<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NETEGRITY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-2911320
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
245 WINTER STREET, WALTHAM, MA 02154
(781)890-1700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JAMES E. HAYDEN
CHIEF FINANCIAL OFFICER
NETEGRITY, INC.
245 WINTER STREET
WALTHAM, MASSACHUSETTS 02154
(781)890-1700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
DAVID P. KREISLER, ESQ.
HUTCHINS, WHEELER & DITTMAR
A PROFESSIONAL CORPORATION
101 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(617) 951-6600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED
SALE TO THE PUBLIC: From time to time after the
effective date of this Registration Statement.
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
investment 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 box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Per Aggregate Offering Amount of
Securities to be Registered Registered Share (1) Price (1) Registration Fee
- --------------------------- ------------ ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, par 795,651 $ 10.50 $ 8,354,336 $ 2,323
value $.01 per share shares
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee, based
upon the average of the high and low prices of the Company's Common Stock as
reported on the Nasdaq SmallCap Stock Market on March 31, 1999 in accordance
with Rule 457 under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 8, 1999
795,651 SHARES
NETEGRITY, INC.
COMMON STOCK
The stockholders of Netegrity, Inc. listed below are offering and
selling 795,651 shares of common stock, par value $0.01 per share, of
Netegrity, Inc. All of the stockholders obtained their shares of Netegrity
common stock on February 8, 1999, by virtue of a stock purchase agreement.
The selling stockholders may offer their Netegrity common stock through
public or private transactions, on or off the United States exchanges, at
prevailing market prices, or at privately negotiated prices.
Netegrity's common stock is listed on the Nasdaq SmallCap Stock Market
with the ticker symbol "NETE." On March 31, 1999, the closing price of one
share of Netegrity common stock on the Nasdaq SmallCap Stock Market was
$11.1875 per share.
-------------------------
SEE "RISK FACTORS"
BEGINNING ON PAGE 3 HEREOF.
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THE DATE OF THIS PROSPECTUS IS ___________, 1999
<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 ("SEC"). You may read
and copy any reports, statements or other information Netegrity files at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from commercial document retrieval services and at the Website maintained by the
SEC at www.sec.gov.
The SEC 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 later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14 or 15 of the Securities Exchange
Act of 1934 until the selling stockholders sell all the shares. This prospectus
is part of a registration statement we filed with the SEC (Registration No.
333-__________).
- Netegrity's Annual Report on Form 10-K for the year ended December 31,
1998, filed on March 31, 1999.
- Netegrity's Current Reports on Form 8-K filed on January 15, 1998 and
June 12, 1998.
- Netegrity's Current Report on Form 8-K/A filed on April 29, 1998.
- Netegrity's Definitive Proxy Statement dated April 9, 1999, filed
on March 19, 1999 in connection with Netegrity's May 11, 1999 Annual
Meeting of Stockholders.
- Netegrity's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998, filed on May 15,
1998, August 11, 1998 and November 12, 1998, respectively.
- All documents filed by Netegrity under the Securities Exchange Act of
1934 (e.g., Forms 10-Q and 8-K) after the date of this prospectus.
If there is any contrary information in a previously filed document that is
incorporated by reference, then you should rely on the information in this
prospectus.
If you are a stockholder, you can obtain any of the documents incorporated
by reference through Netegrity or the SEC. Documents incorporated by reference
are available from Netegrity without charge, excluding all exhibits. You may
obtain documents incorporated by reference in prospectus by requesting them in
writing to the following address or by telephone:
Netegrity, Inc.
Attention: Investor Relations
245 Winter Street
Waltham, Massachusetts 02451
(781) 890-1700
YOU SHOULD RELY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS OR ANY SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE
YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS
PROSPECTUS. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THE
PROSPECTUS IS ACCURATE AS OF ANY DATE ON THE FRONT OF THOSE DOCUMENTS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION IN
WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION.
- 2 -
<PAGE>
THE COMPANY
We design, develop, market and support software for controlling user access
to electronic commerce applications. We also offer a full range of professional
services to integrate, implement and support our software product offering. Our
customers are Fortune 2000 companies and smaller organizations whose business
model is built on intensive Internet use. These companies use electronic
commerce as a means to interact with their customers, suppliers, partners and
employees. Typical industries include the financial services, high tech,
manufacturing, telecommunications and insurance industries, as well as academia
and the government. Our dedicated focus on intranet and extranet security helps
customers design electronic business applications that allows them to securely
exchange mission-critical information.
Four major technologies are used to build electronic commerce sites:
authentication products to identify users, directory servers to store user
names, application servers to transact business, and Web servers to publish the
information. These four disparate technologies are not easily integrated,
resulting in an electronic commerce site that is both difficult to navigate and
very difficult to manage. Our flagship software product, SiteMinder(R), offers a
solution to this problem by integrating with these technologies and providing
the policies by which the applications can function efficiently. As the
industry's first directory-enabled secure user management system, SiteMinder
provides centralized access control, single sign-on and distributed management
for electronic commerce applications. This new category of software enables Web
administrators to centrally control access to membership-based sites or sites
requiring a log-in, while distributing the administrative responsibilities to
various individuals. It also provides end-users with the benefit of single
sign-on and personalized Web content. SiteMinder has been designed to be open
and extensible and work with leading security technologies, Web servers, and
application development platforms.
We have also been involved in the network security market since 1994, when
we became the first North American distributor and reseller of Check Point
Software Technologies, Ltd.'s (ACheck Point@) FireWall-1J. Today, we are a
leading U. S. value-added reseller of FireWall-1, distinguishing ourself by
providing comprehensive pre-and post-sales support and consulting services.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE PURCHASING
THE SHARES OF NETEGRITY COMMON STOCK OFFERED BY THIS PROSPECTUS. THE DISCUSSION
CONTAINED IN THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISK AND UNCERTAINTIES. THESE FORWARD LOOKING STATEMENTS USE LANGUAGE SUCH AS
"BELIEVES," "EXPECTS," "MAY," "WILL," "SHOULD," OR "ANTICIPATES" OR SIMILAR
EXPRESSIONS AND MAY INCLUDE DISCUSSIONS OF FUTURE STRATEGY. THE RISK FACTORS
DESCRIBED BELOW APPLY TO ALL FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN
THIS PROSPECTUS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE
FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS THAT COULD CAUSE OR CONTRIBUTE TO
SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW.
OUR PERFORMANCE WILL DEPEND ON THE GROWTH AND COMMERCIAL ACCEPTANCE OF OUR
PRODUCT
In support of our sales efforts, we conduct our own marketing programs
intended to position and promote our products and services. Marketing activities
include trade shows, seminars, direct mail, Internet marketing, public
relations, and participation in industry programs and forums. We also benefit
from joint marketing programs conducted with strategic partners, such as joint
seminars and direct mailings, and lead sharing.
Because our plans call for SiteMinder to produce a substantial portion of
our future product and services revenue, any factor adversely affecting sales of
our products and services would materially adversely effect us. Our future
financial performance will depend in part on the successful development,
introduction and customer acceptance of new and enhanced versions of our
products and our services. There can be no assurance that we will continue to be
successful in marketing our products or any new or enhanced products. In
addition, competitive pressures or other factors may result in significant price
erosion thereby having a material adverse effect on our financial condition or
results of operations.
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<PAGE>
THE DEVELOPMENT OF A MARKET FOR OUR PRODUCTS IS UNCERTAIN
We provide security management to the electronic commerce market. If either
the electronic commerce market or the market for security management for
electronic commerce do not grow at a significant rate, our business, operating
results and financial condition will be materially adversely affected.
Electronic commerce has been used widely for only a short time, and the market
for Web development products is new and rapidly evolving. As is typical for new
and rapidly evolving industries, demand for recently introduced products is
highly uncertain.
OUR PERFORMANCE DEPENDS ON OUR ABILITY TO OBTAIN FOLLOW-ON SALES
Customers place SiteMinder orders for initial applications or sites with
the expectation of placing future orders for follow-on deployments for
additional extranet and intranet sides and applications. Our plan calls for
receiving substantial follow-on sales from customers. Our future financial
performance will depend on the successful deployment of SiteMinder by customers
in order to generate follow-on sales. There can be no assurance that customers
will place follow-on orders.
OUR SUCCESS DEPENDS ON OUR ABILITY TO EXPAND OUR SALES FORCE AND DISTRIBUTION
CHANNELS
To increase our revenue, we must increase the size of our sales force and
the number of our indirect channel partners. In particular, we must increase the
number of strategic partnerships and other third-party relationships with
vendors of Internet-related systems, application software and resellers and
systems integrators. In addition, our existing license relationships must
generate increased revenues. A failure to do so could have a material adverse
effect on our business, operating results and financial condition. There is
intense competition for sales personnel in our business, and there can be no
assurance that we will be successful in attracting, integrating, motivating and
retaining new sales personnel. Our existing or future channel partners may
choose to devote greater resources to marketing and supporting the products of
other companies. In addition, we will need to resolve potential conflicts among
our sales force and channel partners.
WE MAY NOT BE PROFITABLE IN THE FUTURE
Since we began operations, we have incurred substantial net losses in every
fiscal period. We cannot predict when we will become profitable, if at all and
if we do, that we will remain profitable for any periods. Failure to achieve
profitability may adversely affect the market price of our common stock. For the
twelve months ended December 31, 1998, we had a net loss of $5,228,750. As a
result of accumulated operating losses, at December 31, 1998, we had an
accumulated deficit of $14,628,196. We have generated relatively small amounts
of SiteMinder revenue until recent fiscal quarters, while increasing
expenditures in all areas, particularly in research and development and sales
and marketing, in order to execute our business plan. Although we have
experienced revenue growth in connection with SiteMinder in recent periods,
it is unlikely that these growth rates are sustainable.
OUR QUARTERLY RESULTS MAY FLUCTUATE
Our quarterly revenue and operating results are difficult to predict and
may fluctuate significantly from quarter to quarter. If our quarter revenue or
operating results fall below our expectations and the expectations of investors,
the price of our common stock could fall substantially. There can be no
assurance that we will attain predicted quarterly revenue or operating results
amounts.
Our quarterly revenue may fluctuate for several reasons, including the
following:
- continued market acceptance for our SiteMinder product for controlling
user access to electronic commerce application;
- the long sales and deployment cycles for potentially large order sizes
of SiteMinder;
- the time and execution of individual contracts;
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<PAGE>
- the timing and releases of new versions of SiteMinder or other
products; and
- continued development of our direct and indirect sales channels.
In addition, because our revenue from services is largely correlated with
our license revenue, a decline in license revenue could also cause a decline in
our services revenue in the same quarter or in subsequent quarters. Other
factors, many of which are outside our control, could also cause variations in
our quarterly revenue and operating results.
Most of our expenses, such as employee compensation and rent, are
relatively fixed. Moreover, our expense levels are based, in part, on our
expectations regarding future revenue increases. As a result, any shortfall in
revenue in relation to our expectations could cause significant changes in our
operating results from quarter to quarter and could result in quarterly losses.
WE FACE SIGNIFICANT COMPETITION FROM OTHER TECHNOLOGY COMPANIES
The market for secure user management and access control is relatively
immature and will become highly competitive based on the anticipated growth of
the electronic commerce market. This market is subject to rapid technological
change, and competition is beginning to intensify as a result of the increasing
demand for intranet and extranet security products. Until recently, our primary
source of competition was from our customers' internal information services
departments that had been building their own solutions. Today, we are also
experiencing competition from a number of new technologies from companies like
Aventail Corporation, DASCOM, enCommerce, Inc., Intellisoft, SecureSoft, Inc.,
and Sirrus Corporation. We expect that additional larger competitors will appear
in the future as the market matures. Current and potential competitors have
established or may in the future establish cooperative relationships with third
parties to increase the availability of their products to the marketplace.
Accordingly, it is possible that new competitors or alliances may emerge and
rapidly acquire significant market share. Potential competitors may have
significantly greater financial, marketing, technical and other competitive
resources than we have. Many of these factors are out of our control, and there
can be no assurance that we can maintain or enhance our competitive position
against current and future competitors.
OUR SUCCESS DEPENDS ON OUR ABILITY TO SUSTAIN CURRENT REVENUES RELATING TO THE
FIREWALL RESELLER BUSINESS
Our firewall reseller business experiences competition from companies that
compete with Check Point's FireWall-1 product such as Axent Technologies,
Trusted Information Systems, Inc., Cisco Systems, Inc., as well as other
resellers of the FireWall-1 product. There can be no assurance that we can
maintain the current levels of revenue generated by our firewall reseller
business.
WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH
We have been experiencing a period of rapid growth that has been placing a
significant strain on all of our resources. From December 31, 1997 to March 30,
1999, the number of our employees increased from 40 to 70. To manage future
growth effectively we must maintain and enhance our financial and accounting
systems and controls, integrate new personnel and manage expanded operations.
Any failure to do so could have a material adverse effect on the quality of our
products, our ability to retain key personnel and our business, operating
results and financial condition.
WE MUST HIRE AND RETAIN SKILLED PERSONNEL IN A TIGHT LABOR MARKET
Qualified personnel are in great demand throughout the software industry.
Our success depends in large part upon our ability to attract, train, motivate
and retain highly skilled employees, particularly sales and marketing personnel,
software engineers and other senior personnel. Our failure to attract and retain
the highly trained technical personnel that are integral to our direct sales,
product development, service and support teams may limit the rate at which we
can generate sales and develop new products or product enhancements. This could
have a material adverse effect on our business, operating results and financial
condition.
WE ARE DEPENDENT ON KEY PERSONNEL
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<PAGE>
Our future success depends to a significant degree on the skill, experience
and efforts of our officers and other key employees, as well as our ability to
retain and motivate our officers and key employees. The loss of our officers or
key employees could have a material adverse effect on our business, operating
results and financial condition. We also depend on the ability of our officers
and key employees to work effectively as a team.
OUR SUCCESS DEPENDS ON OUR ABILITY TO PROTECT OUR PROPRIETARY RIGHTS
We depend upon a combination of patent and trademark laws, license
agreements, non-disclosure and other contractual provisions to protect
proprietary and distribution rights in our products. In addition, we attempt to
protect our proprietary information and those of our vendors and partners
through confidentiality and/or license agreements with our employees and others.
Despite these precautions, it may be possible for unauthorized third parties to
obtain information that we regard as proprietary and/or confidential.
OTHER COMPANIES MAY CLAIM THAT WE INFRINGE THEIR PROPRIETARY TECHNOLOGY
Although we attempt to avoid infringing known proprietary rights of third
parties, we are subject to the risk of claims alleging infringement of third
party proprietary rights. If we were to discover that any of our products
violated third party proprietary rights, there can be no assurance that we would
be able to obtain licenses on commercially reasonable terms to continue offering
the product without substantial reengineering or that any effort to understand
such reengineering would be successful. We do not conduct comprehensive patent
searches to determine whether the technology used in our products infringes
patents held by third parties. In addition, product development is inherently
uncertain in a rapidly evolving technology environment in which there may be
numerous patent applications pending, many of which are confidential when filed,
with regard to similar technologies.
Any claim of infringement could cause us to incur substantial costs
defending against the claim, even if the claim is invalid, and could distract
our management from our business. Furthermore, a party making such a claim could
secure a judgment that requires us to pay substantial damages. A judgment could
also include an injunction or other court order that could prevent us from
selling our products. Any of these events could have a material adverse effect
on our business, operating results and financial condition.
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF OUR PRODUCTS CONTAIN ERRORS
Software products as complex as ours may contain undetected errors or
"bugs" which result in product failures. The occurrence of errors could result
in loss of or delay in revenue, loss of market share, failure to achieve market
acceptance, diversion of development resources, injury to our reputation, or
damage to our efforts to build brand awareness, any of which could have a
material adverse effect on our business, operating results and financial
condition.
WE MAY BE SUBJECT TO RISKS ASSOCIATED WITH FUTURE ACQUISITIONS
In the future, we may pursue acquisitions to obtain complementary products,
services and technologies. At present, we have no agreements or other
arrangements with respect to any acquisition. An acquisition may not produce the
revenue, earnings or business synergies that we anticipated, and an acquired
product, service or technology might not perform as we expected. If we pursue
any acquisition, our management could spend a significant amount of time and
effort in identifying and completing the acquisition. If we complete an
acquisition, we would probably have to devote a significant amount of management
resources to integrating the acquired business with our existing business.
To pay for an acquisition, we might use capital stock or cash.
Alternatively, we might borrow money from a bank or other lender. If we use
capital stock, our stockholders would experience dilution of their ownership
interests. If we use cash or debt financing, our financial liquidity will be
reduced.
OUR FUTURE SUCCESS WILL DEPEND ON OUR ABILITY TO ENHANCE EXISTING PRODUCTS AND
DEVELOP NEW PRODUCTS
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<PAGE>
We believe our future success will depend in large part on our ability to
enhance and broaden our existing product line to meet the evolving needs of the
market. There can be no assurance that we will be able to respond effectively to
technological changes or new industry standards or developments. In addition, we
could be adversely affected if we were to incur significant delays or be
unsuccessful in developing new products or enhancing our existing products, or
if any such enhancements or new products do not gain market acceptance. In
addition, a number of factors, including the timing of product introductions and
enhancements by us or our competitors, market acceptance of new products, or
customer order deferrals in anticipation of new products, may cause variations
in our future operating results.
VOLATILITY OF STOCK PRICE
Our stock price, like that of other technology companies, is subject to
significant volatility. The announcement of new products, services or
technological innovations by us or our competitors, quarterly variations in our
results of operations, changes in revenue or earnings estimates by the
investment community and speculation in the press or investment community are
among the factors affecting our stock price. In addition, the stock price may be
affected by general market conditions and domestic and international economic
factors unrelated to our performance. Because of these reasons, recent trends
should not be considered reliable indicators of future stock prices or financial
results.
WE MAY BE ADVERSELY IMPACTED BY YEAR 2000 ISSUES
Many currently installed computer systems and software products are
dependent upon internal calendars coded to accept only two digit entries in the
date code field. These date code fields will need to accept four digit entries
to distinguish 21st century dates from 20th century dates. Computer systems and
software used by many companies may need to be upgraded to comply with such
"Year 2000" requirements.
We are currently assessing whether our products will be adversely affected
by date changes in the Year 2000. However, there can be no assurances that our
current products do not contain undetected errors or defects associated with
Year 2000 date functions that may result in material costs to us. Additionally,
there can be no assurance that third-party products with which we have material
relationships are Year 2000 compliant. Specific factors may result in a
third-party application used in conjunction with our products that may not be
Year 2000 compliant. Users must test their unique combination of hardware,
system software, and transaction and application software in order for Year 2000
compliance to be achieved.
USE OF PROCEEDS
All net proceeds from the sale of the Netegrity shares will go to the
stockholders who offer and sell their shares. Accordingly, we will not receive
any proceeds from sales of the Netegrity shares.
DIVIDEND POLICY
We have never paid cash dividends on its common stock. While subject to
periodic review, the current policy of the Board of Directors is to retain all
earnings to provide funds for our continued growth.
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<PAGE>
SELLING STOCKHOLDERS
The shares listed below represent all of the shares that each selling
stockholder currently owns:
<TABLE>
<CAPTION>
SHARES WHICH
SHARES BENEFICIALLY MAY BE SOLD SHARES
OWNED (1) PURSUANT TO BENEFICIALLY OWNED
PRIOR TO OFFERING THIS PROSPECTUS AFTER OFFERING (2)
---------------
------------------------------- ------------------------------
SELLING STOCKHOLDER NUMBER PERCENT NUMBER PERCENT
------------------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Fidelity Securities Fund: Fidelity OTC
Portfolio(3) 700,000 * 700,000 --- *
Pequot Offshore Private Equity Fund, Inc. 553,042(3) * 9,772 543,270(4) *
Pequot Private Equity Fund, LP 4,368,034(5) * 77,184 4,290,850(5) *
Anthony J. Medaglia, Jr.(6) 11,695 * 8,695 3,000 *
</TABLE>
* Less than 1.0% of the Company's outstanding Common Stock.
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act, and the information is
not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as
to which the individual has sole or shared voting power or investment
power and also any shares which the individual has the right to acquire
within 60 days of the date of this Prospectus through the exercise of
any stock option or other right. Unless otherwise indicated in the
footnotes, each person has sole voting and investment power (or shares
such powers with his or her spouse) with respect to the shares shown as
beneficially owned.
(2) Assumes that each selling stockholder will sell all of the Netegrity
shares set forth above under "Shares Which May Be Sold Pursuant to This
Prospectus". There can be no assurance that the selling stockholders
will sell all or any of the Netegrity shares offered under this
prospectus.
(3) The entity is either an investment company or a portfolio of an
investment company registered under Section 8 of the Investment Company
Act of 1940, as amended, or a private investment account advised by
Fidelity Management & Research Company ("FMR Co."). FMR Co. is a
Massachusetts corporation and an investment advisor registered under
Section 203 of the Investment Advisers Act of 1940, as amended, and
provides investment advisory services to each of such Fidelity entities
identified above, and to other registered investment companies and to
certain other funds which are generally offered to a limited group of
investors. FMR Co. is a wholly-owned subsidiary of FMR Corp. ("FMR"), a
Massachusetts corporation. The holdings are as of April 5, 1999.
(4) Includes 374,608 shares of Series D Convertible Preferred Stock which
is automatically convertible in Common Stock at the option of the
holder and 168,662 Warrants.
(5) Includes 2,958,726 shares of Series D Convertible Preferred Stock which
is automatically convertible in Common Stock at the option of the
holder and 1,332,124 Warrants.
(6) Mr. Medaglia is the Secretary of Netegrity and a stockholder of
Hutchins, Wheeler & Dittmar, A Professional Corporation, counsel to
Netegrity.
PLAN OF DISTRIBUTION
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<PAGE>
The sale or distribution of the shares may be effected directly to
purchasers by the selling stockholders or by any donee or pledgee of any such
selling stockholders as principals or through one or more underwriters,
brokers, dealers or agents from time to time in one or more transactions
(which may involve crosses or block transactions) (i) or on any exchange or
in the over-the-counter market, (ii) in transactions otherwise than in the
over-the-counter market, (iii) through the writing of put on call options
(whether such options are listed on an options exchange or otherwise) on, or
settlement of short sale of the shares, (iv) through the distribution of the
shares by any selling stockholder to its partners, members or shareholders or
(v) through a combination of any of the above. Any of such transactions may
be effected at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, at varying prices determined at the
time of sale or at negotiated or fixed prices, in each case as determined by
the selling stockholder or by agreement between the selling stockholder and
underwriters, brokers, dealers or agents, or purchasers. If the selling
stockholders effect such transactions by selling Shares to or through
underwriters, brokers, dealers or agents, such underwriters, brokers, dealers
or agents may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders or commissions from purchasers of
shares for whom they may act as agent (which discounts, concessions or
commissions as to particular underwriters, brokers, dealers or agents may be
in excess of those customary in the types of transactions involved). The
selling stockholders and any brokers, dealers or agents that participate in
the distribution of shares may be deemed to be underwriters, and any profit
on the sale of shares by them and any discounts, concessions or commission
received by any such underwriters, brokers, dealers or agents may be deemed
to be underwriting discounts and commissions under the Securities Act.
The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in
short sales of the Netegrity's Common Stock in the course of hedging the
positions they assume with selling stockholders. The selling stockholders may
also enter into options or other transactions with broker-dealers or other
financial institutions which require the delivery to such broker-dealer or
other financial institution of Shares offered hereby, which Shares such
broker-dealer or other financial institution may resell pursuant to this
Prospectus (as supplemented or amended to reflect such transaction).
Under the securities laws of certain states, the shares may be sold in
such states only through registered or licensed brokers or dealers. In
addition, in certain states the shares may not be sold unless the shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
Selling stockholders may also resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such rule.
We will pay all of the expenses incident to the registration, offering
and sale of the shares to the public hereunder other than commissions, fees
and discounts of underwriters, brokers, dealers and agents. We have agreed to
indemnify the selling stockholders and any underwriters against certain
liabilities, including liabilities under the Securities Act. We will not
receive any of the proceeds from the sale of any of the shares by the selling
stockholders.
We have agreed to keep the Registration Statement of which this prospectus
constitutes a part effective until the earlier of the date upon which all of the
Netegrity shares are sold or February 8, 2001.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon by Hutchins,
Wheeler & Dittmar, A Professional Corporation, Boston, Massachusetts, counsel to
the Company.
EXPERTS
Our consolidated financial statements as of December 31, 1998 and December
31, 1997 and for the three years in the fiscal year ended December 31, 1998 and
1997, and the nine-month transition period ended December 31, 1996 appearing in
our Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and
incorporated by reference in this Prospectus have been incorporated herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of such firm as experts in accounting and auditing.
- 9 -
<PAGE>
NO ONE (INCLUDING ANY SALESMAN OR BROKER)
IS AUTHORIZED TO PROVIDE ORAL OR WRITTEN
INFORMATION ABOUT THIS OFFERING THAT IS NOT
INCLUDED IN THIS PROSPECTUS.
----------------------
TABLE OF CONTENTS
PAGE
Where You Can Find More Information........................2
Incorporation of Certain Documents By Reference............2
The Company................................................3
Risk Factors...............................................3
Use of Proceeds............................................7
Selling Stockholders.......................................8
Plan of Distribution.......................................9
Legal Matters..............................................9
Experts....................................................9
NETEGRITY, INC.
795,651 SHARES
OF
COMMON STOCK
PROSPECTUS
________, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Netegrity will pay all expenses incident to the offering and sale to the
public of the shares being registered other than any commissions and discounts
of underwriters, dealers or agents and any transfer taxes. Such expenses are set
forth in the following table. All of the amounts shown are estimates except the
SEC registration fee.
SEC registration fee.............................................$ 2,323
Nasdaq SmallCap Stock Market Listing Fee......................... 7,500
Legal fees and expenses.......................................... 10,000
Printing fees and expenses....................................... 2,000
Miscellaneous expenses........................................... 177
Total............................................................$22,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The By-Laws of Netegrity (Article V) provide the following:
SECTION 5.1 THIRD PARTY ACTIONS. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a Director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise (each an "Indemnitee"),
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding.
SECTION 5.2 DERIVATIVE ACTIONS. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit.
SECTION 5.3 EXPENSES. To the extent that a Director, officer, employee or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 5.1 and 5.2,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
SECTION 5.4 AUTHORIZATION AND REQUEST FOR INDEMNIFICATION.
(a) Any indemnification requested by the Indemnitee under Section 5.1
hereof shall be made no later than ten (10) days after receipt of the written
request of the Indemnitee, unless it shall have been adjudicated by a court of
final determination that the Indemnitee did not act in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
(b) Any indemnification requested by the Indemnitee under Section 5.2
hereof shall be made no later than ten (10) days after receipt of the written
request of the Indemnitee, unless it shall have been adjudicated by a court of
final determination that the
II-1
<PAGE>
Indemnitee did not act in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, the Indemnitee
shall have been finally adjudged to be liable to the Company by a court of
competent jurisdiction due to willful misconduct of a culpable nature in the
performance of the Indemnitee's duty to the Corporation unless and only to the
extent that any court in which such proceeding was brought shall determine upon
application that despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
SECTION 5.5 ADVANCE PAYMENT OF EXPENSES. Subject to Section 5.4 above, the
Corporation shall advance all expenses incurred by the Indemnitee in connection
with the investigation, defense, settlement or appeal of any proceeding to which
the Indemnitee is a party or is threatened to be made a party by reason of the
fact that the Indemnitee is or was an agent of the Corporation. The Indemnitee
hereby undertakes to repay such amounts advanced only if, and to the extent
that, it shall ultimately be determined that the Indemnitee is not entitled to
be indemnified by the Corporation. The advances to be made hereunder shall be
paid by the Corporation to or on behalf of the Indemnitee within 30 days
following delivery of a written request therefor by the Indemnitee to the
Corporation.
SECTION 5.6 NON-EXCLUSIVENESS. The indemnification provided by this Article
V shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 5.7 INSURANCE. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article V.
SECTION 5.8 CONSTITUENT CORPORATIONS. The Corporation shall have power to
indemnify any person who is or was a director, officer, employee or agent of a
constituent corporation absorbed in a consolidation or merger with this
Corporation or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, in the same manner as hereinabove
provided for any person who is or was a Director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
SECTION 5.9 ADDITIONAL INDEMNIFICATION. In addition to the foregoing
provisions of this Article V, the Corporation shall have the power, to the full
extent provided by law, to indemnify any person for any act or omission of such
person against all loss, cost, damage and expense (including attorney's fees) if
such person is determined (in the manner prescribed in Section 5.4 hereof) to
have acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interest of the Corporation.
ITEM 16. EXHIBITS
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (included on page II-3).
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
A. UNDERTAKING PURSUANT TO RULE 415
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement
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;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of this offering.
B. UNDERTAKING REGARDING FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT
DOCUMENTS BY REFERENCE AND ANNUAL AND QUARTERLY REPORTS
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 the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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 Regulations S-X is 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.
C. UNDERTAKING IN RESPECT OF INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Waltham, Commonwealth of Massachusetts, on this of
April 8, 1999.
NETEGRITY, INC.
By: /s/ James E. Hayden
-----------------------------------------
James E. Hayden
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT each person whose signature appears
below severally constitutes and appoints James E. Hayden with the power to act
as attorney-in-fact, with the power of substitution, for him or her in any and
all capacities, to sign any amendment to this Registration Statement and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting to said attorney-in-fact,
and full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact 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 of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Barry N. Bycoff
- ------------------------------
Barry N. Bycoff President, Chief Executive Officer and April 7, 1999
Director
/s/ James E. Hayden
- ------------------------------
James E. Hayden Chief Financial Officer, Vice President of April 7, 1999
Finance and Administration and Treasurer
/s/ Eric R. Giler
- ------------------------------
Eric R. Giler Director April 7, 1999
/s/ Michael L. Mark
- ------------------------------
Michael L. Mark Director April 7, 1999
/s/ James P. McNiel
- ------------------------------
James P. McNiel Director April 7, 1999
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Milton J. Pappas
- ------------------------------
Milton J. Pappas Director April 7, 1999
/s/ Ralph B. Wagner
- ------------------------------
Ralph B. Wagner Director April 7, 1999
/s/ Stephen L. Watson
- ------------------------------
Stephen L. Watson Chairman of the Board April 7, 1999
Director
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (included on page II-3).
<PAGE>
EXHIBIT 5.1
APRIL 8, 1999
NETEGRITY, INC.
245 Winter Street
Waltham, MA 02154
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on or about the date hereof (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of up to 795,651 shares of your Common Stock
(the "Shares"). All of the Shares are issued and outstanding and may be offered
for sale for the benefit of the selling stockholders named in the Registration
Statement. We understand that the Shares are to be sold from time to time at
prevailing prices or as otherwise described in the Registration Statement. As
your legal counsel, we have also examined the proceedings taken by you in
connection with the issuance of the Shares.
Based on the foregoing, it is our opinion that the Shares are validly
issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.
We understand that this opinion is to be used only in connection with the
offer and sale of the Shares while the Registration Statement is in effect.
Very truly yours,
HUTCHINS, WHEELER & DITTMAR,
A PROFESSIONAL CORPORATION
<PAGE>
EXHIBIT 23.1
CONSENT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-3 of our report dated April 8, 1999, on our audits of the consolidated
financial statements and the consolidated financial statement schedule of
Netegrity, Inc. as of December 31, 1998 and December 31, 1997 and for each of
the three years in the period ended December 31, 1998 and 1997, and the
nine-month transition period ended December 31, 1996. We also consent to the
reference to our firm under the caption "Experts".
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 8, 1999
