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As filed with the Securities and Exchange Commission on March 15, 2000
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________________
TSI International Software Ltd.
(Exact name of Registrant as specified in its charter)
______________________________
<TABLE>
<CAPTION>
Delaware 7372 06-11321
<S> <C> <C>
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
______________________________
45 Danbury Road
Wilton, Connecticut 06897
(203) 761-8600
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
______________________________
Constance F. Galley
President and Chief Executive Officer
TSI International Software Ltd.
45 Danbury Road
Wilton, Connecticut 06897
(203) 761-8600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
______________________________
Copies of all communications, including all communications sent to the agent for
service, should be sent to:
Lawrence S. Wittenberg, Esq.
Testa, Hurwitz & Thibeault, LLP
High Street Tower
125 High Street
Boston, Massachusetts 02110
(617) 248-7000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
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. [_]
______________________________
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount to be Proposed Maximum Amount of
Securities to be Registered Registered Aggregate Offering Price (1) Registration Fee (2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock, $.01 par value per share 906,961 $121,022,608 $31,950
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
(2) Pursuant to Rule 457(c) under the Securities Act of 1933, the
registration fee has been calculated based upon the average of the
high and low prices per share of the common stock of TSI International
Software Ltd. on the Nasdaq National Market on March 9, 2000.
______________________________
TSI Software hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until TSI Software 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 Section 8(a), may
determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
This information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell securities, and we are not soliciting offers to buy these securities.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, Dated March 15, 2000.
TSI INTERNATIONAL SOFTWARE LTD.
906,961 Shares
Common Stock
This prospectus is part of a registration statement that covers 906,961
shares of our common stock. The shares may be offered and sold from time to
time by some of our stockholders. We will not receive any of the proceeds from
the resale of the shares.
Our common stock is quoted on the Nasdaq National Market under the symbol
"MCTR". On March 13, 2000, the last reported sale price for the common stock on
the Nasdaq National Market was $139 per share.
___________________________________________________________
Investing in our common stock is risky. See "Risk Factors" beginning on
page 3.
___________________________________________________________
The Securities and Exchange Commission and State Securities Regulators have
not approved or disapproved these securities or determined if this Prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is April __, 2000.
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SUMMARY
Because this is only a summary, it does not contain all the information
that may be important to you. You should read the entire prospectus, especially
the risk factors, before deciding to invest in our common stock
The Company
We are a leading provider of software that enables companies to transform
their traditional business into an electronic business or e-business using the
Internet and corporate networks. The key to e-business transformation is
seamless integration of business applications across enterprise landscapes that
include back-office systems, Web applications, traditional e-commerce
applications, electronic marketplaces and electronic exchanges. Our flagship
Mercator product line provides software essential for integrating applications
to enable e-business. Mercator products eliminate major stumbling blocks
associated with integrating complex, disparate applications by resolving
fundamental incompatibilities in application formats and semantics. Mercator
provides a single, standards-based architecture that can be applied to all e-
business integration requirements, including business-to-business, consumer-to-
business and internal application-to-application integration. Using Mercator
products, customers can reduce the cost and risk of e-business application
deployment, accelerate e-business benefits and deliver rapid response to
changing business requirements.
Recent Developments
Each of the shares being registered were acquired in connection with our
acquisition of Novera Software, Inc. on September 30, 1999. As part of the
acquisition agreement, we agreed to register 894,971 of the 1,789,916 shares
issued to the Novera stockholders in this registration statement. Additionally,
we have included 11,990 shares issued upon the exercise of options issued to
former Novera option holders in this registration statement because they were
not eligible to be registered on Form S-8.
Contact Information
We were incorporated in Connecticut in 1985 and reincorporated in Delaware in
1993. Our principal executive offices are located at 45 Danbury Road, Wilton,
Connecticut 06897, and our telephone number is (203) 761-8600.
__________________
We have registered trademarks for the TSI logo and "Mercator".
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus constitute forward-looking
statements. These statements relate to future events or other future financial
performance, and are identified by words like may, will, should, expects,
scheduled, plans, intends, anticipates, believes, estimates, potential, or
continue or the negative of such words. These statements are only predictions.
Our actual experience may be materially different. We cannot guarantee future
results, levels of activity, performance, or achievements. You should not
unduly rely on these forward-looking statements, which apply only as of the date
of this prospectus. We are under no duty to update any of the forward-looking
statements after the date of this prospectus.
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RISK FACTORS
You should carefully consider the following risks before making an
investment decision. Our business, results of operations and financial
condition could be adversely affected by any of the following risks. Additional
risks and uncertainties, including those that are not yet identified or that we
currently think are immaterial, may also adversely affect our business, results
of operations and financial condition. The market price of our common stock
could decline due to any of these risks, and you could lose all or part of your
investment.
Our quarterly and annual operating results are volatile and difficult to predict
and may cause our stock price to fluctuate
Our quarterly and annual operating results have varied significantly in
the past and are expected to do so in the future. We believe that you should not
rely on period to period comparisons of our results of operations as indications
of our future performance. In some future periods, our results of operations may
be below the expectation of public market analysts and investors. In this case,
the price of our common stock would likely decline. Our revenues and results of
operations are difficult to forecast and depend on a variety of factors. These
factors include the following:
. the size, timing and terms of individual license transactions;
. the sales cycle for our products;
. demand for and market acceptance of our products and related services,
particularly our Mercator products;
. our ability to expand, and market acceptance of, our professional
services business;
. the timing of our expenditures in anticipation of product releases or
increased revenue;
. the timing of product enhancements and product introductions by us
and our competitors;
. market acceptance of enhanced versions of our existing products and
of new products;
. changes in pricing policies by us and our competitors;
. variations in the mix of products and services sold by us;
. the mix of channels through which our products and services are
sold;
. our success in penetrating international markets;
. the buying patterns and budgeting cycles of customers;
. personnel changes, our ability to attract and retain qualified sales,
professional services and research and development personnel and the
rate at which this personnel becomes productive; and
. general economic conditions.
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We have historically derived a substantial portion of our revenues from
the licensing of our software products, and we anticipate that this trend will
continue for the foreseeable future. Software license revenues are difficult to
forecast for a number of reasons, including the following:
. we typically do not have a material backlog of unfilled orders, and
revenues in any quarter substantially depend on orders booked and
shipped in that quarter;
. the length of the sales cycles for our products can vary significantly
from customer to customer and from product to product and can be as
long as nine months or more;
. the terms and conditions of individual license transactions, including
prices and discounts, are often negotiated based on volumes and
commitments, and may vary considerably from customer to customer;
. We have generally recognized a substantial portion of our quarterly
software licensing revenues in the last month of each quarter.
Accordingly, the cancellation or deferral of even a small number of
purchases of our products could harm our business.
It would be difficult for us to adjust our spending if we experience any revenue
shortfalls
Our future revenues will also be difficult to predict and we could fail to
achieve our revenue expectations. Our expense levels are based, in part, on our
expectation of future revenues, and expense levels are, to a large extent, fixed
in the short term. We may be unable to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall. If revenue levels are below
expectations for any reason, our operating results are likely to be harmed. Net
income may be disproportionately affected by a reduction in revenue because a
large portion of our expenses is related to headcount that cannot be easily
reduced without harming our business.
In addition, we currently intend to increase our operating expenses by
expanding our research and product development staff, particularly research and
development personnel to be devoted to our Mercator product line, increasing our
sales and marketing and professional services operations, expanding distribution
channels and hiring personnel in other operating areas. We expect to experience
a significant time lag between the date professional services, sales and
technical personnel are hired and the date these employees become fully
productive. The timing of expansion and the rate at which new technical,
professional services and sales personnel become productive as well as the
timing of the introduction and success of new distribution channels could cause
material fluctuations in our quarterly results of operations. Furthermore, to
the extent increased operating expenses precede or are not subsequently followed
by increased revenues, our business could be harmed.
We may experience seasonal fluctuations in our revenues or results of operations
While we have not historically experienced any significant seasonal
fluctuations in our revenues or results of operations, it is not uncommon for
software companies to experience strong fourth quarters followed by weaker first
quarters, in some cases with sequential declines in revenues or operating
profit. We believe that many software companies exhibit this pattern in their
sales cycles primarily due to customers' buying patterns and budget cycles. We
may display this pattern in future years.
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We depend on the sales of our Mercator products and related services
We introduced our Mercator products in 1993. In recent years, a
significant portion of our revenue has been attributable to licenses of our
Mercator products and related services, and we expect that revenue attributable
to our Mercator products and related services will continue to represent a
significant portion of our total revenue for the foreseeable future.
Accordingly, our future operating results significantly depend on the market
acceptance and growth of our Mercator product line and enhancements of these
products and services. Market acceptance of our Mercator product line may not
increase or remain at current levels, and we may not be able to successfully
market our Mercator product line or develop extensions and enhancements to this
product line on a long-term basis. In the event that our current or future
competitors release new products that provide, or are perceived as providing,
more advanced features, greater functionality, better performance, better
compatibility with other systems or lower prices than our Mercator product line,
demand for our products and services would likely decline. A decline in demand
for, or market acceptance of, our Mercator product line would harm our business.
We may experience difficulties in developing and introducing new or enhanced
products necessitated by technological changes
Our future success will depend, in part, upon our ability to anticipate
changes, to enhance our current products and to develop and introduce new
products that keep pace with technological advancements and address the
increasingly sophisticated needs of our customers. Our products may be rendered
obsolete if we fail to anticipate or react to change.
Development of enhancements to existing products and new products depends,
in part, on a number of factors, including the following:
. the timing of releases of new versions of applications systems by
vendors;
. the introduction of new applications, systems or computing
platforms;
. the timing of changes in platforms;
. the release of new standards or changes to existing standards; and
. changing customer requirements.
Our product enhancements or new products may not adequately meet the
requirements of the marketplace or achieve any significant degree of market
acceptance. In addition, our introduction or announcement, or an introduction
or announcement by one or more of our current or future competitors, of products
embodying new technologies or features could render our existing products
obsolete or unmarketable. Our, or our competitors', introduction or
announcement of enhanced or new product offerings may cause customers to defer
or cancel purchases of our existing products. Any deferment or cancellation of
purchases could harm our business.
We could experience delays in developing and releasing new products or product
enhancements
We may experience difficulties that could delay or prevent the successful
development, introduction and marketing of new products or product enhancements.
We have in the past experienced delays in the
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introduction of product enhancements and new products and we may experience
delays in the future. Furthermore, as the number of applications, systems and
platforms supported by our products increases, we could experience difficulties
in developing, on a timely basis, product enhancements which address the
increased number of new versions of applications, systems or platforms served by
our existing products. If we fail, for technological or other reasons, to
develop and introduce product enhancements or new products in a timely and cost-
effective manner or if we experience any significant delay in product
development or introduction, our customers may delay or decide against purchases
of our products, which could harm our business.
The success of our products will also depend upon the success of the platforms
we target
We may, in the future, seek to develop and market enhancements to existing
products or new products which are targeted for applications, systems or
platforms which we believe will achieve commercial acceptance. This could
require us to devote significant development, sales and marketing personnel, as
well as other resources, to these efforts, which would otherwise be available
for other purposes. We may not be able to successfully identify these
applications, systems or platforms, and even if we do so, they may not achieve
commercial acceptance or we may not realize a sufficient return on our
investment. Failure of these targeted applications, systems or platforms to
achieve commercial acceptance or our failure to achieve a sufficient return on
our investment could harm our business.
We may not successfully expand our sales and distribution channels
An integral part of our strategy is to expand our indirect sales channels,
including value-added resellers, independent software vendors, systems
integrators and distributors. This channel is accounting for a growing
percentage of our total revenues and we are increasing resources dedicated to
developing and expanding these indirect distribution channels. We may not be
successful in expanding the number of indirect distribution channels for our
products. If we are successful in increasing our sales through indirect sales
channels, we expect that those sales will be at lower per unit prices than sales
through direct channels, and revenue we receive for each sale will be less than
if we had licensed the same product to the customer directly.
Selling through indirect channels may also limit our contact with our
customers. As a result, our ability to accurately forecast sales, evaluate
customer satisfaction and recognize emerging customer requirements may be
hindered.
Even if we successfully expand our indirect distribution channels, any new
value added resellers, independent software vendors, system integrators or
distributors may offer competing products, or have no minimum purchase
requirements of our products. These third parties may also not have the
technical expertise required to market and support our products successfully.
If the third parties do not provide adequate levels of services and technical
support, our customers could become dissatisfied, or we would have to devote
additional resources for customer support. Our brand name and reputation could
be harmed. Selling products through indirect sales channels could cause
conflicts with the selling efforts of our direct sales force.
Our strategy of marketing products directly to end-users and indirectly
through value added resellers; independent software vendors, systems integrators
and distributors may result in distribution channel conflicts. Our direct sales
efforts may compete with those of our indirect channels and, to the extent
different resellers target the same customers, resellers may also come into
conflict with each other. Although we have attempted to manage our distribution
channels to avoid potential conflicts, channel
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conflicts may harm our relationships with existing value added resellers,
independent software vendors, systems integrators or distributors or impair our
ability to attract new value added resellers, independent software vendors,
systems integrators and distributors.
Our future success depends on retaining our key personnel and attracting and
retaining additional highly qualified employees
Our future success depends in large part on the continued service of our
key sales, professional services and research and development personnel, as well
as senior management. All of our employees are employed at-will and we have no
fixed-term employment agreements with our employees, which prevents them from
terminating their employment at any time. The loss of the services of any of
one or more of our key employees could harm our business.
Our future success also depends on our ability to attract, train and retain
highly qualified sales, research and development, professional services and
managerial personnel, particularly sales, professional services and research and
development personnel with expertise in enterprise resource planning systems.
Competition for these personnel is intense. We may not be able to attract,
assimilate or retain qualified personnel. We have at times experienced, and we
continue to experience, difficulty in recruiting qualified sales and research
and development personnel, and we anticipate these difficulties will continue in
the future. Furthermore, we have in the past experienced, and in the future we
expect to continue to experience, a significant time lag between the date sales,
research and development and professional services personnel are hired and the
date these employees become fully productive.
We may encounter difficulties in managing our growth
Our business has grown in recent periods, with total revenues increasing
from approximately $16.1 million in 1995 to $98.6 million in 1999. We have also
acquired the assets of Software Consulting Partners in November 1998, we
acquired Braid Ltd. in March 1999, and Novera Software, Inc. in September, 1999.
The growth of our business has placed, and is expected to continue to place, a
strain on our administrative, financial, sales and operational resources and
increased demands on our systems and controls. For example, from December 31,
1998 to December 31, 1999 we noted an increase in quarterly days sales
outstanding from approximately 109 days to approximately 113 days, respectively,
and an increase in total accounts receivable from $18.0 million to $38.3
million, respectively.
To deal with these concerns, we have recently implemented, or are in the
process of implementing and will be required to implement in the future, a
variety of new and upgraded operational and financial systems, procedures and
controls. In addition, we intend to hire additional administrative personnel.
We may not be able to successfully complete the implementation and integration
of these systems, procedures and controls, or hire additional personnel, in a
timely manner. The failure of our management to respond to, and manage, our
growth and changing business conditions, or to adapt our operational, management
and financial control systems to accommodate our growth could harm our business.
We may face significant risks in expanding our international operations
International revenues accounted for 11.8% of our total revenues for 1998
and 29.4% of our total revenues for 1999. This increase was due primarily to
the acquisitions of Braid Ltd., and the establishment of an office in Germany.
Continued expansion of our international sales and marketing efforts will
require significant management attention and financial resources. We also
expect to commit additional time and
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development resources to customizing our products for selected international
markets and to developing international sales and support channels.
International operations involve a number of additional risks, including
the following:
. impact of possible recessionary environments in economies outside the
United States;
. longer receivables collection periods and greater difficulty in
accounts receivable collection;
. unexpected changes in regulatory requirements;
. dependence on independent resellers;
. reduced protection for intellectual property rights in some countries;
. possible tariffs and other trade barriers;
. foreign currency exchange rate fluctuations;
. difficulties in staffing and managing foreign operations;
. the burdens of complying with a variety of foreign laws;
. potentially adverse tax consequences; and
. political and economic instability.
To the extent that our international operations expand, we expect that an
increasing portion of our international license and service and other revenues
will be denominated in foreign currencies, subjecting us to fluctuations in
foreign currency exchange rates. We do not currently engage in foreign currency
hedging transactions. However, as we continue to expand our international
operations, exposures to gains and losses on foreign currency transactions may
increase. We may choose to limit our exposure by the purchase of forward
foreign exchange contracts or similar hedging strategies. The currency exchange
strategy that we adopt may not be successful in avoiding exchange-related
losses. In addition, the above-listed factors may cause a decline in our future
international revenue and, consequently, may harm our business. We may not be
able to sustain or increase revenue that we derive from international sources.
Our success depends upon the widespread use and adoption of the internet and
intranets
We believe that demand for enterprise application integration solutions,
such as those that we offer, will depend, in part, upon the adoption by
businesses and end-users of the internet and intranets as platforms for
electronic commerce and communications. The internet and intranets are new and
evolving, and they may not be widely adopted, particularly for electronic
commerce and communications among businesses. Critical issues concerning the
internet and intranets, including security, reliability, cost, ease of use and
access and quality of service, remain unresolved at this time, inhibiting
adoption by many enterprises and end-users. If the internet and intranets are
not widely used by businesses and end-users, particularly for electronic
commerce, our business would be harmed.
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Government regulation and legal uncertainties relating to the internet could
adversely affect our business
Congress has recently passed legislation and several more bills have
recently been sponsored in both the House and Senate that are designed to
regulate certain aspects of the internet, including on-line content, copyright
infringement, user privacy, taxation, access charges, liability for third-party
activities and jurisdiction. In addition, federal, state, local and foreign
governmental organizations are also considering other legislative and regulatory
proposals that would regulate the internet. Areas of potential regulation
include libel, pricing, quality of products and services, and intellectual
property ownership.
The laws governing the use of the internet, in general, remain largely
unsettled, even in areas where there has been some legislative action. It may
take years to determine whether and how existing laws such as those governing
intellectual property; privacy, libel and taxation apply to the internet. In
addition, the growth and development of the market for online commerce may
prompt calls for more stringent consumer protection laws, both in the United
States and abroad. This occurrence may impose additional burdens on companies
conducting business online by limiting how information can flow over the
internet and the type of information that can flow over the internet. The
adoption or modification of laws or regulations relating to the internet could
adversely affect our business.
It is not known how courts will interpret both existing and new laws.
Therefore, we are uncertain as to how new laws or the application of existing
laws will affect our business. In addition, our business may be indirectly
affected by our clients who may be subject to such legislation. Increased
regulation of the internet may decrease the growth in the use of the internet,
which could decrease the demand for our services, increase our cost of doing
business or otherwise have a material adverse effect on our business, results of
operations and financial condition.
Capacity constraints caused by growth in the use of the internet may,
unless resolved, impede further development of the internet to the extent that
users experience delays, transmission errors and other difficulties. Further,
the adoption of the internet for commerce and communications, particularly by
those individuals and companies that have historically relied upon alternative
means of commerce and communication generally requires the understanding and
acceptance of a new way of conducting business and exchanging information. In
particular, companies that have already invested substantial resources in other
means of conducting commerce and exchanging information may be particularly
reluctant or slow to adopt a new internet-based strategy that may make their
existing personnel and infrastructure obsolete. If the necessary
infrastructure, products, services or facilities are not developed, or if the
internet does not become a viable commercial medium, our business, results of
operations and financial condition could be materially and adversely affected.
The U.S. Omnibus Appropriations Act of 1998 places a moratorium on taxes
levied on internet access from October 1, 1998 to October 21, 2001. However,
states may place taxes on internet access if taxes had already been generally
imposed and actually enforced prior to October 1, 1998. States which can show
they enforced internet access taxes prior to October 1, 1998 and states after
October 21, 2001 may be able to levy taxes on internet access resulting in
increased cost to access the internet, resulting in a material adverse effect on
our business.
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We face significant competition in the market for e-business integration
software
The market for our products and services is extremely competitive and
subject to rapid change. Because there are relatively low barriers to entry in
the software market, we expect additional competition from other established and
emerging companies.
In the e-business integration market, our Mercator products and related
services compete primarily against solutions developed internally by individual
businesses to meet their specific e-business integration needs. In addition, we
face increasing competition in the e-business integration market from other
third-party software vendors.
Many of our current and potential competitors have longer operating
histories, significantly greater financial, technical, product development and
marketing resources, greater name recognition and larger customer bases than we
do. Our present or future competitors may be able to develop products that are
comparable or superior to those we offer, adapt more quickly than we do to new
technologies, evolving industry trends or customer requirements, or devote
greater resources than we do to the development, promotion and sale of their
products. Accordingly, we may not be able to compete effectively in our target
markets against these competitors.
We expect that we will face increasing pricing pressures from our current
competitors and new market entrants. Our competitors may engage in pricing
practices that reduce the average selling prices of our products and related
services. To offset declining average selling prices, we believe that we must
successfully introduce and sell enhancements to existing products and new
products on a timely basis. We must also develop enhancements to existing
products and new products that incorporate features that can be sold at higher
average selling prices. To the extent that enhancements to existing products and
new products are not developed in a timely manner, do not achieve customer
acceptance or do not generate higher average selling prices, our operating
margins may decline.
We have only limited protection for our proprietary technology
Our success is dependent upon our proprietary software technology. We do
not currently have any patents and we rely principally on trade secret,
copyright and trademark laws, nondisclosure and other contractual agreements and
technical measures to protect our technology. We also believe that factors such
as the technological and creative skills of our personnel, product enhancements
and new product developments are essential to establishing and maintaining a
technology leadership position. We enter into confidentiality and/or license
agreements with our employees, distributors and customers, and we limit access
to and distribution of our software, documentation and other proprietary
information. The steps that we have taken may not be sufficient to prevent
misappropriation of our technology, and these protections do not preclude
competitors from developing products with functionality or features similar to
our products. Third parties could also independently develop competing
technologies that are substantially equivalent or superior to our technologies.
Furthermore, effective copyright and trade secret protection may be unavailable
or limited outside of the United States. Any failure by or inability of us to
protect our proprietary technology could harm our business.
We may become subject to infringement claims
Although we do not believe that our products infringe the proprietary
rights of any third parties, third parties might assert infringement claims
against us or our customers in the future. Furthermore, we may initiate claims
or litigation against third parties for infringement of our proprietary rights
or to establish
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the validity of our proprietary rights. Litigation, either as plaintiff or
defendant, would cause us to incur substantial costs and divert management
resources from productive tasks. Any litigation, regardless of the outcome,
could harm our business. Furthermore, parties making claims against us could
secure substantial damages, as well as injunctive or other equitable relief,
which could effectively block our ability to license our products in the United
States or abroad. A large monetary judgment could harm our business.
If it appears necessary or desirable, we may seek licenses to intellectual
property that we are allegedly infringing. We may not be able to obtain
licenses on acceptable terms, if at all. The failure to obtain the necessary
licenses or other rights could harm our business. As the number of software
products in the industry increases and the functionality of these products
further overlaps, we believe that software developers may become increasingly
subject to infringement claims. Any claims, with or without merit, can be time
consuming and expensive to defend and could harm our business. There are
currently no pending claims that our products, trademarks or other proprietary
rights infringe upon the proprietary rights of third parties.
Software defects could diminish demand for our products
Software products as complex as those that we offer may contain defects or
failures when introduced or when new versions are released. We have, in the
past, discovered software defects in certain of our products and we may
experience delays or lost revenue to correct these defects in the future.
Despite our testing of our products, we may find errors in new products or
releases after commencement of commercial shipments, resulting in our loss of
market share or failure to achieve market acceptance.
We may become subject to product liability claims
Our license agreements with our customers typically contain provisions
designed to limit our exposure to potential product liability claims. It is
possible, however, that the limitation of liability provisions contained in our
license agreements, especially unsigned "shrink-wrap" licenses, may not be
effective under the laws of certain jurisdictions. Consequently, the sale and
support of our software entails the risk of product liability claims in the
future. We currently have a standard business owner's insurance policy, but we
do not have insurance specifically for software product liability risks or
software errors and omissions.
We may face difficulties in successfully integrating any businesses, products or
technologies that we have or may acquire
In September 1999, we acquired all of the capital stock of Novera Software,
Inc., a provider of Web application integration software products. In March
1999, we acquired all of the outstanding share capital of Braid, a provider of
enterprise application integration software products to financial services
institutions. In November 1998, we acquired all of the assets of Software
Consulting Partners, a professional services organization. If other appropriate
opportunities present themselves, we intend to acquire businesses, products or
technologies that we believe are strategic. We may not be able to identify,
negotiate or finance acquisitions successfully, or integrate these acquisitions
with our current business. The process of integrating an acquired business,
product or technology may result in unforeseen operating difficulties and
expenditures and may absorb significant management attention that would
otherwise be available for ongoing development of our business. For example,
with the acquisition of Braid, we have had to manage a larger and more
geographically dispersed operation.
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Moreover, we may not realize the anticipated benefits of any acquisition.
Acquisitions could result in potentially dilutive issuances of equity
securities, the incurrence of debt, contingent liabilities and/or amortization
expenses related to goodwill and other intangible assets, which could harm our
business. Any future acquisitions of other technologies, products or companies
may require us to obtain additional equity or debt financing, which may not be
available or may be dilutive.
Our stock price has been volatile and could continue to remain volatile
The market price of our common stock has risen significantly since our initial
public offering in July 1997. The trading price of our common stock has
fluctuated in the past and may be significantly affected by a number of factors,
including the following:
. actual or anticipated fluctuations in our operating results;
. announcements of technological innovations or new products by us or
our competitors;
. developments with respect to patents, copyrights or proprietary
rights;
. conditions and trends in the software or other industries; and
. general market conditions.
In addition, the stock market has, from time to time, experienced
significant price and volume fluctuations that have particularly affected the
market prices for the common stock of technology companies. These broad market
fluctuations may cause the market price of our common stock to decline.
We could face securities litigation if our stock price remains highly volatile
In the past, securities class action litigation has often followed periods
of volatility in the market price of a company's securities. We may face
securities class action litigation in the future. Any litigation could result
in substantial costs and a diversion of management's attention and resources,
which could harm our business.
Our stockholder rights plan, corporate governance structure and governing law
may delay or prevent our acquisition by another company
Our governing documents as well as Delaware law contain provisions that
could make it more difficult for a third party to attempt to acquire or gain
control of our company. These provisions include:
. our Board of Directors can issue shares of preferred stock without any
vote or action by the stockholders and this stock could have voting,
liquidation and dividend rights superior to that of existing
stockholders and could impede the success of any acquisition attempt
by another company;
. we adopted a stockholders rights plan which permits existing
stockholders to purchase a substantial number of shares at a
substantial discount to the market price if a third party attempts to
gain control on a large equity position in our company;
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. a stockholder must give our Board of Directors prior notice of a
proposal to take action by written consent;
. a stockholder must give advance notice to the Board of Directors
before stockholder-sponsored proposals may receive consideration at
annual meetings and before a stockholder may make nominations for the
election of directors;
. vacancies on the Board of Directors may be filled until the next
annual meeting of stockholders only by majority vote of the directors
then in office; and
. stockholders cannot call special meetings of stockholders
We are also governed by Section 203 of the Delaware General Corporation
Law, which restricts certain business combinations with any "interested
stockholder," as defined by that statute. Our stockholder rights plan, our
charter bylaws and the provisions of Section 203 could make it more difficult
for a third party to acquire control of our outstanding voting stock and could
delay or prevent a change in our control.
Future sales of our common stock by our stockholders could cause our stock price
to decline
If our stockholders sell substantial amounts of our common stock, including
shares issued upon exercise of options and warrants, in the public market, the
market price of our common stock could fall. These sales could also impair our
ability to raise capital through the sale of equity securities in the future at
a price we deem appropriate. All of our outstanding shares of common stock may
be sold in the public market except those held by our affiliates and the portion
of the shares held by former Novera shareholders that are not included in this
registration statement. Shares held by affiliates may be sold by them in the
public market, subject to volume restrictions and other provisions of Rule 144
under the Securities Act.
USE OF PROCEEDS
We will not receive any proceeds from the resale of the common stock by the
selling stockholders. The principal purpose of this offering is to effect an
orderly disposition of the selling stockholders' shares.
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SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of our shares as of February 23, 2000 and the number of shares which
may be offered by the selling stockholders. Some of the selling stockholders
are partnerships which may distribute their shares to their partners who may
sell the shares pursuant to this prospectus. The selling stockholders may make
gifts of shares and if they do, the donee will be able to sell the shares under
this prospectus. We have assumed, when calculating the numbers in the table,
that all of the shares owned by each selling stockholder and offered pursuant to
this prospectus will be sold. As of February 23, 2000, there were 28,331,723
shares of common stock outstanding. An asterisk means that the number is less
than 1%.
<TABLE>
<CAPTION>
Shares Owned Before the Shares Offered Pursuant to Shares Owned After
Offering this Prospectus the Offering
----------------------- -------------------------- ----------------------
Selling Stockholders Number Percent Number Percent Number Percent
- -------------------- ------ ------- ------ ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Herbert L. Rush 262,207 * 131,104 * 131,103 *
Timothy D. Hamilton 77,308 * 38,654 * 38,654 *
Michael J. Frey (1) 22,659 * 8,194 * 14,465 *
John A. Orenstein (2) 38,126 * 18,858 * 19,268 *
Avrum Belzer 4,919 * 2,460 * 2,459 *
Ronald E. Dann 5,787 * 1,532 * 4,255 *
John Deignan (3) 6,096 * 1,127 * 4,969 *
Laurie Desroches (4) 1,179 * 164 * 1,015 *
Peter S. Easton (5) 6,403 * 1,245 * 5,158 *
William G. Filler (6) 7,920 * 1,507 * 6,413 *
Martha F. Groves 8,296 * 1,250 * 7,046 *
Bart A. Hanlon (7) 12,952 * 1,025 * 11,927 *
Sean Lindsay (8) 1,474 * 205 * 1,269 *
Harminder Nayar (9) 2,283 * 256 * 2,027 *
Brian P. O'Halloran (10) 5,649 * 451 * 5,198 *
John W. Piekos (11) 8,462 * 820 * 7,642 *
Donna White (12) 6,208 * 1,230 * 4,978 *
Gary B. Zakon (13) 18,699 * 5,068 * 13,631 *
Jeffrey Anuszczyk 1,844 * 922 * 922 *
Scott Barnett 1,199 * 600 * 599 *
Christopher Cool 1,998 * 1,153 * 845 *
Donna M. Donovan 61 * 31 * 30 *
Ralph Engwall 1,229 * 615 * 614 *
Neveen Farag 348 * 174 * 174 *
Boris Finkelstein 1,281 * 641 * 640 *
Sukie Hanna 768 * 384 * 384 *
Steven Hershberg 1,445 * 723 * 722 *
Neil M. Mager 3,115 * 1,558 * 1,557 *
Kristine Murphy 502 * 251 * 251 *
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Richard T. Reichgut 2,049 * 1,025 * 1,024 *
Christin Taber 717 * 359 * 358 *
Adam Ward 2,152 * 1,076 * 1,076 *
Diane Nealon 1,639 * 820 * 819 *
Charles River Partners 403,724 1.43% 201,862 * 201,862 *
VII, Limited Partnership
Matrix Partners (14) 403,723 1.43% 201,862 * 201,861 *
John Mandile 26,443 * 13,222 * 13,221 *
Sigma Partners (15) 114,288 * 57,145 * 57,143 *
Frank Moss 2,962 * 1,481 * 1,481 *
Ronald Nordin 3,530 * 1,765 * 1,765 *
Paul Levine and the Paul 12,452 10,506 1,946
Levine Family Trust (16)
Invemed Fund, L.P. 144,694 * 72,347 * 72,347 *
Egan-Managed Capital, L.P. 96,462 * 48,231 * 48,231 *
Comdisco, Inc. 12,057 * 6,029 * 6,028 *
Alliance Technology 120,577 * 60,289 * 60,288 *
Ventures II, L.P. (17)
Gatehouse Investors, LLC 7,234 * 3,617 * 3,617 *
Margaret S. Stohr 409 * 409 * -- *
Donald Bulens 307 * 307 * -- *
Heidrick & Struggles, Inc. 1,639 * 1,639 * -- *
David Bailey 768 * 768 * -- *
------------------------------------------------------------------------------------
1,876,803 6.62% 906,961 3.20% 969,842 3.42%
Total:
</TABLE>
___________________
(1) Includes 772 shares underlying options which are exercisable on or before
June 1, 2000.
(2) Includes 410 shares underlying options which are exercisable on or before
June 1, 2000.
(3) Includes 213 shares underlying options which are exercisable on or before
June 1, 2000.
(7) Includes 5,303 shares underlying options which are exercisable on or before
June 1, 2000.
(8) Includes 90 shares underlying options which are exercisable on or before
June 1, 2000.
(9) Includes 221 shares underlying options which are exercisable on or before
June 1, 2000.
(10) Includes 2,982 shares underlying options which are exercisable on or before
June 1, 2000.
(11) Includes 2,323 shares underlying options which are exercisable on or before
June 1, 2000.
(12) Includes 1,249 shares underlying options which are exercisable on or before
June 1, 2000.
(13) Includes 2,480 shares underlying options which are exercisable on or before
June 1, 2000.
(14) Includes 383,537 shares owned by Matrix Partners IV, L.P. and 20,186 shares
owned by Matrix IV Entrepreneurs Fund, L.P.
(15) Includes 89,637 shares owned by Sigma Partners III, L.P. and 22,183 shares
owned by Sigma
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Associates III, L.P.
(16) Includes 10,041 shares owned by Paul Levine and 2,411 shares owned by the
Paul Levine Family Trust.
(17) Includes 118,213 shares owned by Alliance Technology Ventures II, L.P. and
2,364 shares owned by ATV II Affiliates Fund, L.P.
None of the selling stockholders has had any material relationship with us or
any of our affiliates within the past three years except as described below.
Novera
Each of the selling stockholders acquired his or its shares in connection
with our acquisition of Novera on September 30, 1999. The reorganization
agreement is incorporated by reference to Exhibit 4.1. As part of the
acquisition, we agreed to register 894,971 of the 1,789,916 shares issued to the
Novera stockholders in this registration statement. Additionally, we have
included 11,990 shares issued upon the exercise of options issued to former
Novera option holders in this registration statement because they were not
eligible to be registered on Form S-8.
A total of 178,990 shares of common stock issued to the Novera stockholders
are held in escrow until September 30, 2000. These shares will be used to
secure the Novera stockholders' obligations to indemnify us for any breach of
the representations or warranties of the Novera stockholders in the
reorganization agreement. Each of the Novera stockholders has sole authority to
vote all securities held by him or it, including those shares held in escrow.
Some of the selling stockholders are presently employed by us or one of our
direct or indirect subsidiaries.
The acquisition of Novera was accounted for using the purchase method of
accounting.
General
Each of the selling stockholders represented to us, in connection with the
completion of the acquisition of Novera, that he or it was acquiring the shares
from us without any present intention of effecting a distribution of those
shares. In recognition of the fact that the selling stockholders may want to be
able to sell their shares when they consider appropriate, we agreed to file with
the Securities and Exchange Commission two registration statements on Form S-3
to permit the public sale of the shares by the selling stockholders from time to
time and to use its commercially reasonable efforts to keep the registration
statements effective until the earlier of (i) the sale of all of the shares
pursuant to the applicable registration statement, (ii) the date all of the
shares are eligible to be sold pursuant to an exemption under the Securities Act
of 1933, or (iii) September 30, 2001. We will prepare and file such amendments
and supplements to the registration statements as may be needed to keep them
effective as necessary.
We have agreed to bear all expenses in connection with the registration and
resale of the shares (other than underwriting discounts and selling commissions
and the fees and expenses of counsel and other advisors to the selling
stockholders). See "Plan of Distribution." The reorganization agreement
provides that we will indemnify the selling stockholders for any losses incurred
by them in connection with actions arising from any untrue statement of a
material fact in the registration statement or any omission of a
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<PAGE>
material fact required to be stated therein, unless such statement or omission
was made in reliance upon written information furnished to us by the selling
stockholders. Similarly, the reorganization agreement provides that each selling
stockholder will indemnify us and its officers and directors for any losses
incurred by them in connection with any action arising from any untrue statement
of material fact in the registration statement or any omission of a material
fact required to be stated therein, if such statement or omission was made in
reliance on written information furnished to us by the selling stockholder.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the registrant
pursuant to the foregoing provisions, we have been informed 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.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 70,000,000 shares of common stock,
$.01 par value per share, and 5,000,000 shares of preferred stock, $.01 par
value per share.
Common Stock
As of February 23, 2000, there were 28,331,723 shares of common stock
outstanding that were held of record by approximately 158 shareholders.
Subject to preferences that may be applicable to any preferred stock
outstanding at the time, the holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available therefor at such
times and in such amounts as the Board of Directors may from time to time
determine. Each stockholder is entitled to one vote for each of common stock
held on all matters submitted to a vote of stockholders. Cumulative voting for
the election of directors is not provided for in our amended and restated
Certificate of Incorporation, which means that the holders of a majority of the
shares voted can elect all of the directors then standing for election. The
common stock is not entitled to preemptive rights and is not subject to
conversion or redemption. Upon our liquidation, dissolution or winding-up, the
assets legally available for distribution to stockholders are distributable
ratably among the holders of the common stock and any participating preferred
stock outstanding at that time after payment of liquidation preferences, if any,
on any outstanding preferred stock and payment of other claims of creditors.
Each outstanding share of common stock is, and all shares of common stock to be
outstanding upon completion of this offering will be, fully paid and
nonassessable.
Preferred Stock
The Board of Directors is authorized subject to any limitations prescribed
by Delaware law, to provide for the issuance of additional shares of preferred
stock in one or more series, to establish from time to time the number of shares
to be included in each such series, to fix the rights, preferences and
privileges of the shares of each wholly unissued series and any qualifications,
limitations or restrictions thereon, and to increase or decrease the number of
shares of any such series (but not below the number of shares of such series
then outstanding), without any further vote or action by the stockholders. The
Board of Directors may authorize the issuance of preferred stock with voting or
conversion rights that could adversely affect the voting power or other rights
of the holders of common stock. Thus, the issuance of preferred stock may have
the effect of delaying, deferring or preventing a change in control of our
company. We have no current plan to issue any shares of preferred stock.
Warrants
As of February 23, 2000, we had outstanding four warrants to purchase
shares of our common stock. These warrants are exercisable for an aggregate of
63,810 shares of common stock. These warrants have an exercise price of $1.00
per share of common stock and expire in June, 2002. These warrants are
exercisable on a net exercise basis.
Registration Rights
Pursuant to the reorganization agreement with Novera, we are required to
use our best efforts to have an effective registration statement on file with
regard to the remaining 894,945 shares of Common Stock issued to former Novera
shareholders by June 1, 2000.
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<PAGE>
Some of our investors holding shares of common stock and warrants to
purchase 63,810 shares of our common stock have "demand" rights to register
shares of common stock, including shares of common stock issuable upon exercise
of such warrants under the Securities Act. If requested by holders of more than
50% of the registrable securities then outstanding, we must file a registration
statement under the Securities Act covering all registrable securities requested
to be registered. We are required to effect two (2) such "demand" registrations
pursuant to these registration rights.
In addition, holders of registrable securities have "piggyback"
registration rights. If we propose to register any of its securities under the
Securities Act other than in connection with our employee benefit plans or a
corporate reorganization, the holders of registrable securities may require us
to include all or a portion of their shares in such registration, although the
managing underwriter, if any, of any such offering has certain rights to limit
the number of registrable securities proposed to be included in such
registration.
Further, if requested by holders of more than 50% of the then outstanding
registrable securities (assuming there is a reasonably anticipated aggregate
offering price to the public of at least $500,000), we must file a registration
statement on Form S-3 with respect to the resale of such registrable securities,
subject to certain conditions.
We will bear all expenses incurred in connection with the above
registrations (other than the underwriters' and brokers' discounts and
commissions).
Our obligation to register the registrable securities will terminate when
all such registrable securities have been registered and sold or are no longer
outstanding.
Delaware Law and Certain Charter and By-Law Provisions; Anti-Takeover Effects
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law regulating corporate takeovers. The anti-takeover law prevents
certain Delaware corporations, including those whose securities are listed on
the Nasdaq National Market, from engaging, under certain circumstances, in a
"business combination" (which includes a merger or sale of more than 10% of the
corporation's assets) with any "interested stockholder" (a stockholder who owns
15% or more of the corporation's outstanding voting stock) for three years
following the date that such stockholder became an "interested stockholder." A
Delaware corporation may "opt out" of the anti-takeover law with an express
provision in its original Certificate of Incorporation or an express provisions
in its Certificate of Incorporation or bylaws resulting from a stockholders'
amendment approved by at least a majority of the outstanding voting shares. We
have not "opted out" of the provisions of the anti-takeover law.
The foregoing provisions 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 us.
Shareholder Rights Plan
On August 27, 1998, our Board of Directors declared a dividend of one
preferred share purchase right for each outstanding share of our common stock.
The dividend was paid to stockholders of record on September 7, 1998. In
addition, one preferred share purchase right shall be issued with each share of
common stock that becomes outstanding between the record date and the earliest
of the distribution date, the redemption date and the final expiration date (as
such terms are defined in the rights agreement). Each preferred share purchase
right entitles the registered holder to purchase from us one one-hundredth of a
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share of our Series A junior participating preferred stock, at a price of
$140.00 per one one-hundredth of a preferred share, subject to adjustment. The
full description and terms of the rights are set forth in a rights agreement
between us and The Bank of New York, as rights agent.
Until the earlier to occur of (i) 10 days following a public announcement
or disclosure that a person or group of affiliated or associated persons, an
acquiring person, has acquired beneficial ownership of 15% or more of the
outstanding shares of common stock or (ii) 10 business days (or such later date
as may be determined by action of the Board of Directors) following the
announcement of an intention to make a tender offer or exchange offer the
conclusion of which would result in a person or group becoming an acquiring
person, the rights will be evidenced, with respect to any of the common stock
certificates outstanding as of the record date, by such shares of common stock
with a copy of a summary of rights attached thereto. Notwithstanding the
foregoing, (i) no person shall become an acquiring person if our Board of
Directors determines in good faith that a person who would otherwise be an
acquiring person has become such inadvertently, and such person as promptly as
practicable takes such actions as may be necessary so that such person would no
longer be considered an acquiring person and (ii) any person or group of
affiliated or associated persons who or which held beneficial ownership of 5% or
more of the outstanding shares of common stock as of August 27, 1998 will not be
deemed to be an acquiring person unless and until such person or group of
affiliated or associated persons hold beneficial ownership of 20% or more of the
then outstanding shares of common stock.
The rights agreement provides that, until the distribution date, the rights
will be transferred with and only with the shares of common stock. Until the
distribution date (or earlier redemption or expiration of the rights), new
certificates for shares of common stock issued after the record date, upon
transfer or new issuance of shares of common stock, will contain a notation
incorporating the rights agreement by reference. Until the distribution date
(or earlier redemption or expiration of the rights), the surrender for transfer
of any certificates for shares of common stock outstanding as of the record
date, even without such notation or a copy of the summary of rights being
attached thereto, will also constitute the transfer of the rights associated
with the shares of common stock represented by such certificate. As soon as
practicable following the distribution date, separate certificates evidencing
the rights will be mailed to holders of record of the shares of common stock as
of the close of business on the distribution date and such separate right
certificates alone will evidence the rights.
The rights are not exercisable until the distribution date. The rights will
expire on September 2, 2008, the final expiration date, unless the final
expiration date is extended or unless we redeem or exchange the rights, in each
case, as described below.
The purchase price payable, and the number of preferred shares or other
securities or property issuable, upon exercise of the rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the preferred
shares, (ii) upon the grant to holders of the preferred shares of certain rights
or warrants to subscribe for or purchase preferred shares at a price, or
securities convertible into preferred shares with a conversion price, less than
the then current market price of the preferred shares or (iii) upon the
distribution to holders of the preferred shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in preferred shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding rights and the number of one one-hundredths of a
preferred share issuable upon exercise of each right are also subject to
adjustment in the event of a stock dividend on the
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<PAGE>
shares of common stock payable in shares of common stock or subdivisions,
consolidations or combinations of the shares of common stock occurring, in any
such case, prior to the distribution date.
Preferred shares purchasable upon exercise of the rights will not be
redeemble. Each preferred share will be entitled to a quarterly dividend
payment of 100 times the dividend declared per shares of common stock. In the
event of liquidation, each preferred share will be entitled to a $1.00
preference, and thereafter the holders of the preferred shares will be entitled
to an aggregate payment of 100 times the aggregate payment of 100 times the
aggregate payment made per shares of common stock. Each preferred share will
have 100 votes, voting together with the shares of common stock. Finally, in
the event of any merger, consolidation or other transaction in which shares of
common stock are exchange, each preferred share will be entitled to receive 100
times the amount received per share of common stock. These rights are protected
by customary antidilution provisions.
Because of the nature of the preferred shares' divided, liquidation and
voting rights, the value of the one one-hundredth interest in a preferred share
purchasable upon exercise of each right should approximate the value of one
share of common stock.
In the event that any person becomes an acquiring person, unless the event
causing the designated percentage threshold to be crossed and the person to
thereby become an acquiring person is a merger or acquisition described in the
next paragraph, each holder of a right, other than rights beneficially owned by
the acquiring person (which will thereafter be void), will thereafter have the
right to receive upon exercise that number of share of common stock having a
market value of two times the exercise price of the right on the terms and
conditions set forth in the rights agreement. If we do not have authorized but
unissued share of common stock sufficient to satisfy such obligation to issue
share of common stock, we are obligated to deliver upon payment of the exercise
price of a right an amount of cash or other securities equivalent in value to
the share of common stock issuable upon exercise of a right.
In the event that any person or group becomes an acquiring person and we
merge into or engage in certain other business combination transactions with an
acquiring person or 50% or more of our consolidated assets or earning power are
sold to an acquiring person, each holder of a right, other than rights
beneficially owned by an acquiring person, will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
right, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the right.
At any time after any person becomes an acquiring person and prior to the
acquisition by such person or group of 50% or more of our outstanding stock, our
Board of Directors may exchange the rights (other than rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one share of common stock, or one one-hundredth of a preferred share
(or of a share of a class or series of our preferred stock having equivalent
rights, preferences and privileged), per right (subject to adjustment).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment of at least 1% in
such purchase price. No fractional preferred shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a preferred
share, which may, at our election, be evidenced by depository receipts) and in
lieu thereof, an adjustment in cash will be made based on the market price of
the preferred shares on the last trading day prior to the date of exercise.
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At any time prior to such time as a person or group becomes an acquiring
person, our Board of Directors may redeem the rights in whole, but not in part,
at a price of $0.001 per right. The redemption of the rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. After the period for redemption
of the rights has expired, the Board of Directors may not amend the rights
agreement to extend the period for redemption of the rights. Immediately upon
any redemption of the rights, the right to exercise the rights will terminate
and the only right of the holders of rights will be to receive the redemption
price.
The terms of the rights may be amended by a resolution of the Board of
Directors without the consent of the holders of the rights, except that from and
after such time as a person or group becomes an acquiring person, no such
amendment may adversely affect the interests of the holders of the rights (other
than an acquiring person).
Until a right is exercised, the holder thereof, as such, will have no
rights as a stockholder of our company, including, without limitation, the right
to vote or to receive dividends.
As of February 23, 2000, there were approximately 28,331,723 shares of our
common stock outstanding. As long as the rights are attached to the shares of
common stock, one additional right shall be deemed to be delivered for each
share of common stock we issue or transfer in the future, including but not
limited to shares of common stock issuable upon exercise of options we grant.
Five hundred thousand preferred shares are initially reserved for issuance upon
exercise of the rights, such number to be subject to adjustment from time to
time in accordance with the rights agreement.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is The Bank of New
York.
22
<PAGE>
PLAN OF DISTRIBUTION
The shares offered in this prospectus may be sold from time to time by the
selling stockholders for their own accounts. Some of the selling stockholders
are partnerships which may distribute their shares to their partners who may
sell the shares pursuant to this prospectus. TSI Software will not receive any
proceeds from this offering. The selling stockholders will pay or assume
brokerage commission or other charges and expenses incurred in the resale of the
shares.
The selling stockholders are not subject to any underwriting agreement. The
selling stockholders, or any parties who receive the shares from the selling
stockholders by way of a gift, donation or other transfer, may sell the shares
covered by this prospectus. The selling stockholders may sell the shares
offered by this prospectus from time to time at market prices prevailing at the
time of sale, at prices relating to the prevailing market prices or at
negotiated prices. The sales may be made in the over-the-counter market, on the
Nasdaq National Market, or on any exchange on which the shares are listed. The
shares may be sold by one or more of the following means:
. one or more block trades in which a broker or dealer will attempt to sell
all or a portion of the shares held by the selling stockholders as agent or
principal;
. purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
. ordinary brokerage transactions and transactions in which a broker solicits
purchasers;
. in negotiated transactions; and
. through other means.
The selling stockholders may effect sales at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The selling stockholders may effect sales by selling shares
to or through broker-dealers, and such broker-dealers may receive compensation
in the form of underwriting discounts, concessions, commissions, or fees from
the selling stockholders and/or purchasers of the shares. Under the federal
securities laws, any broker-dealers that participate with the selling
stockholders in the distribution of the shares may be deemed to be underwriters
and any commissions received by them and any profit on the resale of the shares
positioned by them might be deemed to be underwriting compensation.
TSI Software intends to maintain the effectiveness of this prospectus until
September 30, 2000 or until such time as is required to satisfy TSI Software's
obligations under the reorganization agreement between TSI Software and Novera.
The selling stockholders' rights to resell shares under this prospectus may be
suspended by TSI Software.
TSI Software will inform the selling stockholders that the antimanipulation
rules under Section 16 of the Securities Exchange Act may apply to sales in the
market and will furnish the selling stockholders with a copy of these rules if
the stockholders request them. TSI Software will also inform the selling
stockholders that they need to deliver a copy of this prospectus to the buyer
when they sell shares.
Some of the shares may be sold under Rule 144 rather than in reliance on this
prospectus.
23
<PAGE>
The common stock is quoted on the Nasdaq National Market under the symbol
"MCTR." On March 13, 2000, the last reported sale price for the common stock on
the Nasdaq National Market was $139 per share.
24
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission You may read and copy
any document we file at the public reference facilities, maintained by the
Securities and Exchange Commission:
<TABLE>
<S> <C> <C>
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 5000 West Madison Street 13/th/ Floor
450 Fifth Street, N.W. Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
</TABLE>
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Section of the Securities and Exchange Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 or by calling the Securities and
Exchange Commission at 1-800-SEC-0330. Our Securities and Exchange Commission
filings are also available to the public from the Securities and Exchange
Commission's website at "http://www.sec.gov."
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the Securities and Exchange
Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filing we
will make with the Securities and Exchange Commission under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act (File No. 000-22667):
1. Our Annual Report on Form 10-K for the year ended December 31, 1998;
2. Our proxy statement, filed on March 15, 1999, for the 1999 annual
meeting of shareholders;
3. Our proxy statement, filed on March 2, 2000, for a special meeting of
shareholders;
3. Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999 and September 30, 1999;
4. Our Current Reports on Form 8-K dated January 29, 1999, April 1, 1999,
June 1, 1999 and October 15, 1999; and
5. The "Description of Capital Stock" contained in our Registration
Statements on Form 8-A, filed on June 6, 1997 and September 4, 1998.
We will provide a copy of any and all of the information that is
incorporated by reference in this prospectus, not including exhibits to the
information unless those exhibits are specifically incorporated by reference
into this prospectus, to any person, without charge, upon written or oral
request.
Requests for copies of this information should be directed to Investor
Relations, TSI International Software Ltd., 45 Danbury Road, Wilton, Connecticut
06897; telephone number (203) 761-8600.
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. You should rely only on the information or
representations provided in this prospectus. We have authorized no one to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus is accurate as of any date other than
the date on the front of the document.
25
<PAGE>
LAWYERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.
EXPERTS
Our consolidated financial statements and related schedule as of December
31, 1998 and 1997, and for each of the years in the three-year period ended
December 31, 1998, included in our annual report on Form 10-K for the year ended
December 31, 1998 and incorporated by reference in this prospectus and
registration statement have been audited by KPMG LLP, independent certified
public accountants, as set forth in their reports incorporated by reference
herein and are included in reliance upon such reports given upon the authority
of said firm as experts in accounting and auditing.
26
<PAGE>
================================================================================
You may rely only on the information contained in this prospectus. We have not
authorized anyone to provide information different from that contained in this
prospectus. Neither the delivery of this prospectus nor sale of common stock
means that information contained in this prospectus is correct after the date of
this prospectus,. This prospectus is not a offer to sell or solicitation of an
offer to buy these shares of common stock in any circumstances under which the
offer solicitation is unlawful.
_________________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary........................................................ 1
Risk Factors................................................... 3
Use of Proceeds................................................ 13
Selling Stockholders........................................... 14
Description of Capital Stock................................... 18
Plan of Distribution........................................... 23
Where You Can Find More Information............................ 25
Incorporation of Certain Information by Reference.............. 25
Lawyers........................................................ 26
Experts........................................................ 26
</TABLE>
906,961 Shares
TSI INTERNATIONAL SOFTWARE LTD.
Common Stock
_______________________
PROSPECTUS
April ___, 2000
________________________
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth an estimate of the expenses expected to be
incurred in connection with the issuance and distribution of the securities
being registered, other than underwriting compensation:
<TABLE>
<S> <C>
Registration fee -- Securities and Exchange Commission...... $ 31,950
Nasdaq National Market additional listing fee............... $ 9,000
Accounting fees and expenses................................ $ 10,000
Legal fees and expenses..................................... $ 75,000
Miscellaneous............................................... $ 10,000
TOTAL.................................................. $135,950
</TABLE>
TSI Software will bear all expenses shown above. All amounts, other than
the Securities and Exchange Commission registration fee and the Nasdaq National
Market additional listing fee are estimates solely for the purpose of this
offering.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law permits us to indemnify
our directors, officers, employees and agents against actual and reasonable
expenses (including attorneys' fees) incurred by them in connection with any
action, suit or proceeding brought against them by reason of their status or
service as a director, officer, employee or agent by or on behalf of our company
and against expenses (including attorneys' fees), judgments, fines and
settlements actually and reasonably incurred by him or her in connection with
any such action, suit or proceeding, if (i) he or she acted in good faith and in
a manner he or she reasonably believed to be in or not opposed to the best
interests of our company and (ii) in the case of a criminal proceeding, he or
she had no reasonable cause to believe his or her conduct was unlawful. Except
as ordered by a court, no indemnification shall be made in connection with any
proceeding brought by or in the right of the corporation where the person
involved is adjudged to be liable to our company.
Article VII of our amended and restated Certificate of Incorporation
contains provisions indemnifying our directors and officers to the fullest
extent permitted by the Delaware General Corporation Law. We have entered into
agreements with each of our director's which eliminate their personal liability
for monetary damages as long as the director's actions were in good faith and in
a manner reasonably believed to be in the bests interests of the Company, and
with respect to a criminal action or proceeding, the director had no reasonable
cause to believe the activity was unlawful. These provisions do not limit or
eliminate our rights or any stockholders' rights to seek non-monetary relief,
such as an injunction or rescission, in the event of a breach of a director's
fiduciary duty.
We maintain directors and officers liability insurance for the benefit of
our directors and certain of its officers.
Our amended and restated by-laws contain no provisions relating to the
indemnification of officers and directors.
II-1
<PAGE>
Item 16. Exhibits.
The following exhibits, required by Item 601 of Regulation S-K, are filed
as a part of this registration statement. Exhibit numbers, where applicable, in
the left column correspond to those of Item 601 of Regulation S-K.
Exhibit No. Item and Reference
- ----------- ------------------
3.1 -- Amended and restated Certificate of Incorporation of TSI
Software (filed as Exhibit 3.02 to our Registration
Statement on Form S-1 (File No. 33-27293) and incorporated
herein by reference)
3.2 -- Amended and restated Bylaws of TSI Software (filed as
Exhibit 3.03 to our Registration Statement on Form S-1 (File
No. 33-27293) and incorporated herein by reference)
4.1 -- Agreement and Plan of Reorganization dated September 30,
1999 by and among TSI Software, Novera Software, Inc. and
Natchez Acquisition Corp. (filed as Exhibit 2.1 to the
Company's current report on Form 8-K/A dated December 15,
1999 and incorporated herein by reference)
4.2 -- Specimen certificate representing the Common Stock (filed as
Exhibit 4.01 to our Registration Statement on Form S-1 (File
No. 33-27293) and incorporated herein by reference)
5.1 -- Legal opinion of Testa, Hurwitz & Thibeault, LLP
23.1 -- Consent of KPMG LLP
23.2 -- Consent of Testa, Hurwitz & Thibeault, LLP (included in
Exhibit 5.1)
24.1 -- Power of attorney (contained on signature page)
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereto.
(b) Insofar as indemnification for liabilities under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the 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 Registration of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
II-2
<PAGE>
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as a 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) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(3) For the purpose 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 thereto.
(4) To remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(5) The undersigned registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Wilton, State of Connecticut on March 14, 2000.
TSI International Software Ltd.
By: /s/ Constance F. Galley
--------------------------------------
Constance F. Galley
President, Chief Executive Officer and
Chairman of the Board of Directors
Power of Attorney
Each person whose signature appears below on this registration statement
hereby constitutes and appoints Constance F. Galley and Ira A. Gerard and each
of them, with full power to act without the other, his true and lawful attorney-
in-fact and agent, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities (until revoked in
writing) to sign any and all amendments (including post-effective amendments and
amendments thereto) to this registration statement on Form S-3 of TSI
International Software Ltd., and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary fully to all intents and purposes as he might or could
do in person thereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement on Form S-3 has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
Name Capacity Date
- ---- -------- ----
/s/ Constance F. Galley President, Chief Executive March 14, 2000
- -----------------------
Constance F. Galley Officer and Chairman of the
Board of Directors
/s/ Ira A. Gerard Senior Vice President, Chief March 14, 2000
- -----------------------
Ira A. Gerard Financial Officer and Treasurer
/s/ Ernest E. Keet Director March 14, 2000
- -----------------------
Ernest E. Keet
/s/ Richard Little Director March 14, 2000
- -----------------------
Richard Little
II-4
<PAGE>
/s/ James P. Schadt Director March 14, 2000
- -------------------
James P. Schadt
/s/ Dennis G. Sisco Director March 14, 2000
- -------------------
Dennis G. Sisco
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit Description of Exhibit
----------------------
Number
- ------
3.1 -- Amended and restated Certificate of Incorporation of TSI Software
(filed as Exhibit 3.02 to our Registration Statement on Form S-1
(File No. 33-27293) and incorporated herein by reference)
3.2 -- Amended and restated Bylaws of TSI Software (filed as Exhibit
3.03 to our Registration Statement on Form S-1 (File No. 33-
27293) and incorporated herein by reference)
4.1 -- Agreement and Plan of Reorganization dated as of September 30,
1999 by and among TSI Software, Novera and Natchez (filed as
Exhibit 2.1 to the Company's current report on Form 8-K/A dated
December 15, 1999 and incorporated herein by reference)
4.2 -- Specimen certificate representing the Common Stock (filed as
Exhibit 4.01 to our Registration Statement on Form S-1 (File No.
33-27293) and incorporated herein by reference)
5.1 -- Legal opinion of Testa, Hurwitz & Thibeault, LLP
23.1 -- Consent of KPMG LLP
23.2 -- Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit
5.1)
24.1 -- Power of attorney (contained on signature page)
<PAGE>
Exhibit 5.l
March 13, 2000
TSI International Software, Ltd.
45 Danbury Road
Wilton, Connecticut 06897
RE: Registration Statement on Form S-3
Relating to 906,961 shares of common stock
------------------------------------------
Dear Sir or Madam:
We are counsel to TSI International Software, Ltd., a Delaware corporation
(the "Company"), and have represented the Company in connection with the
preparation and filing of the Company's Registration Statement on Form S-3 (the
"Registration Statement"), covering the resale to the public of up to 906,961
shares of the Company's common stock, $.01 par value per share (the "Shares")
by certain stockholders of the Company.
We have reviewed the corporate proceedings taken by the Board of Directors
of the Company with respect to the authorization and issuance of the Shares. We
have also examined and relied upon originals or copies, certified or otherwise
authenticated to our satisfaction, of all corporate records, documents,
agreements or other instruments of the Company and have made all investigations
of law and have discussed with the Company's officers all questions of fact that
we have deemed necessary or appropriate.
Based upon and subject to the foregoing, we are of the opinion that the
Shares are legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm in the prospectus
contained in the Registration Statement under the caption "Lawyers."
Very truly yours,
/s/ Testa, Hurwitz & Thibeault, LLP
-----------------------------------
Testa, Hurwitz & Thibeault, LLP
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of our reports dated February 3, 1999 relating to the financial
statements and related financial statement schedule, which appear in TSI
International Software Ltd.'s Annual Report on Form 10-K for the year ended
December 31, 1998. We also consent to the references to us under the headings
"Experts" in such Registration Statement.
/s/ KPMG LLP
March 15, 2000
