<PAGE>
As filed with the Securities and Exchange Commission on December 17, 1998
REGISTRATION STATEMENT NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________
SEGUE SOFTWARE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 95-4188982
(State of incorporation) (I.R.S. Employer Identification Number)
201 SPRING STREET
LEXINGTON, MASSACHUSETTS 02421
(781) 402 - 1000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
SEGUE SOFTWARE, INC. 1998 EMPLOYEE STOCK OPTION PLAN
(Full Title of the Plan)
_________________________
STEPHEN B. BUTLER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SEGUE SOFTWARE, INC.
201 SPRING STREET
LEXINGTON, MASSACHUSETTS 02421
(781) 402 - 1000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
_________________________
With a copy to:
Jeffrey C. Hadden, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
53 State Street
Boston, Massachusetts 02109-2881
(617) 570-1000
_________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================================
Proposed Maximum
Title of Securities Being Amount to be Proposed Maximum Offering Aggregate Amount of
Registered Registered(1) Price Per Share Offering Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 7,202 $ 0.75 $ 5,401.50 $ 1.51
per share 15,826 2.34 37,032.84 10.30
8,087 4.21 34,046.27 9.47
968,885 23.25(2) 22,526,576.25 6,262.39
--------- -------------- ---------
1,000,000 $22,603,056.86 $6,284.00
===========================================================================================================================
</TABLE>
(1) Additional shares issued or available for issuance under the Segue
Software, Inc. 1998 Employee Stock Option Plan ( the "Stock Option Plan");
plus such additional number of shares as may be required pursuant to the
Stock Option Plan in the event of a stock dividend, stock split,
recapitalization or other similar event.
(2) This estimate is based on the average of the high and low sales prices on
the Nasdaq National Market of the Common Stock of Segue Software, Inc. on
December 14, 1998 pursuant to Rules 457(c) and (h) under the Securities Act
of 1933, as amended, solely for purposes of determining the registration
fee.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUSES
Item 1. Plan Information.*
----------------
Item 2. Registrant Information and Employee Plan Annual Information.*
-----------------------------------------------------------
* Information required by Part I to be contained in the Section 10(a)
Prospectuses is omitted from this Registration Statement in accordance with Rule
428 under the Securities Act of 1933, as amended (the "Securities Act") and the
Introductory Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
Segue Software, Inc. (the "Company") hereby incorporates by reference the
documents listed in (a) through (c) below, which have previously been filed with
the Securities and Exchange Commission.
(a) The Company's Annual Report on Form 10-K, containing audited financial
statements for the fiscal year ended December 31, 1997, filed with the
Securities and Exchange Commission (the "Commission") pursuant to
Section 13(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on March 30, 1998;
(b) All other reports filed since December 31, 1997 pursuant to Section
13(a) or 15(d) of the Exchange Act; and
(c) The description of the Company's common stock contained in its
Registration Statement on Form 8-A, filed with the Commission on
February 16, 1996, as amended, under Section 12 of the Exchange Act and
any amendments or reports filed for the purpose of updating such
description.
In addition, all documents subsequently filed with the Commission by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment hereto which indicates that
all securities offered hereunder have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof from the date
of filing of such documents.
Item 4. Description of Securities.
-------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
Not Applicable.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
Subsection (a) of Section 145 of the Delaware General Corporation Law (the
"DGCL") empowers a corporation to 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 the person 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), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good
<PAGE>
faith and in a manner the person 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 the person's conduct was
unlawful. Under subsection (a) the termination of any action, suit or proceeding
by judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person 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 reasonable cause to believe that the
person's conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
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 the
person 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 the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit 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 which the Court of Chancery or such other court
shall deem proper.
Subsection (d) of Section 145 of the DGCL permits indemnification under
subsections (a) and (b) of Section 145 only if authorized in the specific case
following a determination that the individual seeking indemnification has met
the standard of conduct required by the applicable subsection. Such
determination shall be made (1) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a quorum, or
(2) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by the stockholders.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section
145, or in the defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection therewith; that indemnification provided
for by Section 145 shall not be deemed exclusive of any other rights to which
the indemnified party may be entitled; that indemnification provided for by
Section 145 shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of such person's heirs, executors and
administrators; and that the corporation has the power to purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against him or her and incurred by him or her in any such
capacity, or arising out of his or her status as such whether or not the
corporation would have the power to indemnify him or her against such
liabilities under Section 145.
Article VII of the Company's Amended and Restated Certificate of
Incorporation, as amended (the "Certificate"), and Article V of the Company's
By-laws provides for indemnification by the Company, to the fullest extent
permitted by Section 145 of the DGCL, the same exists or may hereafter be
amended, of its directors, officers, and certain persons serving at the request
of the Company as a director, officer, employee or agent of another company, or
of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan (hereinafter "Indemnitee") against all
expense, liability and loss (including attorney's fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by the Indemnitee in connection with the defense or settlement of any
threatened, pending or completed legal proceeding, whether civil, criminal,
administrative or investigative, in which said Indemnitee is involved by reason
of his relationship with the Company.
Article VIII of the Company's Certificate provides that no director of the
Company shall be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases, or (iv)
for any transaction from which the director derived an improper personal
benefit. In addition, the Certificate provides that if the DGCL is amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the DGCL as so amended.
2
<PAGE>
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits.
--------
The following is a complete list of exhibits filed or incorporated by
reference as part of this registration statement.
Exhibits
- --------
4.1 Segue Software, Inc. Amended and Restated Certificate of Incorporation
(incorporated herein by reference to exhibit 3.2 of the Company's
Registration Statement on Form S-1 (File No. 333-1488) as filed with
the Commission on February 16, 1996).
4.2 Segue Software, Inc. By-laws (incorporated herein by reference to
exhibit 3.3 of the Company's Registration Statement on Form S-1 (File
No. 333-1488) as filed with the Commission on February 16, 1996).
*4.3 Segue Software, Inc. 1998 Employee Stock Option Plan.
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities being registered.
23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1).
*23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Powers of Attorney (included on page 5 of this registration statement).
*Filed herewith
Item 9. Undertakings.
------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(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 with or
furnished to the Commission by the registrant pursuant to Section 13 or
15(d) of the Exchange Act that are incorporated by reference 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 the offering.
3
<PAGE>
(b) 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 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.
(c) 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.
4
<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-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Lexington, Commonwealth of Massachusetts, on
December 17, 1998.
SEGUE SOFTWARE, INC.
By: /s/ Stephen B. Butler
---------------------
Stephen B. Butler
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Segue Software, Inc. hereby severally constitute Stephen B. Butler
and Carl D. Blandino, and each of them singly, our true and lawful attorneys
with full power to them, and each of them singly, to sign for us and in our
names in the capacities indicated below, the registration statement filed
herewith and any and all amendments to said registration statement, and
generally to do all such things in our names and in our capacities as officers
and directors to enable Segue Software, Inc. to comply with the provisions of
the Securities Act of 1933 and all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by our said attorneys, or any of them, to said registration statement and any
and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ Stephen B. Butler President, Chief Executive Officer, December 17, 1998
- --------------------- Director (Principal Executive Officer)
Stephen B. Butler
/s/ Carl D. Blandino Senior Vice President of Administration, December 17, 1998
- -------------------- Chief Financial Officer
Carl D. Blandino (Principal Financial and Accounting Officer)
/s/ Leonard E. Baum Director December 17, 1998
- -------------------
Leonard E. Baum
/s/ Ronald D. Fisher Director December 17, 1998
- --------------------
Ronald D. Fisher
/s/ John R. Levine Director December 17, 1998
- ------------------
John R. Levine
/s/ Howard L. Morgan Director December 17, 1998
- --------------------
Howard L. Morgan
/s/ James H. Simons Director December 17, 1998
- -------------------
James H. Simons
</TABLE>
5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
4.1 Segue Software, Inc. Amended and Restated Certificate of
Incorporation (incorporated herein by reference to exhibit 3.2 of the
Company's Registration Statement on Form S-1 (File No. 333-1488) as
filed with the Commission on February 16, 1996).
4.2 Segue Software, Inc. By-laws (incorporated herein by reference to
exhibit 3.2 of the Company's Registration Statement on Form S-1 (File
No. 333-1488) as filed with the Commission on February 16, 1996).
*4.3 Segue Software, Inc. 1998 Employee Stock Option Plan.
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities being registered.
23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1).
*23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Powers of Attorney (included on page 5 of this registration
statement).
*Filed herewith
<PAGE>
EXHIBIT 4.3
-----------
SEGUE SOFTWARE, INC.
1998 EMPLOYEE STOCK OPTION PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
----------------------------------------
The name of the plan is the Segue Software, Inc. 1998 Employee Stock Option
Plan (the "Plan"). The purpose of the Plan is to encourage and enable the
employees and consultants of Segue Software, Inc. (the "Company") and its
Subsidiaries (as defined below) upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" has the meaning specified in Section 2.
"Effective Date" means November 23, 1998.
"Fair Market Value" of the Stock on any given date means the fair market
value of the Stock determined in good faith by the Committee; provided, however,
that (i) if the Stock is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), NASDAQ National System
or a national securities exchange, the determination shall be made by reference
to market quotations. If there are no market quotations for such date, the
determination shall be made by reference to the last date preceding such date
for which there are market quotations.
"Independent Director" means a member of the Board who is neither an
employee or officer of the Company or any Subsidiary.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Stock" means the Common Stock, par value $.01 per share, of the Company,
subject to adjustments pursuant to Section 3.
"Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities, beginning with the
Company, if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
A-1
<PAGE>
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT
-----------------------------------------------------
PARTICIPANTS AND DETERMINE AWARDS
---------------------------------
(a) Committee. The Plan shall be administered by the Board of Directors of
---------
the Company, or at the discretion of the Board, by a committee or committees of
the Board consisting of not less than two Independent Directors, except as
contemplated by Section 2(c). Each member of the Committee shall be a "Non-
Employee Director" within the meaning of Rule 16b-3(a)(3) under the Act. All
references herein to the Committee shall be deemed to refer to the entity then
responsible for administration of the Plan at the relevant time (i.e., either
the Board of Directors or a committee of the Board, as applicable).
(b) Powers of Committee. The Committee shall have the power and authority
-------------------
to grant Stock Options consistent with the terms of the Plan, including the
power and authority:
(i) to select the employees of the Company and its Subsidiaries to
whom Stock Options may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any,
of Stock Options granted to any one or more participants;
(iii) to determine the number of shares of Stock to be covered by any
Stock Option;
(iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of the
Plan, of any Stock Option, which terms and conditions may differ among
individual Stock Options and participants, and to approve the form of
written instruments evidencing the Stock Options;
(v) to accelerate at any time the exercisability or vesting of all or
any portion of any Stock Option and/or to include provisions in Stock
Options providing for such acceleration;
(vi) to impose any limitations on Stock Options granted under the
Plan, including limitations on transfers, repurchase provisions and the
like and to exercise repurchase rights or obligations;
(vii) to extend at any time the period in which Stock Options may be
exercised; and
(viii) at any time to adopt, alter and repeal such rules, guidelines
and practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Stock Option (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in connection
with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.
(c) Delegation of Authority to Grant Stock Options. The Board, in its
----------------------------------------------
discretion, may appoint the Chief Executive Officer of the Company as a one-
person Committee in addition to the Committee contemplated by Section 2(a)
having authority (co-extensive with such other Committee) to grant Stock Options
to individuals who are not subject to the reporting and other provisions of
Section 16 of the Act or "covered employees" within the meaning of Section
162(m) of the Code.
A-2
<PAGE>
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; ADJUSTMENTS; SUBSTITUTION
--------------------------------------------------------
(a) Stock Issuable. The maximum number of shares of Stock reserved and
--------------
available for issuance under the Plan shall be 1,000,000 shares of Stock. For
purposes of the foregoing limitations, the shares of Stock underlying any Stock
Options which are forfeited, canceled, reacquired by the Company, satisfied
without the issuance of Stock or otherwise terminated (other than by exercise)
shall be added back to the shares of Stock available for issuance under the
Plan. The shares available for issuance under the Plan may be authorized but
unissued shares of Stock or shares of Stock reacquired by the Company.
(b) Adjustments. Upon the occurrence of any of the following events, a
-----------
Plan participant's rights with respect to any Stock Option granted to him or her
hereunder which have not previously been exercised in full shall be adjusted as
hereinafter provided, unless otherwise specifically provided in the written
agreement between such participant and the Company relating to such Stock
Option:
(i) Stock Dividends and Stock Splits. If the shares of Stock shall be
--------------------------------
subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Stock as a stock dividend on its
outstanding Stock, the number of shares of Stock issuable upon the exercise
of such Stock Option shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase
price per share to reflect such subdivision, combination or stock dividend.
(ii) Consolidations or Mergers. If the Company is to be consolidated
-------------------------
with or acquired by another entity in a merger, sale of all or
substantially all of the Company's assets or otherwise (an "Acquisition"),
the board of directors or the appropriate committee thereof of any entity
assuming the obligations of the Company hereunder shall, as to outstanding
Stock Options, either (A) make appropriate provision for the continuation
of such Stock Options by substituting on an equitable basis for the shares
of Stock then subject to such Stock Options either consideration payable
with respect to the outstanding shares of Stock in connection with the
Acquisition or securities of such successor or acquiring entity; (B) upon
written notice to the Plan participants, provide that all Stock Options
must be exercised (either to the extent then exercisable or, at the
discretion of the Committee, all Stock Options being made fully exercisable
for purposes of this Section 3(b)(ii)), within a specified number of days
of the date of such notice, at the end of which period the Stock Options
shall terminate; or (C) terminate all Stock Options in exchange for a cash
payment equal to the excess of the Fair Market Value of the shares of Stock
subject to such Stock Options (either to the extent then exercisable or, at
the discretion of the Committee, all Stock Options being made fully
exercisable for purposes of this Section 3(b)(ii)) over the exercise price
thereof.
(iii) Recapitalization or Reorganization. In the event of a
----------------------------------
recapitalization or reorganization of the Company (other than a transaction
described in Section 3(b)(ii) above) pursuant to which securities of the
Company or of another corporation are issued with respect to the
outstanding shares of Stock, each Plan participant upon exercising a Stock
Option shall be entitled to receive for the purchase price paid upon such
exercise the securities he or she would have received if he or she had
exercised such Stock Option prior to such recapitalization or
reorganization.
(c) Substitute Awards. The Committee may grant Stock Options under the
-----------------
Plan in substitution for stock and stock based awards held by employees of
another corporation who become employees of the Company or a Subsidiary as the
result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation. The Committee may direct that
the substitute Stock Options be granted on such terms and conditions as the
Committee considers appropriate in the circumstances.
A-3
<PAGE>
SECTION 4. ELIGIBILITY
-----------
Participants in the Plan will be such employees and consultants of the
Company and its Subsidiaries who are responsible for or contribute to the
management, growth or profitability of the Company and its Subsidiaries as are
selected from time to time by the Committee, in its sole discretion.
SECTION 5. STOCK OPTIONS
-------------
Any Stock Option granted under the Plan shall be pursuant to a stock option
agreement which shall be in such form as the Committee may from time to time
approve. Option agreements need not be identical.
Stock Options granted under the Plan will not qualify as "incentive stock
options" as defined in Section 422 of the Code.
(a) Terms of Stock Options. Stock Options granted under the Plan shall be
----------------------
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable:
(i) Exercise Price. The exercise price per share for the Stock
--------------
covered by a Stock Option shall be determined by the Committee at the time
of grant.
(ii) Option Term. The term of each Stock Option shall be fixed by the
-----------
Committee.
(iii) Exercisability; Rights of a Stockholder. Stock Options shall
---------------------------------------
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Committee at or after the grant
date; provided, however, that Stock Options granted in lieu of cash
compensation shall be exercisable in full as of the grant date. The
Committee may at any time accelerate the exercisability of all or any
portion of any Stock Option. An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of a Stock Option
and not as to unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole or
------------------
in part, by giving written notice of exercise to the Company, specifying
the number of shares to be purchased. Payment of the purchase price may be
made by one or more of the following methods:
(A) In cash, by certified or bank check or other instrument
acceptable to the Committee;
(B) In the form of shares of Stock that are not then subject to
restrictions under any Company plan and that have been held by the
optionee free of such restrictions for at least six months, if
permitted by the Committee in its discretion. Such surrendered shares
shall be valued at Fair Market Value on the exercise date; or
(C) By the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the purchase price; provided that in the event
the optionee chooses to pay the purchase price as so provided, the
optionee and the broker shall comply with such procedures and enter
into such agreements of indemnity and other agreements as the
Committee shall prescribe as a condition of such payment procedure.
A-4
<PAGE>
Payment instruments will be received subject to collection. The delivery
of certificates representing the shares of Stock to be purchased pursuant
to the exercise of a Stock Option will be contingent upon receipt from the
optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price
for such shares and the fulfillment of any other requirements contained in
the Stock Option or applicable provisions of laws.
(v) Termination. Unless otherwise provided in the option agreement or
-----------
determined by the Committee, upon the optionee's termination of employment
(or other business relationship) with the Company and its Subsidiaries, the
optionee's rights in his or her Stock Options shall automatically
terminate.
(b) Reload Options. At the discretion of the Committee, Stock Options
--------------
granted under the Plan may include a "reload" feature pursuant to which an
optionee exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Stock Option (with an exercise price equal to the Fair Market Value
of the Stock on the date the additional Stock Option is granted and with the
same expiration date as the original Stock Option being exercised, and with such
other terms as the Committee may provide) to purchase that number of shares of
Stock equal to the number delivered to exercise the original Stock Option.
(c) Non-transferability of Options. No Stock Option shall be transferable
------------------------------
by the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee. Notwithstanding the foregoing, the Committee
may provide in an option agreement that the optionee may transfer, without
consideration for the transfer, his or her Stock Options to members of his
immediate family, to trusts for the benefit of such family members, to
partnerships in which such family members are the only partners; or to
charitable organizations; provided, however, that the transferee agrees in
writing to be bound by the terms and conditions of this Plan and the applicable
option agreement.
SECTION 6. TAX WITHHOLDING
---------------
(a) Payment by Participant. Each participant shall, no later than the date
----------------------
as of which the value of a Stock Option or of any Stock or other amounts
received thereunder first becomes includable in the gross income of the
participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of, any federal,
state, or local taxes of any kind required by law to be withheld with respect to
such income. The Company and its Subsidiaries shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the participant.
(b) Payment in Stock. Subject to approval by the Committee, a participant
----------------
may elect to have such tax withholding obligation satisfied, in whole or in
part, by (i) authorizing the Company to withhold from shares of Stock to be
issued pursuant to any Stock Option a number of shares with an aggregate Fair
Market Value (as of the date the withholding is effected) that would satisfy the
withholding amount due, or (ii) transferring to the Company shares of Stock
owned by the participant with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the withholding amount due.
SECTION 7. TRANSFER, LEAVE OF ABSENCE, ETC.
--------------------------------
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
A-5
<PAGE>
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to re-
employment is guaranteed either by a statute or by contract or under the policy
pursuant to which the leave of absence was granted or if the Committee otherwise
so provides in writing.
SECTION 8. AMENDMENTS AND TERMINATION
--------------------------
The Board may, at any time, amend or discontinue the Plan and the Committee
may, at any time, amend or cancel any outstanding Stock Option (or provide
substitute Stock Options at the same or reduced exercise or purchase price or
with no exercise or purchase price in a manner not inconsistent with the terms
of the Plan), but such price, if any, must satisfy the requirements which would
apply to the substitute or amended Stock Option if it were then initially
granted under this Plan for the purpose of satisfying changes in law or for any
other lawful purpose, but no such action shall adversely affect rights under any
outstanding Stock Option without the holder's consent.
SECTION 9. STATUS OF PLAN
--------------
With respect to the portion of any Stock Option which has not been
exercised and any payments in cash, Stock or other consideration not received by
a participant, a participant shall have no rights greater than those of a
general creditor of the Company unless the Committee shall otherwise expressly
determine in connection with any Stock Option or Stock Options. In its sole
discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the Company's obligations to deliver Stock or make payments
with respect to Stock Options hereunder, provided that the existence of such
trusts or other arrangements is consistent with the foregoing sentence.
SECTION 10. GENERAL PROVISIONS
------------------
(a) No Distribution; Compliance with Legal Requirements. The Committee may
---------------------------------------------------
require each person acquiring Stock pursuant to a Stock Option to represent to
and agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to a Stock Option until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Committee may require the placing of such
stop-orders and restrictive legends on certificates for Stock as it deems
appropriate.
(b) Other Compensation Arrangements; No Employment Rights. Nothing
-----------------------------------------------------
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Stock Options do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
SECTION 11. GOVERNING LAW
-------------
This Plan shall be governed by Delaware law except to the extent such law
is preempted by federal law.
Adopted and Effective: November 23, 1998
A-6
<PAGE>
EXHIBIT 5.1
-----------
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
December 17, 1998
Segue Software, Inc.
201 Spring Street
Lexington, Massachusetts 02421
Re: Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
This opinion is delivered in our capacity as counsel to Segue Software,
Inc. (the "Company") in connection with the preparation and filing with the
Securities and Exchange Commission under the Securities Act of 1933 of a
Registration Statement on Form S-8 (the "Registration Statement") relating to
1,000,000 shares (the "Shares") of the Company's common stock, par value $.01
per share (the "Common Stock"), which the Company is authorized to issue
pursuant to the Segue Software, Inc. 1998 Employee Stock Option Plan (the
"Option Plan").
As counsel for the Company, we have examined a copy of the Option Plan and
the Company's Amended and Restated Certificate of Incorporation and the Amended
and Restated By-laws, each as presently in effect, and such records,
certificates and other documents of the Company as we have deemed necessary or
appropriate for the purposes of this opinion.
Based on the foregoing, we are of the opinion that, when the Shares are
sold and paid for pursuant to the terms of the Option Plan, the Shares will be
legally issued, fully paid and non-assessable by the Company under the General
Corporation Law of the State of Delaware.
The foregoing assumes that all requisite steps will be taken to comply with
the requirements of the Act and applicable requirements of state laws regulating
the offer and sale of securities.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
GOODWIN, PROCTER & HOAR LLP
<PAGE>
EXHIBIT 23.2
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Segue Software, Inc. on Form S-8 of our report dated February 5, 1998, on our
audits of the consolidated financial statements of Segue Software, Inc. as of
December 31, 1997 and 1996, and for each of the three years in the period ended
December 31, 1997, which report is included in the Segue Software, Inc. Annual
Report on Form 10-K for the year ended December 31, 1997.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
December 17, 1998
