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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 7, 1999
REGISTRATION NO. 333-58639
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE
AMENDMENT NO. 3
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ROSS SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 94-2170198
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
2 CONCOURSE PARKWAY, SUITE 800
ATLANTA, GEORGIA 30328
(770) 351-9600
(Address, including zip code and telephone number, including area code, of
Registrant's principal executive offices)
DENNIS V. VOHS
CHIEF EXECUTIVE OFFICER
ROSS SYSTEMS, INC.
2 CONCOURSE PARKWAY, SUITE 800
ATLANTA, GEORGIA 30328
(770) 351-9600
(Name, address, including zip code and telephone number, including area code, of
agent for service)
------------------------------
COPIES TO:
MARIO M. ROSATI, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
(650) 493-9300
FAX: (650) 845-5000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time as the several selling stockholders may decide.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED(2) SHARE(1) PRICE(1) FEE(3)
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value per share.......... 1,341,246 $2.5938 $3,478,923.87 $967.14
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the Registration
fee pursuant to Rule 457. Based on the last reported sale price for the
Company's Common Stock on October 6, 1999.
(2) Shares issuable upon conversion of subordinated debentures (and interest
accrued thereon) in the principal amount of $1,333,333.00 issued by the
Registrant to a certain accredited investor in a private placement
transaction. See "Selling Stockholder" for a description of certain
assumptions made by the Registrant to determine the number of shares of
Common Stock to be registered hereunder. Pursuant to Rule 416 under the
Securities Act of 1933, any additional shares of Common Stock issued either
as a result of the provisions of the subordinated debentures pursuant to
which the Common Stock will be issued or by reason of a reduction in the
conversion price of the subordinated debentures in accordance with the terms
thereof are deemed to be registered herewith.
(3) In connection with the Registration Statement on Form S-3 (Registration
Number 333-58639) originally filed by the Registrant on July 7, 1998, the
Registrant paid to the Commission a filing fee of $2,981.00.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION DATED OCTOBER 7, 1999
PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
ROSS SYSTEMS, INC.
COMMON STOCK
This Prospectus relates to the offering by an investor (the "Selling
Stockholder") of (i) shares (the "Conversion Shares") of common stock, $0.001
par value per share (the "Common Stock") issuable upon conversion of convertible
subordinated debentures in the principal amount of $1,333,333.00 (the
"Debentures") issued by Ross Systems, Inc. (the "Company" or "Ross") and (ii) an
additional indeterminate number of shares of Common Stock (the "PIK Shares")
that may be issued as interest accrued on the Debentures. The Conversion Shares
and the PIK Shares collectively are referred to herein as the "Securities." The
number of Conversion Shares and PIK Shares offered for resale hereby will be
determined by formulae set forth in the Debentures (see "Selling Stockholder").
The Securities may be sold from time to time through brokers, to dealers
acting as principals, directly to purchasers in negotiated transactions, or any
combination of these methods of sale. In addition, shares may be transferred in
connection with the settlement of call options, short sales or similar
transactions that may be effected by the Selling Stockholder. Sales may be made
at prevailing market prices at the time of such sales, at prices related to such
prevailing prices, at fixed prices that may be changed or at negotiated prices.
See "Selling Stockholder" and "Plan of Distribution."
None of the proceeds from the sale of the Securities by the Selling
Stockholder will be received by the Company. The Company has agreed to bear all
expenses (other than selling commissions) in connection with the registration
and sale of the Securities being offered by the Selling Stockholder. The Company
has agreed to indemnify the Selling Stockholder against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the
"Securities Act").
In connection with any sales, the Selling Stockholder and any brokers
participating in such sales may be deemed to be "underwriters" within the
meaning of the Securities Act. See "Selling Stockholder."
On October 6, 1999, the last sale price of the Company's Common Stock on the
Nasdaq National Market was $2.5938 per share (symbol ROSS).
THE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS," COMMENCING
ON PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1999.
<PAGE>
AVAILABLE INFORMATION
As used in this Prospectus, unless the context otherwise requires, the terms
"Ross" and the "Company" mean Ross Systems, Inc., a Delaware corporation, and
its subsidiaries. The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports and proxy
statements and other information filed with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: New York Regional Office, 7 World Trade Center, Suite
1300, New York, New York 10048; and Chicago Regional Office, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding registrants that filed
electronically with the Commission. The address of the site is
http://www.sec.gov.
The Company's Common Stock is traded on the Nasdaq National Market. Reports
and other information concerning the Company may be inspected at the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
This Prospectus constitutes part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits thereto, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement,
copies of which may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of the
fees prescribed by the Commission. Statements contained in this Prospectus as to
the contents of any contract or any other document filed, or incorporated by
reference, as an exhibit to the Registration Statement, are qualified in all
respects by such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents, previously filed by the Company with the Commission
pursuant to the Exchange Act, are hereby incorporated by reference, except as
superseded or modified herein:
The description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A filed March 22, 1991.
Annual Report on Form 10-K for the fiscal year ended June 30, 1999 (the
"Form 10-K Report").
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the
termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and shall be part hereof from the date of filing of such
document. Any statement contained in any document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference in this Prospectus modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any document described above (other than exhibits). Requests
for such copies should be directed to Ross Systems, Inc. at its principal
offices located at 2 Concourse Parkway, Suite 800, Atlanta, Georgia 30328,
telephone (770) 351-9600, attention: Chief Financial Officer.
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<PAGE>
RISK FACTORS
An investment in the shares being offered by this Prospectus involves a high
degree of risk. The following factors, in addition to those discussed elsewhere
in this Prospectus, should be carefully considered in evaluating the Company and
its business prospects before purchasing shares offered by this Prospectus. This
Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in the following risk factors and elsewhere in this
Prospectus.
HISTORY OF LOSSES. In fiscal 1997, the Company incurred operating losses
and net losses. In the year ended June 30, 1998, the Company operated
profitably. In the year ended June 30, 1999, the Company again incurred
operating losses and net losses. There can be no assurance that the Company will
be profitable in the future. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Results of Operations" in the
Company's Form 10-K Report and Form 10-Q Reports.
FLUCTUATIONS IN OPERATING RESULTS. The Company has experienced significant
quarterly fluctuations in operating results and anticipates that such
fluctuations may occur in the future. See quarterly financial information
contained in Note 13 to the Consolidated Financial Statements in the Form 10-K
Report. Quarterly revenues depend on the volume and timing of orders received
during the quarter, which are difficult to forecast. The Company generally ships
orders as received and, as a result, typically has little or no backlog.
Historically, the Company has often realized a substantial portion of its
software product license revenues in the last two weeks of a quarter. Due to the
Company's relatively low cost of incremental software product license revenues,
any shortfall or delay in software product license revenues has an immediate and
substantial impact on profitability in the quarter. Operating results may also
fluctuate due to factors such as the demand for the Company's products, the size
and timing of customer orders, the introduction of new products and product
enhancements by the Company or its competitors, changes in the proportion of
revenues attributable to software product licenses versus consulting and other
services, changes in the level of operating expenses, and competitive conditions
in the industry. Many of the factors that could result in quarterly fluctuations
are not within the Company's control. Fluctuations in operating results may
result in volatility in the price of the Company's Common Stock. During the
period including fiscal 1998 and fiscal 1999, the market prices of the Common
Stock have ranged from a high of $5.0625 to a low of $1.8125.
LIQUIDITY AND CAPITAL RESOURCES. In fiscal 1997 and fiscal 1999, the
Company used cash of $7.1 million and $6.6 million, respectively, for operations
and for investments in capitalized software, property and equipment. In fiscal
1998, the cash provided by the Company's operations exceeded its investment in
capitalized software, property and equipment by $600,000. There can be no
assurance that this positive cash position will occur in future fiscal periods.
At June 30, 1999, the Company had cash deposits of $6.3 million and total
borrowings of $12.0 million against a $15 million revolving credit facility.
Borrowings under the revolving credit facility are collateralized by
substantially all of the assets of the Company and availability is based on
eligible accounts receivable, as determined in the lender's sole discretion.
Based on eligible accounts receivable at June 30, 1999, the Company's borrowing
power under the revolving credit facility, combined with the Company's cash and
cash equivalents, was $6.3 million.
In fiscal 1995, 1996, 1997 and 1998, the Company issued equity securities to
finance its operations. These issuances have increased the number of Common and
Common equivalent shares outstanding by approximately 51% since the end of
fiscal 1995. On February 6, 1998, the Company entered into an agreement with
certain qualified investors, including the Selling Stockholder (collectively,
the "Investors") relating to a private placement of convertible subordinated
debentures in the aggregate principal amount of up to $10,000,000. The Investors
invested $6,000,000 at the closing on February 6, 1998, and invested $4,000,000
on June 16, 1998 (the "Second Closing"). Substantially all of proceeds from the
debenture financing have been used to improve the Company's balance sheet and
lower its debt service expense. To
3
<PAGE>
date, the Company has issued 1,537,331 shares of Common Stock upon conversion of
the debentures and the interest accrued thereon which have increased the number
of Common Stock and Common equivalent shares outstanding by approximately 7.3%
since the end of June 1998. Because the number of shares of Common Stock
issuable by the Company upon conversion of the debentures and the interest
accrued thereon is based on conversion formulae which are set forth in the
debentures and therefore is not fixed, it is not possible to determine the
increase in the number of shares of Common Stock and Common equivalent shares
outstanding as a result of the issuance of such shares of Common Stock issuable
by the Company upon conversion of the debentures and the interest accrued
thereon. However, the percentage increase could be greater than 20%. On October
1, 1998, the Company redeemed $2,667,000 of the $4,000,000 Second Closing
debentures at a redemption price of $2,880,000 (108% of the face amount of the
Second Closing debentures). The only Second Closing debentures not redeemed are
the Debentures held by the Selling Stockholder. The Company and the Selling
Stockholder agreed to certain changes to the conversion features of the
Debentures that, among other things, precludes conversion at the option of the
Selling Stockholder prior to October 7, 1999 and fixes a minimum conversion
price of $4.00 per share if conversion occurs prior to October 7, 1999 (after
October 7, 1999, the conversion price and the Selling Stockholder's ability to
convert the Debenture at its option will be on the terms set forth in the
original Debenture).
INTERNATIONAL SALES. The Company derived approximately 31%, 33%, 31% and
33% of its total revenues from international sales in fiscal 1996, 1997, 1998
and 1999, respectively, and expects that such sales will continue to generate a
significant percentage of total revenues. Pacific Rim software product license
revenues were $3.3 million and $3.1 million for fiscal year 1998 and 1999,
respectively. Pacific Rim software product license revenue is heavily
concentrated with $2.5 million of each of the fiscal 1998 and 1999 totals with
one distributor in Japan. There can be no assurance that this distributor will
continue to distribute the Company's products beyond fiscal year 2000, wherein
the Company expects the distributor to pay $2.0 million under its agreement with
the Company. To date, the Company has not sought to hedge the risks associated
with currency fluctuations, but may engage in such transactions in the future in
order to reduce its exposure to currency fluctuations. The Company is also
subject to other risks associated with international operations, including
tariff regulations, unexpected changes in regulatory requirements, longer
accounts receivable payment cycles, potentially adverse tax consequences,
economic and political instability, restrictions on repatriation of earnings,
and the burdens of complying with a wide variety of foreign laws. There can be
no assurance that such factors will not have a material adverse effect on the
Company's future international sales and, consequently, on the Company's
business, financial condition and results of operations. See
"Business--Marketing and Sales" in the Form 10-K Report and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations" in the Form 10-K Report.
RAPID TECHNOLOGICAL CHANGE; PRODUCT TRANSITIONS. The market for the
Company's products is characterized by ongoing technological developments,
evolving industry standards and rapid changes in customer requirements. As a
result, the Company's prospects depend upon its ability to continue to enhance
its existing products, develop and introduce in a timely manner new products
that take advantage of technological advances, and respond to new customer
requirements. There can be no assurance that the Company will be successful in
developing and marketing enhancements to its existing products or new products
incorporating new technology on a timely basis, or that its new products will
adequately address the changing needs of its markets. If the Company is unable
to develop and introduce new products, or enhancements to existing products, in
a timely manner in response to changing market conditions or customer
requirements, the Company's business and results of operations will be
materially and adversely affected. From time to time, the Company or its
competitors may announce new products, capabilities or technologies that have
the potential to replace or shorten the life cycles of the Company's existing
products. There can be no assurance that announcements of currently planned or
other new products will not cause customers to defer purchasing existing Company
products. Delays or difficulties associated with
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new product introductions or product enhancements could have a material adverse
effect on the Company's business, financial condition and results of operations.
Software products as complex as those offered by the Company may contain
undetected errors when first introduced or as new versions are released. There
can be no assurance that errors will not be found in new products after
commencement of commercial shipments, resulting in a loss of or delay in market
acceptance. See "Business--Competition" in the Form 10-K Report.
COMPETITION. The business applications software market is intensely
competitive. Due to the breadth of the Company's product line, it competes with
a broad range of applications software companies. The Company's primary
competitors include the following: business application software providers which
offer products on multiple platforms, such as Baan Company NV, Oracle
Corporation, PeopleSoft, Inc. and SAP AG; and business applications software
providers in vertical markets that offer products that compete with the
Company's process manufacturing products, such as J.D. Edwards & Company,
Invensys PLC, QAD, Inc. and System Software Associates, Inc. Additionally, the
Company faces competition from third party business application processing
providers operating on minicomputers such as the IBM AS/400. Many of the
Company's competitors have substantially greater financial, technical, marketing
and sales resources than the Company. See "Business--Competition" in the Form
10-K Report.
DEPENDENCE ON AND RELATIONSHIP WITH MICROSOFT. A significant portion of the
Company's total revenues are derived from business application software products
and related services for users of client/server computers. The Company's
business therefore depends to a large extent on the success of client/server
computers in the commercial marketplace. In particular, the Company believes
that Microsoft's NT operating system plays and will continue to play an
important role in the client/server market as the operating system secures a
majority of new installations in the client/server environment due to its low
cost and ease of use. The Company's business would be materially and adversely
affected if commercial market share for client/server computers declined or if
their installed customer base in this market eroded. The Company considers its
close relationship with Microsoft in software product development activities to
be strategic to the Company's business. The Company would be materially and
adversely affected if Microsoft decided to terminate or significantly reduce its
cooperation with the Company in these development activities, or to market
products competitive with the Company's products.
KEY EMPLOYEES. The Company's success depends on a number of its key
employees, most of whom are not subject to employment contracts. The loss of the
services of these key employees could have a material adverse effect on the
Company. The Company believes that its future success will also depend in large
part on its ability to attract and retain highly-skilled technical, managerial
and marketing personnel. Competition for such personnel in the software industry
is intense, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel. See "Business--Employees" in the Form
10-K Report.
DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISK OF TECHNOLOGY LITIGATION. The
Company's success is dependent upon its proprietary technology and products. The
Company regards its software as proprietary and, to date, has relied principally
upon copyrights, trademarks, trade secrets and contractual restrictions to
protect its proprietary technology. The Company currently has no patents. The
Company generally enters into confidentiality agreements with employees and
confidentiality and license agreements with its distributors, customers and
potential customers, and limits access to and distribution of the source code to
its software and other proprietary information. Under some circumstances, the
Company grants licenses that give limited access to the source code of the
Company's products which increases the likelihood of misappropriation or misuse
of the Company's technology. Accordingly, despite precautions taken by the
Company, it may be possible for unauthorized third parties to copy certain
portions of the Company's technology or to obtain and use information that the
Company regards as proprietary. There can be no assurance that the steps taken
by the Company will be adequate to prevent misappropriation of its technology or
to provide an adequate remedy in the event of a breach by others. In addition,
the laws of
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<PAGE>
some foreign countries do not protect the Company's proprietary rights to the
same extent as do the laws of the United States.
There has been substantial industry litigation regarding intellectual
property rights of technology companies. Although the Company is not aware of
any infringement by its products of any patents or proprietary rights of others,
patent protection for software is still a developing area of law. The Company
has, in the past, been subject to litigation related to alleged infringement by
the Company of a third party's rights, which resulted not only in the Company
incurring significant legal fees and settlement costs but also in a substantial
diversion of management attention and a loss of software product license
revenues due to prospective customer concerns related to such litigation. In the
future, the Company may be subject to additional litigation to defend the
Company against claimed infringement of the rights of others or to determine the
scope and validity of the proprietary rights of others. Any such litigation
could be costly and cause diversion of management's attention, either of which
could have a material adverse affect on the Company's business, results of
operations and financial condition. Adverse determinations in such litigation
could result in the loss of the Company's proprietary rights, subject the
Company to significant liabilities, require the Company to seek licenses from
third parties or prevent the Company from manufacturing or selling its products,
any one of which could have a material adverse effect on the Company's business,
financial condition and results of operations. Furthermore, there can be no
assurance that any necessary licenses will be available on reasonable terms, or
at all. See "Business--Proprietary Rights and Licenses" in the Form 10-K Report.
SHARES ELIGIBLE FOR FUTURE SALE. Depending upon the date on which the the
outstanding debentures issued in February and June 1998 (the "Aggregate
Debentures") are converted and the market price for the Common Stock on such
date, the number of shares of Common Stock issuable under the Aggregate
Debentures and the interest accrued thereon to the Investors could represent a
significant percentage of the outstanding shares of Common Stock. Sale of the
shares of Common Stock issuable under the Aggregate Debentures and the interest
accrued thereon or the sale of additional shares of the Company's Common Stock
after this offering in the public market could materially adversely affect the
market price of the Common Stock.
ANTI-TAKEOVER EFFECT OF PREFERRED SHARES RIGHTS PLAN AND CERTAIN CHARTER AND
BYLAW PROVISIONS. In September 1998, the Company's Board of Directors adopted a
Preferred Shares Rights Plan. The Preferred Shares Rights Plan provides for a
dividend distribution of one Preferred Shares Purchase Right (a "Right") on each
outstanding share of the Company's Common Stock. Each Right entitles
stockholders to buy 1/1000th of a share of the Company's Series B Participating
Preferred Stock at an exercise price of $21.75. The Rights will become
exercisable following the tenth day after a person or group announces
acquisition of 15% or more of the Company's Common Stock, or announces
commencement of a tender offer, the consummation of which would result in
ownership by the person or group of 15% or more of the Company's Common Stock.
The Company will be entitled to redeem the Rights at $0.01 per Right at any time
on or before the tenth day following acquisition by a person or group of 15% or
more of the Company's Common Stock.
The Preferred Shares Rights Plan and certain provisions of the Company's
Certificate of Incorporation and Bylaws may have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire control of the Company. This could limit the price that
certain investors might be willing to pay in the future for shares of the
Company's Common Stock. Certain provisions of the Company's Certificate of
Incorporation and Bylaws allow the Company to issue preferred stock without any
vote or further action by the stockholders, eliminate the right of stockholders
to act by written consent without a meeting, specify procedures for director
nominations by stockholders and submission of other proposals for consideration
at stockholder meetings, and eliminate cumulative voting in the election of
directors. Certain provisions of Delaware law applicable to the Company could
also delay or make more difficult a merger, tender offer or proxy contest
involving the Company, including Section 203, which prohibits a Delaware
corporation from engaging in any business combination with any
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interested stockholder for a period of three years unless certain conditions are
met. The Preferred Shares Rights Plan, the possible issuance of Preferred Stock,
the procedures required for director nominations and stockholder proposals and
Delaware law could have the effect of delaying, deferring or preventing a change
in control of the Company, including without limitation, discouraging a proxy
contest or making more difficult the acquisition of a substantial block of the
Company's Common Stock. These provisions could also limit the price that
investors might be willing to pay in the future for shares of the Company's
Common Stock.
RISKS OF THE COMPANY'S YEAR 2000 ISSUES AND THE COMPANY'S CONTINGENCY
PLANS. The Year 2000 issue arises because certain electronic data processing
systems use two digits rather than four to define the applicable year which may
preclude proper date recognition after December 31, 1999. During fiscal 1997 and
1998, the Company empowered key individuals as responsible for identifying and
resolving Year 2000 dysfunction. These efforts include identification and review
of internal operating systems and applications, customer projects and services,
and discussions with third-party suppliers to the business.
A most reasonably likely worst case Year 2000 scenario is not known at this
time. This determination will be made after the receipt of the remaining
material third-party supplier questionnaires. However, the shipment of software
to customers is expected to continue with no interruption and no material loss
of revenues is anticipated. The Year 2000 project has had minimal impact on the
schedule of other major information technology projects.
The Company has not completed a contingency plan; however, each facility
will incorporate the Year 2000 scenario into their existing disaster contingency
plan by June 1999. The contingency plan will ensure that the necessary backup
measures for computer processing are identified. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Results of
Operations" in the Form 10-K Report.
ABSENCE OF DIVIDENDS. The Company has never declared or paid any cash
dividends and does not anticipate paying cash dividends in the foreseeable
future.
7
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SELLING STOCKHOLDER
The following table sets forth certain information as of October 1, 1999
with respect to the beneficial ownership by the Selling Stockholder of shares of
the Company's Common Stock. The Selling Stockholder purchased the Debentures
from the Company in a private transaction in June 1998. The Debentures were
amended in October 1998. The Securities offered by this Prospectus will be
acquired by the Selling Stockholder upon conversion of the Debentures and as
interest accrued on the Debentures. If the Debentures are converted, the
conversion price will be determined by the method set forth in the original
Debentures, which is summarized below. The form of the Debentures and the
Amendment to the Debentures have been filed as Exhibits 4.4 and 4.5,
respectively, hereto.
The Debentures issued by the Company to the Selling Stockholder set forth
the terms for conversion of the Debentures into the Conversion Shares and the
terms of conversion of the interest accrued on the Debentures into the PIK
Shares (the "Conversion Formulae"). The number of shares of Common Stock
issuable upon conversion and in connection with payments of interest in shares
of Common Stock depends upon the "Market Price" of the Common Stock. "Market
Price" is defined as the lesser of (i) the Maximum Conversion Price and (ii)
101% of the average of the two lowest closing bid prices of the Common Stock as
reported by the Bloomberg Service for the thirty trading days immediately
preceding the conversion date. The "Maximum Conversion Price" is defined as (a)
$7.00 per share for the period ending on December 31, 1998 and (b) for the
period beginning on January 1, 1999, 115% of the average closing bid price of
the Common Stock over the 1998 calendar year, in each instance subject to
certain adjustments. There is no maximum or minimum number of Conversion Shares
or PIK Shares that may be issued pursuant to the Debentures. If the aggregate
number of Conversion Shares and PIK Shares to be issued to the Selling
Stockholder were to increase above the aggregate number of shares set forth in
the table, this Prospectus will be amended to indicate the increased number. The
Selling Stockholder may sell all, less than all or none of the shares of Common
Stock. The Selling Stockholder is not an affiliate of the Company nor has it
held a position, office or had any other material relationship with the Company
or any of its affiliates within the past three years except as a security holder
of the Company.
<TABLE>
<CAPTION>
SHARES OWNED BEFORE
NAME OFFERING(1)(2)
- -------------------------------------------------------------------------- -------------------
<S> <C>
The Tail Wind Fund, Ltd. ................................................. 1,341,246
Windermere House
404 East Bay Street
P.O. Box SS-5539
Nassau, Bahamas
</TABLE>
- --------------------------
(1) The Selling Stockholder has the right to acquire the Conversion Shares and
may acquire PIK Shares. The number of Conversion Shares shown in the table
for the Selling Stockholder has been calculated assuming a conversion Market
Price of $1.9882 (for purposes of calculating a conversion market price that
reflects the recent closing prices of the Company's Common Stock, the
$1.9882 conversion Market Price assumes 101% of the Market Price using
October 1, 1999 as a conversion date) and has been multiplied by a factor of
two, because the number of shares issuable on conversion may increase
without limit depending on the Market Price of the Common Stock at the time
of conversion. If the Market Price on the relevant date(s) of conversion is
greater than $1.9882, fewer than half of the number of shares shown will be
issued to the Selling Stockholder. The Company also has registered for
resale an indeterminate number of shares of Common Stock which have been and
may be issued as the PIK Shares.
(2) Assumes that all shares offered hereby are sold by the Selling Stockholder
to non-affiliates of the Selling Stockholder.
8
<PAGE>
DESCRIPTION OF EQUITY SECURITIES
The authorized capital stock of the Company consists of 37,000,000 shares of
Common Stock, $0.001 par value per share, (35,000,000 of which are designated as
"Common Stock" and 2,000,000 of which are designated "Non-voting Common Stock")
and 5,000,000 shares of Preferred Stock, $0.001 par value per share. As of
October 1, 1999, 23,334,992 shares of Common Stock were outstanding, held of
record by approximately 423 stockholders and no shares of Non-voting Common
Stock were outstanding. As of October 1, 1999, debentures in the principal
amount of $2,233,333, including the Debentures, (the "Aggregate Debentures")
were outstanding and held of record by the Selling Stockholder (convertible into
2,246,587 shares of Common Stock based upon the conversion Market Price
assumptions set forth in footnote one to the table above). The interest accrued
on the Aggregate Debentures is convertible into an indeterminate number of
shares of Common Stock.
PLAN OF DISTRIBUTION
The sale of all or a portion of the shares of Common Stock offered hereby by
the Selling Stockholder may be effected from time to time at prevailing market
prices at the time of such sales, at prices related to such prevailing prices,
at fixed prices that may be changed or at negotiated prices. The Selling
Stockholder may effect such transactions by selling directly to purchasers in
negotiated transactions, to dealers acting as principals or through one or more
brokers, or any combination of these methods of sale. In addition, shares may be
transferred in connection with the settlement of call options, short sales or
similar transactions that may be effected by the Selling Stockholder. Dealers or
brokers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholder. The Selling Stockholder and any
brokers or dealers that participate in the distribution may under certain
circumstances be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by such brokers or dealers and any
profits realized on the resale of shares by them may be deemed to be
underwriting discounts and commissions under the Securities Act. The Company and
the Selling Stockholder may agree to indemnify such brokers or dealers against
certain liabilities, including liabilities under the Securities Act.
Pursuant to the terms of the Registration Rights Agreement dated February 6,
1998 among the Company and the Selling Stockholder, the Company is obligated to
keep the Registration Statement effective for the period ending thirty-six
months after the initial effective date of the Registration Statement (which
period will be extended by the number of days dispositions of Conversion Shares
are suspended by the Company under the Registration Statement) or until the
holder of Conversion Shares has completed the distribution of the Conversion
Shares, whichever occurs first.
There is no assurance that the Selling Stockholder will sell any or all of
the shares of Common Stock offered hereby.
The Company has agreed to pay the expenses incurred in connection with the
registration of the shares of Common Stock offered hereby. The Selling
Stockholder will be responsible for all selling commissions, transfer taxes and
related charges in connection with the offer and sale of such shares.
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon for
Ross by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California. Mario M. Rosati, a Director and Assistant Secretary of the Company,
is a member of Wilson Sonsini Goodrich & Rosati, Professional Corporation, and
holds options to purchase 34,000 shares of Common Stock.
9
<PAGE>
EXPERTS
The consolidated balance sheet as of June 30, 1999 and 1998, the related
consolidated statements of operations, shareholders' equity, and cash flows for
the year then ended and schedule, incorporated by reference in this Prospectus
and Registration Statement, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of said firm
as experts in giving said report.
The consolidated balance sheet as of June 30, 1997 (not incorporated by
reference herein) and the related consolidated statements of operations,
shareholders' equity, and cash flows for the year ended June 30, 1997,
incorporated by reference in this Prospectus and Registration Statement from the
Company's 1999 Annual Report on Form 10-K, have been incorporated herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given upon the authority of that firm as experts in accounting and auditing.
10
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION
WITH ANY OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE SECURITIES OFFERED HEREBY, NOR DO THEY CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Information Incorporated by Reference..................................... 2
Risk Factors.............................................................. 3
Selling Stockholder....................................................... 8
Description of Equity Securities.......................................... 9
Plan of Distribution...................................................... 9
Legal Matters............................................................. 9
Experts................................................................... 10
</TABLE>
------------------------
ROSS SYSTEMS, INC.
---------------------
PROSPECTUS
---------------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fee and the Nasdaq
National Market listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................ $ 2,981
Nasdaq National Market listing fee................................. 17,500
Printing and engraving expenses.................................... 8,000
Legal fees and expenses............................................ 8,000
Accounting fees and expenses....................................... 24,000
Miscellaneous...................................................... 5,000
---------
Total.......................................................... $ 65,481
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation of the Registrant eliminates the liability
of directors to the Registrant for monetary damages for breach of fiduciary duty
as a director to the fullest extent permissible under Delaware law, as such law
exists currently or as it may be amended in the future. Under Delaware law, such
provision may not eliminate or limit director monetary liability for: (a)
breaches of the director's duty of loyalty to the Registrant or its
stockholders; (b) acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law; (c) the payment of unlawful dividends
or unlawful stock repurchases or redemptions; or (d) transactions in which the
director received an improper personal benefit. Such limitation of liability
provisions also may not limit a director's liability for violation of, or
otherwise relieve the Registrant or its directors from the necessity of
complying with, federal or state securities laws, or affect the availability of
non-monetary remedies such as injunctive relief or rescission.
The Registrant's Bylaws provide that the Registrant shall indemnify its
directors and officers and may indemnify its employees and other agents to the
fullest extent permitted by law. The Registrant believes that indemnification
under its Bylaws covers at least negligence and gross negligence on the part of
indemnified parties. The Registrant's Bylaws also permit the Registrant to
secure insurance on behalf of any officer, director, employee or other agent for
any liability arising out of his or her actions in such capacity, regardless of
whether the Registrant would have the power to indemnify him or her against such
liability under the General Corporation Law of Delaware. The Registrant
currently has secured such insurance on behalf of its officers and directors.
The Registrant has entered into agreements to indemnify its directors and
officers, in addition to indemnification provided for in the Registrant's
Bylaws. Subject to certain conditions, these agreements, among other things,
indemnify the Registrant's directors and officers for certain expenses
(including attorney's fees), judgments, fines and settlement amounts incurred by
any such person in any action or proceeding, including any action by or in the
right of the Registrant, arising out of such person's services as a director or
officer of the Registrant, any subsidiary of the Registrant or any other company
or enterprise to which the person provides services at the request of the
Registrant.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
3.1(1) Certificate of Incorporation of Registrant.
3.2(1) By-Laws of Registrant.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
4.1(2) Form of Convertible Securities Subscription Agreement between the Registrant and
each Investor.
4.2(2) Form of Subordinated Debenture Due February 6, 2003 issued by the Registrant to
each Investor on February 6, 1998.
4.3(2) Registration Rights Agreement among the Registrant and each Investor.
4.4* Form of Subordinated Debenture due February 6, 2003 issued by the Registrant to
each Investor on June 16, 1998.
4.5* Amendment Number One to the Convertible Subordinated Debenture between the
Registrant and the Selling Stockholder dated October 7, 1998.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.4* Consent of Wilson Sonsini Goodrich & Rosati, P.C. (included in Exhibit 5.1)
24.1* Power of Attorney
</TABLE>
- ------------------------
* Previously filed.
(1) Incorporated by reference to the exhibit filed with Registrant's Current
Report on Form 8-K dated July 24, 1998.
(2) Incorporated by reference to the exhibit filed with the Registrant's Current
Report on Form 8-K filed February 12, 1998.
ITEM 17. UNDERTAKINGS
1. The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sale are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that the undertakings set forth in paragraph (i) and (ii)
above shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or 15(d) of the
Exchange Act that are incorporated by reference in this Registration
Statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
<PAGE>
2. 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 thereof.
3. Insofar as indemnification of liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in 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.
4. The undersigned Registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(b) 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 thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this Pre-Effective
Amendment No. 3 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Atlanta, State of
Georgia, on October 7, 1999.
<TABLE>
<S> <C> <C>
ROSS SYSTEMS, INC.
By /s/ ROBERT B. WEBSTER
-----------------------------------------
Robert B. Webster,
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Pre-Effective Amendment No. 3 to the Registration Statement has been signed by
the following persons in the capacities and on the date indicated:
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- ---------------
Chairman of the Board and
/s/ DENNIS V. VOHS Chief Executive Officer
- ------------------------------ (Principal Executive October 7, 1999
(Dennis V. Vohs) Officer)
Vice President, Chief
/s/ ROBERT B. WEBSTER Financial Officer
- ------------------------------ (Principal Financial and October 7, 1999
(Robert B. Webster) Accounting Officer) and
Secretary
* J. WILLIAM GOODHEW
- ------------------------------ Director October 7, 1999
(J. William Goodhew)
* MARIO M. ROSATI
- ------------------------------ Director October 7, 1999
(Mario M. Rosati)
- ------------------------------ Director
(Bruce J. Ryan)
* J. PATRICK TINLEY
- ------------------------------ Director October 7, 1999
(J. Patrick Tinley)
*By: /s/ DENNIS V. VOHS
- ------------------------------
(Dennis V. Vohs) October 7, 1999
(Attorney-In-Fact)
II-4
<PAGE>
INDEX TO EXHIBITS
EXHIBITS
<TABLE>
<C> <S>
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
</TABLE>
<PAGE>
EXHIBIT 23.1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated August 20, 1999
included in Ross Systems, Inc.'s Form 10-K for the year ended June 30, 1999 and
to all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Atlanta, Georgia
October 7, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the registration
statement of Ross Systems, Inc. on Form S-3 of our report, dated August 21, 1997
relating to the financial statements and financial statement schedule, which
appears in Ross Systems, Inc.'s Annual Report on Form 10-K for the year ended
June 30, 1999. We also consent to the reference under the heading "Experts" in
such registration statement.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Atlanta, Georgia
October 6, 1999
