<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 5, 1996
REGISTRATION NO. 333-12761
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FORRESTER RESEARCH, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 7389 04-2797789
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification Number)
Organization)
</TABLE>
1033 MASSACHUSETTS AVENUE, CAMBRIDGE, MASSACHUSETTS 02138 (617) 497-7090
(Address, including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------
GEORGE F. COLONY
CHAIRMAN OF THE BOARD, PRESIDENT, AND CHIEF EXECUTIVE OFFICER
FORRESTER RESEARCH, INC.
1033 MASSACHUSETTS AVENUE
CAMBRIDGE, MASSACHUSETTS 02138
(617) 497-7090
(Name, Address, including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
------------------------
Copies to:
<TABLE>
<S> <C>
ANN L. MILNER, ESQ. PETER B. TARR, ESQ.
ROPES & GRAY HALE AND DORR
ONE INTERNATIONAL PLACE 60 STATE STREET
BOSTON, MA 02110 BOSTON, MA 02109
(617) 951-7000 (617) 526-6000
</TABLE>
------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
------------------------
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, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 5, 1996
2,000,000 SHARES
[LOGO]
FORRESTER RESEARCH, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
---------------------
All of the 2,000,000 shares of Common Stock offered hereby are being sold
by Forrester Research, Inc. Prior to this offering, there has been no public
market for the Common Stock of the Company. It is currently estimated that the
initial public offering price per share will be between $13.00 and $15.00. For
factors to be considered in determining the initial public offering price, see
"Underwriting".
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.
The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "FORR".
---------------------
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.
---------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
-------------- ------------ -----------
<S> <C> <C> <C>
Per Share................................ $ $ $
Total(3)................................. $ $ $
<FN>
- ---------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting".
(2) Before deducting estimated expenses of $950,000 payable by the Company.
(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 300,000 shares at the initial public offering price per
share, less the underwriting discount, solely to cover over-allotments. If
such option is exercised in full, the total initial public offering price,
underwriting discount, and proceeds to the Company will be $ , $ ,
and $ , respectively. See "Underwriting".
</TABLE>
---------------------
The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York, on or about
, 1996, against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO. ROBERTSON, STEPHENS & COMPANY
---------------------
The date of this Prospectus is , 1996.
<PAGE> 3
[A Graphic of three intertwined elipses illustrates Forrester Research, Inc.'s
three main research areas -- Corporate IT, New Media, and Strategic Management]
Our goal at Forrester is to give our clients confidence that they're
putting attention, time, and resources where they will have the greatest
benefit. Forrester's innovative research services, which are topically
organized around Strategic Management, Corporate IT, and New Media research
themes, add insight and perspective to a business-focused review of emerging
technology.
Forrester is about change. In particular, how new technology will change
large companies, consumers, and society - and what our clients should be doing
about it.
Forrester Research, Inc. intends to furnish to its stockholders annual
reports containing audited financial statements and quarterly reports containing
unaudited interim financial information for the first three fiscal quarters of
each fiscal year of the Company.
---------------------------
"Forrester Research, Inc." and all of the Company's logos and product and
service names are trademarks of the Company and are used throughout this
Prospectus as such. The Prospectus also contains trademarks of other companies.
---------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE> 4
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Financial Statements and Notes thereto appearing elsewhere
in this Prospectus. Except as otherwise noted, all information in this
Prospectus (i) assumes no exercise of the Underwriters' over-allotment option,
and (ii) reflects the filing of a Restated Certificate of Incorporation
immediately prior to the completion of this offering.
THE COMPANY
Forrester Research, Inc. ("Forrester" or the "Company") is a leading
independent research firm offering products and services that help its clients
assess the effect of technology on their businesses. The Company provides
analysis and insight into a broad range of technology areas such as computing,
software, networking, the Internet, and telecommunications, and projects how
technology trends will impact businesses, consumers, and society. Forrester's
clients, which include senior management, business strategists, and information
technology ("IT") professionals within large enterprises, use Forrester's
prescriptive research to understand and benefit from current developments in
technology and as support for their development and implementation decisions.
Forrester offers its clients annual memberships to any of its 10 research
services. Each research service focuses on a particular area of technology and
explores business issues relevant to clients' decision-making. These issues
include the impact that the application of technology may have on financial
results, investment priorities, organizational effectiveness, and staffing
requirements. Forrester also provides advisory services to a limited number of
clients to help them explore in greater detail the topics covered by the core
research.
Forrester targets its products and services to both large enterprises and
technology vendors. As of September 30, 1996, Forrester's research was delivered
to more than 860 client companies. Approximately 72% of Forrester's client
companies with memberships expiring during the nine-month period ended September
30, 1996 renewed one or more memberships for the Company's products and
services.
The Company was incorporated in Massachusetts on July 7, 1983 and was
reincorporated in Delaware on February 21, 1996. The Company's executive offices
are located at 1033 Massachusetts Avenue, Cambridge, Massachusetts 02138, and
its telephone number is (617) 497-7090.
<TABLE>
THE OFFERING
<S> <C>
Common Stock offered by the Company................. 2,000,000 shares
Common Stock to be outstanding after the offering... 8,000,000 shares(1)
Approved Nasdaq National Market symbol.............. FORR
Use of proceeds..................................... For working capital and other general
corporate purposes, including possible
acquisitions.
<FN>
- ---------------
(1) Based on the number of shares of Common Stock outstanding at September 30,
1996. Does not include 3,100,000 shares of Common Stock reserved under the
Company's stock plans, of which 772,691 shares were subject to outstanding
options at September 30, 1996.
</TABLE>
RISK FACTORS
Certain risk factors should be considered in evaluating the Company and its
business before purchasing the Common Stock offered by this Prospectus. Such
factors include, among others, the Company's need to attract and retain
professional staff, the Company's ability to manage growth, possible variations
in the Company's quarterly operating results, possible volatility of the market
price for the Company's Common Stock, the Company's dependence on renewals of
its membership-based research services and on key personnel, risks associated
with the Company's ability to anticipate market trends and to offer new products
and services, competition in the market for research products and services, and
concentration of control of the Company after this offering. For a discussion of
these and certain other factors, see "Risk Factors".
- --------------------------------------------------------------------------------
3
<PAGE> 5
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<TABLE>
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------------ ------------------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Core research................ $ 1,637 $ 2,626 $ 4,691 $ 6,363 $ 10,150 $ 7,036 $ 12,585
Advisory services and
other...................... 1,337 2,139 2,608 3,336 4,439 2,080 3,789
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues............... 2,974 4,765 7,299 9,699 14,589 9,116 16,374
Income from operations....... 424 586 947 1,487 1,784 742 2,154
Net income................... 480 654 980 1,539 2,027 962 2,382
Pro forma income tax
adjustment(1).............. 192 262 365 583 739 364 918
Pro forma net income(1)...... 288 392 615 956 1,288 598 1,464
Pro forma net income per
common share(2)............ $ .05 $ .06 $ .10 $ .15 $ 0.20 $ .10 $ 0.23
Weighted average common
shares outstanding(2)...... 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------------------
PRO FORMA
PRO AS
FORMA ADJUSTED
ACTUAL (3)(4) (3)(4)(5)
------ ------ ---------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents and marketable securities.......................... $10,848 $ 7,248 $32,338
Working capital.............................................................. 2,094 (2,006) 23,084
Total assets................................................................. 23,323 19,723 44,813
Total stockholders' equity................................................... 4,242 142 25,232
<FN>
- ---------------
(1) The Company has elected to be taxed, since January 1, 1987, under subchapter
S of the Internal Revenue Code of 1986, as amended (the "Code"), whereby the
sole stockholder is liable for individual federal and state income taxes on
the Company's taxable income. Upon the completion of this offering, the
Company will terminate its S corporation election and will be subject to
corporate-level federal and state income taxes. Accordingly, the pro forma
income tax adjustments represent the income taxes that would have been
recorded if the Company had been a C corporation for the periods presented.
See Note 3 of Notes to Financial Statements.
(2) Pro forma net income per common share is computed by dividing pro forma net
income by the weighted average number of shares of common stock and common
stock equivalents outstanding during the period. See Note 1 of Notes to
Financial Statements.
(3) Pro forma to give effect to the (i) distribution of previously undistributed
S corporation earnings taxed or taxable to the Company's sole stockholder of
approximately $3,600,000 based on earnings through September 30, 1996, and
(ii) termination of the Company's S corporation election and the recognition
of a net deferred income tax liability of approximately $500,000 as of
September 30, 1996. See Notes 1 and 3 of Notes to Financial Statements.
(4) Does not include an adjustment for the distribution to be made to the sole
stockholder of the Company after completion of this offering in an amount
equal to the Company's undistributed S corporation earnings from October 1,
1996 through the termination of the Company's S corporation election.
(5) Adjusted to reflect the sale of 2,000,000 shares of Common Stock at an
assumed initial public offering price of $14.00 per share (less estimated
underwriting discount and offering expenses).
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE> 6
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following risk factors should be considered in evaluating the Company and its
business before purchasing the Common Stock offered by this Prospectus.
NEED TO ATTRACT AND RETAIN PROFESSIONAL STAFF
The Company's future success will depend in large measure upon the
continued contributions of its senior management team, research analysts, and
experienced sales personnel. Accordingly, future operating results will be
largely dependent upon the Company's ability to retain the services of these
individuals and to attract additional qualified personnel from a limited pool of
qualified candidates. The Company experiences intense competition in hiring and
retaining professional personnel from, among others, producers of information
technology products, other research firms, management consulting firms, print
and electronic publishing companies, and financial services companies. Many of
these firms have substantially greater financial resources than the Company to
attract and compensate qualified personnel. The loss of the services of key
management and professional personnel or the inability to attract such personnel
could have a material adverse effect on the Company's business, financial
condition, and results of operations.
MANAGEMENT OF GROWTH
The Company's growth has placed significant demands on its management and
other resources. The Company's revenues increased approximately 50% to $14.6
million in 1995 from $9.7 million in 1994 and increased 80% to $16.4 million in
the nine months ended September 30, 1996 from $9.1 million in the nine months
ended September 30, 1995. The Company's staff increased from 61 full-time
employees on January 1, 1995 to 119 full-time employees on September 30, 1996
and further increases are expected during the remainder of 1996. The Company's
ability to manage growth, if any, effectively will require it to continue to
develop and improve its operational, financial, and other internal systems, as
well as its business development capabilities, and to train, motivate, and
manage its employees. In addition, the Company may acquire complementary
businesses, products, or technologies, although it currently has no commitments
or agreements to do so. The Company's management has limited experience
integrating acquisitions. If the Company is unable to manage its growth
effectively, such inability could have a material adverse effect on the quality
of the Company's products and services, its ability to retain key personnel and
its business, financial condition, and results of operations.
VARIABILITY OF QUARTERLY OPERATING RESULTS; POSSIBLE VOLATILITY OF STOCK PRICE
The Company's revenues and earnings may fluctuate from quarter to quarter
based on a variety of factors including the timing and size of new and renewal
memberships from clients, the timing of revenue-generating events sponsored by
the Company, the utilization of its advisory services, the introduction and
marketing of new products and services by the Company and its competitors, the
hiring and training of new analysts and sales personnel, changes in demand for
the Company's research, and general economic conditions. As a result, the
Company's operating results in future quarters may be below the expectations of
securities analysts and investors which could have a material adverse effect on
the market price for the Company's Common Stock. In addition, the stock market
recently has experienced volatility which has affected the market price of
securities of many companies and which has sometimes been unrelated to the
operating performance of such companies. Factors such as announcements of new
services or offices or strategic alliances by the Company or its competitors, as
well as market conditions in the information technology services industry, may
have a significant impact on the market price of the Common Stock. The market
price for the Company's Common Stock may also be affected by movements in prices
of stocks in general.
5
<PAGE> 7
DEPENDENCE ON RENEWALS OF MEMBERSHIP-BASED RESEARCH SERVICES
The Company's success depends in part upon renewals of memberships for its
core research products. Approximately 70% and 77% of the Company's revenues in
1995 and the first nine months of 1996, respectively, were derived from the
Company's membership-based core research products. A decline in renewal rates
for the Company's core research products could have a material adverse effect on
the Company's business, financial condition, and results of operations.
DEPENDENCE ON KEY PERSONNEL
The Company's future success will depend in large part upon the continued
services of a number of key employees. The loss of key personnel, in particular
George F. Colony, the Company's founder and Chairman of the Board of Directors,
President, and Chief Executive Officer, would have a material adverse effect on
the Company's business, financial condition, and results of operations. The
Company has entered into a registration rights and non-competition agreement
with Mr. Colony which provides that if Mr. Colony's employment with the Company
is terminated he will not compete with the Company for the one-year period
following his termination. See "Business -- Employees" and "Management --
Registration Rights and Non-Competition Agreement".
RISKS ASSOCIATED WITH ANTICIPATING MARKET TRENDS
The Company's success depends in part upon its ability to anticipate
rapidly changing technologies and market trends and to adapt its core research
to meet the changing information needs of the Company's clients. The technology
sectors that the Company analyzes undergo frequent and often dramatic changes,
including the introduction of new products and obsolescence of others, shifting
strategies and market positions of major industry participants, paradigm shifts
with respect to system architectures, and changing objectives and expectations
of users of technology. The environment of rapid and continuous change presents
significant challenges to the Company's ability to provide its clients with
current and timely analysis, strategies, and advice on issues of importance to
them. Meeting these challenges requires the commitment of substantial resources,
and any failure to continue to provide insightful and timely analysis of
developments, technologies, and trends in a manner that meets market needs could
have a material adverse effect on the Company's business, financial condition,
and results of operations.
NEW PRODUCTS AND SERVICES
The Company's future success will depend in part on its ability to offer
new products and services that successfully gain market acceptance by addressing
specific industry and business organization sectors, changes in client
requirements, and changes in the technology industry. The process of internally
researching, developing, launching, and gaining client acceptance of a new
product or service, or assimilating and marketing an acquired product or
service, is inherently risky and costly. There can be no assurance that the
Company's efforts to introduce new, or assimilate acquired, products or services
will be successful.
COMPETITION
The Company competes in the market for research products and services with
other independent providers of similar services. Several of the Company's
competitors have substantially greater financial, information-gathering, and
marketing resources than the Company. In addition, the Company's indirect
competitors include the internal planning and marketing staffs of the Company's
current and prospective clients, as well as other information providers such as
electronic and print publishing companies, survey-based general market research
firms, and general business consulting firms. The Company's indirect competitors
may choose to compete directly against the Company in the future. In addition,
there are relatively few barriers to entry into the Company's market and new
competitors could readily seek to compete against the Company in one or more
market segments addressed by the Company's products and services. Increased
competition could
6
<PAGE> 8
adversely affect the Company's operating results through pricing pressure and
loss of market share. There can be no assurance that the Company will be able to
continue to compete successfully against existing or new competitors. See
"Business -- Competition".
CONCENTRATION OF CONTROL
Upon completion of this offering, Mr. Colony will beneficially own
approximately 74% of the Company's outstanding Common Stock. As a result, he
will have the ability to elect the Company's directors and to determine the
outcome of corporate actions requiring stockholder approval. This concentration
of ownership may have the effect of delaying or preventing a change in control
of the Company. See "Management" and "Description of Capital Stock".
INTERNATIONAL OPERATIONS
Revenues attributable to customers outside the United States represented
approximately 18% and 21% of the Company's total revenues for the year ended
December 31, 1995 and for the nine months ended September 30, 1996,
respectively. The Company expects that international revenues will continue to
account for a substantial portion of total revenues and intends to continue to
expand its international operations. Expansion into new geographic territories
requires considerable management and financial resources and may negatively
impact the Company's near-term results of operations. The Company's
international operations are subject to numerous inherent challenges and risks,
including developing and managing relationships with international sales
representative organizations, reliance by the Company on sales entities which it
does not control, greater difficulty in maintaining direct client contact,
political and economic conditions in various jurisdictions, tariffs and other
trade barriers, longer accounts receivable collection cycles, difficulties in
protecting intellectual property rights in international jurisdictions, and
potentially adverse tax consequences. There can be no assurance that such
factors will not have a material adverse effect on the Company's business,
financial condition, and results of operations.
POTENTIAL EFFECT OF ANTI-TAKEOVER PROVISIONS
The Company's Board of Directors has the authority, without action by the
Company's stockholders, to fix the rights and preferences of and to issue shares
of the Company's Preferred Stock, which may have the effect of delaying,
deterring, or preventing a change in control of the Company. The Company has
also imposed various procedural and other requirements that could make it more
difficult for stockholders to effect certain corporate actions. In addition, the
classification of the Board of Directors of the Company could have the effect of
delaying, deterring, or preventing a change in control of the Company. See
"Description of Capital Stock".
NO PRIOR PUBLIC MARKET
Before this offering, there was no public market for the Common Stock, and
there can be no assurance that an active trading market will develop or be
sustained. The initial public offering price will be determined by negotiation
between the Company and the representatives of the Underwriters based on several
factors, including prevailing market conditions and recent operating results of
the Company, and may not be indicative of the market price of the Common Stock
after this offering. See "Underwriting".
SHARES ELIGIBLE FOR FUTURE SALE
Sales of Common Stock in the public market after this offering could
adversely affect the market price of the Common Stock. The 2,000,000 shares
offered hereby will be freely tradeable in the open market. The remaining
6,000,000 shares, all of which Mr. Colony owns, are subject to a 180-day lock-up
agreement with the representatives of the Underwriters. Following the expiration
or earlier termination of the lock-up agreement, these shares will be eligible
for sale in the open market
7
<PAGE> 9
pursuant to Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"). Upon completion of this offering, options to purchase 157,376
shares of Common Stock will be immediately exercisable, 106,595 of which shares
are subject to 180-day lock-up agreements with the representatives of the
Underwriters. The Company intends to register an aggregate of 200,000 shares of
Common Stock reserved for issuance under its employee stock purchase plan upon
consummation of this offering, which shares will not be issuable until June
1997. In addition, the Company intends to register an additional 2,900,000
shares of Common Stock reserved for issuance under its stock option plans 90
days after completion of this offering. See "Management -- Stock Plans" and
"Description of Capital Stock -- Shares Eligible for Future Sale".
ABSENCE OF DIVIDENDS
The Company does not anticipate paying any cash dividends on the Common
Stock in the foreseeable future other than distributions to the Company's sole
stockholder in connection with the termination of the Company's S corporation
election. See "Termination of S Corporation Election and S Corporation
Distribution" and "Dividend Policy".
DILUTION
Purchasers of the Common Stock offered hereby will suffer an immediate
dilution of $10.85 per share in the net tangible book value per share of the
Common Stock from the assumed initial public offering price. To the extent that
outstanding options to purchase Common Stock are exercised, there will be
further dilution. See "Dilution".
8
<PAGE> 10
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company hereby (at an assumed initial public
offering price of $14.00 per share and net of estimated underwriting discount
and offering expenses) are estimated to be approximately $25,090,000
($28,996,000 if the Underwriters' over-allotment option is exercised in full).
The Company expects to use the net proceeds of this offering for working capital
and general corporate purposes, including possible acquisitions. The Company
currently has no commitments or agreements with respect to any specific
acquisition. Pending such uses, the Company intends to invest the net proceeds
primarily in short- and intermediate-term interest-bearing obligations of
investment grade.
TERMINATION OF S CORPORATION ELECTION
AND S CORPORATION DISTRIBUTION
The Company has operated as an S corporation since January 1, 1987. As a
result of its S corporation election, the income of the Company has been taxed,
for federal and state income tax purposes, directly to the sole stockholder of
the Company, except for certain state income taxes imposed at the corporate
level. Upon the completion of this offering, the Company will terminate its S
corporation election and will be subject to federal and state income taxes at
prevailing corporate rates. Termination of this election will result in a net
deferred tax liability being recorded as a charge to operations during the
quarter in which this offering is completed. This deferred tax liability is
approximately $500,000 as of September 30, 1996.
In addition, the Company will declare a distribution to its current
stockholder in an amount equal to the Company's undistributed S corporation
earnings. This distribution will be paid out of the Company's cash balances and
proceeds from the sale of marketable securities. See "Dividend Policy" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources". The Company and Mr. Colony also
intend to enter into a Tax Indemnification Agreement. See "Certain
Transactions".
DIVIDEND POLICY
The Company paid cash dividends of $1,750,000, $1,121,342, and $169,893 to
Mr. Colony, the sole stockholder of the Company, in the years ended December 31,
1994 and 1995 and the nine months ended September 30, 1996, respectively. In
addition, the Company will make a distribution to Mr. Colony equal to the
Company's undistributed S corporation earnings through the termination of the
Company's S corporation election. This distribution is estimated to be
$3,600,000 based on earnings through September 30, 1996. This estimate does not
include the amount to be distributed for S corporation earnings from October 1,
1996 through the termination of the Company's S corporation election. The
Company anticipates that following completion of this offering and the
distribution of S corporation earnings to the Company's sole stockholder, future
earnings, if any, will be retained for the development of its business, and the
Company does not anticipate paying any cash dividends on the Common Stock in the
foreseeable future. See "Termination of S Corporation Election and S Corporation
Distribution" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources".
9
<PAGE> 11
DILUTION
<TABLE>
The pro forma net tangible book value of the Company as of September 30,
1996 was approximately $(81,000), or $(0.01) per share of common stock. Pro
forma net tangible book value per share of common stock is determined by
dividing the Company's tangible net worth (tangible assets less liabilities) by
the number of shares of Common Stock outstanding after giving effect to the (i)
distribution of previously undistributed S corporation earnings taxed or taxable
to the Company's sole stockholder of approximately $3,600,000 through September
30, 1996, and (ii) termination of the Company's S corporation election and the
recognition of a deferred income tax liability of approximately $500,000 as of
September 30, 1996, both to occur upon completion of this offering, but not
giving effect to the distribution to be made to the sole stockholder upon
completion of this offering in an amount equal to the Company's undistributed S
corporation earnings from October 1, 1996 through the date of termination of the
Company's S corporation election. After giving effect to the sale of 2,000,000
shares of Common Stock at an assumed initial public offering price of $14.00 per
share (less estimated underwriting discount and offering expenses) resulting in
estimated net proceeds of $25,090,000, the pro forma net tangible book value of
the Company as of September 30, 1996 would have been approximately $25,232,000,
or $3.15 per share. This represents an immediate increase of $3.16 per share to
the existing stockholder and an immediate dilution of $10.85 per share to new
investors. The following table illustrates this per share dilution:
<S> <C> <C>
Assumed initial public offering price per share.......................... $14.00
Pro forma net tangible book value per share as of September 30,
1996............................................................... $(0.01)
Increase per share attributable to new investors.................... 3.16
------
Pro forma net tangible book value per share after this offering.......... 3.15
------
Dilution per share to new investors...................................... $10.85
======
</TABLE>
<TABLE>
The following table summarizes on a pro forma basis as of September 30,
1996 the total consideration paid, and the average price per share paid by the
existing stockholder and new investors assuming the sale of the Common Stock
offered hereby at an assumed initial public offering price of $14.00 per share,
before deducting the estimated underwriting discount and offering expenses, and
assuming the Underwriters' over-allotment option is not exercised.
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE PAID
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- ----------
<S> <C> <C> <C> <C> <C>
Existing stockholder(1)........... 6,000,000 75.0% $ 60,000 0.2% $ 0.01
New investors..................... 2,000,000 25.0 28,000,000 99.8 $14.00
--------- ----- ----------- ----- ------
Total........................ 8,000,000 100.0% $28,060,000 100.0%
========= ===== =========== =====
<FN>
- ---------------
(1) Excludes 772,691 shares of Common Stock issuable upon exercise of certain
options held by executive officers, directors, and certain employees of the
Company that were outstanding as of September 30, 1996. To the extent any
outstanding options are exercised, there will be additional dilution to new
investors. See "Management -- Stock Plans" and Note 6 of Notes to Financial
Statements.
</TABLE>
10
<PAGE> 12
<TABLE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1996 (i) on an actual basis, (ii) on a pro forma basis after
giving effect to (a) the distribution of previously undistributed S corporation
earnings taxed or taxable to the Company's sole stockholder of approximately
$3,600,000 through September 30, 1996, and termination of the Company's S
corporation election and the recognition of a deferred income tax liability of
approximately $500,000 as of September 30, 1996, both to occur upon completion
of this offering, and (b) certain amendments to the Company's Certificate of
Incorporation increasing the number of authorized shares of common stock to
25,000,000 and establishing a class of Preferred Stock consisting of 500,000
shares, and (iii) on a pro forma as adjusted basis to reflect the sale of
2,000,000 shares of common stock at an assumed initial public offering price of
$14.00 per share (less estimated underwriting discount and offering expenses).
This table should be read in conjunction with the Company's Financial Statements
and Notes thereto included elsewhere in this Prospectus.
<CAPTION>
AS OF SEPTEMBER 30, 1996
----------------------------------------
(IN THOUSANDS)
PRO FORMA AS
ACTUAL PRO FORMA(1) ADJUSTED(1)
------ ------------ ------------
<S> <C> <C> <C>
Stockholders' equity:
Preferred stock, $.01 par value, per share:
500,000 shares authorized; none issued.. $ -- $ -- $ --
Common stock, $.01 par value, per share:
7,000,000 shares authorized; 6,000,000
shares issued and outstanding at
September 30, 1996; 25,000,000 shares
authorized and 6,000,000 shares issued
and outstanding on a pro forma basis;
and 8,000,000 shares issued and
outstanding on a pro forma as adjusted
basis(2).............................. 60 60 80
Additional paid-in capital................... -- -- 25,070
Retained earnings............................ 4,178 78 78
Unrealized gain on marketable securities..... 4 4 4
------ ---- -------
Total stockholders' equity................... 4,242 142 25,232
------ ---- -------
Total capitalization.................... $4,242 $142 $25,232
====== ==== =======
<FN>
- ---------------
(1) Does not include an adjustment for the distribution to be made to the sole
stockholder of the Company after completion of this offering in an amount
equal to the Company's undistributed S corporation earnings from October 1,
1996 through the termination of the Company's S corporation election.
(2) Excludes 772,691 shares of common stock issuable upon exercise of certain
options held by executive officers, directors, and certain employees of the
Company as of September 30, 1996.
</TABLE>
11
<PAGE> 13
SELECTED FINANCIAL DATA
<TABLE>
The selected financial data presented below as of and for each of the three
years ended December 31, 1993, 1994, and 1995, and for the nine months ended
September 30, 1996 have been derived from the Company's financial statements,
which have been audited by Arthur Andersen LLP, independent public accountants.
The selected financial data as of and for the years ended December 31, 1991 and
1992 and for the nine-month period ended September 30, 1995 have been derived
from the unaudited financial statements of the Company. In the opinion of
management, the unaudited financial statements have been prepared on the same
basis as the audited financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial position and the results of operations as at and
for these periods. Operating results for the nine months ended September 30,
1996 are not necessarily indicative of the results that may be expected for the
full year or any other period. The financial information set forth below is
qualified by and should be read in conjunction with the Financial Statements of
the Company and the Notes thereto included elsewhere in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------------ -------------------------
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Core research.............. $ 1,637 $ 2,626 $ 4,691 $ 6,363 $ 10,150 $ 7,036 $ 12,585
Advisory services and
other.................... 1,337 2,139 2,608 3,336 4,439 2,080 3,789
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues............. 2,974 4,765 7,299 9,699 14,589 9,116 16,374
Operating Expenses:
Cost of services and
fulfillment.............. 1,308 1,866 2,406 3,424 5,486 3,550 5,911
Selling and marketing...... 721 1,645 2,693 3,593 5,643 3,730 6,234
General and
administrative........... 485 599 1,148 1,045 1,389 887 1,715
Depreciation and
amortization............. 36 69 105 150 287 207 360
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from
operations........... 424 586 947 1,487 1,784 742 2,154
Interest income........ 56 68 79 125 339 266 354
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before state income
tax provision............ 480 654 1,026 1,612 2,123 1,008 2,508
State income tax
provision(1)............. -- -- 46 73 96 46 126
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............. $ 480 $ 654 $ 980 $ 1,539 $ 2,027 $ 962 $ 2,382
========== ========== ========== ========== ========== ========== ==========
Pro forma income tax
adjustment(1)............ 192 262 365 583 739 364 918
---------- ---------- ---------- ---------- ---------- ---------- ----------
Pro forma net income(1).... $ 288 $ 392 $ 615 $ 956 $ 1,288 $ 598 $ 1,464
========== ========== ========== ========== ========== ========== ==========
Pro forma net income per
common share(2).......... $ .05 $ .06 $ .10 $ .15 $ 0.20 $ .10 $ 0.23
Weighted average common
shares outstanding(2).... 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
DECEMBER 31, -------------------------
------------------------------------------------------------------ PRO FORMA
1991 1992 1993 1994 1995 ACTUAL (3)(4)
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents
and marketable
securities............... $ 883 $ 2,385 $ 3,111 $ 4,764 $ 7,518 $ 10,848 $ 7,248
Working capital............ 160 409 901 528 991 2,094 (2,006)
Total assets............... 2,275 4,964 6,367 8,784 15,426 23,323 19,723
Stockholders' equity....... 331 696 1,331 1,120 2,047 4,242 142
</TABLE>
12
<PAGE> 14
- ---------------
(1) The Company has elected to be taxed, since January 1, 1987, under subchapter
S of the Code, whereby the sole stockholder is liable for federal and state
income taxes on the Company's taxable income. Upon the completion of this
offering, the Company will terminate its S corporation election and will be
subject to corporate-level federal and state income taxes. Accordingly, the
pro forma income tax adjustments represent the income taxes that would have
been recorded if the Company had been a C corporation for the periods
presented. See Note 3 of Notes to Financial Statements.
(2) Pro forma net income per common share is computed by dividing pro forma net
income by the weighted average number of shares of common stock and common
stock equivalents outstanding during the period. See Note 1 of Notes to
Financial Statements.
(3) Pro forma to give effect to the (i) distribution of previously undistributed
S corporation earnings taxed or taxable to the Company's sole stockholder of
approximately $3,600,000 through September 30, 1996, and (ii) termination of
the Company's S corporation election and the recognition of a deferred
income tax liability of approximately $500,000 as of September 30, 1996. See
Notes 1 and 3 of Notes to Financial Statements.
(4) Does not include an adjustment for the distribution to be made to the sole
stockholder of the Company after completion of this offering in an amount
equal to the Company's undistributed S corporation earnings from October 1,
1996 through the termination of the Company's S corporation election.
13
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Forrester has experienced year-to-year revenue growth every year since its
inception in 1983. Over the last five years, the Company's revenues have
increased to $14.6 million in 1995 from $3.0 million in 1991. The Company's
revenues were $16.4 million in the first nine months of 1996. Forrester
attributes this growth to the Company's continuing reputation for quality
research and timely, accurate analysis of technology industry developments; the
introduction of new products and services; and the expansion of the Company's
sales and marketing organization. In addition, the Company believes the speed of
technology change and the increasingly participatory nature of technology
decisions have led to a growing market need for independent research and
analysis on the impact of technology on large enterprises, consumers, and
society.
Revenues from core research also increased over the last five years, to
$10.1 million in 1995 from $1.6 million in 1991, and increased as a percentage
of total revenues to 70% in 1995 from 55% in 1991. Revenues from core research
were $12.6 million for the first nine months of 1996, or 77% of total revenues.
Forrester attributes this growth to, in addition to the factors cited above, an
increase in total Strategy Research Services offered -- from three in 1991 to
four in 1994, to six in 1995, and to a total of 10 Strategy Research Services as
of September 30, 1996.
Memberships to Forrester's Strategy Research Services are renewable
contracts, typically annual and payable in advance. Accordingly, a substantial
portion of the Company's billings are initially recorded as deferred revenue and
recognized pro rata on a monthly basis over the contract period. The Company's
other revenues are derived from advisory services rendered pursuant to
Forrester's Partners Program and Strategy Review Program, and from the Forrester
Technology Management Forum (the "Forum"). The Company's advisory service
clients purchase such services in conjunction with the purchase of core research
memberships to Strategy Research Services, and the contracts for such purchases
are also generally payable in advance. Billings attributable to advisory
services are initially recorded as deferred revenues and recognized as revenue
when performed. Similarly, Forum billings are initially recorded as deferred
revenues and are recognized upon completion of the event.
The Company's operating expenses consist of cost of services and
fulfillment, selling and marketing expenses, general and administrative
expenses, and depreciation and amortization. Cost of services and fulfillment
represent the costs associated with production and delivery of the Company's
products and services, and include the costs of salaries, bonuses, and related
benefits for research personnel, and all associated editorial, travel, and
support services. Selling and marketing expenses include salaries, employee
benefits, travel expenses, promotional costs, and sales commissions, which are
deferred when paid and expensed as the related revenue is recognized. General
and administrative expenses include the costs of the finance, operations, and
corporate IT groups, and other administrative functions of the Company.
The Company has had income from operations in each of the last five years
from 1991 through 1995 and in the first nine months of 1996. Income from
operations rose 321% to $1.8 million in 1995 from $423,665 in 1991. Income from
operations was $2.2 million for the nine-month period ended September 30, 1996.
The Company has elected to be taxed, since January 1, 1987, under
subchapter S of the Code whereby the sole stockholder is liable for individual
federal and certain state income taxes on the Company's taxable income. As such,
the Company has not paid federal income taxes and paid reduced state income
taxes. Upon completion of this offering, the Company will terminate its S
corporation election and will be subject to corporate-level federal and state
income taxes. Termination of this election will result in a deferred income tax
liability being recorded as a charge to operations during the quarter in which
this offering is completed. This deferred tax liability is approximately
$500,000 as of September 30, 1996. The combination of the state income tax
provision and the pro forma income tax adjustment in the Company's historical
financial statements
14
<PAGE> 16
reflects the federal and state income taxes which would have been recorded if
the Company had been treated as a C corporation during the periods presented.
The Company has calculated these amounts based upon an estimated effective tax
rate for the respective periods.
The Company believes that the "agreement value" of contracts to purchase
core research and advisory services provides a significant measure of the
Company's business volume. Forrester calculates agreement value as the
annualized fees payable under all core research and advisory services contracts
in effect at a given point in time, without regard to the remaining duration of
such contracts. Agreement value increased 74% to $17.8 million at December 31,
1995 from $10.2 million at December 31, 1994. At September 30, 1996 agreement
value was $25.9 million. The Company's experience is that a substantial portion
of client companies renew expiring contracts for an equal or higher level of
total core research and advisory service fees each year. Approximately 71% and
72% of Forrester's client companies with memberships expiring during 1995 and
the first nine months of 1996, respectively, renewed one or more memberships for
the Company's products and services, although these renewal rates are not
necessarily indicative of the rate of future retention of the Company's revenue
base. The number of client companies increased to more than 860 at September 30,
1996 from 799 at December 31, 1995, and no single client company accounted for
over 4% of the Company's revenue in 1995 or over 3% of the Company's revenue in
the nine months ended September 30, 1996.
RESULTS OF OPERATIONS
<TABLE>
The following table sets forth certain financial data as a percentage of
total revenues for the periods indicated:
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------- -------------
1993 1994 1995 1995 1996
--- --- --- --- ---
<S> <C> <C> <C> <C> <C>
Core research.............................. 64% 66% 70% 77% 77%
Advisory services and other................ 36 34 30 23 23
--- --- --- --- ---
Total revenues............................. 100 100 100 100 100
--- --- --- --- ---
Cost of services and fulfillment........... 33 35 37 39 36
Selling and marketing...................... 37 37 39 41 38
General and administrative................. 16 10 9 10 11
Depreciation and amortization.............. 1 2 2 2 2
--- --- --- --- ---
Income from operations..................... 13 16 13 8 13
Interest income............................ 1 1 2 3 2
--- --- --- --- ---
Income before state income tax provision... 14 17 15 11 15
Provision for state income tax............. 1 1 1 1 1
--- --- --- --- ---
Net income................................. 13% 16% 14% 10% 14%
==== ==== ==== ==== ====
Pro forma income tax adjustment............ 5 6 5 4 6
--- --- --- --- ---
Pro forma net income....................... 8% 10% 9% 6% 8%
==== ==== ==== ==== ====
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
REVENUES. Total revenues increased 80% to $16.4 million in the nine months
ended September 30, 1996 from $9.1 million in the corresponding period of 1995.
Revenues from core research increased 79% to $12.6 million in the nine months
ended September 30, 1996 from $7.0 million in the corresponding period in 1995.
The increases in total revenues and revenues from core research were primarily
attributable to an increase in the number of clients, the introduction of new
Strategy Research Services, and continued expansion and increased productivity
of the Company's sales force.
15
<PAGE> 17
Advisory services and other revenues increased 82% to $3.8 million in the
nine months ended September 30, 1996 from $2.1 million in the nine months ended
September 30, 1995. This increase was primarily attributable to demand for the
Partners and Strategy Review Programs.
Revenues attributable to customers outside the United States increased 102%
to $3.4 million in the nine months ended September 30, 1996 from $1.7 million in
the nine months ended September 30, 1995, and also increased as a percentage of
total revenues to 21% for the nine months ended September 30, 1996 from 18% for
the nine months ended September 30, 1995. The increase was due primarily to the
addition of direct international sales personnel. The Company invoices its
international clients in U.S. dollars.
Agreement value grew to $25.9 million at September 30, 1996 from $13.7
million at September 30, 1995. No single client company accounted for more than
2% of agreement value or 3% of revenues for the nine months ended September 30,
1996.
COST OF SERVICES AND FULFILLMENT. Cost of services and fulfillment
decreased as a percentage of total revenues to 36% in the nine months ended
September 30, 1996 from 39% in the nine months ended September 30, 1995. These
costs increased 67% to $5.9 million in the nine months ended September 30, 1996
from $3.5 million in the nine months ended September 30, 1995. The expense
increase in this period was principally due to increased analyst staffing for
new Strategy Research Services and related compensation expense.
SELLING AND MARKETING. Selling and marketing expenses decreased as a
percentage of total revenues to 38% in the nine months ended September 30, 1996
from 41% in the nine months ended September 30, 1995. These expenses increased
67% to $6.2 million in the nine months ended September 30, 1996 from $3.7
million in the nine months ended September 30, 1995. The increase in expense was
principally due to the addition of direct salespersons and increased sales
commission expense associated with increased revenues. The decrease as a
percentage of total revenues was principally due to increased productivity of
the Company's direct sales force.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
as a percentage of total revenues to 11% in the nine months ended September 30,
1996 from 10% in the nine months ended September 30, 1995. These expenses
increased 93% to $1.7 million in the nine months ended September 30, 1996 from
$887,037 in the nine months ended September 30, 1995. The increase in expenses
was principally due to staffing increases in operations and IT and higher costs
associated with the Company's new Cambridge headquarters.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased 73% to $359,531 in the nine months ended September 30, 1996 from
$207,347 in the nine months ended September 30, 1995. The increase in this
expense was principally due to purchases of computer equipment, software, and
office furnishings to support business growth, and the Company's move to its new
Cambridge headquarters and expansion thereof.
INTEREST INCOME. Interest income increased to $353,915 in the nine months
ended September 30, 1996 from $266,252 in the nine months ended September 30,
1995 due to an increase in the Company's cash balances resulting from positive
cash flows from operations.
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
REVENUES. Total revenues increased 50% to $14.6 million in 1995 from $9.7
million in 1994, and 33% from $7.3 million in 1993. Revenues from core research
increased 59% to $10.1 million in 1995 from $6.4 million in 1994, and 36% from
$4.7 million in 1993. The increases in total revenues and revenues from core
research were primarily attributable to an increase in the number of clients,
the introduction of new Strategy Research Services, continued expansion and
increased productivity of the Company's sales force, and growing market
acceptance of the Company's products. The Company introduced two new Strategy
Research Services in 1995, one new Strategy Research Service in 1994, and did
not start any new Strategy Research Services in 1993.
Advisory services and other revenues increased 33% to $4.4 million in 1995
from $3.3 million in 1994, and 28% from $2.6 million in 1993. The increase in
advisory services and other revenues was
16
<PAGE> 18
primarily attributable to demand for the Company's advisory services. The
decrease of these revenues as a percentage of total revenues to 30% in 1995 from
34% in 1994 and 36% in 1993 reflects the results of the Company's strategy to
expand sales of its core research. See "Business -- Strategy".
Revenues attributable to sales to customers outside the United States
increased 61% to $2.6 million in 1995 from $1.6 million in 1994, and 43% from
$1.1 million in 1993. International sales represented 18%, 16%, and 15% of total
revenue for 1995, 1994, and 1993, respectively. The increase was due primarily
to the Company's creation and growth of a direct international sales force from
one employee in 1993 to eight employees at December 31, 1995.
Agreement value grew 74% to $17.8 million at December 31, 1995 from $10.2
million at December 31, 1994, and 75% from $5.8 million at December 31, 1993.
COST OF SERVICES AND FULFILLMENT. Cost of services and fulfillment
increased as a percentage of total revenues to 37% in 1995 from 35% in 1994 and
33% in 1993. These costs increased 60% to $5.5 million in 1995 from $3.4 million
in 1994, and 42% from $2.4 million in 1993. These increases were principally due
to investment in new Strategy Research Services and resultant increased analyst
staffing and related compensation expense.
SELLING AND MARKETING. Selling and marketing expenses increased as a
percentage of total revenues to 39% in 1995 from 37% in 1994 and 1993. These
expenses increased 57% to $5.6 million in 1995 from $3.6 million in 1994, and
33% from $2.7 million in 1993. The increase in expenses was principally due to
the addition of direct salespersons and marketing personnel and increased sales
commissions resulting from increased revenues.
GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased
as a percentage of total revenues to 9% in 1995 from 10% in 1994 and 16% in
1993. These expenses increased 33% to $1.4 million in 1995 from $1.0 million in
1994, and decreased 9% from $1.1 million in 1993. The increase in expenses from
1994 to 1995 was principally due to staffing increases in operations and IT,
higher costs associated with the Company's new Cambridge headquarters, and
investment in the Company's internal IT systems.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased 91% to $287,705 in 1995 from $150,067 in 1994, and 43% from $105,120
in 1993. The increase in this expense was principally due to purchases of
computer equipment, software, and office furnishings to support business growth
and the Company's move to its new Cambridge headquarters and expansion thereof.
INTEREST INCOME. Interest income increased 171% to $339,569 in 1995 from
$125,115 in 1994, and 58% from $79,343 in 1993. This increase resulted primarily
from an increase in the Company's cash balances resulting from positive cash
flows from operations.
17
<PAGE> 19
QUARTERLY RESULTS OF OPERATIONS
<TABLE>
The following tables set forth certain quarterly financial data for each of
the seven quarters in the period ended September 30, 1996, together with such
data as a percentage of total revenues. The quarterly information presented is
unaudited and, in the opinion of management, has been prepared on the same basis
as the annual audited statements and includes all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of the
information for the periods presented, when read in conjunction with the
Financial Statements of the Company and the Notes thereto included elsewhere in
this Prospectus. Operating results for any quarter are not necessarily
indicative of results for any future period.
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1995 1995 1995 1995 1996 1996 1996
--------- -------- ------------- ------------ --------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Core research.......... $2,049 $2,344 $2,643 $3,114 $3,646 $4,128 $4,811
Advisory services and
other................ 659 529 892 2,359 1,100 1,188 1,501
------ ------ ------ ------ ------ ------ ------
Total revenues......... 2,708 2,873 3,535 5,473 4,746 5,316 6,312
Cost of services and
fulfillment.......... 1,058 1,105 1,387 1,936 1,736 2,010 2,165
Selling and
marketing............ 1,106 1,255 1,369 1,913 1,841 2,104 2,289
General and
administrative....... 270 288 329 502 618 516 581
Depreciation and
amortization......... 65 63 80 79 92 120 148
------ ------ ------ ------ ------ ------ ------
Income from
operations....... 209 162 370 1,043 459 566 1,129
Interest income.... 75 102 89 73 110 121 123
------ ------ ------ ------ ------ ------ ------
Income before state
income tax
provision............ 284 264 459 1,116 569 687 1,252
State income tax
provision............ 13 12 21 50 30 35 61
------ ------ ------ ------ ------ ------ ------
Net income......... $ 271 $ 252 $ 438 $1,066 $ 539 $ 652 $1,191
====== ====== ====== ====== ====== ====== ======
Pro forma income tax
adjustment........... 103 95 166 375 200 243 475
------ ------ ------ ------ ------ ------ ------
Pro forma net income... $ 168 $ 157 $ 272 $ 691 $ 339 $ 409 $ 716
====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1995 1995 1995 1995 1996 1996 1996
--------- -------- ------------- ------------ --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF TOTAL
REVENUES:
Core research............. 76% 82% 75% 57% 77% 78% 76%
Advisory services and
other................... 24 18 25 43 23 22 24
--- --- --- --- --- --- ---
Total revenues............ 100 100 100 100 100 100 100
Cost of services and
fulfillment............. 39 38 39 35 37 37 34
Selling and marketing..... 41 44 39 35 38 40 37
General and
administrative.......... 10 10 9 9 13 10 9
Depreciation and
amortization............ 2 2 2 1 2 2 2
--- --- --- --- --- --- ---
Income from
operations.......... 8 6 11 20 10 11 18
Interest income....... 3 4 3 1 2 2 2
--- --- --- --- --- --- ---
Income before state income
tax provision........... 11 10 14 21 12 13 20
State income tax
provision............... 1 1 1 1 1 1 1
--- --- --- --- --- --- ---
Net income............ 10% 9% 13% 20% 11% 12% 19%
=== === === === === === ===
Pro forma income tax
adjustment.............. 4 3 5 7 4 4 8
--- --- --- --- --- --- ---
Pro forma net income...... 6% 6% 8% 13% 7% 8% 11%
=== === === === === === ===
</TABLE>
18
<PAGE> 20
Revenues generally increased each quarter during the seven quarters ended
September 30, 1996, reflecting the overall growth in the Company's business.
Historically, total revenues in the fourth quarter have reflected the
significant positive contribution of revenues attributable to the Forrester
Forum. As a result, the Company has typically experienced a decline in total
revenues from the quarter ended December 31 to the quarter ended March 31. In
addition, cost of services and fulfillment and sales and marketing expense has
typically decreased as a percentage of revenues during the fourth quarter. Sales
and marketing expenses increased as a percentage of revenues during the quarter
ended June 30, 1995 due to additional costs related to new collateral material
printed in connection with the Company's move into its new Cambridge offices.
General and administrative expenses increased as a percentage of revenues during
the quarter ended March 31, 1996 compared to the quarter ended December 31, 1996
due to increased hiring of operations personnel and the increased revenues
during the quarter ended December 31, 1995 attributable to the Forum. The
Company's quarterly operating results have fluctuated in the past and may
continue to fluctuate in the future.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations to date through funds generated
from operations. Memberships for core research, which constituted approximately
77% of the Company's revenues for the nine months ended September 30, 1996, are
annually renewable and are generally payable in advance. These up-front payment
terms together with historical year-to-year revenue growth have allowed the
Company to generate positive cash flows each year since 1984, one year after its
inception in 1983. The Company generated $4.6 million in cash from operating
activities during 1995, $3.7 million during 1994, and $1.3 million during 1993.
In the nine months ended September 30, 1996, the Company generated $4.8 million
in cash from operating activities.
In 1995, the Company used $5.2 million of cash in investing activities,
consisting of $751,850 for the purchase of property and equipment and $4.5
million for net purchases of marketable securities. The Company regularly
invests excess funds in short- and intermediate-term interest-bearing
obligations of investment grade. In 1995, the Company used $1.1 million in
financing activities, consisting solely of a distribution to the stockholder
primarily to pay income taxes on the Company's net income. See "Termination of S
Corporation Election and S Corporation Distribution" and "Dividend Policy"
above.
In the nine months ended September 30, 1996, the Company used $4.4 million
of cash in investing activities. The primary uses were the purchase of $1.5
million of property and equipment and the net purchase of $2.9 million of
marketable securities.
As of September 30, 1996, the Company had cash and cash equivalents of $1.3
million and $9.6 million in marketable securities. This amount will be reduced
by a distribution to the sole stockholder of the Company after completion of
this offering as described in "Termination of S Corporation Election and S
Corporation Distribution". The Company does not have a line of credit and does
not anticipate the need for one in the foreseeable future. The Company currently
has no material capital commitments and does not foresee that capital
expenditures will increase substantially during the next two years. The Company
believes that its current cash balance, marketable securities, and cash flows
from operations, together with the net proceeds from the offering, will satisfy
working capital, financing activities, and capital expenditure requirements for
at least the next two years.
The Company will declare a distribution to its current stockholder in an
amount equal to the Company's undistributed S corporation earnings of
approximately $3,600,000 through September 30, 1996. The estimated distribution
through September 30, 1996 does not include the amount to be distributed for S
corporation earnings from October 1, 1996 through termination of the Company's S
corporation election. These distributions will be paid out of the Company's cash
balances and proceeds from the sale of marketable securities.
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<PAGE> 21
BUSINESS
Forrester is a leading independent research firm offering products and
services that help its clients assess the effect of technology on their
businesses. The Company provides analysis and insight into a broad range of
technology areas such as computing, software, networking, the Internet, and
telecommunications, and projects how technology trends will impact businesses,
consumers, and society. Forrester's clients, which include senior management,
business strategists, and IT professionals within large enterprises, use
Forrester's prescriptive research to understand and benefit from current
developments in technology and as support for their development and
implementation decisions.
Forrester offers its clients annual memberships to any of its 10 research
services ("Strategy Research Services"). Each Strategy Research Service focuses
on a particular area of technology and explores business issues relevant to
clients' decision-making. These issues include the impact that the application
of technology may have on financial results, investment priorities,
organizational effectiveness, and staffing requirements. Forrester also provides
advisory services to a limited number of clients to help them explore in greater
detail the topics covered by the core research.
Forrester targets its products and services to both large enterprises and
technology vendors. As of September 30, 1996, Forrester's research was delivered
to more than 860 client companies. No single client company accounted for more
than 3% of the Company's revenues during the nine-month period ended September
30, 1996. Approximately 72% of Forrester's client companies with memberships
expiring during the nine-month period ended September 30, 1996 renewed one or
more memberships for the Company's products and services.
INDUSTRY BACKGROUND
Businesses increasingly depend on technology for competitive advantage and
success. Technology is being used as a strategic tool to develop innovative
products, services, and distribution channels, as well as to create more
efficient internal business processes. Decisions about how to deploy networks,
software, and other systems are increasingly participatory, with
line-of-business managers, marketing executives, and corporate leaders joining
IT professionals in the technology review and decision-making process. Together,
these individuals must develop a coherent strategy that leverages innovative
systems to reach new markets, gain competitive advantage, and develop high
customer service and loyalty levels. Developing such a strategy is difficult,
however, as the rate of technology change accelerates. Increased complexity and
the proliferation of vendors and solutions have increased the challenges in
anticipating and understanding emerging technologies.
The strategic use of technology, the widening scope of decision-making, the
speed of change, and the complexity of decisions make it difficult for
organizations to efficiently generate research and analysis on their own. Costly
incremental resources -- time and expertise -- are required for successful
analysis and implementation of technology. Poor decisions can be costly and
detrimental to an organization's competitive position. Consequently, demand is
growing for external sources of expertise that provide independent,
vendor-neutral business advice on how to benefit from technology change.
Research firms that provide tactical product assessment or customized consulting
are often too narrow in their perspective to satisfy this demand. Business
leaders as well as technology users require comprehensive research that can
anticipate, assess, and interpret major trends. Forrester believes there is a
growing need for thematic, prescriptive analysis of technology that appeals to
senior management, business strategists, and IT professionals, and helps
organizations improve their strategic planning processes, leverage technology
change, and gain competitive advantage.
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<PAGE> 22
THE FORRESTER SOLUTION
Forrester addresses the growing demand for thematic, prescriptive analysis
of technology by providing business-focused research to senior management,
business strategists, and IT professionals. The Company's research methodology
analyzes complex technology issues and delivers prescriptive analysis and advice
through each of its 10 Strategy Research Services. This research helps large
enterprises make informed decisions that positively affect competitive strategy
and business performance, reduce risk, and manage cost. Although Forrester's
research is user-focused, IT vendors also use Forrester's research for
marketing, product positioning, and market planning.
Forrester differentiates its products and services from those offered by
other research firms by:
ADDRESSING NEEDS OF BUSINESS EXECUTIVES. Forrester's core research
and advisory services blend analysis of technology with related business
issues to enable senior management to better use technology for competitive
advantage. Unlike narrowly focused, tactically based research that assesses
products and components, Forrester's research provides a strategic view of
the impact of technology on long-term business plans.
DELIVERING VALUABLE, STAND-ALONE WRITTEN RESEARCH. Forrester's
research distills the abundance of information, activities, and
developments in the IT industry into a concise, easy-to-read guide for
decision-making. In contrast to research that requires interactive
consulting support, Forrester's research is designed to provide valuable,
prescriptive analysis that stands on its own without requiring ongoing
analyst interaction.
TAKING A STAND ON DIFFICULT TECHNOLOGY ISSUES. Forrester's research
and analysts challenge conventional viewpoints; the Company does not expect
clients to agree with every prediction or conclusion presented. However,
the Company does believe that strong opinions and recommendations will
enable clients to more thoroughly consider the use of technology to gain
competitive advantage. Forrester, unlike many other research firms,
provides concrete, actionable business advice.
PROVIDING A BROAD VIEW OF TECHNOLOGY CHANGE. Forrester's research
approach provides an integrated, cross-disciplinary view of technologies
and their impact throughout organizations and industries. The Company's
cross-service collaboration ensures that a coherent, thematic analysis is
consistently delivered to clients. Forrester's broad perspective can be
contrasted with narrowly defined, specifically tailored technology
assessments.
FOCUSING ON EMERGING TECHNOLOGIES IN CONSUMER AND BUSINESS
MARKETS. Forrester's research methodology is designed to identify
fundamental shifts in technology before these changes appear on the
horizons of most users, vendors, and other research firms. Forrester's
interview-based research approach combines input from early adopters of new
technologies, vendors, and consumers to gauge the likelihood of a
technology's success and its potential impact on various markets.
STRATEGY
Forrester seeks to capitalize on the growing demand for technology
research, analysis, and advice. To achieve this goal, Forrester has adopted the
following strategies:
LEVERAGE CORE RESEARCH. By focusing on sales of its stand-alone core
research, the Company can deliver value to its clients and can increase its
revenues without having to provide ongoing and direct analyst support. In
addition, Forrester's current and developing electronic delivery options
make it easier to disseminate research within an organization while
providing greater ease of use, including the ability to search, customize,
and sort information according to individual preferences. Finally, the
Company intends to continue to introduce new Strategy Research Services and
to provide advisory services that build upon the analysis and
recommendations set forth in the core research to enhance sales of that
core research.
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<PAGE> 23
EXPAND CLIENT BASE AND PENETRATE EXISTING ACCOUNTS. The Company
believes that its current offerings of products and services, and
anticipated new products and services, can continue to be successfully
marketed and sold to new client companies, as well as to new organizations
within existing client companies. Forrester currently targets senior
management, business strategists, and IT professionals within Fortune 1,000
companies. The Company seeks to expand its international audience by
targeting select geographic markets. The Company also aims to increase the
number of Strategy Research Services that each client purchases through
increased marketing of new and current products and services.
IDENTIFY AND DEFINE NEW TECHNOLOGY MARKETS. Forrester seeks to
position itself ahead of other research firms by delivering strategic
research and analysis on new and emerging technologies. Forrester believes
its methodology and culture allow it to focus on areas of technology change
and enable it to expand its product and service offerings to address new
technology issues.
ATTRACT AND RETAIN HIGH-QUALITY RESEARCH PROFESSIONALS. The knowledge
and experience of Forrester's analysts are critical elements of the
Company's ability to provide high-quality products and services. The
Company seeks to attract, develop, and retain outstanding research
professionals by providing a creative corporate environment and culture, a
competitive compensation structure, training and mentoring programs for
individual development, and recognition and rewards for excellent
individual and team performance.
EXPAND AND LEVERAGE SALES FORCE. The Company is expanding its current
direct sales force and is seeking to increase the average sales volume per
sales representative. The Company believes that this increase can be
achieved as the average tenure of the Company's sales representatives
lengthens and marketing initiatives shorten the sales cycle. Initiatives
include the improvement of existing and the development of new methods for
obtaining highly qualified sales leads, targeted use of third-party
telemarketing firms, and hosting of regional marketing events around the
world.
PRODUCTS AND SERVICES
Forrester's principal products are annually renewable memberships to 10
Strategy Research Services in three main research areas: Corporate IT, New
Media, and Strategic Management. Corporate IT Research services analyze how
technology change impacts IT's infrastructure, tactics, and mission; New Media
Research services provide insight into how companies can leverage emerging
technology to deliver content and services to consumers; and Strategic
Management Research assists senior executives in understanding the long-term
implications of technology change on organizational and business strategies.
Each Strategy Research Service delivers monthly Reports and biweekly Briefs,
except the Leadership Strategies service which delivers Reports on a bimonthly
basis and Executive Takes on a biweekly basis. Additionally, Forrester provides
advisory services to select clients through the Partners Program and Strategy
Review Program. The Company holds one major event each year, the Forrester
Technology Management Forum, a two-day conference devoted to leading technology
issues.
STRATEGY RESEARCH SERVICES
The Company's Strategy Research Services provide ongoing research and
analysis on the developments, information, and activities in the technology
industry. Each service is staffed by a team of research analysts and associates
with substantial experience in the technology area covered by that service. The
services employ a consistent research methodology to analyze technology issues,
address related business issues, and offer recommendations and action plans.
While each service addresses a specific technology area, collectively they
present complementary, consistent research themes and provide comprehensive
coverage of relevant technology issues faced by the Company's clients.
Businesses are able to supplement and extend internal resources with current,
thorough, and focused analysis and recommendations. In addition, technology
vendors are able to augment and test competitive, new product, marketing, and
sales plans against Forrester's independent analysis and advice.
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<PAGE> 24
The following table summarizes the coverage areas of Forrester's Strategy
Research Services:
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CORPORATE IT RESEARCH SAMPLE TOPICS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
COMPUTING STRATEGY SERVICE -- introduced in November 1983, analyzes the rollout - Systems and network management
and management of large-scale client/server systems, the impact of the Internet - Directories
on computing architectures, and the changing IT organization - Operating systems
- Servers, PCs, workstations
- Internet Computing
- --------------------------------------------------------------------------------------------------------------------------------
NETWORK STRATEGY SERVICE -- introduced in December 1986, analyzes high- - ATM
performance network services and guides companies to build advanced networks - Video
that support client/server applications, link mobile workers, and connect - EDI
business partners and customers - Internetworking equipment
- Networking protocols and services
- Internet/Intranet
- --------------------------------------------------------------------------------------------------------------------------------
PACKAGED APPLICATION STRATEGIES -- introduced in April 1996, analyzes the - Cost of ownership analysis
impact of emerging technologies on application strategy and helps clients - eCommerce packages
acquire, manage, and leverage packaged software applications - Suite vs. best-of-breed
- Application data warehousing
- Impact of Internet/Intranet
- --------------------------------------------------------------------------------------------------------------------------------
SOFTWARE STRATEGY SERVICE -- introduced in April 1990, analyzes and defines - Object-oriented technology
strategies for the overall software architecture needed to meet business - Internet/Intranet software
objectives, including strategic use of data, documents, and development - Document management
- Data warehousing
- Web servers
- --------------------------------------------------------------------------------------------------------------------------------
TELECOM STRATEGIES -- introduced in June 1996, analyzes the strategic use of - Wide area networking
communications technologies and helps clients use telecommunications to gain - Wireless communications
competitive advantage and cut costs - Internet access
- Deregulation
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
NEW MEDIA RESEARCH SAMPLE TOPICS
- --------------------------------------------------------------------------------------------------------------------------------
INTERACTIVE TECHNOLOGY STRATEGIES -- introduced in March 1996, analyzes - Multimedia development
interactive development and delivery technologies that affect consumers - CD-ROM
- Web site development tools
- Web site management
- Search engines
- --------------------------------------------------------------------------------------------------------------------------------
MEDIA & TECHNOLOGY STRATEGIES -- introduced in September 1996, analyzes - Internet advertising
electronic media business models for publishers, broadcasters, and information - On-line magazines
service providers and helps clients build technology-based media franchises - Electronic yellow pages
- Future of business information
services
- --------------------------------------------------------------------------------------------------------------------------------
MONEY & TECHNOLOGY STRATEGIES -- introduced in September 1995, analyzes - eCommerce
consumer financial services, focusing on technology's impact on how consumers - Integrated financial services
spend, save, and invest - Smart cards
- On-line retailing
- On-line banking
- Web strategies for financial firms
- --------------------------------------------------------------------------------------------------------------------------------
PEOPLE & TECHNOLOGY STRATEGIES -- introduced in May 1994, analyzes how emerging - Consumer demographics
technologies affect consumer lifestyles and behavior - On-line services and the Internet
- On-line business models
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
STRATEGIC MANAGEMENT RESEARCH SAMPLE TOPICS
- --------------------------------------------------------------------------------------------------------------------------------
LEADERSHIP STRATEGIES -- introduced in September 1995, analyzes how executives - Strategic planning
can maximize the business benefits of technology and guides them in making - IT cost management
effective decisions about strategic direction, investment properties, and - Best practices/benchmarking
resource management - Strategic vendor selection
- High Performance IT
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 25
Each client that purchases a membership to a Strategy Research Service
receives the following written materials:
FORRESTER REPORTS are created monthly by the services in Corporate IT
and New Media Research, and bimonthly by the Leadership Strategies service.
These Reports deliver analysis on current technology issues in a concise
format.
FORRESTER BRIEFS AND TAKES offer timely analysis on industry events,
issues, technology, or other specific research topics. Corporate IT and New
Media clients receive 24 Briefs per year, and Leadership Strategies clients
receive 26 Executive Takes per year.
JOURNAL ENTRIES are presented at the end of every Forrester Report and
offer Forrester's inside perspective on current events in the industry.
In addition to printed reports, Strategy Research Service core
research deliverables are available in the following electronic delivery
formats:
FORRESTER INTERNET gives clients access to a full archive of
Forrester's research from 1993 to the present via the World Wide Web.
Extensive search capabilities and end user customization allow clients to
tailor document viewing to their particular needs.
FORRESTER INTRANET delivers the same research archive as Forrester
Internet, can be purchased with or without a search engine, and is
compatible with any client's Intranet environment.
FORRESTER RESEARCH FOR LOTUS NOTES USERS provides access to
Forrester's full research archive from 1993 to the present via replication
to Forrester's Lotus Notes server. Documents can be viewed and sorted by
Strategy Research Service, analyst, technology, product, company, people,
or date.
ADVISORY SERVICES AND EVENTS
Forrester provides advisory services to a limited number of clients through
its Partners Program and Strategy Review Program. These programs leverage
Forrester's research expertise to address clients' long-term planning issues and
align Forrester's core research and insight with specific business goals. As of
September 30, 1996, 68 client companies were members of the Partners Program and
196 client companies were members of the Strategy Review Program. In addition to
core research, each client purchasing a membership to the Partners Program and
Strategy Review Program receives the following deliverables, respectively:
THE PARTNERS PROGRAM provides clients with a proactive relationship
with Forrester analysts to address long-range planning, technology
decision-making, and strategic management best practices. The base program
includes a series of one-day meetings and conference calls with Forrester
analysts.
THE STRATEGY REVIEW PROGRAM gives clients access to Forrester analysts
in a series of quarterly two-hour conference calls or meetings in order to
apply the research to business strategies.
The Company also hosts the Forrester Forum each year. The Forum brings
together more than 500 senior executives for a two-day conference to network
with their peers and hear major figures from the technology industry and leaders
from other business sectors discuss the impact of technology change on business.
PRICING
The prices for Forrester's core research are a function of the number of
services purchased, the number of research recipients within the client
organization, and the delivery format (i.e., printed or electronic). The average
contract for annual memberships sold to Forrester clients for core
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<PAGE> 26
research, excluding annual memberships for core research in connection with
Forrester's Partners and Strategy Review Programs, for the year ended December
31, 1995 was approximately $10,200 and for the nine months ended September 30,
1996 was approximately $13,600. The prices for Forrester's Partners and Strategy
Review Programs are also a function of the number of services purchased, the
number of research recipients within the client organization, delivery format,
and amount and type of advisory services. All Partners Program and Strategy
Review Program memberships sold include core research. The average contract for
annual memberships sold to Forrester clients for the Partners Program for the
year ended December 31, 1995 was approximately $65,700 and for the nine months
ended September 30, 1996 was approximately $86,600. The average contract price
of annual memberships sold to Forrester clients for the Strategy Review Program,
for the year ended December 31, 1995 was approximately $33,300 and for the nine
months ended September 30, 1996 was approximately $35,700.
Forrester believes that the agreement value of contracts to purchase core
research and advisory services provides a significant measure of the Company's
business volume. Forrester calculates agreement value as the annualized fees
payable under all core research and advisory services contracts in effect at a
given point in time, without regard to the remaining duration of the contracts.
Agreement value at December 31, 1994 was $10.2 million and grew to $17.8 million
at December 31, 1995. At September 30, 1996, agreement value was $25.9 million.
RESEARCH AND ANALYSIS
Forrester employs a structured and consistent research methodology across
the Company's 10 Strategy Research Services. Each service is managed by a
service director who is responsible for implementing the Company's research
methodology and maintaining research quality in the service's particular
technology coverage area. Forrester's methodology enables the Company to
identify and analyze emerging technology trends, markets, and audiences, and
ensures consistent research quality and recommendations across all services. The
Company's research is thematic in approach: Forrester Reports are composed
around major technology trends, not isolated technology review and assessment.
Research themes apply throughout different research Reports, within services,
and across research services.
Forrester's research process subjects initial ideas to research, analysis,
and rigorous validation, and produces conclusions, predictions, and
recommendations. Forrester employs several different primary research methods:
confidential interviews with early adopters of new technology, technology
vendors, consumers, and users and vendors in related technology areas; regular
briefings with vendors to review current positions and future directions; and
input from clients and third parties gathered during advisory sessions.
Reports begin with cross-service discussion sessions with analysts.
Cross-service testing of an idea continues throughout the Report process at
informal and weekly research meetings. At the final stage of the research
process, senior analysts meet to test the conclusions of each Report. Also, each
Report is reviewed by an analyst outside the research service as an additional
quality check and to ensure clarity and readability by all clients -- especially
those lacking strong technology backgrounds. All research is reviewed and graded
by Forrester's senior research directors.
The knowledge and experience of Forrester's analysts are critical elements
of the Company's ability to provide high-quality research and analysis.
Forrester analysts average approximately 10 years of industry experience, with
varied backgrounds mirroring all facets of the industry -- vendor and user
marketing and development, entrepreneurs, financial services, and journalism.
The Forrester culture and compensation system foster a dedication to
high-quality research across all research services.
All members of Forrester's research staff participate in the Company's
incentive compensation bonus plan. Each employee's performance against
individual and team goals determines an eligible bonus that is funded by the
Company's overall performance against key business objectives. Individual and
team goals include on-time delivery of high-quality research, core research
bookings,
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<PAGE> 27
and advisory services support to Partners and Strategy Review Program clients.
Senior analysts and research directors are eligible to receive equity awards
under the Company's stock plans.
SALES AND MARKETING
Forrester has made a substantial investment in its direct sales force to
better serve clients and address additional markets. The Company's direct sales
force, comprised of 38 sales representatives as of September 30, 1996, consists
of business development managers who are responsible for maintaining and
leveraging the current client base by renewing and selling additional Strategy
Research Services to existing clients, corporate account managers who develop
new business in assigned territories, and regional sales directors who focus on
high-level client contact and service.
Forrester sells its products and services through its headquarters in
Cambridge, Massachusetts, and a regional sales office in San Francisco.
Forrester also uses six local independent sales representatives to market and
sell its products and services internationally. These independent third-party
representatives cover the following territories: Australia, Brazil, France,
Japan, Spain, and South Africa.
The Company has developed and will continue to implement products and
programs to support the sales representatives in their effort to differentiate
Forrester and define the value derived from the Company's research and analysis.
These products and programs include extensive worldwide press relations, direct
mail campaigns, telemarketing, and a worldwide events program. In addition, the
Company uses its Web site as a strategic tool to increase the quality and speed
of lead development for the sales force. All Forrester sales representatives
participate in the Company's annual commission and bonus plan. Commissions are
paid monthly based upon attainment of net bookings against established quotas;
quarterly bonuses are paid for exceeding quota levels.
As of September 30, 1996, Forrester's research was delivered to over 860
client companies, including 57 of the 1996 Fortune 100 companies and 157 of the
1996 Fortune 500 companies. No single client company accounted for over 3% of
the Company's revenues for the nine months ended September 30, 1996.
COMPETITION
Forrester believes that the principal competitive factors in its industry
include quality of research and analysis, timely delivery of information, the
ability to offer products that meet the changing needs of organizations for
research and analysis, independence from vendors, and customer service and
price. The Company believes it competes favorably with respect to each of these
factors. Additionally, the Company believes that its business-focused review of
emerging technologies and high-level, easy-to-read research format distinguish
it from its competitors.
The Company competes in the market for technology research products and
services with other independent providers of similar services. Forrester's
principal direct competitor in IT research is Gartner Group, Inc., which has a
substantially longer operating history, is significantly larger, and has
considerably greater financial resources and market share than the Company.
Numerous other companies, including META Group, Inc., provide IT research and
analysis. In addition, the Company's indirect competitors include the internal
planning and marketing staffs of the Company's current and prospective clients,
as well as other information providers such as electronic and print publishing
companies, survey-based general market research firms, and general business
consulting firms. The Company's indirect competitors could choose to compete
directly against the Company in the future. In addition, there are relatively
few barriers to entry into the Company's market and new competitors could
readily seek to compete against the Company in one or more market segments
addressed by the Company's Strategy Research Services. Increased competition
could adversely affect the Company's operating results through pricing pressure
and loss of market share. There can be no assurance that the Company will be
able to continue to compete successfully against existing or new competitors.
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<PAGE> 28
EMPLOYEES
Forrester's culture emphasizes certain key values -- quality, cooperation,
and creativity -- that it believes are critical to its continued growth. To
encourage achievement of the Company's key values, the Company places great
emphasis on individual excellence, and employees at all levels of the
organization are encouraged to take initiative and lead individual projects that
enhance Forrester's effectiveness. Forrester regularly recognizes and rewards
excellent performance in all areas of the Company. The Company's balanced
emphasis on individual achievement and teamwork is reflected in its compensation
structure. Each employee's performance is measured against individual and team
goals that determine an eligible bonus funded by the Company's overall
performance against key business objectives. This structure gives employees a
vested interest in the Company's overall success and performance while still
promoting individual excellence.
As of September 30, 1996, Forrester employed a total of 119 persons,
including 55 research staff, 44 sales and marketing personnel, and 20 operations
personnel. Of these employees, 118 are located at the Company's headquarters in
Cambridge, Massachusetts and one is located at another domestic facility. None
of the Company's employees is represented by a collective bargaining
arrangement, and the Company has experienced no work stoppages. The Company
believes that its relations with its employees are good.
As of September 30, 1996, there were options to purchase 748,691 shares of
the Common Stock of the Company granted to employees under the Company's 1996
Amended and Restated Equity Incentive Plan. Upon completion of this offering,
options to purchase 149,376 shares of the Company's Common Stock held by
employees of the Company will become immediately exercisable.
Forrester's continued growth depends in large part on its ability to
attract, retain, and motivate highly skilled research analysts, sales and
marketing personnel, and operations staff. Competition for highly skilled
personnel in the Company's market is intense, and many of the companies with
which Forrester directly competes for such personnel have substantially greater
financial and other resources than the Company. In addition, competition for
highly skilled personnel can be expected to become more intense as competition
in the Company's industry increases. Although the Company expects to continue to
attract sufficient numbers of highly skilled employees and to retain and
motivate its existing research analysts, sales and marketing personnel, and
operations staff for the foreseeable future, there can be no assurance that the
Company will be able to do so. The loss of any of the Company's senior
management personnel or any failure to attract, retain, and motivate a
sufficient number of qualified personnel would have a material adverse effect on
the Company's business, financial condition, and results of operations. The
Company has entered into non-competition agreements with each of its group
directors, service directors, senior analysts, and certain other employees which
provide that such persons will not compete with the Company for the one-year
period after the date of termination of employment with the Company.
FACILITIES
The Company's headquarters are located in approximately 30,000 square feet
of office space in Cambridge, Massachusetts. This facility accommodates
research, marketing, sales, IT, and operations personnel. The initial lease term
of this facility expires in January 2001. The Company has the option to extend
this lease for up to two additional terms of five years each. The Company also
leases office space in San Francisco to support its sales functions. The Company
believes that its existing facilities are adequate for its current needs and
that additional facilities are available for lease to meet future needs.
LEGAL PROCEEDINGS
The Company is not currently a party to any material legal proceedings.
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<PAGE> 29
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
The executive officers and members of and nominees to the Board of
Directors of the Company are as follows:
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
George F. Colony.............................. 43 Chairman of the Board, President,
and Chief Executive Officer
William M. Bluestein, Ph.D. .................. 39 Group Director, New Media Research
Paul D. Callahan.............................. 47 Group Director, Corporate IT Research
Ruth Habbe.................................... 41 Director, Marketing
Mary A. Modahl................................ 34 Group Director, New Media Research
David H. Ramsdell............................. 45 Director, Finance
Jon D. Schwartz............................... 36 Director, Worldwide Sales
Paul J. Warren................................ 31 Director, IT
Susan M. Whirty, Esq.......................... 39 Director, Operations, General Counsel,
Secretary, Treasurer
Stuart D. Woodring............................ 36 Group Director, Corporate IT Research
Robert M. Galford(1).......................... 44 Member of the Board of Directors
George R. Hornig(1)........................... 42 Member of the Board of Directors
Christopher W. Mines(1)....................... 42 Member of the Board of Directors
Michael H. Welles(1).......................... 42 Member of the Board of Directors
<FN>
- ---------------
(1) Elected to serve as members of the Board of Directors commencing immediately
following the completion of this offering.
</TABLE>
George F. Colony, founder of the Company, has served as President and Chief
Executive Officer since its inception in July 1983.
William M. Bluestein, Ph.D., currently serves as Group Director, New Media
Research. He was previously Director and Senior Analyst with the Company's
People & Technology Strategies from 1994 to 1995, and Director and Senior
Analyst with the Company's Computing Strategy Service from 1990 to 1993.
Paul D. Callahan currently serves as Group Director, Corporate IT Research.
He was previously with the Company's Network Strategy Service where he served as
Director from 1995 to 1996, Senior Analyst from 1993 to 1995, and Analyst from
1992 to 1993. Prior to joining the Company, Mr. Callahan was a manager with
Digital Equipment Corporation's networks business from 1987 to 1992.
Ruth Habbe has served as the Company's Director, Marketing since 1994.
Prior to joining the Company, Ms. Habbe was Vice President, Marketing at Imagery
Software, Inc. from 1992 to 1994 and Document Imaging Segment Manager at Digital
Equipment Corporation from 1990 to 1992.
Mary A. Modahl currently serves as Group Director, New Media Research. She
was previously Director and Senior Analyst with the Company's People &
Technology Strategies from 1994 to 1995, Senior Analyst with the Company's
Computing Strategy Service from 1993 to 1994, and Director of the Network
Strategy Service from 1990 to 1993.
David H. Ramsdell became the Company's Director, Finance in October 1996.
Mr. Ramsdell was Vice President, Finance at Virus Research Institute, Inc., a
developer of vaccine delivery systems, from August 1993 through September 1996.
He also served as Chief Financial Officer at ISI Systems, Inc., a data
processing and software development company, from 1987 to August 1993.
28
<PAGE> 30
Jon D. Schwartz currently serves as the Company's Director, Worldwide
Sales. He was previously Director of the Company's North American Sales from
1993 to 1995, and Partners Manager from 1990 to 1993.
Paul J. Warren has served as the Company's Director, IT since 1995. Before
joining the Company, Mr. Warren was Manufacturing Systems Manager for Malden
Mills, a textile manufacturer, from 1993 to 1995. He also served as a
Manufacturing Systems Analyst for Malden Mills from 1991 to 1993.
Susan M. Whirty, Esq. has served as the Company's Director, Operations and
General Counsel since March 1993 and has served as the Company's Secretary and
Treasurer since February 1996. Prior to joining the Company, Ms. Whirty was
Corporate Counsel at Cognos Corporation, a software development and application
company, from 1989 to 1993.
Stuart D. Woodring currently serves as Group Director, Corporate IT
Research. He was previously Director of the Company's Corporate IT Research
services from 1994 to 1995 and Director of the Software Strategy Service from
1990 to 1994.
Robert M. Galford has been elected to serve as a Director of the Company
commencing immediately following this offering. Mr. Galford has been a member of
the Faculty of the Executive Programs at Columbia University's Graduate School
of Business since 1994. Before joining Columbia's Executive Programs, he taught
at Boston University from 1993 to 1994. Prior to his work in executive
education, Mr. Galford was a Vice President of the MAC Group from 1986 to 1991
and its successor firm, Gemini Consulting, from 1991 to 1994.
George R. Hornig has been elected to serve as a Director of the Company
commencing immediately following this offering. Mr. Hornig has been Managing
Director and Member of the Management Committee of Deutsche Morgan Grenfell, an
investment banking firm, from 1993 to the present. From 1991 to 1993, Mr. Hornig
was President and Chief Operating Officer of Dubin & Swieca Holdings, Inc., an
investment management firm. He is also Director of Unity Mutual Life Insurance
Company and SL Industries, Inc., a manufacturer and distributor of engineered
products.
Christopher W. Mines has been elected to serve as a Director of the Company
commencing immediately following this offering. Mr. Mines currently serves as a
Principal of GeoPartners Research, Inc. Prior to joining GeoPartners in 1992, he
was an analyst at Cowen & Company from 1983 to 1991 and at the Yankee Group from
1980 to 1983.
Michael H. Welles has been elected to serve as a Director of the Company
commencing immediately following this offering. Mr. Welles has been General
Manager, Next Generation Products for Lotus Development Corporation since 1994.
From 1991 to 1994, he was General Manager of Lotus' Improv development team.
BOARD OF DIRECTORS
The Company's Bylaws provide for a Board of Directors of three or more
directors, and the number of directors is currently fixed at five. Under the
terms of the Company's Certificate of Incorporation and Bylaws, the Board of
Directors is composed of three classes of similar size, each elected in a
different year, so that only approximately one-third of the Board of Directors
is elected in any single year. Mr. Colony is designated as a Class I director
elected for a term expiring in 1999 and until his successor is elected and
qualified; Mr. Hornig and Mr. Mines are designated Class II directors elected
for a term expiring in 1998 and until their successors are elected and
qualified; and Mr. Welles and Mr. Galford are designated Class III directors
elected for a term expiring in 1997 and until their successors are elected and
qualified.
The Board of Directors of the Company will have an Audit Committee
consisting of two members (Messrs. Hornig and Mines) and a Compensation
Committee consisting of two members (Messrs. Galford and Welles). The purpose of
the Audit Committee is to review the results of
29
<PAGE> 31
operations of the Company with officers of the Company who are responsible for
accounting matters and, from time to time, with the Company's independent
auditors. The Compensation Committee recommends annual compensation arrangements
for the Company's executive officers and reviews annual compensation
arrangements for all other officers and significant employees.
DIRECTOR COMPENSATION
Members of the Board of Directors of the Company are reimbursed for their
expenses incurred in connection with attending any meeting. In addition, in
September 1996, the Board of Directors adopted and the sole stockholder approved
the 1996 Stock Option Plan for Non-Employee Directors (the "Director Option
Plan") pursuant to which each of the non-employee directors who have agreed to
serve as directors of the Company received, on the date that the Company first
filed a registration statement under the Securities Act covering the Common
Stock, an option to purchase 6,000 shares of the Company's Common Stock at an
exercise price of $13.00. Such options will vest in three equal installments
commencing on the date of completion of the initial public offering of the
Common Stock and on the first and second anniversaries of such date. See "Stock
Plans -- 1996 Stock Option Plan for Non-Employee Directors".
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL COMPENSATION
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
--------------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
George F. Colony.............................. 1995 $135,000 $ 0 $19,129
Chairman of the Board,
President, and Chief
Executive Officer
Jon D. Schwartz............................... 1995 $177,444 $20,400 $ --
Director, Worldwide Sales
Stuart D. Woodring............................ 1995 $125,000 $43,827 $ --
Group Director, Corporate IT Research
Paul D. Callahan.............................. 1995 $120,000 $44,608 $ --
Group Director, Corporate IT Research
William M. Bluestein, Ph.D.................... 1995 $110,000 $46,476 $ --
Group Director, New Media Research
<FN>
- ---------------
(1) No named Executive Officer other than Mr. Colony received other annual
compensation in excess of the lesser of $50,000 or 10% of his salary and
bonus. Other annual compensation paid to Mr. Colony includes approximately
$7,000 for life insurance and $4,700 for health insurance and excludes
distributions to Mr. Colony based on the Company's S corporation earnings.
See "Dividend Policy".
</TABLE>
STOCK PLANS
1996 EQUITY INCENTIVE PLAN
The Company's Amended and Restated 1996 Equity Incentive Plan (the "Equity
Incentive Plan"), which was originally approved by the Board of Directors and
the sole stockholder of the Company in February 1996 and amended and restated in
September 1996, provides for grants of incentive stock options within the
meaning of Section 422 of the Code, non-qualified stock options, and restricted
and nonrestricted shares to employees and other persons who are important to the
success of the Company. As of September 30, 1996, a total of 2,750,000 shares of
Common Stock have been reserved for issuance under the Equity Incentive Plan,
subject to adjustment for stock splits and similar events, of which 2,001,309
remained available for future grants. The exercise price of all incentive stock
options granted under the Equity Incentive Plan must be at least equal to the
fair market value of the shares of Common Stock on the date of grant. The
exercise price of all non-
30
<PAGE> 32
qualified options granted under the Equity Incentive Plan is determined by the
Compensation Committee of the Board of Directors. The Compensation Committee may
reduce the exercise price of any outstanding options. With respect to any
participant who owns stock possessing more than 10% of the voting power of all
classes of stock of the Company, the exercise price of any incentive stock
option granted must equal at least 110% of the fair market value on the grant
date and the maximum term of the option must not exceed five years. The term of
all other options granted under the Equity Incentive Plan may not exceed 10
years. Unless terminated sooner, the Equity Incentive Plan will terminate in
February 2006. The Board of Directors has authority to amend or terminate the
Equity Incentive Plan, provided no such action may impair the rights of the
holder of any outstanding options without the written consent of such holder.
1996 EMPLOYEE STOCK PURCHASE PLAN
The Company's 1996 Employee Stock Purchase Plan (the "Stock Purchase
Plan"), which was approved by the Board of Directors and by the sole stockholder
of the Company in September 1996, is intended to qualify under Section 423 of
the Code. A total of 200,000 shares of Common Stock has been reserved for
issuance under the Stock Purchase Plan. Purchases under the Stock Purchase Plan
will occur at the end of each option period. The first option period will
commence on the date of this Prospectus and will end on June 30, 1997.
Thereafter, each option period will be successive six-month purchase periods.
Employees are eligible to participate if they are regularly employed by the
Company for at least 30 hours per week.
The Stock Purchase Plan permits eligible employees to purchase Common Stock
through payroll deductions that may not exceed 10% of an employee's base
compensation, including commissions, bonuses, and overtime, at a price equal to
85% of the fair market value of the Common Stock at the beginning or the end of
a purchase period, whichever is lower. Unless terminated sooner, the Stock
Purchase Plan will terminate 10 years from its effective date. The Board of
Directors has authority to amend or terminate the Stock Purchase Plan, provided
no such action may adversely affect the rights of any participant.
1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Director Option Plan was approved by the Board of Directors and by the
sole stockholder of the Company in September 1996. Pursuant to the Director
Option Plan, non-employee directors who have agreed to serve as a director of
the Company have each received, on the date that the Company first filed a
registration statement under the Securities Act covering the Common Stock, an
option to purchase 6,000 shares of the Company's Common Stock at an exercise
price of $13.00. Such options will vest in three equal installments commencing
on the date of completion of the initial public offering of the Common Stock and
on the first and second anniversaries of such date. Each non-employee director
elected thereafter shall be awarded an option to purchase 6,000 shares of Common
Stock at an exercise price equal to the fair market value of the Common Stock
upon his or her election as director, which will vest in three equal
installments commencing on the date of grant and on the first and second
anniversary of the date of grant. Each non-employee director will also receive
an option to purchase 4,000 shares of Common Stock at an exercise price equal to
the fair market value of the Common Stock each year immediately following the
Company's annual stockholders meeting, which will vest in three equal
installments on the first, second, and third anniversaries of the date of grant.
The Compensation Committee also has the authority under the Director Option Plan
to grant options to non-employee directors in such amounts and in such terms not
inconsistent with the Director Option Plan as it shall determine at the time of
grant. All such options will be granted at fair market value. Each option will
be non-transferable except upon death and will expire 10 years after the date of
grant. A total of 150,000 shares of Common Stock has been reserved for issuance
under the Director Option Plan, 126,000 of which remain available for future
grants.
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<PAGE> 33
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, Mr. Colony was responsible for compensation decisions,
although he consulted as to such decisions with an outside compensation
consultant. Following this offering the Company will have a Compensation
Committee consisting of Messrs. Galford and Welles, neither of whom is an
employee of the Company.
REGISTRATION RIGHTS AND NON-COMPETITION AGREEMENT
The Company and Mr. Colony have entered into a registration rights and
non-competition agreement (the "Registration Rights and Non-Competition
Agreement") which provides that if Mr. Colony's employment with the Company is
terminated he will not compete with the Company for the one-year period after
the date of such termination. The Registration Rights and Non-Competition
Agreement also provides Mr. Colony with certain registration rights with respect
to his Common Stock, described under "Description of Capital Stock".
CERTAIN TRANSACTIONS
The Company and Mr. Colony intend to enter into an indemnification
agreement relating to their respective income tax liabilities. Mr. Colony will
continue to be liable for personal income taxes on the Company's income for all
periods prior to the time the Company ceases to be an S corporation, while the
Company will be liable for all income taxes subsequent to the time it ceases to
be an S corporation. The agreement generally provides that the Company will
indemnify Mr. Colony for any increase in his taxes (including interest and
penalties) resulting from adjustments initiated by taxing authorities and from
payments to him under the agreement, and Mr. Colony will pay to the Company an
amount equal to any decrease in his tax liability resulting from adjustments
initiated by taxing authorities.
32
<PAGE> 34
PRINCIPAL STOCKHOLDERS
<TABLE>
The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding Common Stock as of September 30, 1996 by
(i) each person or entity who is known by the Company to beneficially own 5% or
more of the Company's voting capital stock, (ii) each of the executive officers
named in the Summary Compensation Table, (iii) each of the Company's directors
(including persons who have consented to be directors), and (iv) all of the
Company's directors and executive officers as a group.
<CAPTION>
NUMBER OF
SHARES OF
COMMON PERCENTAGE BENEFICIALLY
STOCK OWNED(1)
BENEFICIALLY -----------------------------------
NAME OF BENEFICIAL OWNER OWNED(1) BEFORE OFFERING AFTER OFFERING
- ------------------------ ------------ --------------- --------------
<S> <C> <C> <C>
George F. Colony.................................. 6,000,000 100% 74%
William M. Bluestein, Ph.D.(2).................... 14,727 * *
Paul D. Callahan(2)............................... 6,927 * *
Jon D. Schwartz(2)................................ 8,182 * *
Stuart D. Woodring(2)............................. 14,727 * *
Robert M. Galford(2).............................. 2,000 * *
George R. Hornig(2)............................... 2,000 * *
Christopher W. Mines(2)........................... 2,000 * *
Michael H. Welles(2).............................. 2,000 * *
Directors and executive officers
as a group (13 persons)(2)...................... 6,083,927 100% 75%
<FN>
- ---------------
* Less than 1%.
(1) Assumes that the Underwriters' over-allotment option is not exercised.
(2) Reflects shares issuable upon exercise of options which vest upon the
completion of this offering. If options to purchase shares that are not
immediately exercisable are included, the number of shares of Common Stock
beneficially owned by Messrs. Bluestein, Callahan, Schwartz, and Woodring
would be 70,926, 45,994, 70,019, and 69,699, respectively.
</TABLE>
33
<PAGE> 35
DESCRIPTION OF CAPITAL STOCK
The following summary describes the Certificate of Incorporation of the
Company, as restated in its entirety immediately prior to the consummation of
this offering.
GENERAL
The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, par value $.01 per share, and 500,000 shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock"). As of September 30,
1996, there were 6,000,000 shares of Common Stock outstanding, held of record by
one stockholder, and no shares of Preferred Stock outstanding.
COMMON STOCK
As of September 30, 1996, there were 6,000,000 shares of Common Stock
outstanding, all of which were held by Mr. Colony. Each holder of Common Stock
is entitled to one vote per share for the election of directors and for all
other matters to be voted on by the Company's stockholders. Subject to
preferences that may be applicable to any outstanding series of Preferred Stock,
the holders of Common Stock are entitled to share ratably in such dividends, if
any, as may be declared from time to time by the Board of Directors, from funds
legally available therefore. See "Dividend Policy". Upon liquidation or
dissolution of the Company, subject to preferences that may be applicable to any
then outstanding Preferred Stock, the holders of Common Stock are entitled to
receive in all assets available for distribution to stockholders. There are no
preemptive or other subscription rights, conversion rights, or redemption or
sinking fund provisions with respect to shares of Common Stock. All of the
outstanding shares of Common Stock are fully paid and nonassessable.
PREFERRED STOCK
The Company's Restated Certificate of Incorporation (the "Certificate")
provides that the Company may, by vote of its Board of Directors, designate the
numbers, relative rights, preferences, and limitations of one or more series of
Preferred Stock and issue the securities so designated. Such provisions may
discourage or preclude certain transactions, whether or not beneficial to
stockholders, and could discourage certain types of tactics that involve an
actual or threatened acquisition or change of control of the Company. This
provision does not prevent stockholders from obtaining injunctive or other
relief against the directors, nor does it shield directors from liability under
federal or state securities laws.
The Company has no current intention to issue any of its unissued,
authorized shares of Preferred Stock. However, the issuance of any shares of
Preferred Stock in the future could adversely affect the rights of the holders
of Common Stock.
REGISTRATION RIGHTS
The Company and Mr. Colony have entered into a Registration Rights and
Non-Competition Agreement, which provides that in the event the Company proposes
to file a registration statement under the Securities Act with respect to an
offering by the Company for its own account or the account of another person, or
both, Mr. Colony shall be entitled to include shares held by him (the
"Registrable Shares") in such a registration, subject to the right of the
managing underwriter of any such offering to exclude some or all of such
Registrable Shares from such registration if and to the extent the inclusion of
the shares would adversely affect the marketing of the shares to be sold by the
Company. The agreement also provides that, at any time following the closing of
an initial public offering of Common Stock, Mr. Colony may require the Company
to register under the Securities Act shares having a fair market value of at
least $5.0 million, except that the Company is not required to effect such
registration more than twice or at certain times described in the agreement. The
34
<PAGE> 36
agreement also provides that the Company will pay all expenses incurred in
connection with such registration.
DELAWARE LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS
Section 203 of the General Corporation Law of Delaware prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder", other than an "interested stockholder" who is an
"interested stockholder" at the time the corporation becomes subject to Section
203, for a period of three years after the date of the transaction in which the
person became an interested stockholder, unless the business combination is
approved in a prescribed manner. A "business combination" includes mergers,
asset sales, and other transactions resulting in a financial benefit to the
interested stockholder. Subject to certain exceptions, an "interested
stockholder" is a person who, together with affiliates and associates, owns, or
within three years did own, 15% or more of the corporation's voting stock. The
Certificate provides that the Company will not be subject to the provisions of
Section 203.
The Certificate and Bylaws provide for the division of the Board of
Directors into three classes as nearly equal in size as possible with staggered
three-year terms. See "Management". In addition, the Certificate of
Incorporation and Bylaws provide that directors may be removed only for cause by
the affirmative vote of the holders of two-thirds of the shares of capital stock
of the Company entitled to vote generally in the election of directors. Under
the Certificate and Bylaws, any vacancy on the Board of Directors, however
occurring, including a vacancy resulting from an enlargement of the Board, may
only be filled by vote of a majority of the directors then in office. The
classification of the Board of Directors and the limitations on the removal of
directors and filling of vacancies could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
acquiring, control of the Company.
The Certificate and Bylaws also provide that any action required or
permitted to be taken by the stockholders of the Company at an annual meeting or
special meeting of stockholders may only be taken if it is properly brought
before such meeting and may not be taken by written action in lieu of a meeting.
The Certificate and Bylaws further provide that special meetings of the
stockholders may only be called by the Chairman of the Board of Directors, the
Chief Executive Officer, or, if none, the President of the Company or by the
Board of Directors. Under the Company's Bylaws, in order for any matter to be
considered "properly brought" before a meeting, a stockholder must comply with
certain requirements regarding advance notice to the Company. The foregoing
provisions could have the effect of delaying until the next stockholders'
meeting stockholder actions which are favored by the holders of a majority of
the outstanding voting securities of the Company. These provisions may also
discourage another person or entity from making a tender offer for the Common
Stock, because such person or entity, even if it acquired a majority of the
outstanding voting securities of the Company, would be able to take action as a
stockholder (such as electing new directors or approving a merger) only at a
duly called stockholders' meeting, and not by written consent.
The General Corporation Law of Delaware provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's Certificate of Incorporation or Bylaws, unless
a corporation's Certificate of Incorporation or Bylaws, as the case may be,
require a greater percentage. The Company's Certificate and the Bylaws require
the affirmative vote of the holders of at least 75% of the shares of capital
stock of the Company issued and outstanding and entitled to vote generally for
directors to amend, alter or repeal the By-Laws or to adopt new by-laws.
The Certificate contains certain provisions permitted under the General
Corporation Law of Delaware relating to the liability of directors. The
provisions eliminate a director's liability to the Company or its stockholders
for monetary damages for a breach of fiduciary duty, except to the extent that
exculpation from liability is not permitted under the General Corporation Law of
Delaware as in effect at the time the liability is determined. The Certificate
also contains provisions obligating
35
<PAGE> 37
the Company to indemnify its officers and directors to the fullest extent
permitted by the General Corporation Law of Delaware. The Company believes that
these provisions will assist the Company in attracting and retaining qualified
individuals to serve as directors.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is The First National
Bank of Boston, Boston, Massachusetts.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have approximately
8,000,000 shares of Common Stock outstanding. Of these shares, the 2,000,000
shares sold in the offering will be freely tradeable without restriction or
further registration under the Securities Act, except for any shares purchased
by an "affiliate" of the Company, as that term is defined in Rule 144 under the
Securities Act (an "Affiliate"). Any shares purchased in the offering by an
Affiliate of the Company may not be resold except pursuant to an effective
registration statement filed by the Company or an applicable exemption from
registration, including the exemption under Rule 144. The remaining 6,000,000
shares will be subject to a 180-day lock-up agreement. After the 180-day period,
these shares will be eligible for sale subject to compliance with Rule 144 under
the Securities Act.
In general, a person (or persons whose shares are aggregated for purposes
of such rule) effecting sales under Rule 144 is entitled to sell, within any
three-month period, a number of such securities that does not exceed the greater
of 1% of the then outstanding shares of the Company's Common Stock
(approximately 80,000 shares immediately after the offering) or the average
weekly trading volume in the Company's Common Stock on the Nasdaq National
Market or reported through the automated quotation system of a registered
securities association during the four calendar weeks preceding such sale. Sales
under Rule 144 are also subject to certain restrictions on the manner of sale,
notice requirements, and the availability of current public information about
the Company. The Company, Mr. Colony, who prior to the completion of this
offering is the sole stockholder of the Company, and directors, certain
executive officers and employees of the Company who hold options to purchase
582,945 shares of Common Stock, have agreed not to offer or sell or otherwise
dispose of any Common Stock with certain limited exceptions until the expiration
of 180 days following the date of this Prospectus without the prior written
consent of the Representatives of the Underwriters. See "Underwriting".
No precise prediction can be made as to the effect, if any, that market
sales of shares or the availability of shares for sale will have on the market
price of the Common Stock prevailing from time to time. The Company is unable to
estimate the number of shares that may be sold in the public market pursuant to
Rule 144, since this will depend on the market price of Common Stock, the
personal circumstances of the sellers, and other factors. Nevertheless, sales or
anticipated sales of significant amounts of the Common Stock of the Company in
the public market could adversely affect the market price of the Company's
Common Stock.
In addition, from time to time after the expiration of the 180-day lock-up
period, Mr. Colony may sell shares of the Company's Common Stock pursuant to a
registration statement filed in the future by the Company pursuant to the
Registration Rights and Non-Competition Agreement between the Company and Mr.
Colony. See "Description of Capital Stock -- Registration Rights".
As of September 30, 1996, options to purchase a total of 772,691 shares of
Common Stock were outstanding, of which options to purchase 157,376 shares will
become exercisable upon completion of this offering. Of the total shares
issuable pursuant to such options 106,595 shares are subject to 180-day lock-up
agreements with the representatives of the Underwriters.
The Company intends to file a registration statement on Form S-8 under the
Securities Act covering 200,000 shares of Common Stock reserved for issuance
under the Stock Purchase Plan upon consummation of this offering, although
shares will not be issuable under the plan until June
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<PAGE> 38
30, 1997. In addition, the Company intends to file registration statements on
Form S-8 covering 2,900,000 shares of Common Stock reserved for issuance under
the Equity Incentive Plan and the Director Option Plan. See "Management -- Stock
Plans". Such registration statements are expected to be filed 90 days after the
date of this Prospectus and will automatically become effective upon filing.
Accordingly, shares issued pursuant to such registration statements will,
subject to Rule 144 volume limitations applicable to Affiliates, be available
for sale in the open market. As of September 30, 1996, options to purchase
772,691 shares were granted and outstanding. Of the total shares issuable
pursuant to such options, 582,945 shares are subject to the lock-up agreements
discussed above.
VALIDITY OF SHARES
The validity of the shares of Common Stock offered by the Company hereby
will be passed upon for the Company by Ropes & Gray, Boston, Massachusetts.
Certain legal matters in connection with this offering will be passed upon for
the Underwriters by Hale and Dorr, Boston, Massachusetts.
EXPERTS
The Financial Statements of the Company and the Financial Statement
Schedule included in this Prospectus and elsewhere in the Registration Statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports thereto, and are included herein in reliance upon the
authority of such firm as experts in giving said reports.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto, certain parts of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is
hereby made to the Registration Statement, including exhibits, schedules, and
reports filed therewith. Statements made in this Prospectus as to the contents
of any contract, agreement, or other document referred to above are necessarily
incomplete. With respect to each such contract, agreement, or other document
filed as an exhibit to the Registration Statement reference is hereby made to
the exhibit for a more complete description of the matter involved, and each
statement shall be deemed qualified in its entirety by such reference. The
Registration Statement, including exhibits and schedules thereto, may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices at Seven World Trade Center, Thirteenth Floor,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and copies may be obtained at the prescribed
rates from the Public Reference Section of the Commission at its principal
office in Washington, D.C. In addition, material that the Company files
electronically with the Commission is available at the Commission's Web site,
http://www.sec.gov, which contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the
Commission.
37
<PAGE> 39
FORRESTER RESEARCH, INC.
<TABLE>
INDEX TO FINANCIAL STATEMENTS
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.............................................. F-2
Balance Sheets as of December 31, 1994 and 1995 and September 30, 1996 ............... F-3
Statements of Income for the years ended December 31, 1993, 1994, and 1995 and the
nine months ended September 30, 1995 and 1996 ...................................... F-4
Statements of Stockholder's Equity for the years ended December 31, 1993, 1994, and
1995 and the nine months ended September 30, 1996 .................................. F-5
Statements of Cash Flows for the years ended December 31, 1993, 1994, and 1995 and the
nine months ended September 30, 1995 and 1996 ...................................... F-6
Notes to Financial Statements......................................................... F-7
</TABLE>
F-1
<PAGE> 40
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholder of
Forrester Research, Inc.:
We have audited the accompanying balance sheets of Forrester Research, Inc.
(a Delaware corporation) as of December 31, 1994 and 1995 and September 30, 1996
and the related statements of income, stockholder's equity, and cash flows for
each of the three years in the period ended December 31, 1995 and for the
nine-month period ended September 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Forrester Research, Inc. as
of December 31, 1994 and 1995 and September 30, 1996 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 and for the nine-month period ended September 30, 1996, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 22, 1996
F-2
<PAGE> 41
<TABLE>
FORRESTER RESEARCH, INC.
BALANCE SHEETS
<CAPTION>
DECEMBER 31, PRO FORMA
------------------------- SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996
---- ---- ------------- ------------
(UNAUDITED)
(NOTE 1)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............ $2,778,725 $ 997,567 $ 1,265,827 --
Marketable securities................ 1,985,355 6,520,481 9,581,843 7,247,670
Accounts receivable, net of allowance
for doubtful accounts of
approximately $88,000, $120,000,
and $179,000 in 1994, 1995, and
1996, respectively................. 2,872,238 5,882,980 8,661,589 8,661,589
Deferred commissions................. 495,215 891,967 1,227,470 1,227,470
Prepaid expenses and other current
assets............................. 60,960 76,542 437,874 437,874
---------- ----------- ----------- -----------
Total current assets............ 8,192,493 14,369,537 21,174,603 17,574,603
---------- ----------- ----------- -----------
Property and equipment, at cost:
Machinery and equipment.............. 707,388 965,435 1,356,776 1,356,776
Furniture and fixtures............... 191,510 288,532 471,462 471,462
Computer software.................... 35,409 206,324 303,032 303,032
Vehicles............................. 30,098 30,098 30,098 30,098
Leasehold improvements............... 38,580 59,262 581,575 581,575
---------- ----------- ----------- -----------
Total property and equipment.... 1,002,985 1,549,651 2,742,943 2,742,943
Less-Accumulated depreciation and
amortization....................... 411,855 493,376 595,017 595,017
---------- ----------- --------------- -------------
Property and equipment, net..... 591,130 1,056,275 2,147,926 2,147,926
---------- ----------- ----------- -----------
Total assets.................... $8,783,623 $15,425,812 $23,322,529 $19,722,529
========== =========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable..................... $ 41,394 $ 377,344 $ 689,765 $ 689,765
Customer deposits.................... -- 97,329 123,004 123,004
Accrued expenses..................... 525,052 1,544,815 2,005,576 2,005,576
Deferred revenue..................... 7,097,574 11,359,101 16,262,166 16,262,166
Deferred income tax liability........ -- -- -- 500,000
---------- ----------- ----------- -----------
Total current liabilities....... 7,664,020 13,378,589 19,080,511 19,580,511
---------- ----------- ----------- -----------
Commitments (Note 4)
Stockholder's equity:
Common stock, $.01 par value
Authorized -- 7,000,000 shares
Issued and outstanding-- 6,000,000
shares.......................... 60,000 60,000 60,000 60,000
Retained earnings.................... 1,059,603 1,965,527 4,177,886 77,886
Unrealized gain on marketable
securities......................... -- 21,696 4,132 4,132
---------- ----------- ----------- -----------
Total stockholder's equity...... 1,119,603 2,047,223 4,242,018 142,018
---------- ----------- ----------- -----------
Total liabilities and
stockholder's equity.......... $8,783,623 $15,425,812 $23,322,529 $19,722,529
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 42
<TABLE>
FORRESTER RESEARCH, INC.
STATEMENTS OF INCOME
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------- ------------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Core research............... $4,690,572 $6,363,335 $10,149,514 $7,036,129 $12,585,114
Advisory services and
other..................... 2,608,545 3,335,467 4,439,298 2,079,503 3,788,876
---------- ---------- ----------- ---------- -----------
Total revenues......... 7,299,117 9,698,802 14,588,812 9,115,632 16,373,990
---------- ---------- ----------- ---------- -----------
Operating expenses:
Cost of services and
fulfillment............... 2,406,311 3,423,844 5,486,346 3,549,669 5,911,226
Selling and marketing....... 2,693,442 3,592,853 5,643,196 3,729,649 6,234,373
General and
administrative............ 1,147,589 1,045,340 1,388,868 887,037 1,714,523
Depreciation and
amortization.............. 105,120 150,067 286,705 207,347 359,531
---------- ---------- ----------- ---------- -----------
Total operating
expenses............. 6,352,462 8,212,104 12,805,115 8,373,702 14,219,653
---------- ---------- ----------- ---------- -----------
Income from
operations........... 946,655 1,486,698 1,783,697 741,930 2,154,337
Interest income, net............. 79,343 125,115 339,569 266,252 353,915
---------- ---------- ----------- ---------- -----------
Income before state
income tax
provision............ 1,025,998 1,611,813 2,123,266 1,008,182 2,508,252
State income tax provision....... 46,000 73,000 96,000 46,000 126,000
---------- ---------- ----------- ---------- -----------
Net income............. 979,998 1,538,813 2,027,266 962,182 2,382,252
Pro forma income tax adjustment
(Note 3)....................... 365,000 583,000 739,000 364,000 918,000
---------- ---------- ----------- ---------- -----------
Pro forma net income............. $ 614,998 $ 955,813 $ 1,288,266 $ 598,182 $ 1,464,252
========== ========== ============ ========== ============
Pro forma net income per common
share.......................... $ 0.10 $ 0.15 $ 0.20 $ 0.10 $ 0.23
========== ========== ============ ========== ============
Weighted average common shares
outstanding.................... 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449
========== ========== ============ ========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 43
<TABLE>
FORRESTER RESEARCH, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
<CAPTION>
COMMON STOCK UNREALIZED
---------------------- GAIN ON TOTAL
NUMBER RETAINED MARKETABLE STOCKHOLDER'S
OF SHARES $.01 PAR EARNINGS SECURITIES EQUITY
--------- -------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992......................... 6,000,000 $60,000 $ 635,792 $ -- $ 695,792
Distributions.................................. -- -- (345,000) -- (345,000)
Net income..................................... -- -- 979,998 -- 979,998
--------- ------- ---------- -------- -----------
Balance, December 31, 1993......................... 6,000,000 60,000 1,270,790 -- 1,330,790
Distributions.................................. -- -- (1,750,000) -- (1,750,000)
Net income..................................... -- -- 1,538,813 -- 1,538,813
--------- ------- ---------- -------- -----------
Balance, December 31, 1994......................... 6,000,000 60,000 1,059,603 -- 1,119,603
Distributions.................................. -- -- (1,121,342) -- (1,121,342)
Net income..................................... -- -- 2,027,266 -- 2,027,266
Unrealized gain on available-for-sale
securities................................... -- -- -- 21,696 21,696
--------- ------- ---------- -------- -----------
Balance, December 31, 1995......................... 6,000,000 60,000 1,965,527 21,696 2,047,223
Distributions.................................. -- -- (169,893) -- (169,893)
Net income..................................... -- -- 2,382,252 -- 2,382,252
Unrealized loss on available-for-sale
securities................................... -- -- -- (17,564) (17,564)
--------- ------- ---------- -------- -----------
Balance, September 30, 1996........................ 6,000,000 60,000 4,177,886 4,132 4,242,018
Pro forma adjustments (Note 1)(Unaudited):
Distribution of undistributed earnings to S
corporation stockholder...................... -- -- (3,600,000) -- (3,600,000)
Recognition of deferred income tax liability
upon termination of S corporation status
(Note 3)..................................... -- -- (500,000) -- (500,000)
--------- ------- ---------- -------- -----------
Pro forma balance, September 30, 1996
(Unaudited)...................................... 6,000,000 60,000 $ 77,886 $ 4,132 $ 142,018
========= ======= ========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 44
<TABLE>
FORRESTER RESEARCH, INC.
STATEMENTS OF CASH FLOWS
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------- -------------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income.................................... $ 979,998 $ 1,538,813 $ 2,027,266 $ 962,182 $ 2,382,252
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization............ 105,120 150,067 286,705 207,347 359,531
Accretion of discount on marketable
securities............................. -- (24,935) (60,377) (73,869) (149,269)
Unrealized gain (loss) on
available-for-sale securities.......... -- -- 21,696 -- (17,564)
Changes in assets and liabilities --
Accounts receivable.................. (478,464) (455,965) (3,010,742) (2,316,995) (2,778,609)
Deferred commissions................. (61,610) (158,244) (396,752) (306,174) (335,503)
Prepaid expenses and other current
assets............................. (5,766) 5,113 (15,582) (137,583) (362,222)
Accounts payable..................... (15,618) 28,748 335,950 201,794 312,421
Customer deposits.................... -- -- 97,329 244,539 25,675
Accrued expenses..................... (99,021) 330,913 1,019,763 814,784 460,761
Deferred revenue..................... 883,018 2,268,001 4,261,527 3,242,935 4,903,065
---------- ----------- ----------- ----------- -----------
Net cash provided by operating
activities.................... 1,307,657 3,682,511 4,566,783 2,838,960 4,800,538
---------- ----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchases of property and
equipment................................... (236,314) (304,736) (751,850) (684,348) (1,450,292)
Purchase of marketable securities............. -- (1,960,420) (9,171,880) (6,928,235) (6,874,001)
Proceeds from sales and maturities
of marketable securities.................... -- -- 4,697,131 3,000,000 3,961,908
---------- ----------- ----------- ----------- -----------
Net cash used in investing
activities.................... (236,314) (2,265,156) (5,226,599) (4,612,583) (4,362,385)
---------- ----------- ----------- ----------- -----------
Cash flows used in financing activities:
Distributions to stockholder.................. (345,000) (1,750,000) (1,121,342) (348,655) (169,893)
---------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents..................................... 726,343 (332,645) (1,781,158) (2,122,278) 268,260
Cash and cash equivalents, beginning of period.... 2,385,027 3,111,370 2,778,725 2,778,725 997,567
---------- ----------- ----------- ----------- -----------
Cash and cash equivalents, end of period.......... $3,111,370 $ 2,778,725 $ 997,567 $ 656,447 $ 1,265,827
========== =========== =========== =========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for income
taxes....................................... $ 42,320 $ 18,961 $ 44,893 $ 41,393 $ 84,669
========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 45
FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(1) OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Forrester Research, Inc. (the Company) creates, publishes, and sells
technology research reports and provides advisory services and technology
conferences. The Company is incorporated under the laws of the State of Delaware
and grants credit to its customers with locations throughout the world.
The preparation of the accompanying financial statements required the use
of certain estimates by management in determining the Company's assets,
liabilities, revenues, and expenses. Actual results could differ from these
estimates.
The accompanying financial statements reflect the application of certain
significant accounting policies as described below and elsewhere in the
accompanying financial statements and notes.
Interim Financial Statements
The accompanying statements of income and cash flows for the nine months
ended September 30, 1995 are unaudited, but in the opinion of management,
include all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of results for these interim periods. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted, although the Company believes that the disclosures included are
adequate to make the information presented not misleading. The results of
operations for the nine months ended September 30, 1996 are not necessarily
indicative of the results to be expected for the entire fiscal year.
Pro Forma Presentation (Unaudited)
The unaudited pro forma balance sheet, as of September 30, 1996, reflects
(i) the distribution of previously undistributed S corporation earnings taxed or
taxable to the Company's sole stockholder of approximately $3.6 million based on
earnings through September 30, 1996, but does not include the amount to be
distributed for S corporation earnings from October 1, 1996 through the
termination of the Company's S corporation election upon completion of this
offering, and (ii) termination of the Company's S corporation election and the
recognition of a deferred income tax liability of approximately $500,000 as of
September 30, 1996 (see Note 3).
Upon completion of an initial public offering, the Company will no longer
be treated as an S corporation and will be subject to federal and state income
taxes at prevailing corporate rates. Accordingly, the accompanying statements of
income include a pro forma income tax adjustment reflecting the Company's income
tax expense assuming the Company had been a C corporation (see Note 3).
Revenue Recognition
The Company invoices its core research, advisory, and other services when
an order is received. The gross amount is recorded as accounts receivable and
deferred revenue when the client is legally obligated to pay the invoice. Core
research, which represents monthly distribution of research reports, is recorded
as revenue ratably over the term of the agreement as the research is delivered.
Advisory and other services are recognized during the period in which the
services are performed.
F-7
<PAGE> 46
FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
Deferred Commissions
Commissions incurred in acquiring new or renewal contracts are deferred and
amortized as the related revenue is recognized. The Company evaluates the
recoverability of deferred commissions at each balance sheet date based on the
status of the related contract.
Pro Forma Net Income Per Common Share
Pro forma net income per common share is computed by dividing pro forma net
income (reflecting the pro forma income tax adjustment discussed in Note 3) by
the weighted average number of shares of common stock and common stock
equivalents outstanding during the period, adjusted for the reincorporation
discussed in Note 6. Common stock equivalents consist of common stock issuable
on the exercise of outstanding options. In accordance with Securities and
Exchange Commission requirements, all common stock and common stock equivalents
issued during the 12 months preceding the proposed date of the Registration
Statement relating to an initial public offering have been included in the net
income per share computation as if they were outstanding for all periods using
the Treasury Stock method.
Depreciation
<TABLE>
The Company provides for depreciation, computed using the straight-line
method, by charges to income in amounts that allocate the costs of these assets
over their estimated useful lives as follows:
<CAPTION>
ESTIMATED
USEFUL LIFE
-----------
<S> <C>
Machinery and equipment.................................... 3 to 5 Years
Furniture and fixtures..................................... 7 Years
Computer software.......................................... 3 Years
Vehicles................................................... 5 Years
Leasehold improvements..................................... Life of lease
</TABLE>
Product Development
All costs incurred in the development of new products and services are
expensed as incurred.
Concentration of Credit Risk
Statement of Financial Accounting Standards (SFAS) No. 105, Disclosure of
Information About Financial Instruments with Off-Balance-Sheet Risk and
Financial Instruments with Concentrations of Credit Risk, requires disclosure of
any significant off-balance-sheet and credit risk concentrations. Financial
instruments, which potentially subject the Company to concentrations of credit
risk, are principally cash and cash equivalents, marketable securities, and
accounts receivable. The Company places its investments in highly rated
institutions. No single customer accounted for greater than 10% of revenues in
any of the periods presented.
Financial Instruments
SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
requires disclosure about fair value of financial instruments. Financial
instruments consist of cash equivalents, marketable securities, and accounts
receivable. The estimated fair value of these financial instruments approximates
their carrying value and, except for accounts receivable, is based primarily on
market quotes. The Company's cash equivalents and marketable securities are
generally obligations of the federal
F-8
<PAGE> 47
FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
government or municipal issuers. The Company, by policy, limits the amount of
credit exposure to any one financial institution.
(2) CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES
The Company considers all short-term, highly liquid investments with
original maturities of 90 days or less to be cash equivalents.
The Company accounts for investments in accordance with SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Under SFAS No.
115, securities that the Company has the positive intent and ability to hold to
maturity are reported at amortized cost and are classified as held-to-maturity.
At December 31, 1994 and 1995 and September 30, 1996, held-to-maturity
securities consisted of investments in U.S. treasury bills. These investments
are classified as current as they mature within one year. Securities purchased
to be held for indefinite periods of time and not intended at the time of
purchase to be held until maturity are classified as available-for-sale
securities. At December 31, 1995 and September 30, 1996, these securities
consisted of investments in federal and state government obligations, which were
recorded at fair market value, with any unrealized gains and losses reported as
a separate component of stockholder's equity. These investments were classified
as marketable securities at December 31, 1995 and September 30, 1996 as it is
the Company's intent to hold these securities less than one year. There were no
available-for-sale securities as of December 31, 1994. Securities that are
bought and held principally for the purpose of selling in the near term are
classified as trading securities. There were no trading securities as of
December 31, 1994 and 1995 and September 30, 1996.
<TABLE>
At December 31, 1994 and 1995 and September 30, 1996 marketable securities
consisted of the following:
<CAPTION>
DECEMBER 31,
-------------------------- SEPTEMBER 30,
1994 1995 1996
---- ---- -------------
<S> <C> <C> <C>
U.S. treasury bills..................... $1,985,355 $3,876,100 $2,951,200
U.S. treasury notes..................... -- 613,456 2,491,410
Federal agency obligations.............. -- 309,255 847,945
State and municipal bonds............... -- 1,721,670 3,291,288
---------- ---------- ----------
$1,985,355 $6,520,481 $9,581,843
========== ========== ==========
</TABLE>
<TABLE>
The following table summarizes the maturity periods of marketable
securities as of September 30, 1996:
<CAPTION>
LESS THAN 1 1 TO 5 5 TO 10
YEAR YEARS YEARS TOTAL
----------- ------ ------- -----
<S> <C> <C> <C> <C>
U.S. treasury bills............... $2,951,200 $ -- $ -- $2,951,200
U.S. treasury notes............... -- 1,994,300 497,110 2,491,410
Federal agency obligations........ -- 443,201 404,744 847,945
State and municipal bonds......... -- 1,725,199 1,566,089 3,291,288
---------- ---------- ---------- ----------
$2,951,200 $4,162,700 $2,467,943 $9,581,843
========== ========== ========== ==========
</TABLE>
Gross realized gains and losses on sales of marketable securities for the
years ended December 31, 1994 and 1995 and the nine months ended September 30,
1995 and 1996, which were calculated based on specific identification, were not
material.
F-9
<PAGE> 48
FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(3) INCOME TAXES
The Company has elected to be taxed, since January 1, 1987, under
Subchapter S of the Internal Revenue Code of 1986, as amended, whereby the sole
stockholder is liable for individual federal and state income taxes on the
Company's taxable income. Payments to the stockholder to cover the tax
liabilities as a result of the Company's taxable income are recorded as
distributions in the accompanying statements of stockholder's equity.
The Company's state income tax provision for each of the periods presented
consists of corporate-level state income taxes that are levied against the
Company as an S corporation.
The Company accounts for income taxes, including pro forma computations, in
accordance with SFAS No. 109, Accounting for Income Taxes. SFAS No. 109
prescribes an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the financial statement carrying amounts and the
tax bases of assets and liabilities. Deferred state taxes as of December 31,
1994 and 1995 and September 30, 1996 were immaterial.
Upon completion of an initial public offering, the Company will terminate
its S corporation election and will be subject to federal and state income taxes
at prevailing corporate rates. Accordingly, the accompanying statements of
income for each of the three years in the period ended December 31, 1995 and the
nine months ended September 30, 1995 and 1996 include a pro forma income tax
adjustment for the income taxes that would have been recorded if the Company had
been a C corporation for the periods presented.
<TABLE>
The pro forma income tax adjustment is computed as follows:
<CAPTION>
YEAR ENDED NINE MONTHS
DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------- -----------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Pro Forma provision for income
taxes:
Current-
Federal..................... $229,000 $482,000 $592,000 $262,000 $ 740,000
State....................... 71,000 149,000 183,000 81,000 229,000
-------- -------- -------- -------- ----------
300,000 631,000 775,000 343,000 969,000
-------- -------- -------- -------- ----------
Deferred-
Federal..................... 85,000 19,000 46,000 51,000 57,000
State....................... 26,000 6,000 14,000 16,000 18,000
-------- -------- -------- -------- ----------
111,000 25,000 60,000 67,000 75,000
-------- -------- -------- -------- ----------
Total required provision
for income taxes....... 411,000 656,000 835,000 410,000 1,044,000
Less: Actual State income tax
provision........................ 46,000 73,000 96,000 46,000 126,000
-------- -------- -------- -------- ----------
Pro forma income tax adjustment.... $365,000 $583,000 $739,000 $364,000 $ 918,000
======== ======== ======== ======== ==========
</TABLE>
The pro forma tax provisions do not materially differ from the Company's
combined federal and state statutory rate of 40%.
Upon termination of the S corporation election, deferred income taxes will
be recorded for the tax effect of cumulative temporary differences between the
financial reporting and tax bases of certain assets and liabilities, primarily
deferred commissions, accrued expenses, and cumulative tax depreciation in
excess of financial reporting allowances. If the S corporation election had been
F-10
<PAGE> 49
FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
terminated at September 30, 1996, these temporary differences would have
resulted in a net deferred income tax liability of approximately $500,000. The
Company will record this tax liability as a one-time increase in the tax
provision in the period in which the S corporation election is terminated. As
this is a nonrecurring charge it has been excluded from the pro forma income tax
adjustment.
(4) COMMITMENTS
The Company leases its office space under an operating lease. The Company
will also make lease payments on its previous facility through January 1997. The
excess of the payments on its old facility over anticipated sublease income has
been accrued as of December 31, 1995 and September 30, 1996.
<TABLE>
At September 30, 1996, approximate future minimum rentals due for the three
months ended December 31, 1996 and the years ending December 31 thereafter are
as follows:
<CAPTION>
PERIOD ENDING AMOUNT
------------- ------
<S> <C>
1996...................................................... $ 313,000
1997...................................................... 1,011,000
1998...................................................... 1,001,000
1999...................................................... 1,007,000
2000...................................................... 1,012,000
Thereafter................................................ 262,000
----------
Total minimum lease payments...................... $4,606,000
==========
</TABLE>
Rent expense was approximately $257,000, $369,000, $663,000, $482,000, and
$509,000 for the years ended December 31, 1993, 1994, and 1995 and the nine
months ended September 30, 1995 and 1996, respectively.
In connection with its facility leases, the Company has outstanding letters
of credit of approximately $73,000.
(5) 401(k) PLAN
The Company has a 401(k) savings plan covering substantially all eligible
employees. The Plan is a qualified defined contribution plan in accordance with
Section 401(k) of the Internal Revenue Code and is funded entirely through
employee contributions.
(6) STOCKHOLDER'S EQUITY
(a) Reincorporation
In February 1996, in connection with the Company's reincorporation in
Delaware, the Company increased the number of authorized shares of common stock
to 7,000,000, and each outstanding share of common stock was exchanged for 6,000
shares of common stock in the reincorporated entity. The accompanying financial
statements and notes have been retroactively adjusted to reflect this
transaction. The Board of Directors has voted to amend the Company's Certificate
of Incorporation to increase the number of authorized shares of common stock to
25,000,000 immediately prior to completion of an initial public offering.
(b) Stock Option Plans
In February 1996, the Company adopted the Forrester Research, Inc. 1996
Equity Incentive Plan, which was amended in September 1996 (the Plan). The Plan
provides for the issuance of
F-11
<PAGE> 50
FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
incentive stock options (ISOs) and nonqualified stock options (NSOs) to purchase
up to 2,750,000 shares of common stock. Under the terms of the Plan, ISOs may
not be granted at less than fair market value on the date of grant (and in no
event less than par value). ISO grants to holders of 10% of the combined voting
power of all classes of Company stock must be granted at an exercise price of
not less than 110% of the fair market value at the date of grant. The fair
market value of $5.50 per share for the options granted in February 1996 was
based on an independent appraisal. Options vest ratably over three years and
expire after 10 years. Options granted under the Plan immediately vest upon
certain events, as defined.
<TABLE>
Stock option activity since the Plan's inception to September 30, 1996 was
as follows:
<CAPTION>
NUMBER EXERCISE PRICE
OF SHARES PER SHARE
---------- --------------
<S> <C> <C>
Granted.................................... 780,046 $5.50-12.00
Canceled................................... 31,355 5.50
------- -----------
Outstanding at September 30, 1996.......... 748,691 $5.50-12.00
======= ===========
Exercisable at September 30, 1996.......... -- $ --
======= ===========
</TABLE>
Upon consummation of the proposed offering, 149,376 ISOs will vest
immediately. As of September 30, 1996, options available for future grant under
the Plan are 2,001,309.
In September 1996, the Company adopted the 1996 Stock Option Plan for
Non-Employee Directors (the Director's Plan) which provides for the issuance of
options to purchase up to 150,000 shares of common stock. The Director's Plan
provides that the four non-employee directors who have agreed to serve as
directors of the Company will receive, on the date that the Company first files
a registration statement under the Securities Act of 1933 covering the common
stock, an option to purchase 6,000 shares of the Company's common stock at an
exercise price of $13.00 per share. Such options will vest in three equal
installments commencing on the date of completion of the initial public offering
of the common stock and on the first and second anniversaries of such date. Each
non-employee director elected thereafter shall be awarded options to purchase
6,000 shares of common stock, at an exercise price equal to the fair market
value of the common stock, upon his or her election as a director, which will
vest in three equal installments commencing on the date of grant and on the
first and second anniversaries of the date of grant. Each non-employee director
will also receive an option to purchase 4,000 shares of common stock, at an
exercise price equal to the fair market value of the common stock, each year
immediately following the Company's annual stockholders meeting, which will vest
in three equal installments on the first, second and third anniversaries of the
date of grant. The Compensation Committee of the Board of Directors also has the
authority under the Director's Plan to grant options to non-employee directors
in such amounts and on such terms as set forth in the Director's Plan as it
shall determine at the time of grant.
F-12
<PAGE> 51
FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
<TABLE>
In October 1995, the Financial Accounting Standards Board (FASB) issued
SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123 requires the
measurement of the fair value of stock options or warrants to be included in the
statement of income or disclosed in the notes to financial statements. The
Company has determined that it will continue to account for stock-based
compensation for employees under Accounting Principles Board Opinion No. 25 and
elect the disclosure-only alternative under SFAS No. 123. The Company has
computed the pro forma disclosures required under SFAS No. 123 for options
granted in 1996 using the Black-Scholes option pricing model prescribed by SFAS
No. 123. The weighted average assumptions used for 1996 are:
<S> <C>
Risk free interest rate...................................... 6.21%
Expected dividend yield...................................... --
Expected lives............................................... 7.5 Years
Expected volatility.......................................... 0%-64%
</TABLE>
<TABLE>
The total value of options granted during the nine months ended September
30, 1996 was computed as approximately $2,614,000. Of this amount approximately
$252,000 would be charged to operations for the nine months ended September 30,
1996 for currently vested options and the remaining amount, approximately
$2,362,000, would be amortized over the related vesting periods. There were no
options or warrants issued prior to 1996. The pro forma effect of SFAS No. 123
for the period ended September 30, 1996 is as follows:
<CAPTION>
AS REPORTED PRO FORMA
----------- ---------
<S> <C> <C>
Pro forma net income........................ $1,464,252 $1,313,252
========== ==========
Pro forma net income per share.............. $ 0.23 $ 0.21
========== ==========
</TABLE>
Upon completion of the initial public offering of common stock 157,376
options will vest resulting in a pro forma after tax charge of approximately
$177,000.
(c) Employee Stock Purchase Plan
In September 1996, the Company adopted the 1996 Employee Stock Purchase
Plan (the Stock Purchase Plan) that provides for the issuance of up to 200,000
shares of common stock. The Stock Purchase Plan is administered by the Board of
Directors. With certain limited exceptions, all employees of the Company
employed more than 30 hours per week, including officers and directors who are
employees, are eligible to participate in the Stock Purchase Plan. The Stock
Purchase Plan consists of semiannual offerings on January 1 and July 1 of each
year. The first offering under the Stock Purchase Plan will commence on the
first day the Company's common stock is publicly traded on the Nasdaq National
Market and will end on June 30, 1997. Each subsequent offering under the Stock
Purchase Plan will be six months in length and will commence on each successive
July 1 and January 1. During each offering under the Plan, the maximum number of
shares of common stock that may be purchased by an employee is determined on the
first day of the offering period under a formula whereby an amount equal to that
percentage of the employee's regular salary that he or she has elected to have
withheld is divided by 85% of the market value of a share of common stock on the
first day of the offering period. An employee may elect to have up to a maximum
of 10% deducted from his or her regular salary for the purpose of purchasing
shares under the Stock Purchase Plan. The price at which the employee's shares
are purchased is the lower of (a) 85% of the closing price of the common stock
on the day that the offering commences, or (b) 85% of the closing price of the
common stock on the day that the offering terminates. No shares have been
purchased under the Stock Purchase Plan.
F-13
<PAGE> 52
FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(d) Preferred Stock
In September 1996, the Board of Directors voted to amend the Company's
Certificate of Incorporation to permit the issuance of up to 500,000 shares of
$.01 par value preferred stock. The Board of Directors has full authority to
issue this stock and to fix the voting powers, preferences, rights,
qualifications, limitations or restrictions thereof, including dividend rights,
conversion rights, redemption privileges and liquidation preferences and the
number of shares constituting any series or designation of such series.
(7) NET SALES BY GEOGRAPHIC DESTINATION
<TABLE>
Net sales by geographic destination and as a percentage of total sales are
as follows:
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
United States......... $6,180,336 $8,103,708 $12,025,529 $7,432,945 $12,967,440
Europe................ 357,365 629,208 1,066,314 670,622 1,766,041
Other................. 761,416 965,886 1,496,969 1,012,065 1,640,509
---------- ---------- ----------- ---------- -----------
$7,299,117 $9,698,802 $14,588,812 $9,115,632 $16,373,990
========== ========== =========== ========== ===========
United States......... 85% 84% 82% 82% 79%
Europe................ 5 6 8 7 11
Other................. 10 10 10 11 10
---------- ---------- ----------- ---------- -----------
100% 100% 100% 100% 100%
========== ========== =========== ========== ===========
</TABLE>
(8) ACCRUED EXPENSES
<TABLE>
Accrued expenses consist of the following:
<CAPTION>
DECEMBER 31,
---------------------- SEPTEMBER 30,
1994 1995 1996
---- ---- -------------
<S> <C> <C> <C>
Payroll and related.............. $ 23,709 $ 802,673 $1,102,668
Other............................ 501,343 742,142 902,908
-------- ---------- ----------
$525,052 $1,544,815 $2,005,576
======== ========== ==========
</TABLE>
F-14
<PAGE> 53
UNDERWRITING
<TABLE>
Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the Underwriters named below, and each of
such Underwriters, for whom Goldman, Sachs & Co. and Robertson, Stephens &
Company LLC are acting as representatives, has severally agreed to purchase from
the Company, the respective number of shares of Common Stock set forth opposite
its name below:
<CAPTION>
NUMBER OF SHARES
UNDERWRITER OF COMMON STOCK
----------- ----------------
<S> <C>
Goldman, Sachs & Co..................................
Robertson, Stephens & Company LLC....................
---------
Total........................................... 2,000,000
=========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.
The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and in part to certain securities dealers at such
price less a concession of $ per share. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share to
certain brokers and dealers. After the shares of Common Stock are released for
sale to the public, the offering price and other selling terms may from time to
time be varied by the representatives.
The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate of 300,000
additional shares of Common Stock to cover over-allotments, if any. If the
Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 2,000,000 shares of Common
Stock offered.
The Company, Mr. Colony, who prior to the completion of the offering is the
sole stockholder of the Company, and directors, certain executive officers, and
other employees of the Company who hold options to purchase 582,945 shares of
Common Stock have agreed that with certain limited exceptions, during the period
beginning from the date of this Prospectus and continuing to and including the
date 180 days after the date of this Prospectus, they will not offer, sell,
contract to sell, or otherwise dispose of any securities of the Company (other
than pursuant to employee stock option plans existing, or on the conversion or
exchange of convertible or exchangeable securities outstanding, on the date of
this Prospectus) which are substantially similar to the shares of Common Stock
or which are convertible into or exchangeable for securities which are
substantially similar to the shares of Common Stock without the prior written
consent of the representatives, except for the shares of Common Stock offered in
connection with this offering.
The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed 5% of the total number of shares of Common
Stock offered by them.
Prior to this offering, there has been no public market for the shares. The
initial public offering price will be negotiated among the Company and the
representatives. Among the factors to be considered in determining the initial
public offering price of the Common Stock, in addition to prevailing market
conditions, will be the Company's historical performance, estimates of the
business potential and earnings prospects of the Company, an assessment of the
Company's management, and the consideration of the above factors in relation to
market valuation of companies in related businesses.
U-1
<PAGE> 54
The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "FORR".
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act.
U-2
<PAGE> 55
[Corporate Logo]
<PAGE> 56
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS 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. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS 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 THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
--------------------------
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 5
Use of Proceeds...................... 9
Termination of S Corporation
Election and S Corporation
Distribution....................... 9
Dividend Policy...................... 9
Dilution............................. 10
Capitalization....................... 11
Selected Financial Data.............. 12
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 14
Business............................. 20
Management........................... 28
Certain Transactions................. 32
Principal Stockholders............... 33
Description of Capital Stock......... 34
Shares Eligible for Future Sale...... 36
Validity of Shares................... 37
Experts.............................. 37
Additional Information............... 37
Index to Financial Statements........ F-1
Underwriting......................... U-1
</TABLE>
THROUGH AND INCLUDING , 1996 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2,000,000 SHARES
FORRESTER RESEARCH, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
----------------------
[LOGO]
----------------------
GOLDMAN, SACHS & CO.
ROBERTSON, STEPHENS & COMPANY
REPRESENTATIVES OF THE UNDERWRITERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 57
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than the
underwriting discounts and commissions. All amounts shown are estimates, except
the Securities and Exchange Commission registration fee and the National
Association of Securities Dealers, Inc. filing fee.
<CAPTION>
ITEM AMOUNT
---- ------
<S> <C>
SEC Registration Fee..................................................... $ 11,897
NASD Filing Fee.......................................................... $ 3,950
Nasdaq National Market Listing Fee....................................... $ 46,000
Blue Sky Fees and Expenses............................................... $ 15,000
Transfer Agent and Registrar Fees........................................ $ 12,500
Accounting Fees and Expenses............................................. $250,000
Legal Fees and Expenses.................................................. $275,000
Printing Expenses........................................................ $125,000
Premium for D&O Insurance................................................ $175,000
Miscellaneous............................................................ $ 35,653
--------
Total............................................................... $950,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Certificate of Incorporation provides that the
Registrant's Directors shall not be liable to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director, except to the
extent that the exculpation from liabilities is not permitted under the Delaware
General Corporation Law as in effect at the time such liability is determined.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In the three years preceding the filing of this Registration Statement, the
Registrant has not sold any securities which were not registered under the
Securities Act of 1933, as amended (the "Securities Act").
The Registrant has awarded to employees and directors options to purchase
782,691 shares of Common Stock, none of which have become exercisable prior to
the date hereof. The Registrant also issued 6,000,000 shares of Common Stock to
its sole stockholder in February 1996 in connection with its reincorporation
merger in Delaware. Such transaction was not a "sale" because it fit within the
exemption under Rule 145(a)(2) under the Securities Act.
II-1
<PAGE> 58
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
The following is a list of exhibits filed as a part of this registration
statement.
(a) Exhibits
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1 Form of Underwriting Agreement among the Underwriters named therein and the Com-
pany.
3.1 Restated Certificate of Incorporation of the Company.
3.2 Bylaws of the Company, as amended.
4 Specimen Certificate for shares of Common Stock, $.01 par value, of the Company.
5 Opinion of Ropes & Gray.
10.1* Form of Registration Rights and Non-Competition Agreement.
10.2 Form of Tax Indemnification Agreement.
10.3* 1996 Amended and Restated Equity Incentive Plan.
10.4* 1996 Employee Stock Purchase Plan.
10.5* 1996 Director Option Plan for Non-Employee Directors.
10.6* Lease dated May 1, 1995 between Advent Realty Limited Partnership II and the
Company for the premises located at 1033 Massachusetts Avenue, Cambridge,
Massachusetts (the "Cambridge Lease").
10.7 First Amendment to the Cambridge Lease, dated August 28, 1995.
10.8 Second Amendment to the Cambridge Lease, dated May 21, 1996.
11 Statement Regarding Computation of Pro Forma Per Share Earnings.
23.1 Consent of Ropes & Gray (contained in its opinion filed as Exhibit 5 hereto).
23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney (included in the signature page of this Registration Statement).
99.1 Consent of Robert M. Galford.
99.2 Consent of George R. Hornig.
99.3 Consent of Christopher W. Mines.
99.4 Consent of Michael H. Welles.
<FN>
- ---------------
* Previously filed.
(b) Financial Statement Schedules
</TABLE>
Schedule II -- Valuation and Qualifying Accounts
All other schedules for which provision is made in Regulations S-X of the
Securities and Exchange Commission are not required under the related
instructions or are inapplicable and, therefore, have been omitted.
ITEM 17. UNDERTAKINGS
(a) 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 provisions described under "Item 14 --
Indemnification of Directors and Officers" above, 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 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
II-2
<PAGE> 59
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.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus 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.
The undersigned Company hereby undertakes to provide at the closing of this
offering to the Underwriters specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
II-3
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Cambridge, Commonwealth of Massachusetts, on this 5th day of November, 1996.
FORRESTER RESEARCH, INC.
By: /s/ GEORGE F. COLONY
----------------------------------
Name: George F. Colony
Chairman of the Board, President,
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Forrester Research, Inc., hereby severally constitute George F.
Colony, David H. Ramsdell, Susan M. Whirty, and Ann L. Milner, and each of them
singly, our true and lawful attorneys with full power to them, and each of them
singly, to sign for us and in our names in the capacities indicated below,
Amendment No. 1 the Registration Statement filed herewith and any and all
amendments to said Registration Statement (or any registration statement for the
same offering that is to be effective upon filing pursuant to Rule 462(b) under
the Securities Act of 1933), and generally to do all such things in our names
and in our capacities as officers and directors to enable Forrester Research,
Inc. to comply with the provisions of the Securities Act of 1933, and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any of
them, to said Amendment No. 1 Registration Statement and any and all amendments
thereto.
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-1 has been signed by the following
persons in the capacities and on the dates indicated.
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE F. COLONY Chief Executive Officer, November 5, 1996
- ---------------------------------------- President and Director
George F. Colony (Principal Executive
Officer)
/s/ DAVID H. RAMSDELL Director, Finance (Principal November 5, 1996
- ---------------------------------------- Financial Officer and
David H. Ramsdell Accounting Officer)
</TABLE>
II-4
<PAGE> 61
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To the Stockholder of
Forrester Research, Inc.:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Forrester Research, Inc. included in this
registration statement and have issued our report thereon dated October 22,
1996. Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 16(b) is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects, the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 22, 1996
S-1
<PAGE> 62
SCHEDULE II
FORRESTER RESEARCH, INC.
<TABLE>
VALUATION AND QUALIFYING ACCOUNTS
<CAPTION>
ADDITIONS
----------------------------------------------------
BALANCE, CHARGED BALANCE,
ALLOWANCE FOR BEGINNING TO COST OR DEDUCTIONS END OF
DOUBTFUL ACCOUNTS OF PERIOD EXPENSE (WRITEOFFS) PERIOD
----------------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fiscal 1993............................... $ -- $158,624 $(125,290) $ 33,334
Fiscal 1994............................... 33,334 108,644 (53,519) 88,459
Fiscal 1995............................... 88,459 62,245 (30,784) 119,920
Nine months ended September 30, 1996...... 119,920 110,000 (50,735) 179,185
</TABLE>
<PAGE> 63
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<S> <C> <C>
1 Form of Underwriting Agreement among the Underwriters named therein and the
Company.
3.1 Restated Certificate of Incorporation of the Company.
3.2 Bylaws of the Company, as amended.
4 Specimen Certificate for shares of Common Stock, $.01 par value, of the
Company.
5 Opinion of Ropes & Gray.
10.1* Form of Registration Rights and Non-Competition Agreement.
10.2 Form of Tax Indemnification Agreement.
10.3* 1996 Amended and Restated Equity Incentive Plan.
10.4* 1996 Employee Stock Purchase Plan.
10.5* 1996 Director Option Plan for Non-Employee Directors.
10.6* Lease dated May 1, 1995 between Advent Realty Limited Partnership II and the
Company for the premises located at 1033 Massachusetts Avenue, Cambridge,
Massachusetts (the "Cambridge Lease").
10.7 First Amendment to the Cambridge Lease, dated August 28, 1995.
10.8 Second Amendment to the Cambridge Lease, dated May 21, 1996.
11 Statement Regarding Computation of Pro Forma Per Share Earnings.
23.1 Consent of Ropes & Gray (contained in its opinion filed as Exhibit 5
hereto).
23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney (included in the signature page of this Registration
Statement).
99.1 Consent of Robert M. Galford.
99.2 Consent of George R. Hornig.
99.3 Consent of Christopher W. Mines.
99.4 Consent of Michael H. Welles.
<FN>
- ---------------
* Previously filed.
</TABLE>
<PAGE> 1
EXHIBIT 1
Forrester Research, Inc.
Common Stock
---------------
UNDERWRITING AGREEMENT
----------------------
November __, 1996
Goldman, Sachs & Co.,
Robertson, Stephens & Company LLC
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
Forrester Research, Inc. a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
2,000,000 shares and, at the election of the Underwriters, up to 300,000
additional shares of Common Stock, $.01 par value ("Stock") of the Company. The
aggregate of 2,000,000 shares to be sold by the Company is herein called the
"Firm Shares" and the aggregate of 300,000 additional shares to be sold by the
Company is herein called the "Optional Shares". The Firm Shares and the Optional
Shares that the Underwriters elect to purchase pursuant to Section 2 hereof are
herein collectively called the "Shares".
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-12761) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered
-1-
<PAGE> 2
to you, and, excluding exhibits thereto, to you for each of the other
Underwriters, have been declared effective by the Commission in such form;
other than a registration statement, if any, increasing the size of the
offering (the "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which
became effective upon filing, no other document with respect to such
registration statement has heretofore been filed with the Commission; and
no stop order suspending the effectiveness of the Initial Registration
Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement and the Rule
462(b) Registration Statement, if any, or filed with the Commission
pursuant to Rule 424(a) of the rules and regulations of the Commission
under the Act is hereinafter called a "Preliminary Prospectus"; the various
parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to
be part of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; and such
final prospectus, in the form first filed pursuant to Rule 424(b) under the
Act, is hereinafter called the "Prospectus");
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein;
(iii) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and the
Registration Statement and any further amendments or supplements to the
Registration Statement do not and will not, as of the applicable effective
date contain an untrue statement of a material fact or omit to state a
material fact required to be stated
-2-
<PAGE> 3
therein or necessary to make the statements therein not misleading and the
Prospectus and any further supplements to the Prospectus do not and will
not, as of the applicable filing date, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through Goldman, Sachs & Co. expressly for use therein;
(iv) The Company has not sustained since the date of the latest
audited financial statements included in the Prospectus any material loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or long-term
debt of the Company or any material adverse change, or any development that
is reasonably likely to result in a material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company, otherwise
than as set forth or contemplated in the Prospectus;
(v) The Company has good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned
by it, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with the use made
and proposed to be made of such property by the Company; and any real
property and buildings held under lease by the Company are held by it under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company;
(vi) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; the
Company has no subsidiaries or equity interest (including a right to
acquire any equity interest) in any other entity;
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<PAGE> 4
(vii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and conform to the description of the Stock contained in
the Prospectus;
(viii) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued and fully paid and non-assessable and will conform
to the description of the Stock contained in the Prospectus;
(ix) The issue and sale of the Shares to be sold by the Company and
the compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the property or assets
of the Company is subject or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the
Company or any of its properties, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or By-Laws
of the Company; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters;
(x) The Company is not (i) in violation of its Certificate of
Incorporation or By-laws or (ii) in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of its
properties may be bound other than, in the case of clause (ii), defaults
that, individually or in the aggregate, will not have a material adverse
effect upon the business, assets, financial position, stockholder's equity
or results of operations of the Company;
(xi) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the caption "Underwriting",
accurately summarize in all material respects the provisions of the laws
and documents referred to therein;
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<PAGE> 5
(xii) There are no legal or governmental proceedings pending to which
the Company is a party or of which any property of the Company is the
subject which, if determined adversely to the Company, would individually
or in the aggregate have a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results of
operations of the Company and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(xiii) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" subject to
registration as such under the Investment Company Act of 1940, as amended
(the "Investment Company Act") or an entity controlled by an "investment
company" as defined in the Investment Company Act;
(xiv) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(xv) To the best of the Company's knowledge, Arthur Andersen LLP,
who have certified certain financial statements of the Company, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder; and
(xvi) The Company owns, is licensed to use or otherwise possesses
adequate rights to use, all material patents, patent rights, inventions,
trade secrets, know-how, trademarks, service marks, trade names and
copyrights described or referred to in the Prospectus as owned or used by
it or which are necessary for the conduct of its businesses as described in
the Prospectus; and the Company has not received any written or, to the
best of the Company's knowledge, oral notice of, and has no knowledge of,
any infringement of or conflict with asserted rights of others with respect
to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase price per
share of $.............., the number of Firm Shares (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying the aggregate number
of Shares to be sold by the Company as set forth in Schedule II hereto by a
fraction, the numerator of which is the aggregate number of Firm Shares to be
purchased by such Underwriter as set forth opposite the name of such Underwriter
in Schedule I hereto and the denominator of which is the aggregate number of
Firm Shares to be purchased by all of the Underwriters from the Company
hereunder and (b) in the event and to the extent that the Underwriters shall
exercise the election to purchase Optional Shares as provided below, the Company
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<PAGE> 6
agrees, to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company at the purchase
price per share set forth in clause (a) of this Section 2, that portion of the
number of Optional Shares as to which such election shall have been exercised
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying such number of Optional Shares by a fraction the numerator of which
is the maximum number of Optional Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I hereto
and the denominator of which is the maximum number of Optional Shares that all
of the Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 300,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company shall be delivered by or on behalf of the Company to
Goldman, Sachs & Co., for the account of such Underwriter, against payment by or
on behalf of such Underwriter of the purchase price therefor by wire transfer or
certified or official bank check or checks, payable to the order of the Company
in federal (same day) funds. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of Goldman, Sachs & Co., 85 Broad Street, New York, New
York 10004 (the "Designated Office"). The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., New York time, on
............., 1996 or such other time and date as Goldman, Sachs & Co. and the
Company may agree upon in writing, and, with respect to the Optional Shares,
9:30 a.m., New York time, on the date specified by Goldman, Sachs & Co. in the
written notice given by Goldman, Sachs & Co. of the Underwriters' election to
purchase such Optional Shares, or such other time and date as Goldman, Sachs &
Co. and the Company may agree upon in writing. Such time and date for delivery
of the Firm Shares is herein called the "First Time of Delivery", such time and
date for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called
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<PAGE> 7
the "Second Time of Delivery", and each such time and date for delivery is
herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 7(j) hereof, and the check or checks specified in subsection
(a) above, will be delivered at the offices of Ropes & Gray, One International
Place, Boston, Massachusetts 02109 (the "Closing Location"), and the Shares will
be delivered at the Designated Office, all at such Time of Delivery. A meeting
will be held at the Closing Location at 1:00 p.m., New York City time, on the
New York Business Day next preceding such Time of Delivery, at which meeting the
final drafts of the documents to be delivered pursuant to the preceding sentence
will be available for review by the parties hereto. For the purposes of this
Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus prior to the last Time of
Delivery unless after reasonable notice thereof you shall have approved such
amendment or supplement (such approval not to be unreasonably withheld or
delayed); to advise you, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish you with copies thereof; to advise you, promptly after it
receives notice thereof, of the issuance by the Commission of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Shares for offering and sale under the securities laws of
such jurisdictions in the United States as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as
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<PAGE> 8
may be necessary to complete the distribution of the Shares, provided that in
connection therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 12:00 noon, New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time, to furnish the
Underwriters with copies of the Prospectus in New York City in such quantities
as you may reasonably request, and, if the delivery of a prospectus is required
at any time prior to the expiration of nine months after the time of issue of
the Prospectus in connection with the offering or sale of the Shares and if at
such time any events shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
when such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary during such period to amend or supplement the Prospectus
in order to comply with the Act, to notify you and upon your request to prepare
and furnish without charge to each Underwriter and to any dealer in securities
as many copies as you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such statement
or omission or effect such compliance, and in case any Underwriter is required
to deliver a prospectus in connection with sales of any of the Shares at any
time nine months or more after the time of issue of the Prospectus, upon your
request but at the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule
158);
(e) During the period beginning from the date hereof and continuing to and
including the date 180 days after the date of the Prospectus, not to offer,
sell, contract to sell or otherwise dispose of, except as provided hereunder,
any securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee stock option
plans existing on the date of this Agreement), without your prior written
consent;
(f) To furnish to its stockholders within 90 days after the end of each
fiscal year an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, within 45 days
after the end of each of the first three quarters of
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<PAGE> 9
each fiscal year (beginning with the fiscal quarter ending after the effective
date of the Registration Statement), consolidated summary financial information
of the Company and its subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission); provided, however, that nothing
herein shall be deemed to require the Company to disclose information that in
its reasonable judgment is confidential;
(h) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National Market
System ("NASDAQ"); and
(j) To file with the Commission such reports on Form SR as may be required
by Rule 463 under the Act;
(k) If the Company elects to rely on Rule 462(b), the Company shall file a
Rule 462(b) Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 p.m., Washington, D.C. time, on the date of this Agreement, and
the Company shall at the time of filing either pay to the Commission the filing
fee for the Rule 462(b) Registration Statement or give irrevocable instructions
for the payment of such fee pursuant to Rule 111(b) under the Act; and
(l) Not to amend, modify, terminate, waive, or otherwise affect the rights
or obligations of any party under, any provision of the Tax Indemnification
Agreement (as defined in Section 7(k) below) without the prior written consent
of the Representatives.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to
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<PAGE> 10
the Underwriters and dealers; (ii) the cost of printing or producing any
Agreement among Underwriters, this Agreement, the Blue Sky Memorandum, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Shares; (iii)
all expenses in connection with the qualification of the Shares for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky survey; (iv) all fees and
expenses in connection with listing the Shares on NASDAQ; (v) the filing fees
incident to, and the fees and disbursements of counsel for the Underwriters in
connection with, securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Shares; (vi) the cost
of preparing stock certificates; (vii) the cost and charges of any transfer
agent or registrar and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
stock transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by the
rules and regulations under the Act and in accordance with Section 5(a) hereof;
if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement, no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Hale and Dorr, counsel for the Underwriters, shall have furnished to
you such opinion or opinions (a draft of each such written opinion is attached
as Annex II(a) hereto), dated such Time of Delivery, with respect to the matters
covered in paragraphs (i) (first sentence only), (ii), (iv), (viii) and (ix) of
subsection (c) below as well as such other related matters as you may reasonably
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
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<PAGE> 11
(c) Ropes & Gray, counsel for the Company, shall have furnished to you
their written opinion (a draft of such opinion is attached as Annex II(b)
hereto), dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware with corporate
power and authority to own, lease and operate its properties and conduct
its business as described in the Prospectus. The Company is duly qualified
to do business and is in good standing in each jurisdiction within the
United States in which it owns or leases real property or maintains an
office.
(ii) The authorized, issued and outstanding capitalization of the
Company as of [date] 1996, is as set forth under the caption
"Capitalization" in the Prospectus. All of the issued and outstanding
shares of Stock have been duly authorized and validly issued and are fully
paid and nonassessable; the Shares have been duly authorized and, when
issued and delivered in accordance with this Agreement, will be validly
issued, fully paid and nonassessable and will conform in all material
respects to the description of the Stock contained in the Prospectus.
(iii) To the knowledge of such counsel, and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending to
which the Company is a party or of which any property of the Company is the
subject.
(iv) This Agreement has been duly authorized, executed and delivered
by the Company.
(v) The issuance and sale by the Company of the Shares and the
performance by the Company of its obligations under this Agreement does not
and will not (i) violate the Certificate of Incorporation or by-laws of the
Company, (ii) breach or result in a default under any agreement, indenture
or other instrument filed as an exhibit to the Registration Statement to
which the Company is a party or by which it is bound, or to which any of
its properties is subject, or (iii) violate any existing Delaware
corporate, Massachusetts or federal law, rule, administrative regulation or
any decree known to such counsel of any court or any governmental agency or
body having jurisdiction over the Company or any of its properties, except
that such counsel need express no opinion as to state securities or "Blue
Sky" laws or as to compliance with the antifraud provisions of federal and
state securities laws.
(vi) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the
United States or The Commonwealth of Massachusetts or the Secretary of
State of the State of Delaware is required for the issuance and sale of the
Shares or the consummation by the Company of the transactions contemplated
by this Agreement, except the registration under the Act of the Shares.
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<PAGE> 12
(vii) The Company is not subject to regulation as an "investment
company" under the Investment Company Act of 1940, as amended.
(viii) The statements set forth in the Prospectus under the caption
"Description of Capital Stock," insofar as they purport to constitute a
summary of the terms of the Stock and under the caption "Underwriting",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, accurately summarize in all material
respects the provisions of the laws and documents referred to therein; and
(ix) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such Time
of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Act and the
rules and regulations thereunder; although they do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, except for those
referred to in the opinion in subsection (xi) of this Section 7(c), nothing
came to such counsel's attention that caused them to believe that, as of
its effective date, the Registration Statement or any further amendment
thereto made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to which such
counsel need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that,
as of its date, the Prospectus or any further amendment or supplement
thereto made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to which such
counsel need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or that, as of such Time of Delivery, either the
Registration Statement or the Prospectus or any further amendment or
supplement thereto made by the Company prior to such Time of Delivery
(other than the financial statements and related schedules therein, as to
which such counsel need express no opinion) contains an untrue statement of
a material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and they do not know of any amendment to the
Registration Statement required to be filed or of any contracts or other
documents of a character required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement or the Prospectus which are not filed or described as required.
(d) On the date of the Prospectus at a time prior to the execution of this
Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective
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<PAGE> 13
amendment to the Registration Statement filed subsequent to the date of this
Agreement and also at each Time of Delivery, Arthur Andersen LLP shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance reasonably satisfactory to you, to the effect set
forth in Annex I hereto (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex I(d) hereto and a draft of the
form of letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(e) hereto);
(e)(i) The Company shall not have sustained since the date of the latest
audited financial statements included in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus,
and (ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
long-term debt of the Company or any change, or any development that is
reasonably likely to result in a material adverse change, in or affecting the
business, assets, financial position, stockholders' equity or results of
operations of the Company, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is in the judgment of the Representatives so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus;
(f) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on the NASDAQ National Market; (ii)
a suspension or material limitation in trading in the Company's securities on
the NASDAQ National Market; (iii) a general moratorium on commercial banking
activities declared by either Federal or New York or Massachusetts State
authorities; or (iv) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war, if the effect of any such event specified in this Clause (iv) in the
judgment of the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated in the Prospectus;
(g) The Shares at the such Time of Delivery shall have been duly listed
for quotation on the NASDAQ National Market;
(h) The Company shall have obtained and delivered to the Underwriters
copies of an agreement from each person listed on Schedule III hereto to the
effect that during the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the Prospectus, such person
shall not offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder, any Stock, or any securities of the
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Company that are substantially similar to the Shares, including but not limited
to any securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially similar
securities (other than pursuant to employee stock option plans existing on the
date of this Agreement), without your prior written consent;
(i) The Company shall have furnished or caused to be furnished to you at
such Time of Delivery certificates of officers of the Company reasonably
satisfactory to you as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Delivery, as to the performance by
the Company of all of its obligations hereunder to be performed at or prior to
such Time of Delivery, and as to such other matters as you may reasonably
request, and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (e) of this
Section;
(j) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the New York Business
Day next succeeding the date of this Agreement; and
(k) The Company and George F. Colony shall have entered into a Tax
Indemnification Agreement in a form acceptable to the Underwriters and their
counsel (the "Tax Indemnification Agreement").
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Goldman, Sachs & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in
-14-
<PAGE> 15
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through Goldman, Sachs & Co. expressly for use therein; and will
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action or claim
as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions
-15-
<PAGE> 16
in respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company
-16-
<PAGE> 17
(including any person who, with his or her consent, is named in the Registration
Statement as about to become a director of the Company) and to each person, if
any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such Shares,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that they have so arranged
for the purchase of such Shares, you or the Company shall have the right to
postpone such Time of Delivery for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all of the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the
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<PAGE> 18
Company and the Underwriters as provided in Section 6 hereof and the indemnity
and contribution agreements in Section 8 hereof; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason any Shares are
not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but the Company shall then be
under no further liability to any Underwriter in respect of the Shares not so
delivered except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire or telex constituting such
Questionnaire, which address will be supplied to the Company by you on request.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Sections 8 and
10 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement.
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<PAGE> 19
No purchaser of any of the Shares from any Underwriter shall be deemed a
successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed and delivered by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts when so executed and delivered shall
together constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us seven counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters and the
Company. It is understood that your acceptance of this letter on behalf of each
of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination, upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
FORRESTER RESEARCH INC.
By:
---------------------------------------------
Name: George F. Colony
Title: President and Chief Executive Officer
Accepted as of the date hereof at
New York, NY:
Goldman, Sachs & Co.
Robertson, Stephens & Company LLC
By:
------------------------------
(Goldman, Sachs & Co.)
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<PAGE> 20
On behalf of each of the Underwriters
-20-
<PAGE> 21
<TABLE>
SCHEDULE I
<CAPTION>
Number of Optional Shares
Total Number of Firm to be Purchased if Maximum
Shares to be Purchased Option Exercised
<S> <C> <C>
Goldman, Sachs & Co.
Robertson, Stephens & Company LLC
--------- -------
Total 2,000,000 300,000
</TABLE>
-1-
<PAGE> 22
<TABLE>
SCHEDULE II
<CAPTION>
Number of Optional Shares
Total Number of Firm Shares to be Purchased if Maximum
to be Purchased Option Exercised
<S> <C> <C>
The Company.................................. 2,000,000 300,000
--------- -------
Total 2,000,000 300,000
</TABLE>
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<PAGE> 23
SCHEDULE III
Persons Subject to Lock-Up
--------------------------
George F. Colony
William M. Bluestein
Mary A. Modahl
Jon D. Schwartz
Stuart D. Woodring
John McCarthy
Susan M. Whirty
Paul D. Callahan
Ruth Habbe
Bobby Cameron
Don Depalma
David Goodtree
Stan Dolberg
Russ Maney
Robert M. Galford
George R. Hornig
Christopher W. Mines
Michael H. Welles
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<PAGE> 24
ANNEX I
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder; and they
have made a review in accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited consolidated
interim financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been separately furnished to the representatives of the
Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the
unaudited condensed consolidated financial statements do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the related published rules and regulations;
(iv) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
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<PAGE> 25
(v) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived any unaudited condensed
financial statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options which were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in the
consolidated long-term debt of the Company and its subsidiaries, or
any
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<PAGE> 26
decreases in consolidated net current assets or stockholders' equity
or other items specified by the Representatives, or any increases in
any items specified by the Representatives, in each case as compared
with amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for decreases or increases which
the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(vi) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(vi) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus, or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and have
found them to be in agreement.
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<PAGE> 1
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
FORRESTER RESEARCH, INC.
Forrester Research, Inc., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. The name of this corporation is Forrester Research, Inc. Forrester
Research, Inc. was originally incorporated under the same name, and the original
Certificate of Incorporation of this corporation was filed with the Secretary of
State of the State of Delaware on February 16, 1996.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Certificate of Incorporation
of this corporation.
3. The text of the Restated Certificate of Incorporation as heretofore
amended or supplemented is hereby restated and further amended to read in its
entirety as follows:
ARTICLE I
The name of this corporation is Forrester Research, Inc.
ARTICLE II
The registered office of this corporation in the State of Delaware is
located at 1013 Centre Road, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is Corporation Service Company.
ARTICLE III
The purpose of this corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
<PAGE> 2
ARTICLE IV
The total number of shares of all classes of stock which this corporation
shall have authority to issue is 25,500,000 shares, consisting of (i) 25,000,000
shares of Common Stock, $.01 par value per share ("Common Stock"), and (ii)
500,000 shares of Preferred Stock, $.01 par value per share ("Preferred Stock").
The following is a statement of the designations and the powers, privileges
and rights, and the qualifications, limitations or restrictions thereof in
respect of each class of capital stock of this corporation.
1. Common Stock.
------------
A. GENERAL. The voting, dividend and liquidation rights of the holders of
the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the board of directors
upon any issuance of the Preferred Stock of any series. The holders of the
Common Stock shall have no preemptive rights to subscribe for any shares of any
class of stock of this corporation whether now or hereafter authorized.
B. VOTING. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders. There shall be no cumulative
voting.
The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of this corporation
entitled to vote, irrespective of the provisions of Section 242(b)(2) of the
General Corporation Law of the State of Delaware.
C. DIVIDENDS. Dividends may be declared and paid on the Common Stock from
funds lawfully available therefor as and when determined by the board of
directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
D. LIQUIDATION. Upon the dissolution or liquidation of this corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of this corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.
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<PAGE> 3
2. Preferred Stock.
---------------
Preferred Stock may be issued from time to time in one or more series, each
of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
board of directors as hereinafter provided. Any shares of Preferred Stock which
may be redeemed, purchased or acquired by this corporation may be reissued
except as otherwise provided by law or this Certificate of Incorporation.
Different series of Preferred Stock shall not be construed to constitute
different classes of shares for the purposes of voting by classes unless
expressly provided in the resolution or resolutions providing for the issue of
such series adopted by the board of directors as hereinafter provided.
Authority is hereby expressly granted to the board of directors from time
to time to issue the Preferred Stock in one or more series, and in connection
with the creation of any such series, by resolution or resolutions providing for
the issue of the shares thereof, to determine and fix such voting powers, full
or limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation thereof, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be stated and expressed in such resolutions, all to the full extent now or
hereafter permitted by the General Corporation Law of the State of Delaware.
Without limiting the generality of the foregoing, the resolutions providing for
issuance of any series of Preferred Stock may provide that such series shall be
superior or rank equally or be junior to the Preferred Stock of any other series
to the extent permitted by law and this Certificate of Incorporation. Except as
otherwise provided in this Certificate of Incorporation, no vote of the holders
of the Preferred Stock or Common Stock shall be a prerequisite to the
designation or issuance of any shares of any series of the Preferred Stock
authorized by and complying with the conditions of this Certificate of
Incorporation, the right to have such vote being expressly waived by all present
and future holders of the capital stock of this corporation.
ARTICLE V
The name and mailing address of the incorporator is Denise M. Aucoin, Ropes
& Gray, One International Place, Boston, Massachusetts 02110-2624.
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<PAGE> 4
ARTICLE VI
The election of directors need not be by written ballot unless the by-laws
shall so require.
ARTICLE VII
In furtherance of and not in limitation of the powers conferred upon the
board of directors by law, the board of directors shall have power to make,
adopt, alter, amend and repeal from time to time by-laws of this corporation,
subject to the right of the stockholders entitled to vote with respect thereto
to alter and repeal by-laws made by the board of directors PROVIDED, HOWEVER,
that the By-Laws shall not be altered, amended or repealed by the stockholders
of this corporation except by the holders of not less than seventy-five percent
(75%) of the shares of capital stock of this corporation issued and outstanding
and entitled to vote generally in the election of directors.
ARTICLE VIII
A director of this corporation shall not be liable to this corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent that exculpation from liability is not permitted
under the General Corporation Law of the State of Delaware as in effect at the
time the liability is determined. No amendment to or repeal of this provision
shall apply to or have any effect on the liability or alleged liability of any
director of this corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.
ARTICLE IX
This corporation shall, to the maximum extent permitted from time to time
under the law of the State of Delaware, indemnify and upon request advance
expenses to any person who is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit, proceeding or claim,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was or has agreed to be a director or officer of this
corporation or while a director or officer is or was serving at the request of
this corporation as a director, officer, partner, trustee, employee or agent of
any corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans,
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<PAGE> 5
against expenses (including attorney's fees and expenses), judgments, fines,
penalties and amounts paid in settlement incurred (and not otherwise recovered)
in connection with the investigation, preparation to defend or defense of such
action, suit, proceeding or claim; PROVIDED, HOWEVER, that the foregoing shall
not require this corporation to indemnify or advance expenses to any person in
connection with any action, suit, proceeding, claim or counterclaim initiated by
or on behalf of such person. Such indemnification shall not be exclusive of
other indemnification rights arising under any by-law, agreement, vote of
directors or stockholders or otherwise and shall inure to the benefit of the
heirs and legal representatives of such person. Any person seeking
indemnification under this Article IX shall be deemed to have met the standard
of conduct required for such indemnification unless the contrary shall be
established. Any repeal or modification of the foregoing provisions of this
Article IX shall not adversely affect any right or protection of a director or
officer of this corporation with respect to any acts or omissions of such
director or officer occurring prior to such repeal or modification.
ARTICLE X
Until the consummation of an initial public offering of the Common Stock
under the Securities Act of 1933, as amended (the "IPO"), the corporation shall
have one or more directors, the number of directors to be determined from time
to time by vote of a majority of the directors then in office. Immediately
following the consummation of the IPO, the following provisions shall apply:
1. NUMBER OF DIRECTORS. The number of directors of this corporation shall
not be less than three. The exact number of directors within the limitations
specified in the preceding sentence shall be fixed from time to time by, or in
the manner provided in, this corporation's by-laws.
2. CLASSES OF DIRECTORS. The board of directors shall be and is divided
into three classes: Class I, Class II and Class III. No one class shall have
more than one director more than any other class. If a fraction is contained in
the quotient arrived at by dividing the designated number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class II, and if such fraction is two-thirds, one of the extra directors shall
be a member of Class II and one of the extra directors shall be a member of
Class III, unless otherwise provided from time to time by resolution adopted by
the board of directors.
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3. ELECTION OF DIRECTORS. Elections of directors need not be by written
ballot except as and to the extent provided in the by-laws of this corporation.
4. TERMS OF OFFICE. Except as provided in Section 7 of this Article XI,
each director shall serve for a term ending on the date of the third annual
meeting of the stockholders following the annual meeting at which such director
was elected; PROVIDED, that each initial director in Class I shall serve for a
term ending on the date of the annual meeting of the stockholders in 1999; each
initial director in Class II shall serve for a term ending on the date of the
annual meeting of the stockholders in 1998; and each initial director in Class
III shall serve for a term ending on the date of the annual meeting of the
stockholders in 1997; and PROVIDED FURTHER, that the term of each director shall
be subject to the election and qualification of his successor and to his earlier
death, resignation or removal.
5. ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF INCREASES OR
DECREASES IN THE NUMBER OF DIRECTORS. In the event of any increase or decrease
in the authorized number of directors, (i) each director then serving as such
shall nevertheless continue as a director of the class of which he is a member
and (ii) the newly created or eliminated directorships resulting from such
increase or decrease shall be apportioned by the board of directors among the
three classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent possible, consistent with the
foregoing rule, any newly created directorships shall be added to those classes
whose terms of office are to expire at the latest dates following such
allocation, and any newly eliminated directorships shall be subtracted from
those classes whose terms of offices are to expire at the earliest dates
following such allocation, unless otherwise provided from time to time by
resolution adopted by the board of directors.
6. REMOVAL. Directors of this corporation may be removed only for cause by
the affirmative vote of the holders of at least two-thirds of the shares of the
capital stock of this corporation issued and outstanding and entitled to vote
generally in the election of directors cast at a meeting of the stockholders
called for that purpose.
7. VACANCIES. Any vacancy in the board of directors, however occurring,
including a vacancy resulting from an enlargement of the board, shall be filled
only by a vote of a majority of the directors then in office, although less than
a quorum, or by a sole remaining director. A director elected to fill a vacancy
shall be elected to hold office until the next election of the class for which
such director shall have been chosen, subject to the election and qualification
of his successor and to his earlier death, resignation or removal.
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8. STOCKHOLDER NOMINATIONS AND INTRODUCTION OF BUSINESS, ETC. Advance
notice of stockholder nominations for election of directors and other business
to be brought by stockholders before either an annual or special meeting of
stockholders shall be given in the manner provided by the by-laws of this
corporation.
9. AMENDMENTS TO ARTICLE. Notwithstanding any other provisions of law, this
Certificate of Incorporation or the by-laws of this corporation, each as
amended, and notwithstanding the fact that a lesser percentage may be specified
by law, the affirmative vote of the holders of at least seventy-five percent
(75%) of the shares of capital stock of this corporation issued and outstanding
and entitled to vote generally in the election of directors shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Article X.
ARTICLE XI
The books of this corporation may (subject to any stationary requirements)
be kept outside the State of Delaware as may be designated by the board of
directors or in the by-laws of this corporation.
ARTICLE XII
At any time during which a class of capital stock of this corporation is
registered under Section 12 of the Securities Exchange Act of 1934 or any
similar successor statute, stockholders of this corporation may not take any
action by written consent in lieu of a meeting. Notwithstanding any other
provisions of law, this Certificate of Incorporation or the By-Laws of this
corporation, each as amended, and notwithstanding the fact that a lesser
percentage may be specified by law, the affirmative vote of the holders of at
least seventy-five percent (75%) of the shares of capital stock of this
corporation issued and outstanding and entitled to vote generally in the
election of directors shall be required to amend or repeal, or to adopt any
provision inconsistent with, this Article XII.
ARTICLE XIII
Special meetings of stockholders may be called at any time by only the
Chairman of the Board of Directors of this corporation, the Chief Executive
Officer (or if there is no Chief Executive Officer, the President) or the Board
of Directors of this corporation. Business transacted at any special meeting of
stockholders shall be limited to matters relating to the
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<PAGE> 8
purpose or purposes stated in the notice of meeting. Notwithstanding any other
provision of law, this Certificate of Incorporation or the By-Laws of this
corporation, each as amended, and notwithstanding the fact that a lesser
percentage may be specified by law, the affirmative vote of the holders of at
least seventy-five percent (75%) of the shares of capital stock of this
corporation issued and outstanding and entitled to vote generally in the
election of directors shall be required to amend or repeal, or to adopt any
provision inconsistent with, this Article XIII.
ARTICLE XIV
This corporation hereby elects not to be governed by Section 203 of the
Delaware General Corporation Law.
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<PAGE> 9
IN WITNESS WHEREOF, this corporation has caused its corporate seal to be
affixed hereto and this Restated Certificate of Incorporation to be signed by
its President this __ day of ____, 1996.
FORRESTER RESEARCH, INC.
By:
-------------------------------
George F. Colony
President
Attest:
- -------------------------
Secretary
[Seal]
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<PAGE> 1
Exhibit 3.2
AMENDED AND RESTATED
BY-LAWS
OF
FORRESTER RESEARCH, INC.
<PAGE> 2
<TABLE>
Table of Contents
-----------------
<CAPTION>
Page
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<S> <C>
ARTICLE 1 - STOCKHOLDERS................................................................................... 1
1.1 Place of Meetings..................................................................... 1
1.2 Annual Meeting........................................................................ 1
1.3 Special Meeting....................................................................... 1
1.4 Notice of Meetings.................................................................... 1
1.5 Voting List........................................................................... 1
1.6 Quorum................................................................................ 2
1.7 Adjournments.......................................................................... 2
1.8 Voting and Proxies.................................................................... 2
1.9 Action at Meeting..................................................................... 2
1.10 Nomination of Directors............................................................... 2
1.11 Notice of Business at Annual Meetings................................................. 3
1.12 Action without Meeting................................................................ 4
1.13 Organization.......................................................................... 4
ARTICLE 2 - DIRECTORS...................................................................................... 4
2.1 General Powers........................................................................ 4
2.2 Number; Election and Qualification.................................................... 4
2.3 Classes of Directors.................................................................. 5
2.4 Terms of Office....................................................................... 5
2.5 Allocation of Directors among Classes in the Event of Increases or
Decreases in the Number of Directors........................................................... 5
2.6 Vacancies............................................................................. 5
2.7 Resignation........................................................................... 5
2.8 Regular Meetings...................................................................... 6
2.9 Special Meetings...................................................................... 6
2.10 Notice of Special Meetings............................................................ 6
2.11 Meetings by Telephone Conference Calls................................................ 6
2.12 Quorum................................................................................ 6
2.13 Action at Meeting..................................................................... 6
2.14 Action by Consent..................................................................... 6
2.15 Removal............................................................................... 7
2.16 Committees............................................................................ 7
2.17 Compensation of Directors............................................................. 7
ARTICLE 3 - OFFICERS....................................................................................... 7
3.1 Enumeration........................................................................... 7
3.2 Election.............................................................................. 7
3.3 Qualification......................................................................... 8
</TABLE>
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<TABLE>
<S> <C>
3.4 Tenure................................................................................ 8
3.5 Resignation and Removal............................................................... 8
3.6 Vacancies............................................................................. 8
3.7 Chairman of the Board and Vice Chairman of the Board.................................. 8
3.8 President............................................................................. 8
3.9 Vice Presidents....................................................................... 8
3.10 Secretary and Assistant Secretaries................................................... 9
3.11 Treasurer and Assistant Treasurers.................................................... 9
3.12 Salaries.............................................................................. 9
ARTICLE 4 - CAPITAL STOCK.................................................................................. 10
4.1 Issuance of Stock..................................................................... 10
4.2 Certificates of Stock................................................................. 10
4.3 Transfers............................................................................. 10
4.4 Lost, Stolen or Destroyed Certificates................................................ 10
4.5 Record Date........................................................................... 11
ARTICLE 5 - GENERAL PROVISIONS............................................................................. 11
5.1 Fiscal Year........................................................................... 11
5.2 Corporate Seal........................................................................ 11
5.3 Waiver of Notice...................................................................... 11
5.4 Voting of Securities.................................................................. 11
5.5 Evidence of Authority................................................................. 11
5.6 Certificate of Incorporation.......................................................... 12
5.7 Transactions with Interested Parties.................................................. 12
5.8 Severability.......................................................................... 12
5.9 Pronouns.............................................................................. 12
ARTICLE 6 - AMENDMENTS..................................................................................... 13
6.1 By the Board of Directors............................................................. 13
6.2 By the Stockholders................................................................... 13
6.2 Certain Provisions.................................................................... 13
</TABLE>
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ARTICLE 1 - STOCKHOLDERS
------------------------
1.1 PLACE OF MEETINGS. All meetings of stockholders shall be held at such
place within or without the State of Delaware as may be designated from time to
time by the Board of Directors or the President or, if not so designated, at the
registered office of the corporation.
1.2 ANNUAL MEETING. The annual meeting of stockholders for the election of
directors and for the transaction of such other business as may properly be
brought before the meeting shall be held at 10:00 a.m. on the ________ _________
in _______ each year (unless that day be a legal holiday in the place where the
meeting is to be held in which case the meeting shall be held at the same hour
on the next succeeding day not a legal holiday) or at such other date and time
as shall be fixed by the Board of Directors or the President and stated in the
notice of the meeting. If no annual meeting is held in accordance with the
foregoing provisions, the Board of Directors shall cause the meeting to be held
as soon thereafter as convenient. If no annual meeting is held in accordance
with the foregoing provisions, a special meeting may be held in lieu of the
annual meeting, and any action taken at that special meeting shall have the same
effect as if it had been taken at the annual meeting, and in such case all
references in these By-Laws to the annual meeting of stockholders shall be
deemed to refer to such special meeting.
1.3 SPECIAL MEETING. Special meetings of stockholders may be called at any
time by the Chairman of the Board of Directors, the Chief Executive Officer (or,
if there is no Chief Executive Officer, the President) or the Board of
Directors. Business transacted at any special meeting of stockholders shall be
limited to matters relating to the purpose or purposes stated in the notice of
meeting.
1.4 NOTICE OF MEETINGS. Except as otherwise provided by law, written
notice of each meeting of stockholders, whether annual or special, shall be
given not less than 10 nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting. The notices of all meetings
shall state the place, date and hour of the meeting. The notice of a special
meeting shall state, in addition, the purpose or purposes for which the meeting
is called. If mailed, notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the corporation.
1.5 VOTING LIST. The officer who has charge of the stock ledger of the
corporation shall prepare, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, at a place within the city where the meeting is to
be held. The list shall also be produced and kept at the time and place of the
meeting during the whole time of the meeting, and may be inspected by any
stockholder who is present.
<PAGE> 5
1.6 QUORUM. Except as otherwise provided by law, the Certificate of
Incorporation or these By-Laws, the holders of a majority of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business.
1.7 ADJOURNMENTS. Any meeting of stockholders may be adjourned to any
other time and to any other place at which a meeting of stockholders may be held
under these By-Laws by the stockholders present or represented at the meeting
and entitled to vote, although less than a quorum, or, if no stockholder is
present, by any officer entitled to preside at or to act as Secretary of such
meeting. It shall not be necessary to notify any stockholder of any adjournment
of less than 30 days if the time and place of the adjourned meeting are
announced at the meeting at which adjournment is taken, unless after the
adjournment a new record date is fixed for the adjourned meeting. At the
adjourned meeting, the corporation may transact any business which might have
been transacted at the original meeting.
1.8 VOTING AND PROXIES. Each stockholder shall have one vote for each
share of stock entitled to vote held of record by such stockholder and a
proportionate vote for each fractional share so held, unless otherwise provided
by the General Corporation Law of the State of Delaware, the Certificate of
Incorporation or these By-Laws. Each stockholder of record entitled to vote at a
meeting of stockholders may vote or express such consent or dissent in person or
may authorize another person or persons to vote or act for him by written proxy
executed by the stockholder or his authorized agent and delivered to the
Secretary of the corporation. No such proxy shall be voted or acted upon after
three years from the date of its execution, unless the proxy expressly provides
for a longer period.
1.9 ACTION AT MEETING. When a quorum is present at any meeting, the
holders of a majority of the stock present or represented and voting on a matter
(or if there are two or more classes of stock entitled to vote as separate
classes, then in the case of each such class, the holders of a majority of the
stock of that class present or represented and voting on a matter) shall decide
any matter to be voted upon by the stockholders at such meeting, except when a
different vote is required by express provision of law, the Certificate of
Incorporation or these By-Laws. Any election by stockholders shall be determined
by a plurality of the votes cast by the stockholders entitled to vote at the
election.
1.10 NOMINATION OF DIRECTORS. Only persons who are nominated in accordance
with the following procedures shall be eligible for election as directors.
Nomination for election to the Board of Directors of the corporation at a
meeting of stockholders may be made by the Board of Directors or by any
stockholder of the corporation entitled to vote for the election of directors at
such meeting who complies with the notice procedures set forth in this Section
1.10. Such nominations, other than those made by or on behalf of the Board of
Directors, shall be made by notice in writing delivered or mailed by first class
United States mail, postage prepaid, to the Secretary, and received not less
than 60 days, nor more than 90 days prior to such meeting; provided, however,
that if less than 70 days' notice or prior public disclosure of the date of the
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<PAGE> 6
meeting is given to stockholders, such nomination shall have been mailed or
delivered to the Secretary not later than the close of business on the 10th day
following the date on which the notice of the meeting was mailed or such public
disclosure was made, whichever occurs first. Such notice shall set forth (a) as
to each proposed nominee (i) the name, age, business address and, if known,
residence address of each such nominee, (ii) the principal occupation or
employment of each such nominee, (iii) the number of shares of stock of the
corporation which are beneficially owned by each such nominee, and (iv) any
other information concerning the nominee that must be disclosed as to nominees
in proxy solicitations pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such person's written
consent to be named as a nominee and to serve as a director if elected); and (b)
as to the stockholder giving the notice (i) the name and address, as they appear
on the corporation's books, of such stockholder and (ii) the class and number of
shares of the corporation which are beneficially owned by such stockholder. The
corporation may require any proposed nominee to furnish such other information
as may reasonably be required by the corporation to determine the eligibility of
such proposed nominee to serve as a director of the corporation.
The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
1.11 NOTICE OF BUSINESS AT ANNUAL MEETINGS. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (i) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (ii) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, (iii) otherwise properly brought before an annual meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, if such business relates to the election of directors of the
corporation, the procedures in Section 1.10 must be complied with. If such
business relates to any other matter, the stockholder must have given timely
notice thereof in writing to the Secretary. To be timely, a stockholder's notice
must be delivered to or mailed and received at the principal executive offices
of the corporation not less than 60 days nor more than 90 days prior to the
meeting; PROVIDED, HOWEVER, that in the event that less than 70 days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the date on which
such notice of the date of the meeting was mailed or such public disclosure was
made, whichever occurs first. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the corporation's books,
of the stockholder proposing such business, (iii) the class and number of shares
of the corporation which are beneficially owned by the stockholder, and (iv) any
material interest of the stockholder in such business. Notwithstanding anything
in these By-Laws to the
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<PAGE> 7
contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section 1.11 and except that
any stockholder proposal which complies with Rule 14a-8 of the proxy rules (or
any successor provision) promulgated under the Exchange Act, and is to be
included in the corporation's proxy statement for an annual meeting of
stockholders shall be deemed to comply with the requirements of this Section
1.11.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 1.11, and if he should so
determine, the chairman shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
1.12 ACTION WITHOUT MEETING. At any time during which a class of capital
stock of the corporation is registered under Section 12 of the Exchange Act,
stockholders may not take any action by written consent in lieu of a meeting.
1.13 ORGANIZATION. The Chairman of the Board, or in his absence the Vice
Chairman of the Board designated by the Chairman of the Board, or the President,
in the order named, shall call meetings of the stockholders to order, and act as
chairman of such meeting; PROVIDED, HOWEVER, that the Board of Directors may
appoint any stockholder to act as chairman of any meeting in the absence of the
Chairman of the Board. The Secretary of the corporation shall act as secretary
at all meetings of the stockholders; but in the absence of the Secretary at any
meeting of the stockholders, the presiding officer may appoint any person to act
as secretary of the meeting.
ARTICLE 2 - DIRECTORS
---------------------
2.1 GENERAL POWERS. The business and affairs of the corporation shall be
managed by or under the direction of a Board of Directors, who may exercise all
of the powers of the corporation except as otherwise provided by law, the
Certificate of Incorporation or these ByLaws. In the event of a vacancy in the
Board of Directors, the remaining directors, except as otherwise provided by
law, may exercise the powers of the full Board until the vacancy is filled.
2.2 NUMBER; ELECTION AND QUALIFICATION. The number of directors which
shall constitute the whole Board of Directors shall be determined by resolution
of the Board of Directors, but following the consummation of the Company's
initial public offering of common stock under the Securities Act of 1933 in no
event shall such number of directors be less than three. The number of directors
may be decreased at any time and from time to time by a majority of the
directors then in office, but only to eliminate vacancies existing by reason of
the death, resignation, removal or expiration of the term of one or more
directors. The directors shall be elected at the annual meeting of stockholders
by such stockholders as have the right to vote on such election. Directors need
not be stockholders of the corporation.
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<PAGE> 8
2.3 CLASSES OF DIRECTORS. The Board of Directors shall be and is divided
into three classes: Class I, Class II and Class III. No one class shall have
more than one director more than any other class. If a fraction is contained in
the quotient arrived at by dividing the designated number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class II, and if such fraction is two-thirds, one of the extra directors shall
be a member of Class II and one of the extra directors shall be a member of
Class III, unless otherwise provided from time to time by resolution adopted by
the Board of Directors.
2.4 TERMS OF OFFICE. Except as otherwise provided in the Certificate of
Incorporation or these By-Laws, each director shall serve for a term ending on
the date of the third annual meeting of the stockholders following the annual
meeting of the stockholders at which such director was elected; PROVIDED, that
each initial director in Class I shall serve for a term ending on the date of
the annual meeting of stockholders in 1999; each initial director in Class II
shall serve for a term ending on the date of the annual meeting of stockholders
in 1998; and each initial director in Class III shall serve for a term ending on
the date of the annual meeting of stockholders in 1997; and PROVIDED FURTHER,
that the term of each director shall be subject to the election and
qualification of his successor and to his earlier death, resignation or removal.
2.5 ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF INCREASES OR
DECREASES IN THE NUMBER OF DIRECTORS. In the event of any increase or decrease
in the authorized number of directors, (i) each director then serving as such
shall nevertheless continue as a director of the class of which he is a member
and (ii) the newly created or eliminated directorships resulting from such
increase or decrease shall be apportioned by the Board of Directors among the
three classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent possible, consistent with the
foregoing rule, any newly created directorships shall be added to those classes
whose terms of office are to expire at the latest dates following such
allocation, and any newly eliminated directorships shall be subtracted from
those classes whose terms of offices are to expire at the earliest dates
following such allocation, unless otherwise provided from time to time by
resolution adopted by the Board of Directors.
2.6 VACANCIES. Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the Board, shall be filled
only by vote of a majority of the directors then in office, although less than a
quorum, or by a sole remaining director. A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office, and a
director chosen to fill a position resulting from an increase in the number of
directors shall hold office until the next election of the class for which such
director shall have been chosen, subject to the election and qualification of
his successor and to his earlier death, resignation or removal.
2.7 RESIGNATION. Any director may resign by delivering his written
resignation to the corporation at its principal office or to the President or
Secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
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2.8 REGULAR MEETINGS. Regular meetings of the Board of Directors may be
held without notice at such time and place, either within or without the State
of Delaware, as shall be determined from time to time by the Board of Directors;
PROVIDED, that any director who is absent when such a determination is made
shall be given notice of the determination. A regular meeting of the Board of
Directors may be held without notice immediately after and at the same place as
the annual meeting of stockholders.
2.9 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
held at any time and place, within or without the State of Delaware, designated
in a call by the Chairman of the Board, President, one-third or more in number
of the Directors, or by one director in the event that there is only a single
director in office.
2.10 NOTICE OF SPECIAL MEETINGS. Notice of any special meeting of directors
shall be given to each director by the Secretary or by the officer or one of the
directors calling the meeting. Notice shall be duly given to each director (i)
by giving notice to such director in person or by telephone at least 24 hours in
advance of the meeting, (ii) by sending a telegram, telecopy, or telex, or
delivering written notice by hand, to his last known business or home address at
least 24 hours in advance of the meeting, or (iii) by mailing written notice to
his last known business or home address at least 72 hours in advance of the
meeting. A notice or waiver of notice of a special meeting of the Board of
Directors need not specify the purposes of the meeting.
2.11 MEETINGS BY TELEPHONE CONFERENCE CALLS. Directors or any members of
any committee designated by the directors may participate in a meeting of the
Board of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation by such means shall constitute
presence in person at such meeting.
2.12 QUORUM. A majority of the total number of the whole Board of Directors
shall constitute a quorum at all meetings of the Board of Directors. In the
event one or more of the directors shall be disqualified to vote at any meeting,
then the required quorum shall be reduced by one for each such director so
disqualified; PROVIDED, HOWEVER, that in no case shall less than one-third (1/3)
of the number of directors so fixed pursuant to Section 2.2 constitute a quorum.
In the absence of a quorum at any such meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice, other
than announcement at the meeting, until a quorum shall be present.
2.13 ACTION AT MEETING. At any meeting of the Board of Directors at which a
quorum is present, the vote of a majority of those present shall be sufficient
to take any action, unless a greater number is required by law, the Certificate
of Incorporation or these By-Laws.
2.14 ACTION BY CONSENT. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee of the Board of Directors
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent to the action in
6
<PAGE> 10
writing, and the written consents are filed with the minutes of proceedings of
the Board or committee.
2.15 REMOVAL. Directors of the corporation may be removed only for cause by
the affirmative vote of the holders of two-thirds of the shares of the capital
stock of the corporation issued and outstanding and entitled to vote generally
in the election of directors at a meeting of the stockholders called for that
purpose.
2.16 COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members of the committee present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board of Directors and subject to the
provisions of the General Corporation Law of the State of Delaware, shall have
and may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation and may authorize the
seal of the corporation to be affixed to all papers which may require it. Each
such committee shall keep minutes and make such reports as the Board of
Directors may from time to time request. Except as the Board of Directors may
otherwise determine, any committee may make rules for the conduct of its
business, but unless otherwise provided by the directors or in such rules, its
business shall be conducted as nearly as possible in the same manner as is
provided in these By-Laws for the Board of Directors.
2.17 COMPENSATION OF DIRECTORS. Directors may be paid such compensation for
their services and such reimbursement for expenses of attendance at meetings as
the Board of Directors may from time to time determine. No such payment shall
preclude any director from serving the corporation or any of its parent or
subsidiary corporations in any other capacity and receiving compensation for
such service.
ARTICLE 3 - OFFICERS
--------------------
3.1 ENUMERATION. The officers of the corporation shall consist of a
President, a Secretary, a Treasurer and such other officers with such other
titles as the Board of Directors shall determine, including a Chairman of the
Board, a Vice Chairman of the Board, and one or more Vice Presidents, Assistant
Treasurers, and Assistant Secretaries. The Board of Directors may appoint such
other officers as it may deem appropriate.
3.2 ELECTION. The President, Treasurer and Secretary shall be elected
annually by the Board of Directors at its first meeting following the annual
meeting of stockholders. Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.
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<PAGE> 11
3.3 QUALIFICATION. No officer need be a stockholder. Any two or more
offices may be held by the same person.
3.4 TENURE. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, each officer shall hold office until his
successor is elected and qualified, unless a different term is specified in the
vote choosing or appointing him, or until his earlier death, resignation or
removal.
3.5 RESIGNATION AND REMOVAL. Any officer may resign by delivering his
written resignation to the corporation at its principal office or to the
President or Secretary. Such resignation shall be effective upon receipt unless
it is specified to be effective at some other time or upon the happening of some
other event. The Board of Directors may remove any officer at any time, with or
without cause.
3.6 VACANCIES. The Board of Directors may fill any vacancy occurring in
any office for any reason and may, in its discretion, leave unfilled for such
period as it may determine any offices other than those of President, Treasurer
and Secretary. Each such successor shall hold office for the unexpired term of
his predecessor and until his successor is elected and qualified, or until his
earlier death, resignation or removal.
3.7 CHAIRMAN OF THE BOARD AND VICE CHAIRMAN OF THE BOARD. The Board of
Directors may appoint a Chairman of the Board. If the Board of Directors
appoints a Chairman of the Board, he shall perform such duties and possess such
powers as are assigned to him by the Board of Directors. If the Board of
Directors appoints a Vice Chairman of the Board, he shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board and shall perform such other duties and
possess such other powers as may from time to time be vested in him by the Board
of Directors.
3.8 PRESIDENT. The President shall, subject to the direction of the Board
of Directors, have general charge and supervision of the business of the
corporation. Unless otherwise provided by the Board of Directors, he shall
preside at all meetings of the stockholders and, if he is a director, at all
meetings of the Board of Directors. Unless the Board of Directors has designated
the Chairman of the Board or another officer as Chief Executive Officer, the
President shall be the Chief Executive Officer of the corporation. The President
shall perform such other duties and shall have such other powers as the Board of
Directors may from time to time prescribe.
3.9 VICE PRESIDENTS. Any Vice President shall perform such duties and
possess such powers as the Board of Directors or the President may from time to
time prescribe. In the event of the absence, inability or refusal to act of the
President, the Vice President (or if there shall be more than one, the Vice
Presidents in the order determined by the Board of Directors) shall perform the
duties of the President and when so performing shall have all the powers of and
be subject to all the restrictions upon the President. The Board of Directors
may assign to any Vice
8
<PAGE> 12
President the title of Executive Vice President, Senior Vice President or any
other title selected by the Board of Directors.
3.10 SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall perform such
duties and shall have such powers as the Board of Directors or the President may
from time to time prescribe. In addition, the Secretary shall perform such
duties and have such powers as are incident to the office of the Secretary,
including without limitation the duty and power to give notices of all meetings
of stockholders and special meetings of the Board of Directors, to attend all
meetings of stockholders and the Board of Directors and keep a record of the
proceedings, to maintain a stock ledger and prepare lists of stockholders and
their addresses as required, to be custodian of corporate records and the
corporate seal and to affix and attest to the same on documents.
Any Assistant Secretary shall perform such duties and possess such powers
as the Board of Directors, the President or the Secretary may from time to time
prescribe. In the event of the absence, inability or refusal to act of the
Secretary, the Assistant Secretary (or if there shall be more than one, the
Assistant Secretaries in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Secretary.
In the absence of the Secretary or any Assistant Secretary at any meeting
of stockholders or directors, the person presiding at the meeting shall
designate a temporary secretary to keep a record of the meeting.
3.11 TREASURER AND ASSISTANT TREASURERS. The Treasurer shall perform such
duties and shall have such powers as may from time to time be assigned to him by
the Board of Directors or the President. In addition, the Treasurer shall
perform such duties and have such powers as are incident to the office of
Treasurer, including without limitation the duty and power to keep and be
responsible for all funds and securities of the corporation, to deposit funds of
the corporation in depositories selected in accordance with these By-Laws, to
disburse such funds as ordered by the Board of Directors, to make proper
accounts of such funds, and to render as required by the Board of Directors
statements of all such transactions and of the financial condition of the
corporation.
The Assistant Treasurers shall perform such duties and possess such powers
as the Board of Directors, the President or the Treasurer may from time to time
prescribe. In the event of the absence, inability or refusal to act of the
Treasurer, the Assistant Treasurer (or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Treasurer.
3.12 SALARIES. Officers of the corporation shall be entitled to such
salaries, compensation or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.
9
<PAGE> 13
ARTICLE 4 - CAPITAL STOCK
-------------------------
4.1 ISSUANCE OF STOCK. Unless otherwise voted by the stockholders and
subject to the provisions of the Certificate of Incorporation, the whole or any
part of any unissued balance of the authorized capital stock of the corporation
or the whole or any part of any unissued balance of the authorized capital stock
of the corporation held in its treasury may be issued, sold, transferred or
otherwise disposed of by vote of the Board of Directors in such manner, for such
consideration and on such terms as the Board of Directors may determine.
4.2 CERTIFICATES OF STOCK. Every holder of stock of the corporation shall
be entitled to have a certificate, in such form as may be prescribed by law and
by the Board of Directors, certifying the number and class of shares owned by
him in the corporation. Each such certificate shall be signed by, or in the name
of the corporation by, the Chairman or Vice Chairman, if any, of the Board of
Directors, or the President or a Vice President, and the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation. Any or all of the signatures on the certificate may be a facsimile.
Each certificate for shares of stock which are subject to any restriction
on transfer pursuant to the Certificate of Incorporation, the By-Laws,
applicable securities laws or any agreement among any number of stockholders or
among such holders and the corporation shall have conspicuously noted on the
face or back of the certificate either the full text of the restriction or a
statement of the existence of such restriction.
4.3 TRANSFERS. Except as otherwise established by rules and regulations
adopted by the Board of Directors, and subject to applicable law, shares of
stock may be transferred on the books of the corporation by the surrender to the
corporation or its transfer agent of the certificate representing such shares
properly endorsed or accompanied by a written assignment or power of attorney
properly executed, and with such proof of authority or the authenticity of
signature as the corporation or its transfer agent may reasonably require.
Except as may be otherwise required by law, by the Certificate of Incorporation
or by these By-Laws, the corporation shall be entitled to treat the record
holder of stock as shown on its books as the owner of such stock for all
purposes, including the payment of dividends and the right to vote with respect
to such stock, regardless of any transfer, pledge or other disposition of such
stock, until the shares have been transferred on the books of the corporation in
accordance with the requirements of these By-Laws.
4.4 LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation may issue a
new certificate of stock in place of any previously issued certificate alleged
to have been lost, stolen, or destroyed, upon such terms and conditions as the
Board of Directors may prescribe, including the presentation of reasonable
evidence of such loss, theft or destruction and the giving of such indemnity as
the Board of Directors may require for the protection of the corporation or any
transfer agent or registrar.
10
<PAGE> 14
4.5 RECORD DATE. The Board of Directors may fix in advance a date as a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders, or entitled to receive payment of any
dividend or other distribution or allotment of any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action. Such record date shall not be more than 60 nor less than 10 days before
the date of such meeting, nor more than 60 days prior to any other action to
which such record date relates.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day before the day on which notice is given, or, if
notice is waived, at the close of business on the day before the day on which
the meeting is held. The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
ARTICLE 5 - GENERAL PROVISIONS
------------------------------
5.1 FISCAL YEAR. Except as from time to time otherwise designated by the
Board of Directors, the fiscal year of the corporation shall begin on the first
day of January in each year and end on the last day of December in each year.
5.2 CORPORATE SEAL. The corporate seal shall be in such form as shall be
approved by the Board of Directors.
5.3 WAIVER OF NOTICE. Whenever any notice whatsoever is required to be
given by law, by the Certificate of Incorporation or by these By-Laws, a waiver
of such notice either in writing signed by the person entitled to such notice or
such person's duly authorized attorney, or by telegraph, cable or any other
available method, whether before, at or after the time stated in such waiver, or
the appearance of such person or persons at such meeting in person or by proxy,
shall be deemed equivalent to such notice.
5.4 VOTING OF SECURITIES. Except as the directors may otherwise designate,
the President or Treasurer may waive notice of, and act as, or appoint any
person or persons to act as, proxy or attorney-in-fact for this corporation
(with or without power of substitution) at, any meeting of stockholders or
shareholders of any other corporation or organization, the securities of which
may be held by this corporation.
5.5 EVIDENCE OF AUTHORITY. A certificate by the Secretary, or an Assistant
Secretary, or a temporary Secretary, as to any action taken by the stockholders,
directors, a
11
<PAGE> 15
committee or any officer or representative of the corporation shall, as to all
persons who rely on the certificate in good faith, be conclusive evidence of
such action.
5.6 CERTIFICATE OF INCORPORATION. All references in these By-Laws to the
Certificate of Incorporation shall be deemed to refer to the Certificate of
Incorporation of the corporation, as amended or restated and in effect from time
to time.
5.7 TRANSACTIONS WITH INTERESTED PARTIES. No contract or transaction
between the corporation and one or more of the directors or officers, or between
the corporation and any other corporation, partnership, association, or other
organization in which one or more of the directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or a committee of the
Board of Directors which authorizes the contract or transaction or solely
because his or their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of Directors
or the committee, and the Board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum;
(2) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
5.8 SEVERABILITY. Any determination that any provision of these By-Laws is
for any reason inapplicable, illegal or ineffective shall not affect or
invalidate any other provision of these By-Laws.
5.9 PRONOUNS. All pronouns used in these By-Laws shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
person or persons may require.
12
<PAGE> 16
ARTICLE 6 - AMENDMENTS
----------------------
6.1 BY THE BOARD OF DIRECTORS. These By-Laws may be altered, amended or
repealed or new By-Laws may be adopted by the affirmative vote of a majority of
the directors present at any regular or special meeting of the Board of
Directors at which a quorum is present.
6.2 BY THE STOCKHOLDERS. These Bylaws may be altered, amended or repealed
or new bylaws may be adopted by the stockholders only by the affirmative vote of
the holders of at least seventy-five (75%) of the shares of the capital stock of
the corporation issued and outstanding and entitled to vote generally in the
election of directors, provided notice of such alteration, amendment, repeal or
adoption of new bylaws shall have been stated in the notice of any regular or
special meeting called for such purpose.
13
<PAGE> 1
Exhibit 4
[FORRESTER LOGO]
FORRESTER RESEARCH, INC.
INCORPORATED UNDER THE LAWS OF DELAWARE
THIS CERTIFICATE IS TRANSFERABLE IN BOSTON, MA OR NEW YORK CITY, NY
NUMBER SHARES
COMMON STOCK SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 346563 10 9
This Certifies that
is the owner of
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, $0.01 PAR VALUE, OF
FORRESTER RESEARCH, INC.
transferable only on the books of the Corporation by the holder hereof in
person or by duly authorized attorney upon surrender of this certificate
properly endorsed.
This certificate and the shares of Common Stock represented hereby are
received and held subject to the laws of the State of Delaware and to the
Certificate of Incorporation and the By-Laws of the Corporation, all as from
time to time amended, and the owner of this certificate by accepting the same
expressly assents thereto. This certificate is not valid unless countersigned by
the Transfer Agent and registered by the Registrar.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by the facsimile signatures of its duly authorized officers and a
facsimile of its corporate seal to be hereunto affixed.
Dated:
[FORRESTER RESEARCH, INC. CORPORATE SEAL 1996 DELAWARE]
/s/ /s/
SECRETARY PRESIDENT
[Set horizontally on right side]
COUNTERSIGNED AND REGISTERED:
THE FIRST NATIONAL BANK OF BOSTON
TRANSFER AGENT AND REGISTRAR
BY /s/
AUTHORIZED SIGNATURE
<PAGE> 2
FORRESTER RESEARCH, INC.
The Corporation is authorized to issue more than one class or series of
stock. Upon written request, the Corporation will furnish without charge to
each stockholder a copy of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - Custodian
--------- -----------
(Cust) (Minor)
under Uniform Gifts to Minors
Act
----------------------------
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received, _______ hereby sell, assign and transfer unto _____________
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
- -------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
_______________________________________________________________________ Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ___________________________________________
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated,
---------------------------
------------------------------------------------------
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED:
------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE> 1
Exhibit 5
[ROPES & GRAY LETTER HEAD]
November 5, 1996
Forrester Research, Inc.
1033 Massachusetts Avenue
Cambridge, Massachusetts 02138
Ladies and Gentlemen:
This opinion is furnished to you in connection with a registration
statement on Form S-1 (the "Registration Statement"), filed with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, for the registration of 2,300,000 shares of Common Stock, $.01 par
value (the "Shares"), of Forrester Research, Inc., a Delaware corporation (the
"Company"). The Shares are to be sold pursuant to an underwriting agreement (the
"Underwriting Agreement") to be entered into among the Company and Goldman,
Sachs & Co. and Robertson, Stephens & Company LLP, as representatives of the
several underwriters named in Schedule I to the Underwriting Agreement.
We have acted as counsel for the Company in connection with the issue and
sale by the Company of the Shares. For purposes of our opinion, we have examined
and relied upon such documents, records, certificates and other instruments as
we have deemed necessary.
We express no opinion as to the applicability of compliance with or effect
of Federal law of the law of any jurisdiction other than The Commonwealth of
Massachusetts and the General Corporation Law of the State of Delaware (the
"Delaware General Corporation Law").
Based upon the foregoing, we are of the opinion that upon the filing with
the Secretary of State of the State of Delaware of the Company's Restated
Certificate of Incorporation in the form approved by the Company's Board of
Directors (the "Restated Certificate") and the sole stockholder of the Company,
the Shares will have been duly authorized and, when issued and
<PAGE> 2
Forrester Research, Inc.
November 5, 1996
Page 2
sold by the Company in accordance with the terms of the Underwriting Agreement,
will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as part of the Registration
Statement and to the use of our name therein and in the related prospectus under
the caption "Validity of Shares."
This opinion is to be used only in connection with the offer and sale of
the Shares while the Registration Statement is in effect.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE> 1
Exhibit 10.2
TAX INDEMNIFICATION AGREEMENT
This TAX INDEMNIFICATION AGREEMENT, dated as of this __ day of ____, 1996,
is entered into by Forrester Research, Inc., a Delaware corporation (the
"Company") and George F. Colony (the "Stockholder").
RECITALS
WHEREAS, the Stockholder holds all of the outstanding shares of the
Company's Common Stock, par value $.01, per share (the "Common Stock").
WHEREAS, the Company has elected to be taxed as S corporation under the
Code.
WHEREAS, the Company is now contemplating offering and selling shares of
its Common Stock to the public (the "Public Offering").
WHEREAS the Company plans, just prior to the completion of the Public
Offering, to terminate its S corporation election.
WHEREAS, after the termination of the Company's S corporation election, the
Stockholder will continue to be liable for his own federal, state, and
local income taxes on the Company's Tax Items that pass through to the
Stockholder under the provisions of Subchapter S of the Code and any
similar provisions of state and local law for all periods prior to the time
the Company ceases to be an S Corporation. The Company will be subject to a
corporate level tax under Subchapter C of the Code and certain state and
local taxing statutes for periods thereafter. The purpose of this Agreement
is to set forth the agreement of the Company and the Stockholder with
respect to certain adjustments to the federal, state, and local personal
income tax liability of the Stockholder attributable to Tax Items of the
Company that pass through to the Stockholder under the provisions of
Subchapter S of the Code and any similar provisions of state and local law
for periods during which the Company is an S Corporation.
The parties agree as follows:
<PAGE> 2
Article I
DEFINITIONS
For purposes of this Agreement the following definitions shall apply:
(a) "ADJUSTMENT" shall mean any proposed or final change in any S
Corporation Tax Liability initiated by the IRS, state or local taxing authority,
or any other relevant taxing authority.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended and in
effect for the taxable period in question.
(c) "FINAL DETERMINATION" shall mean the final resolution of any tax
Income Tax liability (including all related interest and penalties) for a
taxable period. A Final Determination shall result from the first to occur of:
(i) the expiration of 30 days after IRS acceptance of a Waiver of
Restrictions on Assessment and Collection of Deficiency in Tax and
Acceptance of Overassessment on Federal Revenue Form 870 or 870-AD (or any
successor comparable form or the expiration of a comparable period with
respect to any comparable agreement or form under the laws of other
jurisdictions), unless, within such period, the taxpayer gives notice to
the other party of the taxpayer's intention to attempt to recover all or
part of any amount paid pursuant to the Waiver by the filing of a timely
claim for refund;
(ii) a decision, judgment, decree, or other order by a court of
competent jurisdiction that is not subject to further judicial review (by
appeal or otherwise) and has become final;
(iii) the execution of a closing agreement under section 7121 of the
Code or the acceptance by the IRS or its counsel of an offer in compromise
under section 7122 of the Code, or comparable agreements under the laws of
other jurisdictions;
(iv) the expiration of the time for filing a claim for refund or for
instituting suit in respect of a claim for refund disallowed in whole or
part by the IRS or other relevant taxing authority;
(v) any other final disposition of the tax liability for such period
by reason of the expiration of the applicable statute of limitations; or
-2-
<PAGE> 3
(vi) any other event that the parties agree is a final and irrevocable
determination of the liability at issue.
(d) "INCOME TAX" shall mean federal income taxes and state and local taxes
imposed upon, or measured by, income. Income Tax includes interest, penalties,
additions to tax, and additional amounts, and any related professional or other
expenses.
(e) "IRS" shall mean the United States Internal Revenue Service or any
successor, including, but not limited to, its agents, representatives, and
attorneys.
(f) "S CORPORATION" shall mean an S Corporation within the meaning of
section 1361 of the Code.
(g) "S CORPORATION TAX LIABILITY" shall mean the personal Income Tax
liability of the Stockholder for Income Taxes attributable to (a) the Company's
Tax Items that pass through to the Stockholder under the provisions of
Subchapter S of the Code and any similar provisions of state and local law or
(b) the Stockholder's receipt of indemnity payments hereunder.
(h) "TAX BENEFIT" shall mean a reduction in the personal Income Tax
liability of the Stockholder (as a result of Tax Items of the Company and all
other Tax Items reflected on the Stockholder's tax return) for any taxable
period. The Stockholder shall be deemed to have realized or received a Tax
Benefit from a Tax Item in a taxable period only if and to the extent that the
Stockholder's personal Income Tax liability for such period is less than it
would have been if such liability were determined without regard to such Tax
Item. The Stockholder shall be deemed to have realized or received a Tax Benefit
with respect to a carryover only if, when, and to the extent the carryover is
used to produce a Tax Benefit.
(i) "TAX ITEM" shall mean any item of income, gain, loss, deduction,
credit, recapture of credit, or any other item which increases or decreases
Income Taxes paid or payable by the Stockholder (when the Company is an S
Corporation) or by the Company.
Article II
INDEMNIFICATION FOR CERTAIN TAXES
The Stockholder shall pay to the Company an amount equal to any Tax Benefit
realized or received arising from an Adjustment with respect to a Tax Item of
the Company for any taxable period in which the Company was taxable as an S
Corporation.
The Company shall pay and indemnify the Stockholder for any S Corporation
Tax Liability arising from an Adjustment with respect to a Tax Item of the
Company.
-3-
<PAGE> 4
Any payment required under this Article shall be made by the earlier of (1)
20 days after the Stockholder receives a refund or credit, (2) 20 days after a
Final Determination with respect to such tax, (3) with respect to a carryover,
20 days after the Stockholder files a tax return on which the carryover produces
a Tax Benefit, or (4) 20 days after the determination by the parties or pursuant
to Article IV that such payment is due.
Article III
COOPERATION AND EXCHANGE OF INFORMATION
Whenever the Stockholder or the Company becomes aware of an issue which it
believes gives rise to payment or indemnification from the other party under
Article II, the Stockholder or the Company (as the case may be) shall promptly
give notice of the issue to the other party. The indemnitor and its
representatives, at the indemnitor's expense, shall be entitled to participate
in all conferences, meetings, or proceedings with the IRS or other taxing
authority with respect to the issue.
The parties agree to consult and cooperate with each other in the
negotiation and settlement or litigation of any Adjustment that may give rise to
any payment or an indemnification payment under this Agreement. All decisions
with respect to such negotiation and settlement or litigation shall be made by
the parties after full, good faith consultation or pursuant to the dispute
resolution provisions of Article IV.
Article IV
DISPUTES
If the parties are, after negotiation in good faith, unable to agree upon
the appropriate application of this Agreement, the controversy shall be settled
by the "Big 6" accounting firm remaining on the list of firms set forth on
Schedule A hereto after the Company and the Stockholder, commencing with the
Company, shall have objected seriatim, to the other firms on the list (the
"Accounting Firm"). The decision of the Accounting Firm shall be final, and each
of the Company and the Stockholder agree immediately to pay to the other any
amount due under this Agreement pursuant to such decision. The expenses of the
Accounting Firm shall be borne one-half by the Company and one-half by the
Stockholder unless the Accounting Firm specifies otherwise.
Article V
MISCELLANEOUS
Section 5.1 TERM OF AGREEMENT. This Agreement shall become effective as of
the date of its execution and shall continue in full force and effect
indefinitely.
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<PAGE> 5
Section 5.2 SEVERABILITY. If any term of this Agreement is held by a court
of competent jurisdiction to be unenforceable, the remainder of the terms set
forth herein shall remain in full force and effect and shall in no way be
impaired. The parties stipulate that they would have executed the remaining
terms without including any which may hereafter be declared unenforceable. In
the event that any term is held to be unenforceable, the parties shall use their
best efforts to find an alternative means to achieve the same or substantially
the same result as that contemplated by such term.
Section 5.3 ASSIGNMENT. Except by operation of law or in connection with
the sale of all or substantially all the assets of a party, this Agreement shall
not be assignable, in whole or in part, directly or indirectly, by the
Stockholder without the written consent of the Company or by the Company without
the written consent of the Stockholder. Any attempt to assign any right or
obligations arising under this Agreement without such consent shall be void.
However, the provisions of this Agreement shall be binding upon inure to the
benefit of, and be enforceable by the parties and their respective successors
and permitted assigns.
Section 5.4 FURTHER ASSURANCES. Subject to the provisions of this
Agreement, the parties shall acknowledge such other instruments and documents,
and take all other actions, as may be reasonably required in order to effectuate
the purposes of this Agreement.
Section 5.5 PARTIES IN INTEREST. Except as herein otherwise specifically
provided, nothing in this Agreement expressed or implied is intended to confer
any right or benefit upon any person, firm, or corporation other than the
parties and their respective successors and permitted assigns.
Section 5.6 WAIVERS, ETC. No failure or delay on the part of the parties
in exercising any power or right under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No modification or waiver of any provision of this Agreement nor
consent to any departure by the parties therefrom shall in any event be
effective unless it shall be in writing, and then such waiver or consent shall
be effective only in the specific instance and for the purpose which given.
Section 5.7 SET-OFF. All payments to be made by any party under this
Agreement shall be made without set-off, counterclaim, or withholding, all of
which are expressly waived.
Section 5.8 CHANGE OF LAW. If, due to any change in applicable law or
regulations or the interpretation thereof by any court or other governing body
having jurisdiction subsequent to the date of this Agreement, performance of any
provision of this Agreement shall be impracticable or impossible, the parties
shall use their best efforts to find an
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<PAGE> 6
alternative means to achieve the same or substantially the same results as are
contemplated by such provision.
Section 5.9 HEADINGS. Descriptive headings are for convenience only and
shall not control or affect the meaning of any provision of this Agreement.
Section 5.10 COUNTERPARTS. For the convenience of the parties, any number
of counterparts of this Agreement may be executed by the parties and each
executed counterpart shall be an original instrument.
Section 5.11 NOTICES. All notices provided for in this Agreement shall be
validly given if in writing and delivered personally or sent by registered mail,
postage prepaid
if to the Company, at
General Counsel
Forrester Research, Inc.
1033 Massachusetts Ave.
Cambridge, MA 02138
copy to:
Ann L. Milner, Esquire
Ropes & Gray
One International Place
Boston, MA 02110-2624
if to the Stockholder, to:
George F. Colony
c/o Forrester Research, Inc.
1033 Massachusetts Ave.
Cambridge, MA 02138
or to such other addresses as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by mail shall be deemed
delivered five calendar days after the date mailed.
Section 5.12 GOVERNING LAW. This Agreement shall be governed by the
domestic substantive laws of The Commonwealth of Massachusetts without regard to
any choice or
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<PAGE> 7
conflict of laws rule or provision that would cause the application of the
domestic substantive laws of any other jurisdiction.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed as of the day and year first written above.
FORRESTER RESEARCH, INC.
By:__________________________________
Name:
Title:
__________________________________
George F. Colony
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<PAGE> 8
SCHEDULE A
Arthur Andersen LLP
Coopers & Lybrand LLP
Deloitt & Touche LLP
Ernst & Young LLP
KPMG Peat Marwick LLP
Price Waterhouse LLP
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<PAGE> 1
EXHIBIT 10.7
FIRST AMENDMENT TO LEASE
August 28, 1995
This First Amendment to Lease (the "First Amendment") is hereby entered
into as of the 28th day of August, 1995 by and between Advent Realty Limited
Partnership II, a Delaware limited partnership with an address at 45 Milk
Street, Boston, Massachusetts ("Landlord"), and Forrester Research, Inc., a
Massachusetts corporation with an address at 1033 Massachusetts Avenue,
Cambridge, Massachusetts ("Tenant").
WHEREAS, Landlord and Tenant entered into that certain Lease dated as of
May 1, 1995, with respect to the second floor and a portion of the third floor
("Premises") of the building located at 1033 Massachusetts Avenue, Cambridge,
Massachusetts (the "Building");
WHEREAS, Article XVII of the Lease describes the procedure for adding the
Third Floor Expansion Area to the Premises on the Third Floor Delivery Date;
WHEREAS, Tenant wishes to add a portion of the Third Floor Expansion Area
to the Premises prior to the Third Floor Delivery Date;
and WHEREAS, Landlord and Tenant wish to amend the definition of the Third
Floor Delivery Date;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and in the Lease, Landlord and Tenant hereby agree as follows:
1. Definitions.
-----------
(a) Capitalized terms and phrases used herein shall have the same meanings as
set forth in the Lease.
(b) The term "Initial Expansion Area" shall mean that portion of the Third Floor
Expansion Area consisting of 2,326 rentable square feet and described on Exhibit
A-1 attached hereto and made a part hereof.
(c) The term "Initial Expansion Area Delivery Date" shall mean September 1,
1995.
(d) Landlord and Tenant agree to amend the meaning of the term Third Floor
Delivery Date to be January 1, 1997.
<PAGE> 2
First Amendment to Lease
Page Two
2. Delivery.
--------
(a) On the Initial Expansion Area Delivery Date Landlord shall deliver to Tenant
and Tenant hereby agrees to thereupon lease from Landlord, as an addition to the
Premises upon the terms and conditions then in effect under the Lease as amended
herein and for the balance of the Term, the Initial Expansion Area. The Rentable
Floor Area of the Premises shall, as of the Initial Expansion Area Delivery
Date, be deemed to include the Initial Expansion Area, for a total of 22,974
square feet. The Initial Expansion Area shall be delivered to Tenant, as-is, in
the same condition as existing on the date of the Lease, reasonable wear and
tear excepted, and free of tenants and occupants.
(b) On the Third Floor Delivery Date Landlord shall deliver to Tenant the
balance of the Third Floor Expansion Area as set forth in the Lease.
3. Construction.
------------
(a) In addition to Tenant's right to submit Tenant's Improvement Request to
Landlord for leasehold improvements to the Third Floor Expansion Area, Tenant
may, upon written notice to Landlord, request that Landlord construct leasehold
improvements to the Initial Expansion Area. Such construction shall be subject
to the procedures set forth Article XVII of the Lease.
(b) Notwithstanding Tenant's right to request that Landlord construct leasehold
improvements either to the Initial Expansion Area or to the Third Floor
Expansion Area, Landlord and Tenant agree that the total allowance for leasehold
improvements contemplated by Section (c)(2)(a) of Article XVII shall be equal to
$20,144.00.
(c) Tenant shall, subject to the reimbursement procedures for leasehold
improvements set forth in the Lease, cause a demising wall to be constructed as
set forth in Exhibit A-2 attached hereto in the location shown in Exhibit A-1
attached hereto. Landlord agrees that at expiration of the Term, or earlier
termination of the Lease, Tenant shall not be required to remove any items
related to such construction.
4. Annual Basic Rent.
-----------------
(a) The Annual Basic Rent for the period commencing on the Initial Expansion
Area Delivery Date and continuing through December 31, 1996 shall be the amount
<PAGE> 3
First Amendment to Lease
Page Three
provided in Section 1.1 of the Lease increased by $34,890. ($15.00 x 2,326) and
shall be due and payable effective on the Initial Expansion Area Delivery Date.
(b) The Annual Basic Rent for the period commencing on the Third Floor
Delivery Date and continuing through June 30, 1997 shall be the amount provided
in Section 1.1 of the Lease increased by $86,970. ($15.00 x 5,798).
(c) For the period commencing on July 1, 1997 and continuing for the balance of
the Term of the Lease, the Annual Basic Rent shall be the amount provided in
Section 1.1 of the Lease appropriately increased for the addition of the Third
Floor Expansion Area by multiplying 5,798 by the square foot rental rates set
forth in Section 1.1 of the Lease.
5. Parking.
-------
(a) As of the Initial Expansion Area Delivery Date, Tenant's Parking shall be
increased from twenty (20) spaces to twenty-three (23) spaces.
(b) As of the Third Floor Delivery Date, Tenant's Parking shall be increased
from twenty-three (23) spaces to twenty-six (26) spaces.
6. RATIFICATION. In all respects not amended hereby the Lease is hereby ratified
and confirmed.
Executed as a sealed Massachusetts instrument.
LANDLORD: ADVENT REALTY LIMITED PARTNERSHIP II
BY: Advent Realty GP II Limited Partnership, its General Partner
BY: Advent Realty, Inc., its General Partner
BY: /s/ Arthur I. Segel
----------------------------------------
Michael A. Ruane, Chairman or
Arthur I. Segel, President
TENANT: FORRESTER RESEARCH, INC.
BY: /s/ George F. Colony
----------------------------------------
George F. Colony, President
<PAGE> 1
EXHIBIT 10.8
SECOND AMENDMENT TO LEASE
This Second Amendment to Lease ("Second Amendment") is dated as of May 21,
1996 between Advent Realty Limited Partnership II, a Delaware limited
partnership with an address at 45 Milk Street, Boston, Massachusetts 02110
("Landlord"), and Forrester Research, Inc., a Delaware corporation with an
address at 1033 Massachusetts Avenue, Cambridge, Massachusetts 02138 ("Tenant").
WHEREAS, Landlord and Tenant have entered into that certain Lease dated as
of May 1, 1995 demising the second floor and a portion of the third floor of the
Building, and granting Tenant certain rights with respect to the third, fourth,
fifth and sixth floors of the Building, and that certain First Amendment to
Lease dated as of August 28, 1995 adding to the Premises certain space on the
third floor of the Building (as so amended, the "Lease");
WHEREAS, Landlord and Tenant desire to add to the Premises the remainder of
the third floor and the entire fifth and sixth floors of the Building in
accordance with the Lease and on the terms contained herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in consideration of the mutual
covenants herein contained, Landlord and Tenant hereby agree as follows. Terms
not defined herein shall have the same meaning as in the Lease.
1. TERM COMMENCEMENT AND EXPIRATION DATES. Landlord and Tenant hereby
confirm that the Term Commencement Date is June 12, 1995 and that the Term
Expiration Date is January 31, 2001. Landlord and Tenant hereby reconfirm that
pursuant to that certain Consent to Sublease dated March 28, 1996 between
Landlord, Tenant and The Stubbins Associates, Inc., the term of the Lease with
respect to the fifth and sixth floors of the Building commences May 21, 1996 and
expires June 8, 2001.
2. MEASUREMENT OF THE PREMISES AND THE BUILDING. Effective May 21, 1996,
Section 1.1 of the Lease shall be amended by deleting the defined term "RENTABLE
FLOOR AREA OF THE PREMISES" and substituting therefor the following:
"RENTABLE FLOOR AREA OF 47,974 Square Feet
THE PREMISES:
Second Floor: 13,223 Square Feet
Third Floor: 9,751 Square Feet
Fifth Floor: 12,500 Square Feet
Sixth Floor: 12,500 Square Feet"
Effective June 3, 1996, Section 1.1 of the Lease shall be amended by
deleting the defined term "RENTABLE FLOOR AREA OF THE PREMISES" and substituting
therefor the
<PAGE> 2
following:
"RENTABLE FLOOR AREA OF 51,446 Square Feet
THE PREMISES:
Second Floor: 13,223 Square Feet
Third Floor: 13,223 Square Feet
Fifth Floor: 12,500 Square Feet
Sixth Floor: 12,500 Square Feet"
Notwithstanding anything to the contrary contained in this Lease, the first
floor of the Building shall be deemed to contain two areas comprising 4273
rentable square feet and 2459 rentable square feet respectively, the mezzanine
floor of the Building shall be deemed to contain two areas comprising 4,957
rentable square feet and 694 rentable square feet respectively, and the fourth
floor of the Building shall be deemed to contain 12,500 rentable square feet.
Section 1.1 of the Lease is hereby amended by deleting the defined term
"TOTAL RENTABLE FLOOR AREA OF THE BUILDING" and substituting therefor the
following:
"TOTAL RENTABLE FLOOR AREA OF 76,329 Square Feet"
THE BUILDING:
3. ANNUAL BASIC RENT. Effective May 21, 1996, Section 1.1 of the Lease
shall be amended by deleting the defined term "ANNUAL BASIC RENT" and
substituting therefor the following:
<TABLE>
"ANNUAL BASIC RENT:
<CAPTION>
----------------------------------------------------------------------
TIME PERIOD ANNUAL RATE CALCULATION
----------------------------------------------------------------------
<S> <C> <C>
June 12, 1995 through $293,019.65 $17.05 x 13,223 rsf +
August 31, 1995 $9.10 x 7,425 rsf
----------------------------------------------------------------------
September 1, 1995 through $327,909.65 $17.05 x 13,223 rsf +
December 11, 1995 $9.10 x 7,425 rsf +
$15.00 x 2,326 rsf
----------------------------------------------------------------------
December 12, 1995 through $386,938.40 $17.05 x 20,648 rsf +
May 20, 1996 $15.00 x 2,326 rsf
----------------------------------------------------------------------
May 21, 1996 through $861,938.40 $17.05 x 20,648 rsf +
June 2, 1996 $15.00 x 2,326 rsf +
$19.00 x 25,000 rsf
----------------------------------------------------------------------
</TABLE>
<PAGE> 3
<TABLE>
----------------------------------------------------------------------
<S> <C> <C>
June 3, 1996 through $914,018.40 $17.05 x 20,648 rsf +
June 11, 1997 $15.00 x 5,798 rsf +
$19.00 x 25,000 rsf
----------------------------------------------------------------------
June 12, 1997 through $924,755.36 $17.57 x 20,648 rsf +
June 30, 1997 $15.00 x 5,798 rsf +
$19.00 x 25,000 rsf
----------------------------------------------------------------------
July 1, 1997 through $939,656.22 $17.57 x 26,446 rsf +
June 11, 1999 $19.00 x 25,000 rsf
----------------------------------------------------------------------
June 12, 1999 through $950,763.54 $17.99 x 26,446 rsf +
January 31, 2001 $19.00 x 25,000 rsf
----------------------------------------------------------------------
February 1, 2001 through $475,000.00 $19.00 x 25,000 rsf
June 8, 2001
----------------------------------------------------------------------
</TABLE>
4. THIRD FLOOR EXPANSION AREA. The defined term "Third Floor Delivery Date"
is hereby revised to mean June 3, 1996.
5. PARKING. Effective September 1, 1996, Section 1.1 of the Lease shall be
amended by deleting the defined term "PARKING" and substituting therefor the
following:
"PARKING: Fifty-seven (57) spaces"
The parking plan dated July 3, 1996 attached hereto as Exhibit A shall
effective such date be substituted for the parking plans attached to the side
letter agreement dated May 1, 1995 between Landlord and Tenant, which is
attached to the Lease as Exhibit G.
Until September 1, 1996 Landlord shall permit Linea 5, inc. and The
Stubbins Associates, Inc. to continue to use the parking spaces which they were
entitled to use immediately prior to May 21, 1996, provided that Landlord shall
receive payment therefor at the rate payable by Tenant under the Lease for
parking spaces.
6. MISCELLANEOUS. In Article XIII of the Lease, the words "Rider Section 3"
are hereby deleted, and the words "Articles XVII and XVIII" are substituted
therefor.
Except as expressly modified herein, all the terms and conditions of the
Lease shall remain in full force and effect and are hereby ratified and
confirmed.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in multiple counterparts under seal as of the date first above written.
Landlord:
ADVENT REALTY LIMITED PARTNERSHIP II
By: Advent Realty GP II Limited Partnership, its
General Partner
By: Advent Realty, Inc., its General Partner
By: /s/ Arthur I. Segal
----------------------------------------
Tenant:
FORRESTER RESEARCH, INC.
By: /s/ George F. Colony
----------------------------------------
George F. Colony, President
<PAGE> 1
EXHIBIT 11
FORRESTER RESEARCH, INC.
<TABLE>
STATEMENT REGARDING COMPUTATION OF PRO FORMA PER SHARE EARNINGS
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1995 1996
------------ -------------
<S> <C> <C>
Computation of income per common share:
Pro forma net income...................................... 1,288,266 1,464,252
========= =========
Shares:
Weighted average shares outstanding....................... 6,000,000 6,000,000
========= =========
Add:
Shares issuable from assumed exercise of options as
determined by the application of the treasury stock
method.................................................. 293,449 293,449
========= =========
Weighted average common and common equivalent shares
outstanding.................................................. 6,293,449 6,293,449
========= =========
Pro forma net income per common share.......................... $0.20 $0.23
========= =========
</TABLE>
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 5, 1996
<PAGE> 1
Exhibit 99.1
By his execution hereof, the undersigned hereby consents to being named
as a director of Forrester Research, Inc. in the Registration Statement on Form
S-1 as set forth therein.
Date: 10/5/96 Signature: /s/ Robert M. Galford
----------------------- -------------------------------
Robert M. Galford
<PAGE> 1
Exhibit 99.2
By his execution hereof, the undersigned hereby consents to being named as a
director of Forrester Research, Inc. in the Registration Statement on Form S-1
as set forth therein.
Date: 9/29/96 Signature: /s/ George R. Horning
---------------------------- ------------------------
George R. Hornig
<PAGE> 1
Exhibit 99.3
By his execution hereof, the undersigned hereby consents to being named as a
director of Forrester Research, Inc. in the Registration Statement on Form S-1
as set forth therein.
Date: 9/19/96 Signature: /s/ Christopher W. Mines
------------------------------ ----------------------------
Christopher W. Mines
<PAGE> 1
Exhibit 99.4
By his execution hereof, the undersigned hereby consents to being named as a
director of Forrester Research, Inc. in the Registration Statement on Form S-1
as set forth therein.
Date: 9/19/96 Signature: /s/ Michael H. Welles
------------------------------ --------------------------
Michael H. Welles
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE NINE MONTH'S ENDED SEPTEMBER 30,
1996 INCLUDED IN ITS REGISTRATION STATEMENT ON FORM S-1 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,265,827
<SECURITIES> 9,581,843
<RECEIVABLES> 8,840,589
<ALLOWANCES> 179,000
<INVENTORY> 0
<CURRENT-ASSETS> 21,174,603
<PP&E> 2,742,943
<DEPRECIATION> 595,017
<TOTAL-ASSETS> 23,322,529
<CURRENT-LIABILITIES> 19,080,511
<BONDS> 0
<COMMON> 60,000
0
0
<OTHER-SE> 4,182,018
<TOTAL-LIABILITY-AND-EQUITY> 23,322,529
<SALES> 0
<TOTAL-REVENUES> 16,373,990
<CGS> 0
<TOTAL-COSTS> 14,219,653
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 110,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,508,252
<INCOME-TAX> 1,044,000
<INCOME-CONTINUING> 1,464,252
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,464,252
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
