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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 28, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ALLAIRE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION
OF INCORPORATION OR ORGANIZATION)
41-1830792
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
ONE ALEWIFE CENTER
CAMBRIDGE, MASSACHUSETTS 02140
(617) 761-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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DAVID J. ORFAO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ALLAIRE CORPORATION
ONE ALEWIFE CENTER
CAMBRIDGE, MASSACHUSETTS 02140
(617) 761-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
ROBERT L. BIRNBAUM, ESQUIRE
WILLIAM R. KOLB, ESQUIRE
FOLEY, HOAG & ELIOT LLP
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
(617) 832-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value.................. 376,690 $149.6875 $56,385,784.375 $14,886
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</TABLE>
(1) Estimated solely for the purpose of determining the registration fee. In
accordance with Rule 457(c) under the Securities Act of 1933, the above
calculation is based on the average of the high and low sale prices reported
in the consolidated reporting system of the Nasdaq National Market on
January 25, 2000.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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ALLAIRE CORPORATION
376,690 SHARES OF COMMON STOCK
The 376,690 shares of our common stock, $.01 par value per share, covered
by this prospectus are being offered by certain of our stockholders on a delayed
or continuous basis, pursuant to the exercise of registration rights.
We will not receive any proceeds from the offering. We will bear the costs
relating to the registration of the shares being offered by this prospectus
(other than selling commissions).
The selling stockholders (or any pledgees, donees, transferees or other
successors in interest of the selling stockholders) may offer the shares, from
time to time during the effectiveness of this registration statement, 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. The selling
stockholders may sell the shares through broker-dealers, who may receive
compensation in the form of discounts, concessions or commissions.
Our common stock is listed on the Nasdaq National Market under the symbol
"ALLR." On January 25, 2000, the last reported sale price for the common stock
on the Nasdaq National Market, was $160.3125 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
ALL SECURITIES TO BE REGISTERED HEREBY ARE TO BE OFFERED BY THE SELLING
STOCKHOLDERS.
The date of this prospectus is January 28, 2000.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED, WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THE PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
AS OF THE DATE OF THIS DOCUMENT.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Risk Factors," and elsewhere in this
prospectus constitute forward-looking statements. These statements relate to
future events or our future financial performance, and are identified by terms
such as "may," "will," "should," "expects," "plans," "intends," "anticipates,"
"believes," "potential" or "continue" or other comparable terminology. These
statements are only predictions. Actual events or results may differ materially.
In evaluating these statements, you should specifically consider various
factors, including the risks outlined under "Risk Factors." These factors may
cause our actual results to differ materially from any forward-looking statement
made in this prospectus. Although we believe that the expectations reflected in
the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements. Moreover, neither we
nor any other person assume responsibility for the accuracy and completeness of
such statements. We are under no duty to update any of the forward-looking
statements after the date of this prospectus to conform the statements to actual
results.
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RISK FACTORS
WE HAVE SUBSTANTIAL NET LOSSES AND MAY NOT BE PROFITABLE IN THE FUTURE.
Since we began operations, we have incurred substantial net losses in every
fiscal year. At September 30, 1999, we had an accumulated deficit of $37.0
million. Although we recorded a small profit for the quarter ended December 31,
1999, we cannot be certain that we will continue to be profitable. Failure to
sustain profitability may adversely affect the market price of our common stock.
In addition, we have generated relatively small amounts of revenue until recent
fiscal quarters, while increasing expenditures in all areas, particularly in
sales and marketing and research and development, in order to execute our
business plan. Although we have experienced revenue growth in recent periods,
the growth has been off of a small base, and it is unlikely that the recent rate
of growth is sustainable.
DISAPPOINTING QUARTERLY REVENUE AND OPERATING RESULTS COULD CAUSE THE PRICE OF
OUR COMMON STOCK TO FALL.
Our quarterly revenue and operating results are difficult to predict and
may fluctuate significantly from quarter to quarter. If our quarterly revenue or
operating results fall below the expectations of investors or public market
analysts, the price of our common stock could fall substantially.
Our quarterly revenue may fluctuate for several reasons, including the
following:
- the market for web application servers and packaged e-business
applications is in an early stage of development and it is therefore
difficult to accurately predict customer demand; and
- the sales cycle for our products and services varies substantially from
customer to customer and, if our average sales price continues to
increase as expected, we expect the sales cycle to lengthen. As a result,
we have difficulty determining whether and when we will receive license
revenue from a particular customer.
In addition, because our revenue from training and consulting services is
largely correlated with our license revenue, a decline in license revenue could
also cause a decline in our services revenue in the same quarter or in
subsequent quarters. Other factors, many of which are outside our control, could
also cause variations in our quarterly revenue and operating results.
Most of our expenses, such as employee compensation and rent, are
relatively fixed. Moreover, our expense levels are based, in part, on our
expectations regarding future revenue increases. As a result, any shortfall in
revenue in relation to our expectations could cause significant changes in our
operating results from quarter to quarter and could result in quarterly losses.
OUR LIMITED OPERATING HISTORY MAKES THE EVALUATION OF OUR BUSINESS AND PROSPECTS
DIFFICULT.
We recorded our first revenue upon delivery of ColdFusion 1.5 to customers
in February 1996. Accordingly, we have only a limited operating history on which
you can base your evaluation of our business and prospects. In addition, our
prospects must be considered in light of the risks and uncertainties encountered
by companies in an early stage of development in new and rapidly evolving
markets, particularly those markets which depend on the Internet.
THE DEVELOPMENT OF A MARKET FOR OUR PRODUCTS IS UNCERTAIN.
If the market for web application servers and packaged e-business
applications does not grow at a significant rate, our business, operating
results and financial condition will be materially adversely affected. Web
technology has been used widely for only a short time, and the market for web
application servers and packaged e-business applications is new and rapidly
evolving. As is typical for new and rapidly evolving industries, demand for
recently introduced products is highly uncertain.
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OUR FUTURE SUCCESS WILL DEPEND ON OUR ABILITY TO MARKET AND SELL ALLAIRE SPECTRA
SUCCESSFULLY.
We expect that our future financial performance will depend in part on
sales of Allaire Spectra. We began commercial shipments of Allaire Spectra in
December 1999. Market acceptance of Allaire Spectra will depend on the market
for packaged e-business applications and customer demand for the specific
functionality of Allaire Spectra. We cannot assure you that either will occur.
In addition, we cannot assure you that Allaire Spectra will meet the performance
needs or expectations of our customers or that it will be free of significant
software defects or bugs. If Allaire Spectra does not meet customer needs or
expectations, for whatever reason, our reputation could be damaged, or we could
be required to upgrade or enhance the product, which could be costly and time
consuming.
OUR BUSINESS WILL BE ADVERSELY AFFECTED IF THE INTERNET DOES NOT BECOME A VIABLE
AND SUBSTANTIAL COMMERCIAL MEDIUM.
Our future success will depend upon the widespread adoption of the Internet
as a primary medium for commerce and other business applications. If the
Internet does not become a viable and substantial commercial medium, our
business, operating results and financial condition will be materially adversely
affected. The Internet has experienced, and is expected to continue to
experience, significant user and traffic growth. This growth has, at times,
caused user frustration with slow access and download times. The Internet
infrastructure may not be able to support the demands placed on it by continued
growth. Moreover, critical issues concerning the commercial use of the Internet,
such as security, reliability, cost, accessibility and quality of service,
remain unresolved and may negatively affect the growth of Internet use or the
attractiveness of commerce and business communication on the Internet. In
addition, the Internet could lose its viability due to delays in the development
or adoption of new standards and protocols to handle increased activity. As
commercial use of the Internet increases, federal, state and foreign agencies
could adopt regulations covering issues such as user privacy, content and
taxation of products and services. If enacted, government regulations could
limit the market for our products and services.
REGULATIONS OR CONSUMER CONCERNS REGARDING PRIVACY ON THE INTERNET COULD LIMIT
MARKET ACCEPTANCE OF ALLAIRE SPECTRA.
The personalization features of Allaire Spectra allows our customers to
develop and maintain web user profiles to tailor content to specific users.
Profile development involves both data supplied by the user and data derived
from the user's web site behavior. Privacy concerns may cause users to resist
providing personal data or to avoid web sites that track user behavior. In
addition, legislative or regulatory requirements may heighten consumer concerns
if businesses must notify web site users that user profile data may be used to
direct product promotion and advertising to users. Other countries and political
entities, such as the European Economic Community, have adopted such legislation
or regulatory requirements. The United States may do so in the future. If
privacy legislation is enacted or consumer privacy concerns limit the market
acceptance of personalization software, our business, financial condition and
operating results could be harmed.
Allaire Spectra uses cookies to track demographic information and user
preferences. A cookie is information keyed to a specific user that is stored on
a computer's hard drive, typically without the user's knowledge. Cookies are
generally removable by the user, although removal could affect the content
available on a particular site. A number of governmental bodies and commentators
in the United States and abroad have urged passage of laws limiting or
abolishing the use of cookies. If such laws are passed or if users begin to
delete or refuse cookies as a common practice, market demand for Allaire Spectra
could be reduced.
WE COMPETE WITH MICROSOFT WHILE SIMULTANEOUSLY SUPPORTING MICROSOFT
TECHNOLOGIES.
We currently compete with Microsoft in the market for web application
servers and related software products while simultaneously maintaining a working
relationship with Microsoft. Microsoft has a longer operating history, a larger
installed base of customers and substantially greater financial, distribution,
marketing and technical resources than our company. As a result, we may not be
able to compete effectively
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with Microsoft now or in the future, and our business, operating results and
financial condition may be materially adversely affected.
We expect that Microsoft's commitment to and presence in the web
application server and related software products market will substantially
increase competitive pressure in the market. We believe that Microsoft will
continue to incorporate web application server technology into its operating
system software and certain of its server software offerings, possibly at no
additional cost to its users.
We believe that we must maintain a working relationship with Microsoft to
achieve success. Most of our customers use Microsoft-based operating platforms,
so it is critical to our success that our products be closely integrated with
Microsoft technologies. Notwithstanding our historical and current support of
the Microsoft platform, Microsoft may in the future promote technologies and
standards more directly competitive with or not compatible with our technology.
WE OPERATE IN HIGHLY COMPETITIVE MARKETS AND MAY NOT BE ABLE TO COMPETE
EFFECTIVELY.
The web application server and packaged e-business applications market is
intensely competitive and rapidly changing. Many of our current and potential
competitors have longer operating histories and substantially greater financial,
technical, marketing, distribution and other resources than we do and therefore
may be able to respond more quickly than we can to new or changing
opportunities, technologies, standards or customer requirements. In the portion
of the market with the highest product prices, we compete with large web and
database platform companies that offer a variety of software products. We also
compete with a number of medium-sized and start-up companies that have
introduced or that are developing web application servers and packaged
e-business applications. In the middle range of the market where product prices
are significantly lower, we compete primarily against Microsoft. We expect that
additional competitors will enter the market with competing products as the size
and visibility of the market opportunity increases. Increased competition could
result in pricing pressures, reduced margins or the failure of our products to
achieve or maintain market acceptance.
If, in the future, a competitor chooses to bundle a competing web
application server or packaged e-business application with other products, the
demand for our products might be substantially reduced. In addition, new
technologies will likely increase the competitive pressures that we face. The
development of competing technologies by market participants or the emergence of
new industry standards may adversely affect our competitive position. As a
result of these and other factors, we may not be able to compete effectively
with current or future competitors, which would have a material adverse effect
on our business, operating results and financial condition.
OUR FAILURE TO EFFECTIVELY INTEGRATE THE BUSINESSES OF BRIGHT TIGER, LIVE
SOFTWARE AND VALTO SYSTEMS MAY ADVERSELY AFFECT OUR BUSINESS.
On April 12, 1999, we merged with Bright Tiger Technologies, on June 25,
1999, we merged with Live Software, and on December 23, 1999, we merged with
Valto Systems. A failure to effectively integrate any of these businesses could
have a material adverse effect on our business, operating results and financial
condition. There can be no assurance that we will be able to develop, market and
sell the Bright Tiger, Live Software and Valto Systems products successfully. In
addition, there can be no assurance that we will be able to retain personnel
from these companies.
IF WE ACQUIRE OTHER BUSINESSES, WE WILL BE SUBJECT TO RISKS THAT COULD ADVERSELY
AFFECT OUR FINANCIAL CONDITION AND OPERATING RESULTS.
From time to time, we may pursue additional acquisitions to obtain
complementary products, services and technologies. An acquisition may not
produce the revenue, earnings or business synergies that we anticipated, and an
acquired product, service or technology might not perform as expected. In
pursuing any acquisition, our management could spend a significant amount of
time and effort in identifying and completing the acquisition. If we complete an
acquisition, we would probably have to devote a significant amount of management
resources to integrate the acquired business with our existing business.
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To pay for an acquisition, we might use our stock or cash. Alternatively,
we might borrow money from a bank or other lender. If we use our stock, our
stockholders would experience dilution of their ownership interests. If we use
cash or debt financing, our financial liquidity will be reduced.
OUR FAILURE TO EXPAND OUR SALES FORCE AND DISTRIBUTION CHANNELS WOULD ADVERSELY
AFFECT OUR REVENUE GROWTH AND FINANCIAL CONDITION.
To increase our revenue, we must increase the size of our sales force and
the number of our indirect channel partners, including original equipment
manufacturers, value-added resellers and systems integrators. A failure to do so
could have a material adverse effect on our business, operating results and
financial condition. There is intense competition for sales personnel in our
business, and there can be no assurance that we will be successful in
attracting, integrating, motivating and retaining new sales personnel. Our
existing or future channel partners may choose to devote greater resources to
marketing and supporting the products of other companies. In addition, we will
need to resolve potential conflicts among our sales force and channel partners.
WE DEPEND ON A SMALL NUMBER OF DISTRIBUTORS FOR A SIGNIFICANT PORTION OF OUR
REVENUE.
We derive a substantial portion of our revenue from a small number of
distributors. For the nine months ended September 30, 1999, revenue from the
indirect distribution channel accounted for 51% of our total revenue, and one
distributor, Ingram Micro, accounted for 37% of total revenue. For the nine
months ended September 30, 1998, revenue from our indirect distribution channel
accounted for 40% of total revenue and Ingram Micro accounted for 22% of total
revenue. The loss of, or a reduction in orders from, Ingram Micro or any other
significant distributor could have a material adverse effect on our business,
operating results and financial condition.
WE MAY EXPERIENCE LOST OR DELAYED SALES AS OUR SALES CYCLE LENGTHENS.
A longer sales cycle reduces our ability to forecast revenue levels and may
result in lost sales. Any delay or loss in sales of our products could have a
material adverse effect on our business, operating results and financial
condition, and could cause operating results to vary significantly from quarter
to quarter. As we increase our sales and marketing focus on larger sales to
businesses and other large organizations, we expect that increased
executive-level involvement of information technology officers and other senior
managers of our customers will be required. Potential large sales may be
delayed, or lost altogether, because we will have to provide a more
comprehensive education to prospective customers regarding the use and benefits
of our products. Our customers' purchase decisions may be subject to delays over
which we may have little or no control, including budgeting constraints,
internal purchase approval review procedures and the inclusion or exclusion of
our products on customers' approved standards lists.
THE MARKET FOR OUR PRODUCTS IS RAPIDLY CHANGING, AND THE FAILURE OF OUR PRODUCTS
TO CONTINUE TO SATISFY THE WEB DEVELOPER COMMUNITY WOULD ADVERSELY AFFECT OUR
OPERATING RESULTS.
If our products do not continue to satisfy the web developer community or
otherwise fail to sustain sufficient market acceptance, our business, operating
results and financial condition would be materially adversely affected. We
believe that a significant contributing factor to our initial growth has been
our ability to create and maintain strong relationships with the community of
web developers that initially adopted our products. This community of early
adopters demands rapid improvements in the performance, features and reliability
of our products, as well as a high level of customer service. Due in part to the
emerging nature of the web application server and packaged e-business
applications market and the substantial resources available to many market
participants, we believe there is a time-limited opportunity to achieve product
adoption.
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OUR EFFORTS TO DEVELOP BRAND AWARENESS MAY BE UNSUCCESSFUL, WHICH COULD LIMIT
OUR ABILITY TO ACQUIRE NEW CUSTOMERS AND GENERATE ONGOING REVENUE GROWTH.
We believe that developing and maintaining awareness of the "Allaire,"
"ColdFusion," "HomeSite," "JRun" and "Allaire Spectra" brand names is critical
to achieving widespread acceptance of our products. If we fail to promote and
maintain our brands or incur significant related expenses, our business,
operating results and financial condition could be materially adversely
affected. To promote our brands, we may find it necessary to increase our
marketing budget or otherwise increase our financial commitment to creating and
maintaining brand awareness among potential customers. Although we have obtained
a United States registration of the trademark "ColdFusion," we are aware of
other companies, including competitors, that use the word "Fusion" in their
marks alone or in combination with other words, and we do not expect to be able
to prevent third party uses of the word "Fusion" for competing goods and
services. For example, NetObjects markets its principal products for designing,
building and updating web sites under the names "NetObjects Fusion" and
"NetObjects Team Fusion." Competitors that use marks that are similar to our
brand names may cause confusion among actual and potential customers, which
could prevent us from achieving significant brand recognition.
TO BE COMPETITIVE, WE MUST CONTINUE TO ENHANCE OUR EXISTING PRODUCTS AND DEVELOP
NEW PRODUCTS.
To be competitive, we must develop and introduce product enhancements and
new products which increase our customers' ability to develop and deploy web
applications. In the past, we have been forced to delay introduction of several
new products. If we fail to develop and introduce new products and enhancements
successfully and on a timely basis, it could have a material adverse effect on
our business, operating results and financial condition.
IF WE ARE UNABLE TO CONTINUE LICENSING TECHNOLOGY FOR OUR PRODUCTS FROM THIRD
PARTIES, OUR PRODUCT DEVELOPMENT EFFORTS COULD BE DELAYED.
We license technology that is incorporated into our products from third
parties. The loss of access to this technology could result in delays in our
development and introduction of new products or enhancements until equivalent or
replacement technology could be accessed, if available, or developed internally,
if feasible. These delays could have a material adverse effect on our business,
operating results and financial condition. In light of the rapidly evolving
nature of web technology and our strategy to pursue industry partnerships, we
believe that we will increasingly need to rely on technology from third party
vendors, such as Microsoft, which may also be competitors. There can be no
assurance that technology from others will continue to be available to us on
commercially reasonable terms, if at all.
OUR FAILURE TO PROPERLY MANAGE OUR GROWTH COULD STRAIN OUR RESOURCES AND
ADVERSELY AFFECT OUR BUSINESS.
Our failure to manage our rapid growth could have a material adverse effect
on the quality of our products, our ability to retain key personnel and our
business, operating results and financial condition. Our revenue increased 156%
for the nine months ended September 30, 1999 from the same period in 1998. The
number of our employees increased from 93 at January 1, 1998 to 270 at January
1, 2000. To manage future growth effectively we must maintain and enhance our
financial and accounting systems and controls, integrate new personnel and
manage expanded operations.
IF WE LOSE THE SERVICES OF JOSEPH ALLAIRE OR DAVID ORFAO, OUR BUSINESS WOULD
SUFFER.
Our future success depends to a significant degree on the skills,
experience and efforts of Joseph J. Allaire, our founder, Chairman of the Board,
and Executive Vice President, and David J. Orfao, our President and Chief
Executive Officer. The loss of the services of Mr. Allaire or Mr. Orfao could
have a material adverse effect on our business, operating results and financial
condition. We also depend on the ability of our executive officers and other
members of senior management to work effectively as a team. We do not have
employment
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agreements with any of our executive officers, and we do not have any key person
life insurance other than for Mr. Allaire and Mr. Orfao.
WE MAY BE UNABLE TO HIRE AND RETAIN THE SKILLED PERSONNEL WE NEED TO SUCCEED.
Qualified personnel are in great demand throughout the software industry.
Our success depends in large part upon our ability to attract, train, motivate
and retain highly skilled employees, particularly sales and marketing personnel,
software engineers and other senior personnel. Our failure to attract and retain
the highly trained technical personnel that are integral to our direct sales,
product development, service and support teams may limit the rate at which we
can generate sales and develop new products or product enhancements. This could
have a material adverse effect on our business, operating results and financial
condition.
OUR SUCCESS DEPENDS ON OUR ABILITY TO PROTECT OUR PROPRIETARY TECHNOLOGY.
Our success depends to a significant degree upon the protection of our
software and other proprietary technology. The unauthorized reproduction or
other misappropriation of our proprietary technology could enable third parties
to benefit from our technology without paying us for it. This could have a
material adverse effect on our business, operating results and financial
condition.
Although we have taken steps to protect our proprietary technology, they
may be inadequate. Existing trade secret, copyright and trademark laws offer
only limited protection. In addition, we rely in part on "shrinkwrap" and
"clickwrap" licenses that are not signed by the end user and, therefore, may be
unenforceable under the laws of certain jurisdictions. Moreover, the laws of
other countries in which we market our products may afford little or no
effective protection of our intellectual property.
If we resort to legal proceedings to enforce our intellectual property
rights, the proceedings could be burdensome and expensive and could involve a
high degree of risk.
CLAIMS BY OTHER COMPANIES THAT WE INFRINGE THEIR COPYRIGHTS OR PATENTS COULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION.
If any of our products violate third party proprietary rights, we may be
required to reengineer our products or seek to obtain licenses from third
parties to continue to offer our products. Any efforts to reengineer our
products or obtain licenses on commercially reasonable terms may not be
successful, and, in any case, would substantially increase our costs and have a
material adverse effect on our business, operating results and financial
condition. We do not conduct comprehensive patent searches to determine whether
the technology used in our products infringes patents held by third parties. In
addition, product development is inherently uncertain in a rapidly evolving
technological environment in which there may be numerous patent applications
pending, many of which are confidential when filed, with regard to similar
technologies.
Although we are generally indemnified against claims that third party
technology that we license infringes the proprietary rights of others, this
indemnification is not always available for all types of intellectual property
rights (for example, patents may be excluded) and in some cases the scope of
such indemnification is limited. Even if we receive broad indemnification, third
party indemnitors are not always well-capitalized and may not be able to
indemnify us in the event of infringement, resulting in substantial exposure to
us. There can be no assurance that infringement or invalidity claims arising
from the incorporation of third party technology in our products, and claims for
indemnification from our customers resulting from these claims, will not be
asserted or prosecuted against us. These claims, even if not meritorious, could
result in the expenditure of significant financial and managerial resources in
addition to potential product redevelopment costs and delays, all of which could
materially adversely affect our business, operating results and financial
condition.
In addition, any claim of infringement could cause us to incur substantial
costs defending against the claim, even if the claim is invalid, and could
distract our management from their business. A party making a claim also could
secure a judgment that requires us to pay substantial damages. A judgment could
also include an injunction or other court order that could prevent us from
selling our products. Any of these events could have a material adverse effect
on our business, operating results and financial condition.
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OUR BUSINESS COULD BE ADVERSELY AFFECTED IF OUR PRODUCTS FAIL TO PERFORM
PROPERLY.
Software products as complex as ours may contain undetected errors or
"bugs," which result in product failures or security breaches or otherwise fail
to perform in accordance with customer expectations. Errors in certain of our
products have been detected after the release of the product. The occurrence of
errors could result in loss of or delay in revenue, loss of market share,
failure to achieve market acceptance, diversion of development resources, injury
to our reputation, or damage to our efforts to build brand awareness, any of
which could have a material adverse effect on our business, operating results
and financial condition.
WE COULD INCUR SUBSTANTIAL COSTS AS A RESULT OF PRODUCT LIABILITY CLAIMS
RELATING TO OUR CUSTOMERS' CRITICAL BUSINESS OPERATIONS.
Many of the web applications developed and deployed with our products are
critical to the operations of our customers' businesses. Any failure in a
customer's web application could result in a claim for substantial damages
against us, regardless of our responsibility for the failure. Although we
maintain general liability insurance, including coverage for errors and
omissions, there can be no assurance that our existing coverage will continue to
be available on reasonable terms or will be available in amounts sufficient to
cover one or more large claims, or that the insurer will not disclaim coverage
as to any future claim.
WE MAY BE AFFECTED BY UNEXPECTED YEAR 2000 PROBLEMS.
Many existing computer systems and software products do not properly
recognize dates after December 31, 1999. This "Year 2000" problem could result
in miscalculations, data corruption, system failures or disruptions of
operations. We are subject to potential Year 2000 problems affecting our
products, our internal systems and the systems of our vendors and distributors,
any of which could have a material adverse effect on our business, operating
results and financial condition. To date, however, we have not experienced
significant Year 2000 problems.
Because ColdFusion, Homesite and JRun do not involve data storage, the
ability of a web application built with these products to comply with Year 2000
requirements is largely dependent on whether the database underlying the
application is Year 2000 compliant. Therefore, there can be no assurance that
web applications developed using our products will comply with Year 2000
requirements. For example, if these products are connected to a database that is
not Year 2000 compliant, the information received by the application may be
incorrect.
In addition, there can be no assurance that Year 2000 errors or defects
will not be discovered in our internal software systems and, if such errors or
defects are discovered, there can be no assurance that the defects or the costs
of making such systems Year 2000 compliant will not be material.
Year 2000 errors or defects in the internal systems maintained by our
vendors or distributors could require us to incur significant unanticipated
expenses to remedy any problems or replace affected vendors and could reduce our
revenue from our indirect distribution channel.
ANTI-TAKEOVER PROVISIONS OF OUR CHARTER AND DELAWARE LAW COULD PREVENT OR DELAY
A CHANGE OF CONTROL OF OUR COMPANY.
Our corporate documents and Delaware law contain provisions that might
enable our management to resist a takeover of our company. These provisions
might discourage, delay or prevent a change in the control of our company or a
change in our management. These provisions could also discourage proxy contests
and make it more difficult for you and other stockholders to elect directors and
take other corporate actions. The existence of these provisions could limit the
price that investors might be willing to pay in the future for shares of our
common stock.
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<PAGE> 11
THE PRICE OF OUR COMMON STOCK HAS BEEN AND MAY CONTINUE TO BE VOLATILE.
The price of our common stock has been and may continue to be volatile. The
price of our common stock may fluctuate significantly in response to a number of
events and factors relating to our company, our competitors and the market for
our products, such as:
- quarterly variations in our operating results;
- announcements of new technological innovations or new products by us or
our competitors;
- changes in financial estimates and recommendations by securities
analysts; and
- news relating to trends in our markets.
In addition, the stock market in general, and the market prices for
Internet-related companies in particular, have experienced extreme volatility
that often has been unrelated to the operating performance of these companies.
These broad market and industry fluctuations may adversely affect the market
price of our common stock, regardless of our operating performance.
Recently, when the market price of a stock has been volatile, holders of
that stock have often instituted securities class action litigation against the
company that issued the stock. If any of our stockholders brought such a lawsuit
against us, we could incur substantial costs defending the lawsuit. The lawsuit
could also divert the time and attention of our management.
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<PAGE> 12
ALLAIRE
We develop, market and support Web application servers and related software
products that enable the development and deployment of sophisticated e-business
Web sites and applications. Our products interoperate with emerging Web
application technologies as well as key enterprise information systems
technologies, and include features and tools that increase the productivity of
Web developers. With the introduction of our new Allaire Spectra product, we
provide both a Web application server and advanced content management, commerce
and personalization capabilities in a packaged e-business application. Our
products are designed to enable businesses such as Williams-Sonoma, Kaiser
Permanente and autobytel.com to build and manage large-scale, content-rich,
transaction-oriented Web sites and applications.
A Web application server is a software program that hosts Web applications
and enables access to these applications through Web browsers, client hardware
devices and other applications. A Web application server also enables hosted
applications to access a company's servers and other internal systems. The Web
application server is the software technology that is central to the Web as a
computing platform, much as the operating system is central software technology
to desktop computing. According to Forrester Research, the market for Web
application servers will triple from $692 million in 1999 to $2.1 billion in
2002. We believe that the central technology role of Web application servers
places leading Web application server vendors in a strong position to sell
related software products. This additional software includes development tools,
management products and packaged e-business applications.
We were incorporated in Minnesota on February 1, 1996 as the successor to a
Minnesota limited liability company and reincorporated in Delaware on April 25,
1997. Our principal executive offices are located at One Alewife Center,
Cambridge, Massachusetts 02140. Our telephone number at that location is (617)
761-2000.
"ColdFusion", "HomeSite" and "Bright Tiger" are federally registered
trademarks of Allaire. We have applied for federal registration of the
trademarks "Allaire" and "Allaire Spectra". The Allaire, ColdFusion, HomeSite
and JRun logos are trademarks of Allaire. Other trademarks or service marks
appearing in this prospectus are the property of their respective holders.
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<PAGE> 13
SELLING STOCKHOLDERS
The shares covered by this prospectus are being offered for sale from time
to time during the period of effectiveness of this registration statement for
the accounts of the selling stockholders set forth below. Each of the selling
stockholders acquired the shares being offered hereunder pursuant to either:
- an Agreement and Plan of Merger, dated June 14 1999, among Allaire,
Sprint Acquisition Corp., a Delaware corporation, and Live Software,
Inc., a California corporation; or
- an Agreement and Plan of Merger, dated December 23, 1999, among Allaire,
VSI Acquisition Corp., a Massachusetts corporation, and Valto Systems,
Inc., a Massachusetts corporation.
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3, of which this prospectus forms a part, with respect to
the resale of the shares from time to time on the Nasdaq National Market or in
privately-negotiated transactions. We have agreed to use our best efforts to
keep such registration statement effective until December 23, 2000, or, if
earlier, until the distribution contemplated in this prospectus has been
completed.
The table below sets forth, as of January 18, 2000, certain information
regarding the beneficial ownership of each selling stockholder. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission. Except as otherwise indicated, each stockholder named in
the table has sole voting and investment power with respect to the shares set
forth opposite such stockholder's name. We have calculated the percentage
beneficially owned based upon the 13,402,847 shares of common stock outstanding
as of January 18, 2000.
We do not know when or in what amounts a selling stockholder may offer
shares for sale. The selling stockholders may not sell any or all of the shares
offered in connection with this prospectus. Because the selling stockholders may
offer all of some of the shares pursuant to this offering, and because there are
currently no agreements, arrangements or understandings with respect to the sale
of any of the shares that will be held by the selling stockholders after
completion of the offering, we can not estimate the number of the shares that
will be held by the selling stockholders after completion of the offering.
However, for purposes of this table, we have assumed that, after completion of
the offering, none of the shares covered by this prospectus will be held by the
selling stockholders.
This registration statement will also cover any additional shares of common
stock that become issuable in connection with the shares registered for sale
under this prospectus 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 outstanding shares of
our common stock.
<TABLE>
<CAPTION>
SHARES SHARES TO BE
BENEFICIALLY OWNED BENEFICIALLY
PRIOR TO OFFERING NUMBER OF OWNED AFTER OFFERING
------------------ SHARES BEING --------------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
- ---- ------- ------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Paul Colton.............................. 380,430 2.8% 190,215 190,215 1.4%
James DeLapa............................. 22,825 * 10,568 12,257 *
Barbara Duchesne......................... 90,000 * 45,000 45,000 *
Shannon Gillikin......................... 21,135 * 10,568 10,567 *
Tim Gelinas.............................. 21,135 * 10,568 10,567 *
David Kenyon............................. 5,284 * 2,642 2,642 *
Imre Kifor............................... 135,000 1.0% 67,500 67,500 *
David Pool............................... 79,257 * 39,629 39,628 *
</TABLE>
- ---------------
* Less than 1%
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<PAGE> 14
The following selling stockholders have had during the past three years the
following material relationships with us or any of our predecessors or
affiliates:
- Paul Colton was a director and an officer of Live Software, Inc.;
- James DeLapa and David Pool were directors of Live Software, Inc.;
- Shannon Gillikin was an officer of Live Software, Inc.;
- Barbara Duchesne was a director of Valto Systems, Inc.; and
- Imre Kifor was a director and an officer of Valto Systems, Inc.
Of the total shares of common stock listed as owned beneficially by the
selling stockholders, 75,340 of the shares are held in escrow accounts to secure
their indemnification obligations to us. It is expected that these shares (less
any shares that may be distributed from the escrow account to us in satisfaction
of indemnification claims) will be released from escrow and distributed to each
of the selling stockholders in accordance with the terms of the merger agreement
pursuant to which the selling stockholder acquired his or her shares. The number
of shares indicated as owned by each selling stockholder includes those shares
(representing approximately 10% of the number of shares beneficially owned by
each selling stockholder) which such selling stockholder is entitled to receive
upon distribution of these shares from the escrow account.
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock offered in
connection with this prospectus by the selling stockholders.
PLAN OF DISTRIBUTION
The shares may be sold from time to time by the selling stockholders, or by
pledgees, donees, transferees or other successors in interest. Such sales may be
made on one or more exchanges or in the over-the-counter market, or otherwise at
prices and at terms then prevailing or at prices related to the then current
market price, or in negotiated transactions. The shares may be sold by one or
more 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. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any commission
received by them and profit on any resale of the shares as principal might be
deemed to be underwriting discounts and commissions under the Securities Act. In
addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to the
prospectus.
If a selling stockholder notifies us that any material arrangement has been
entered into with a broker-dealer for the sale of the shares through a block
trade, special offering, exchange distribution or secondary distribution or a
purchase by a broker or dealer, we will file a supplement to this prospectus, if
required, pursuant to Rule 424(c) under the Securities Act, disclosing the
following information:
- the name of each selling stockholder and of the participating
broker-dealer(s);
- the number of shares involved;
- the price at which such shares were sold;
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<PAGE> 15
- the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus;
and
- other facts material to the transaction.
We have agreed to pay the expenses incurred in connection with preparing
and filing the registration statement and this prospectus (other than selling
commissions). We have agreed to indemnify the selling stockholders against
certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for our company by Foley, Hoag & Eliot LLP of Boston, Massachusetts.
EXPERTS
The financial statements as of December 31, 1998 and 1997 and for each of
the three years in the period ended December 31, 1998, incorporated in this
Prospectus by reference to the Registration Statement on Form S-1 filed on
September 15, 1999, as amended, have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. We have also filed with
the Securities and Exchange Commission a registration statement on Form S-3
under the Securities Act with respect to the common stock offered in connection
with this prospectus. This prospectus does not contain all of the information
set forth in the registration statement. We have omitted certain parts of the
registration statement in accordance with the rules and regulations of the
Commission. For further information with respect to us and our common stock, you
should refer to the registration statement. Statements contained in this
prospectus as to the contents of any contract or any other document referred to
are not necessarily complete, and, in each instance, you should refer to the
copy of the contract or document filed as an exhibit to or incorporated by
reference in the registration statement. Each such statement is qualified in all
respects by reference to such exhibit.
You may read any document that we have filed or will file with the
Commission without charge at the public reference facilities maintained by the
Commission at the following locations:
<TABLE>
<CAPTION>
MAIN OFFICE REGIONAL OFFICES
- ----------- ----------------
<S> <C>
Room 1024 Suite 1400
Judiciary Plaza 500 West Madison Street
450 Fifth Street, N.W., Chicago, Illinois 60661
Washington, D.C. 20549 7 World Trade Center
Thirteenth Floor
New York, New York 10048
</TABLE>
You may obtain copies of all or any portion of the documents that we file
with the Commission from the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549, or by
calling the Commission at 1-800-SEC-0330, at prescribed rates. Our filings are
also available to the public on the Commission's Website at http://www.sec.gov.
14
<PAGE> 16
Our common stock is traded on the Nasdaq National Market. Reports and other
information concerning our company may be inspected at the National Association
of Securities Dealers, Inc., 1725 K Street, N.W., Washington, D.C. 20006.
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be a part of this prospectus, and information that we later file
with the Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934.
(a) Our annual report on Form 10-K for the fiscal year ended December 31,
1998;
(b) Our quarterly reports on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999 and September 30, 1999;
(c) Our current reports on Form 8-K dated April 27, 1999 (as amended on
June 15, 1999) and September 3, 1999; and
(d) Our registration statement on Form S-1 (File No. 333-86568) as declared
effective by the Commission on September 28, 1999.
(e) the description of our common stock contained in the registration
statement on Form 8-A filed with the Commission on January 15, 1999
under Section 12 of the Exchange Act, including any amendment or report
filed for the purpose of updating such description.
You may request a copy of these filings at no cost by writing or calling us
at the following address and telephone number:
Allaire Corporation
One Alewife Center
Cambridge, MA 02140
Attention: Chief Financial Officer
(617) 761-2000
15
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
issuance and distribution of the securities being registered. All amounts shown
are estimates except the Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $14,886
Legal fees and expenses..................................... 25,000
Accounting fees and expenses................................ 5,000
Printing, EDGAR formatting and mailing expenses............. 4,000
Miscellaneous............................................... 1,114
-------
Total..................................................... $50,000
=======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law affords a Delaware
corporation the power to indemnify its present and former directors and officers
under certain conditions. Article Sixth of Allaire's Amended and Restated
Certificate of Incorporation (the "Certificate") provides that Allaire shall
indemnify each person who at any time is, or shall have been, a director or
officer of Allaire and was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was a director or officer of Allaire, or is or was serving at the request
of Allaire as a director, officer, trustee of, or in a similar capacity with,
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement incurred in connection with any such action, suit or proceeding,
to the maximum extent permitted by the Delaware General Corporation Law, as the
same exists or may hereafter be amended. No amendment to or repeal of the
provisions of Article Sixth of the Certificate shall deprive a director or
officer of the benefit thereof with respect to any act or failure occurring
prior to such amendment or repeal.
Section 102(b)(7) of the Delaware General Corporation Law gives a Delaware
corporation the power to adopt a charter provision eliminating or limiting the
personal liability of directors to the corporation or its stockholders for
breach of fiduciary duty as directors, provided that such provision may not
eliminate or limit the liability of directors for (a) any breach of the
director's duty of loyalty to the corporation or its stockholders, (b) any acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) any payment of a dividend or approval of a stock
purchase that is illegal under Section 174 of the Delaware General Corporation
Law or (d) any transaction from which the director derived an improper personal
benefit. Article Seventh of the Certificate provides that to the maximum extent
permitted by the Delaware General Corporation Law, no director of Allaire shall
be personally liable to Allaire or to any of its stockholders for monetary
damages arising out of such director's breach of fiduciary duty as a director of
Allaire. No amendment to or repeal of the provisions of Article Seventh shall
apply to or have any effect on the liability or the alleged liability of any
director of Allaire with respect to any act or failure to act of such director
occurring prior to such amendment or repeal. A principal effect of such Article
Seventh is to limit or eliminate the potential liability of Allaire's directors
for monetary damages arising from breaches of their duty of care, unless the
breach involves one of the four exceptions described in (a) through (d) above.
Section 145 of the Delaware General Corporation Law also affords a Delaware
corporation the power to obtain insurance on behalf of its directors and
officers against liabilities incurred by them in those capacities. We have
procured a directors' and officers' liability and company reimbursement
liability insurance policy that (a) insures directors and officers of Allaire
against losses (above a deductible amount) arising from certain claims made
against them by reason of certain acts done or attempted by such directors or
officers and
II-1
<PAGE> 18
(b) insures Allaire against losses (above a deductible amount) arising from any
such claims, but only if Allaire is required or permitted to indemnify such
directors or officers for such losses under statutory or common law or under
provisions of the Certificate or its By-Laws.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following information is furnished with regard to all securities sold
by Allaire since February 1996 which were not registered under the Securities
Act.
(a) Issuances of Common Stock by Allaire Minnesota.
From February 1996 through January 1997, Allaire Corp., a Minnesota
corporation ("Allaire Minnesota"), issued and sold an aggregate of 2,000,000
shares of its Common Stock for consideration valued at $51,690.
(b) Issuances of Preferred Stock by Allaire Minnesota.
From June 1996 through March 1997, Allaire Minnesota issued and sold an
aggregate of 56,557 shares of its Series A Convertible Preferred Stock, for
aggregate consideration of $255,165. From June 1996 through March 1997, Allaire
Minnesota also issued and sold an aggregate of 514,306 shares of its Series B
Convertible Preferred Stock, for aggregate consideration of $2,324,664. In
December 1996, Allaire Minnesota issued and sold an aggregate of 84,600 shares
of its Series C Preferred Stock, for aggregate consideration of $499,986.
(c) Grants and Exercises of Allaire Minnesota's Stock Options.
From June 1996 through April 1997, Allaire Minnesota issued options to
purchase an aggregate of 1,086,800 shares of its Common Stock, and sold 1,250
shares of its Common Stock pursuant to the exercise of such options for
aggregate consideration of $1,250. On April 25, 1997 Allaire Minnesota was
reincorporated as a Delaware corporation through the merger of Allaire Minnesota
into Allaire. Pursuant to the reincorporation merger, each share of Common Stock
of Allaire Minnesota was automatically changed and converted into two shares of
Common Stock of Allaire. Each share of Series A, B and C Convertible Preferred
Stock of Allaire Minnesota was automatically changed and converted into one
share of the corresponding series of Allaire's Convertible Preferred Stock. Each
share of Allaire's Series A, B and C Convertible Preferred Stock issued pursuant
to the reincorporation merger automatically changed and converted into two
shares of Allaire's Common Stock upon the closing of Allaire's initial public
offering in January 1999. Also pursuant to the reincorporation merger, each
option to purchase one share of Common Stock of Allaire Minnesota was
automatically converted and changed into an option to purchase two shares of
Allaire's Common Stock.
(d) Issuances of Common Stock by Allaire.
From January 1998 through April 22, 1999, Allaire issued and sold 1,438,019
shares of its Common Stock for aggregate consideration of $546,245. In April
1999, in order to acquire Bright Tiger Technologies Inc., Allaire issued and
sold 288,583 shares of its Common Stock. In June 1999, in order to acquire Live
Software, Inc., Allaire issued and sold 528,376 shares of its Common Stock. In
December, 1999, in order to acquire Valto Systems, Inc., Allaire issued and sold
225,000 shares of its Common Stock.
(e) Issuances of Preferred Stock by Allaire.
On December 7, 1998, Allaire issued and sold 31,250 shares of Series A
Convertible Preferred Stock for aggregate consideration of $500,000. Each of
these 31,250 shares of Series A Convertible Stock automatically changed and
converted into one share of Allaire's Common Stock upon the closing of Allaire's
initial public offering. In February 1998, Allaire issued and sold 656 shares of
Series A Convertible Preferred Stock, for aggregate consideration of $5,250.
Each of these 656 shares of Series A Convertible Preferred Stock automatically
changed and converted into one share of Allaire's Common Stock upon the closing
of Allaire's initial public offering. In May and June 1997, Allaire issued and
sold 2,336,909 shares of Series D Convertible Preferred Stock, for aggregate
consideration of $9,347,636. Each share of Series D Convertible Preferred
II-2
<PAGE> 19
Stock automatically changed and converted into one share of the Company Common
Stock upon the closing of Allaire's initial public offering.
(f) Grants of Allaire's Stock Options.
From April 1997 through April 22, 1999, Allaire granted options to purchase
an aggregate of 1,911,610 shares of its Common Stock, exercisable at a weighted
average exercise price of $15.17 per share.
The issuances described in this Item 15 were made in reliance upon the
exemption from registration set forth in Section 4(2) of the Securities Act
relating to sales by an issuer not involving any public offering. None of the
foregoing transactions involved a distribution or public offering. No
underwriters were engaged in connection with the foregoing issuances of
securities, and no underwriting discounts or commissions were paid.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <S>
4.1 Amended and Restated Certificate of Incorporation (filed as
Exhibit 3.3 to the Company's Registration Statement on Form
S-1 (File No. 333-68639) and incorporated herein by
reference)
4.2 Amended and Restated By-Laws of the Company (filed as
Exhibit 3.5 to the Company's Registration Statement on Form
S-1 (File No. 333-68639) and incorporated herein by
reference)
5.1 Opinion of Foley, Hoag & Eliot LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Foley, Hoag & Eliot LLP (included in Exhibit 5.1)
24.1 Power of Attorney (contained on the signature page)
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of a prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table upon effectiveness hereof;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3, Form S-8 or Form F-3 and 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
Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
II-3
<PAGE> 20
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration, by means of a post-effective
amendment, any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference to the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Cambridge, Massachusetts, on this 28th day of January, 2000.
ALLAIRE CORPORATION
By: /s/ DAVID J. ORFAO
------------------------------------
David J. Orfao
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Joseph J. Allaire, David J. Orfao and David A.
Gerth, and each of them, his true and lawful attorneys-in-fact and agents with
full power of substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange 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 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 any or all of them, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOSEPH J. ALLAIRE Chairman of the Board of January 28, 2000
- --------------------------------------------------- Directors and Executive Vice
Joseph J. Allaire President, Products
/s/ DAVID J. ORFAO President, Chief Executive January 28, 2000
- --------------------------------------------------- Officer and Director
David J. Orfao (principal executive officer)
/s/ DAVID A. GERTH Vice President, Finance and January 28, 2000
- --------------------------------------------------- Operations, Treasurer and
David A. Gerth Chief Financial Officer
(principal financial and
accounting officer)
/s/ JONATHAN A. FLINT Director January 28, 2000
- ---------------------------------------------------
Jonathan A. Flint
/s/ JOHN J. GANNON Director January 28, 2000
- ---------------------------------------------------
John J. Gannon
/s/ THOMAS A. HERRING Director January 28, 2000
- ---------------------------------------------------
Thomas A. Herring
</TABLE>
II-5
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.1 Amended and Restated Certificate of Incorporation (filed as
Exhibit 3.3 to the Company's Registration Statement on Form
S-1 (File No. 333-68639) and incorporated herein by
reference)
4.2 Amended and Restated By-Laws of the Company (filed as
Exhibit 3.5 to the Company's Registration Statement on Form
S-1 (File No. 333-68639) and incorporated herein by
reference)
5.1 Opinion of Foley, Hoag & Eliot LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Foley, Hoag & Eliot LLP (included in Exhibit 5.1)
24.1 Power of Attorney (contained on the signature page)
</TABLE>
<PAGE> 1
Exhibit 5.1
January 28, 2000
Allaire Corporation
One Alewife Center
Cambridge, Massachusetts 02140
Ladies and Gentlemen:
We are familiar with the Registration Statement on Form S-3 (the "S-3
Registration Statement") filed today by Allaire Corporation, a Delaware
corporation (the "Company"), with the Securities and Exchange Commission under
the Securities Act of 1933, as amended. The S-3 Registration Statement relates
to the proposed offering by the Company of 376,690 shares (the "Shares") of its
Common Stock, $0.01 par value per share, all of which Shares are now issued and
outstanding.
In arriving at the opinions expressed below, we have examined and
relied on:
(a) the Amended and Restated Certificate of Incorporation of the
Company;
(b) the Amended and Restated By-Laws of the Company; and
(c) the records of meetings and consents of the Board of Directors and
stockholders of the Company provided to us by the Company.
In addition, we have examined and relied on the originals or copies
certified or otherwise identified to our satisfaction of all such corporate
records of the Company and such other instruments and other certificates of
public officials, officers and representatives 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.
<PAGE> 2
Allaire Corporation
January 28, 2000
Page 2
Based upon the foregoing, it is our opinion that:
1. the Company has taken all necessary corporate action required
to authorize the issuance and sale of the Shares; and
2. the Shares have been validly and legally issued and are fully
paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
S-3 Registration Statement.
Very truly yours,
FOLEY, HOAG & ELIOT LLP
By: /s/ William R. Kolb
----------------------------
A Partner
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our reports dated June 25, 1999 relating to the
financial statements and financial statement schedule as of December 31, 1998
and 1997 and for each of the three years in the period ended December 31, 1998,
which appear in Allaire Corporation's Registration Statement on Form S-1, filed
on September 15, 1999, as amended. We also consent to the reference to us under
the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
January 28, 2000
