased Shares on the date of this Agreement equals the Purchase Price paid
(and thus no tax is payable), the election must be made to avoid adverse tax
consequences in the future. The form for making this election is attached as
Exhibit III. FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30) DAY
PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME BY HOLDER AS THE
FORFEITURE RESTRICTIONS LAPSE.
12
EXHIBIT III
SECTION 83(b) ELECTION
This statement is being made under Section 83(b) of the Internal
Revenue Code, pursuant to Treas. Reg. Section 1.83-2.
The taxpayer who performed the services is:
Name:
---------------------------------------------------
Address:
---------------------------------------------------
Taxpayer Ident. No.:
---------------------------------------------------
The property with respect to which the election is being made is ________
shares of the common stock of Apptivity Corporation.
The property was issued on ________________, 199__.
The taxable year in which the election is being made is the calendar year 199__.
The property is subject to a repurchase right pursuant to which the issuer
has the right to acquire the property at the original purchase price if
for any reason taxpayer's employment with the issuer is terminated. The
issuer's repurchase right lapses in a series of monthly installments
over a four year period ending on ____________.
The fair market value at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never
lapse) is $_____ per share.
The amount paid for such property is $_____ per share.
A copy of this statement was furnished to Apptivity Corporation for whom
taxpayer rendered the services underlying the transfer of property.
This statement is executed on ________________, 199__.
- ---------------------------------- ----------------------------------------
Spouse (if any) Taxpayer
This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Purchase Agreement. This
filing should be made by registered or certified mail, return receipt requested.
Purchaser must retain two (2) copies of the completed form for filing with his
or her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
13
APPENDIX
The following definitions shall be in effect under the Agreement:
AGGREGATE PURCHASE PRICE shall have the meaning assigned to such term in the
Recitals.
AGREEMENT shall mean this Stock Restriction Agreement.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COMMON STOCK shall mean the Company's common stock.
COMPANY shall mean Apptivity Corporation, a California corporation, and its
successors and assigns.
CORPORATE TRANSACTION shall mean either of the following shareholder-approved
transactions:
a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to a person or
persons different from the persons holding those securities
immediately prior to such transaction, or
the sale, transfer or other disposition of all or substantially all
of the Company's assets in complete liquidation or dissolution of
the Company.
FAIR MARKET VALUE of a share of Common Stock on any relevant date, prior to
the initial public offering of the Common Stock, shall be determined by
the Board of Directors after taking into account such factors as it
shall deem appropriate.
OWNER shall mean Holder and all subsequent holders of the Purchased Shares who
derive their chain of ownership through a Permitted Transfer from
Holder.
PARENT shall mean any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company, provided each corporation in
the unbroken chain (other than the Company) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the Purchased Shares,
provided and only if Holder obtains the Company's prior written consent
to such transfer, (ii) a transfer of title to the Purchased Shares
effected pursuant to Holder's will or the laws of intestate succession
following Holder's death or (iii) a transfer to the Company in pledge as
security for any purchase-money indebtedness incurred by Holder in
connection with the acquisition of the Purchased Shares.
PURCHASED SHARES shall have the meaning assigned to such term in the Recitals.
14
PURCHASEPRICE shall mean the purchase price per share as calculated by dividing
the Aggregate Purchase Price by the total number of Purchased Shares.
RECAPITALIZATION shall mean any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock as a class without the Company's
receipt of consideration.
REORGANIZATION shall mean any of the following transactions:
a merger or consolidation in which the Company is not the surviving
entity,
a sale, transfer or other disposition of all or substantially all of the
Company's assets,
a reverse merger in which the Company is the surviving entity but in
which the Company's outstanding voting securities are transferred
in whole or in part to a person or persons different from the
persons holding those securities immediately prior to the merger,
or
any transaction effected primarily to change the state in which the
Company is incorporated or to create a holding company structure.
REPURCHASE RIGHT shall mean the right granted to the Company in accordance with
Article C.
SERVICE shall mean the provision of services to the Company (or any Parent or
Subsidiary) or its successors or assigns, by a person in his or her
capacity as an employee, subject to the control and direction of the
employer entity as to both the work to be performed and the manner and
method of performance, as a non-employee member of the Board of
Directors or as a consultant.
STOCK PURCHASE AGREEMENT shall mean that certain Stock Purchase Agreement by
and between the Company and Holder dated as of _______________, 1996.
SUBSIDIARY shall mean any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company, provided each
corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
VESTING SCHEDULE shall mean the vesting schedule specified in Paragraph C.3.
UNVESTED SHARES shall have the meaning assigned to such term in Paragraph C.1.
1
Exhibit 5.1
Opinion of Counsel
[FOLEY, HOAG & ELIOT LLP LETTERHEAD]
November 24, 1997
Progress Software Corporation
14 Oak Park
Bedford, MA 01730
Ladies and Gentlemen:
We have acted as counsel for Progress Software Corporation, a
Massachusetts corporation (the "Company"), in connection with the preparation
and filing with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, of a Registration Statement on Form S-8 (the "Registration
Statement") relating to the offering of up to 25,596 shares (the "Shares") of
the Company's common stock, $.01 par value ("Common Stock"), issued to the
selling stockholders named in the Registration Statement in exchange for shares
of common stock, $.01 par value per share of Apptivity Corporation, a California
corporation ("Apptivity"), which were issued to the selling stockholders when
they were employees, directors and consultants of Apptivity as a benefit
incident to their employment by or services to Apptivity.
In arriving at the opinions expressed below, we have examined and relied
on the following documents:
(i) the Registration Statement;
(ii) the Agreement and Plan of Merger among the Company, Apptivity and
certain other parties pursuant to which the Shares were issued to
the selling stockholders;
(iii) the Restated Articles of Organization of the Company, as amended
as of the date hereof;
(iv) the By-Laws of the Company, as amended as of the date hereof; and
(v) the records of meetings and consents of the Board of Directors and
stockholders of the Company provided to us by the Company.
2
In addition, we have examined and relied on the originals or copies certified or
otherwise identified to our satisfaction of all such other records, documents
and instruments of the Company and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis for the opinions
expressed below. We have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
the original documents of all documents submitted to us as certified or
photostatic copies.
We express no opinion other than as to the laws of The Commonwealth of
Massachusetts.
Based upon the foregoing, we are of the opinion that the Shares have been
duly authorized and are validly issued, fully paid and non-assessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement.
Very truly yours,
FOLEY, HOAG & ELIOT LLP
By /s/ Robert W. Sweet, Jr.
----------------------------
A Partner
1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Progress Software Corporation on Form S-8 of our report dated December 20, 1996,
appearing in the Annual Report on Form 10-K of Progress Software Corporation for
the year ended November 30, 1996.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
Boston, Massachusetts
December 2, 1997
