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Filed pursuant to Rule 424(b)(3)
Registration No. 333-76365
PROSPECTUS
156,501 Shares
SEGUE SOFTWARE, INC.
Common Stock
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The selling stockholders identified in this prospectus are offering to sell
up to an aggregate of 156,501 shares of common stock of Segue Software, Inc.
The common stock is quoted on the Nasdaq National Market under the trading
symbol "SEGU." The last reported sale price of the common stock on the Nasdaq
National Market on June 24, 1999 was $7.375 per share.
The selling stockholders may sell their shares of common stock in any manner
described in the "Plan of Distribution" section of this prospectus beginning on
page 7.
Investing in the common stock involves certain risks. See "Risk Factors"
beginning on page 2.
Neither the Securities Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. It is illegal for any person to tell
you otherwise.
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The date of this prospectus is June 25, 1999
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RISK FACTORS
An investment in the common stock involves various risks. This prospectus
contains forward-looking statements within the meaning of the federal
securities laws. You are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties.
Actual events or results may differ materially from those discussed in the
forward-looking statements as a result of various factors, including the
factors referenced in Segue's documents which are filed with the SEC and which
are incorporated by reference herein. In deciding whether or not to invest in
the common stock, you should consider the following risk factors:
Segue's quarterly results may fluctuate. Segue's quarterly revenue and
operating results are difficult to predict and may fluctuate significantly from
quarter to quarter. If Segue's quarterly revenue or operating results fall
below the expectations of investors or public market analysts, the price of its
common stock could fall substantially. Segue's quarterly revenue may fluctuate
significantly for several reasons, including: the timing of introductions of
new products or product enhancements by Segue or its competitors; personnel
changes; the size and timing of individual orders; software bugs or other
product quality problems; competition and pricing; customer order deferrals in
anticipation of new products or product enhancements; demand for Segue's
products is difficult to predict for reasons discussed below; changes in
operating expenses; product mix; and general economic conditions. A substantial
portion of Segue's operating expenses are related to personnel, facilities and
marketing programs. The level of spending for such expenses cannot be adjusted
quickly and is based, in significant part, on our expectations of future
revenues. If actual revenue levels are below management's expectations, results
of operations are likely to be adversely affected. In addition, Segue does not
typically experience order backlog. Furthermore, Segue has often recognized a
substantial portion of its revenues in the last month of a quarter, with these
revenues frequently concentrated in the last weeks or days of a quarter. As a
result, product revenues in any quarter are substantially dependent on orders
booked and shipped in the latter part of that quarter, and revenues for any
future quarter are not predictable with any significant degree of accuracy. For
these reasons, Segue believes that period-to-period comparisons of its results
of operations are not necessarily meaningful and should not be relied upon as
indications of future performance.
Segue may not be profitable in the future. Since Segue began operations, it
has generally experienced losses. Losses have resulted in an accumulated
deficit of approximately $18.0 million as of December 31, 1998. Segue had net
income of $144,000 in 1996, a net loss of $11.5 million in 1997, which includes
a charge of $9.1 million for purchased research and development in process and
$718,000 for severance charges, and a net loss of $2.9 million in 1998, which
includes a charge of $1.5 million related to the Eventus Software and Black &
White Software acquisitions and a charge of $667,000 related to the write-offs
of an NRE fee and guaranteed royalties. While Segue has experienced revenue
growth in recent periods, continued growth at the same rate is not sustainable
and is not necessarily indicative of future operating results. Failure to
sustain or increase profitability may adversely affect the market price of the
common stock.
Segue has recently shifted its focus from general software testing to e-
business testing. In 1997 Segue began to develop and acquire technology to
provide automated software testing for Web-enabled software applications,
including its acquisition of SQLBench in December 1997. These developments
allowed Segue to extend its testing capabilities beyond distributed
client/server applications with GUI front ends. Because e-business scenario
testing is more complicated than general software testing, Segue may experience
issues with its product quality. In the second quarter of 1998, Segue
introduced "LiveQuality," an e-business scenario testing product. In the fourth
quarter of 1998, Segue acquired Eventus Software and Black & White Software
which provided Segue with other technologies to expand its current line of e-
business testing products. Segue's shift from a general software testing
company to an e-business testing company during the past year has resulted in
significant changes in (i) Segue's organizational structure, (ii) management
personnel, (iii) product mix, and (iv) sales approach. If Segue fails to
effectively manage these changes, or make other changes which may be needed in
connection with such shift to an e-business testing company, Segue's business,
operating results and financial condition may be materially adversely affected.
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The development of a market for Segue's products is uncertain. The market
for automated software testing products is relatively new and undeveloped.
Marketing and sales techniques in the automated software testing marketplace,
as well as the bases for competition, are not well established. There can be no
assurance as to the extent that a significant market for automated software
testing products will develop or the extent to which Segue's products will be
accepted in that market. Although Segue believes that the current trend toward
increased use of automated software testing will continue, a majority of
software testing is still carried out manually, and there can be no assurance
that the automated software testing market will enjoy continued growth.
The commercial market for products and services designed for use on the
Internet, Intranet and Extranet has only recently begun to develop. The success
of Segue's products focused on e-commerce and Internet applications will depend
on the growth of the market and on its ability to continue to enhance its
products to work with all of the prevalent technologies driving Internet
applications. There can be no assurance that Segue will be able to effectively
adapt its products to the prevalent technologies being used on e-commerce
applications or to successfully compete in the market for Internet-related
products and services. As is typical for new and rapidly evolving industries,
demand for recently introduced products is highly uncertain.
Segue may have difficulty managing its growth. Segue has been experiencing a
period of rapid growth, including increases in the number of orders, customers
and employees. Segue's rapid growth has placed, and may continue to place,
strains on its management, operations and systems. To manage future growth
effectively, Segue must expand, improve and effectively utilize its
operational, management, marketing, sales and financial systems as necessitated
by changes in its business. Segue is implementing an ERP information system and
opening a Technical Support Center in Ireland in 1999, both of which could be
disruptive. Additionally, as part of the restructuring plan in the first
quarter of 1999 Segue significantly changed the sales management team and
consolidated the position of Senior Vice President of Research and Development
with the position of Senior Vice President and General Manager of the executive
management team. In conjunction with these management changes, Segue also
changed the structure of its internal organization by adding product divisions
which relate to its e-business testing products. Segue also refocused its sales
and marketing approach to focus on e-commerce applications. There can be no
assurance that Segue will be able to effectively manage such changes and such
changes are likely to be disruptive.
Segue may be subject to risks associated with its recent acquisitions and
future acquisitions. In the fourth quarter of 1998 Segue acquired Eventus
Software and Black & White Software in two separate transactions. Segue's
product range and customer base have increased in the recent past due in part
to these acquisitions. These acquisitions provided Segue with technologies to
expand its current line of e-business testing products. There can be no
assurance that the integration of all of the acquired technologies will be
successful or will not result in unforeseen difficulties which may absorb
significant management attention.
In the future, Segue may acquire additional businesses or product lines. The
recently completed acquisitions, or any future acquisition, may not produce the
revenue, earnings or business synergies that it anticipated, and an acquired
product, service or technology might not perform as expected. Prior to
completing an acquisition, however, it is difficult to determine if such
benefits can actually be realized. The process of integrating acquired
companies into Segue's business may also result in unforeseen difficulties.
Unforeseen operating difficulties may absorb significant management attention,
which Segue might otherwise devote to its existing business. Also, the process
may require significant financial resources that Segue might otherwise allocate
to other activities, including the ongoing development or expansion of its
existing operations. The integration of the acquisitions of Eventus Software
and Black & White Software will take longer than expected.
If Segue pursues a future acquisition, its management could spend a
significant amount of time and effort in identifying and completing the
acquisition. To pay for a future acquisition, Segue might use capital stock or
cash. Alternatively, Segue might borrow money from a bank or other lender. If
Segue uses capital stock as it did with its recent acquisitions, Segue's
stockholders would experience dilution of their ownership interests. If Segue
uses cash or debt financing, its financial liquidity will be reduced.
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Segue has recently changed its sales approach and restructured its sales
teams. As part of the shift in Segue's business to e-business testing, Segue
has recently begun to focus its marketing and sales efforts with a solution
sales approach. Segue's direct sales force focuses on large enterprise and
strategic sales in an effort to provide as many solutions as a particular
client needs. To facilitate the solution sales approach, Segue restructured its
direct sales force into teams of one strategic sales representative and one
technical support engineer. Segue has also recently hired additional sales
personnel and worked to integrate sales personnel from Eventus and Black &
White. There can be no assurance that this sales approach will result in
greater revenues. Because Segue's sales force focuses on making larger sales,
its sales cycle may increase.
Larger purchases will take longer than smaller sales because customers will
generally take more time to decide on whether to make larger purchases. A
longer sales cycle reduces Segue's ability to forecast revenue levels. Any
delay or loss in sales of Segue's products could have a material adverse effect
on its business, operating results and financial condition, and could cause its
operating results to vary significantly from quarter to quarter.
Segue's performance will depend in part on the growth and commercial
acceptance of the Internet. Segue's future success will depend substantially
upon the widespread adoption of the Internet as a primary medium for commerce
and business applications. If the Internet does not become a viable and
substantial commercial medium, Segue's business, operating results and
financial condition will be materially adversely affected. The Internet has
experienced, and is expected to continue to experience, significant user and
traffic growth which has, at times, caused user frustration with slow access
and download times. The Internet infrastructure may not be able to support the
demands placed on it by continued growth. Moreover, critical issues concerning
the commercial use of the Internet, such as security, reliability, cost,
accessibility and quality of service, remain unresolved and may negatively
affect the growth of Internet use or the attractiveness of commerce and
business communication on the Internet. In addition, the Internet could lose
its viability due to delays in the development or adoption of new standards and
protocols to handle increased activity or due to increased government
regulation and taxation of Internet commerce.
Segue faces significant competition from other software companies. The
market for software quality management tools is new, intensely competitive and
subject to rapid technological change. Segue expects competition to intensify
in the future. Segue currently encounters competition from a number of public
and private companies including Mercury Interactive Corporation, Rational
Software Corporation and Compuware Corporation. Many of Segue's current and
potential competitors have longer operating histories, greater name
recognition, larger installed customer bases, and significantly greater
financial, technical and marketing resources than it does and, therefore, may
be able to respond more quickly than Segue can to new or changing
opportunities, technologies, standards or customer requirements or may be able
to devote greater resources to the promotion and sale of their products than
Segue. Segue may also face increased competition from the recent consolidation
of several companies in the automated software quality market. An increase in
competition could result in price reductions and loss of market share. Such
competition and any resulting reduction in profitability could have a material
adverse effect on Segue's business, operating results and financial condition.
Segue's business could be adversely affected if its products contain errors.
Software products as complex as Segue's products may contain undetected errors
or "bugs," which result in product failures. The occurrence of errors could
result in loss of or delay in revenue, loss of market share, failure to achieve
market acceptance, diversion of development resources, injury to Segue's
reputation, or damage to its efforts to build brand awareness, any of which
could have a material adverse effect on Segue's business, operating results and
financial condition.
Segue's future success will depend on its ability to enhance existing
products and develop new products. To be competitive, Segue must develop and
introduce product enhancements and new products that increase its customers'
ability to test their systems. If Segue fails to develop and introduce new
products and enhancements successfully and on a timely basis, it could have a
material adverse effect on Segue's business, operating results and financial
condition. The emerging nature of the automated software testing and e-commerce
testing markets
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requires that Segue continually improve the performance, features and
reliability of its products, particularly in response to competitive offerings
and evolving customer needs. Segue must also introduce enhancements to existing
products as quickly as possible and prior to the introduction of competing
products. Segue has acquired, and may in the future acquire, technologies to
provide it with the tools to introduce new products or to enhance current
products. The success of such acquisitions will depend in part on Segue's
ability to effectively integrate the technologies.
Segue must hire and retain skilled personnel in a tight labor market.
Qualified personnel are in great demand throughout the software industry.
Segue's success depends in large part upon its ability to attract, train,
motivate and retain highly skilled employees, particularly sales and marketing
personnel, software engineers and other senior personnel. There is intense
competition for sales personnel in Segue's business, and there can be no
assurance that Segue will be successful in attracting, integrating, motivating
and retaining new sales personnel. The failure of Segue to attract and retain
the highly skilled personnel that are integral to its direct sales, product
development, service and support teams may limit the rate at which Segue can
generate sales and develop new products or product enhancements. This could
have a material adverse effect on Segue's business, operating results and
financial condition.
Segue faces many risks associated with international business activities.
Segue derived approximately 16% of its total product sales from international
customers in 1998. The international market for software products is highly
competitive and Segue expects to face substantial competition in this market
from established and emerging companies. Segue faces many risks associated with
international business activities including currency fluctuations, imposition
of government controls, export license requirements, restrictions on the export
of critical technology, political and economic instability, tailoring of
products to local requirements, trade restrictions, changes in tariffs and
taxes, difficulties in staffing and managing international operations, longer
accounts receivable payment cycles and the burdens of complying with a wide
variety of foreign laws and regulations. To the extent that Segue is unable to
expand international sales in a timely and cost-effective manner, Segue's
business could be materially adversely affected.
Segue may be affected by unexpected Year 2000 problems. Many existing
computer systems and software products do not properly recognize dates after
December 31, 1999. This "Year 2000" problem could result in miscalculations,
data corruption, system failures or disruptions of operations. Segue is subject
to potential Year 2000 problems affecting its products, its internal systems
and the systems of its vendors and distributors, any of which could have a
material adverse effect on Segue's business, operating results and financial
condition.
In addition, there can be no assurance that Year 2000 errors or defects will
not be discovered in Segue's internal software systems and, if such errors or
defects are discovered, there can be no assurance that the costs of making such
systems Year 2000 compliant will not be material.
Year 2000 errors or defects in the internal systems maintained by Segue's
vendors or distributors could require Segue to incur significant unanticipated
expenses to remedy any problems or replace affected vendors and could reduce
Segue's revenue from its indirect distribution channel.
Segue may be subject to risks associated with its channel partner program.
Although Segue has not historically sold significant amounts of its products
through indirect channels, Segue intends to continue to develop channel sales
as part of its business strategy. Recently Segue has added significant
resources to expand its channel sales, including dedicating sales personnel to
increase sales through current channel partners and developing relationships
with other potential channel partners. There can be no assurance that Segue's
greater efforts will result in an increase in revenues. Furthermore, Segue may
be subject to certain distinct risks associated with channel sales. Segue
licenses its products to channel partners at a discount and such partners re-
license the products to end-users. Segue's agreements with its channel partners
are non-exclusive and provide the channel partners with 60-day price
protection. Because Segue's channel partners generally order products after
they have received purchase orders, there is no requirement that Segue
repurchase any product. Segue typically does not grant its channel partners a
contractual right to return software products. When approved by
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management, however, Segue has accepted returns of certain software products
and has provided an allowance for the specified products. Segue selects its
channel partners based on the partner's financial viability, product expertise
and market focus. In order for Segue's strategy to broaden market penetration
through its channel partner program to be successful, Segue must increase its
unit sales to offset the discount Segue is providing to its channel partners.
There can be no assurance that Segue will succeed in the development of these
channels. Moreover, selling through indirect channels may limit Segue's contact
with the end users of its products. As a result, Segue's ability to accurately
forecast sales, evaluate customer satisfaction and recognize emerging customer
requirements may be hindered and its ability to develop and maintain customer
goodwill may be limited. Furthermore, Segue's existing or future channel
partners may choose to devote greater resources to marketing and supporting the
products of other companies. In addition, Segue will need to resolve potential
conflicts among its sales force and channel partners.
Segue could be subject to product liability claims. In selling its products,
Segue relies primarily on "shrink wrap" licenses that contain, among other
things, provisions protecting against the unauthorized use, copying and
transfer of the licensed program and limiting Segue's exposure to potential
product liability claims. However, these licenses are not signed by the
licensees and the provisions of these licenses, including the provisions
limiting Segue's exposure to product liability claims, may therefore be
unenforceable under the laws of certain jurisdictions. Segue's products may be
used on applications that are critical to the operations of its customers'
businesses. Any failure in a customer's applications could result in a claim
for substantial damages against Segue, regardless of Segue's responsibility for
such failure. Although Segue maintains general liability insurance, including
coverage for errors and omissions, there can be no assurance that such coverage
will continue to be available on reasonable terms or will be available in
amounts sufficient to cover one or more large claims, or that the insurer will
not disclaim coverage as to any future claim.
Segue's success depends on its ability to protect its proprietary
technology. Segue's success depends to a significant degree upon the protection
of its software and other proprietary technology. The unauthorized reproduction
or other misappropriation of Segue's proprietary technology could enable third
parties to benefit from Segue's technology without paying Segue for it. This
could have a material adverse effect on Segue's business, operating results and
financial condition. Although Segue has taken steps to protect its proprietary
technology, they may be inadequate. Segue currently relies on a combination of
trademark, copyright and trade secret laws and contractual provisions to
protect its proprietary rights in its products. Segue presently has no
registered copyrights. Segue has a patent but there can be no assurance that
the patent would be upheld if challenged. Moreover, the laws of other countries
in which Segue markets its products may afford little or no effective
protection of Segue's intellectual property. There can be no assurance that
Segue's competitors will not independently develop technologies that are
substantially equivalent or superior to Segue's technology. If Segue resorts to
legal proceedings to enforce its intellectual property rights, the proceedings
could be burdensome and expensive and could involve a high degree of risk.
There can be no assurance that third parties will not assert intellectual
property infringement claims against Segue. If Segue were to discover that any
of its products violated third party proprietary rights, there can be no
assurance that Segue would be able to obtain licenses on commercially
reasonable terms to continue offering the product without substantial
reengineering or that any effort to undertake such reengineering would be
successful.
Any claim of infringement could cause Segue to incur substantial costs
defending against the claim, even if the claim is invalid, and could distract
management from Segue's business. Furthermore, a party making such a claim
could secure a judgment that requires Segue to pay substantial damages. A
judgment could also include an injunction or other court order that could
prevent Segue from selling its products. Any of these events could have a
material adverse effect on Segue's business, operating results and financial
condition.
THE COMPANY
Segue is a Delaware corporation with its principal executive offices at 201
Spring Street, Lexington, Massachusetts 02421. Its telephone number is (781)
402-1000.
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USE OF PROCEEDS
Segue will not receive any proceeds from the sale of the common stock under
this prospectus.
MATERIAL TERMS OF THE EVENTUS TRANSACTION
On December 3, 1998, Segue and its wholly-owned subsidiary, SSI Merger
Corp., entered into an Agreement and Plan of Merger dated December 3, 1998,
with Eventus Software and the stockholders of Eventus Software. Under the terms
of the merger agreement, SSI Merger Corp. was merged with and into Eventus
Software, with Eventus Software surviving the merger. As a result of the
merger, which was treated for accounting purposes as a "pooling of interests"
transaction, the stockholders of Eventus Software received an aggregate of
312,990 shares of common stock, and the holders of outstanding Eventus Software
options and warrants received options and warrants to purchase up to an
aggregate of 31,951 shares of common stock. Eventus Software is now a wholly-
owned subsidiary of Segue based in San Francisco, California and engaged in the
business of developing and marketing web management software.
The stockholders of Eventus Software entered into a Registration Rights
Agreement with Segue pursuant to which Segue agreed to register 50% of the
shares of common stock issued to such stockholders in connection with the
merger. Under the registration rights agreement, each selling stockholder is
entitled for a period of 30 days in which this registration statement is
effective (the "Initial Sale Period") to sell shares of common stock issued by
Segue to such holder in connection with the merger. Near the end of the Initial
Sale Period, Segue will determine the total number of shares of common stock
registered pursuant to this registration statement which remain unsold and will
within five business days of the end of such 30-day period notify the selling
stockholders of the number of unsold shares (the "Request Notice"). The selling
stockholders will have the right to sell under this registration statement any
additional shares of common stock (up to the aggregate amount unsold) during
the Additional Sale Period (as defined below) by giving written notice to Segue
within five business days after delivery of the Request Notice advising Segue
of the number of shares that such selling stockholder desires to sell (the
"Additional Sale Notice"). If the number of shares requested to be sold by the
selling stockholders exceeds the amount unsold after the Initial Sale Period,
then the available shares will be allocated among the selling stockholders who
have timely sent an Additional Sale Notice to Segue on a pro rata basis. Within
five business days after the date upon which the Request Notice is required to
be delivered, Segue shall notify (the "Participation Notice") each
participating selling stockholder of the number of shares that such stockholder
will be entitled to sell during the Additional Sale Period. The Additional Sale
Period is the period from the date of the Participation Notice to a date on
which there has elapsed a total of 30 days for which this registration
statement has been effective and the participating selling stockholders could
have sold their shares thereunder. The selling stockholders agree that from the
period after the end of the Initial Sale Period to the beginning of the
Additional Sale Period, they will not sell any shares registered under this
registration statement.
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SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
Number of Shares of Number of Shares Percentage
Common Stock Number of Shares of Common Stock Ownership
Name of Selling Beneficially Owned as of Common Stock Beneficially Owned After
Stockholder of March 15, 1999(1) Offered Hereby After Offering(2) Offering
--------------- --------------------- ---------------- ------------------ ----------
<S> <C> <C> <C> <C>
Edan Kabatchnik......... 29,173 14,430 14,743 *
SQRIBE TECHNOLOGIES CORP
....................... 42,755 21,378 21,377 *
Mike Burkland(3)........ 126,939 63,470 63,469 *
Tom Burkland............ 192 96 96 *
Kevin Edwards........... 98 49 49 *
Bill Fry................ 141 71 70 *
Michael Funk............ 28 14 14 *
Nasreen Husain.......... 384 192 192 *
Ben King................ 1,359 680 679 *
Eduard Klinkovich....... 42 21 21 *
Chris Kocher............ 47 24 23 *
Levinger & Associates... 171 86 85 *
Brian Perry............. 4,448 2,224 2,224 *
David Shen.............. 128 64 64 *
Kerry Smith............. 51 26 25 *
Troy Terry.............. 832 416 416 *
Charmen Weidenbach...... 1,595 798 797 *
Steve Weiss............. 81 41 40 *
Amisil Holdings
Limited................ 27,421 13,711 13,710 *
Dave DeWalt(4).......... 25,486(5) 7,479 7,478 *
Arti Bhargava........... 7,478 3,739 3,739 *
Fenwick & West LLP...... 2,492 1,246 1,246 *
Mark C. Stevens......... 2,492 1,246 1,246 *
Sumitomo Corporation.... 30,000 15,000 15,000 *
Sumisho Datacom,
Inc.(6)................ 15,000 7,500 7,500 *
Sumitronics Inc.(7)..... 5,000 2,500 2,500 *
</TABLE>
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* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities and includes any securities which the person has the right to
acquire within 60 days of March 15, 1999 through the conversion or exercise
of any security or other right.
(2) Gives effect to the sale of the shares of common stock.
(3) Mike Burkland is currently receiving termination benefits from Segue.
(4) Dave DeWalt is an employee of Segue.
(5) Represents 14,957 shares of common stock currently held and options to
purchase 10,529 shares of common stock.
(6) Sumisho Datacom, Inc. is the exclusive distributor for the sale of
SilkControl in Japan.
(7) Sumitronics Inc. is acting as a purchasing and shipping agent of Sumisho
Datacom, Inc. for SilkControl.
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PLAN OF DISTRIBUTION
The shares of common stock offered by this prospectus (the "Shares") are
being offered on behalf of the selling stockholders. Such Shares may be sold or
distributed from time to time by the selling stockholders, or by donees or
transferees of, or other successors in interest to, the selling stockholders,
directly to one or more purchasers or through brokers, dealers or underwriters
who may act solely as agents or may acquire such Shares as principals, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at negotiated prices, or at fixed prices, which may
be changed. The sale of the Shares offered hereby may be effected in one or
more of the following methods: (i) ordinary brokers' transactions; (ii)
transactions involving cross or block trades or otherwise on the Nasdaq
National Market; (iii) purchases by brokers, dealers or underwriters as
principal and resale by such purchasers for their own accounts pursuant to this
prospectus; (iv) "at the market" to or through market makers or into an
existing market for Segue common stock; (v) in other ways not involving market
makers or established trading markets, including direct sales to purchasers or
sales effected through agents; (vi) through transactions in options, swaps or
other derivatives (whether exchange-listed or otherwise); (vii) in privately
negotiated transactions; (viii) to cover short sales; or (ix) any combination
of the foregoing.
From time to time, one or more of the selling stockholders may pledge,
hypothecate or grant a security interest in some or all of the Shares owned by
them, and the pledgees, secured parties or persons to whom such Shares have
been hypothecated shall, upon foreclosure in the event of default, be deemed to
be selling stockholders hereunder. The number of Shares beneficially owned by
those selling stockholders who so transfer, pledge, donate or assign such
Shares will decrease as and when they take such actions. The plan of
distribution for the Shares sold hereunder will otherwise remain unchanged,
except that the transferees, pledgees, donees or other successors will be
selling stockholders hereunder. In addition, a selling stockholder may, from
time to time, sell short the Shares, and in such instances, this prospectus may
be delivered in connection with such short sales and the shares of Segue common
stock offered hereby may be used to cover such short sales.
A selling stockholder may enter into hedging transactions with broker-
dealers and the broker-dealers may engage in short sales of Segue common stock
in the course of hedging the positions they assume with such selling
stockholder, including, without limitation, in connection with distributions of
Segue common stock by such broker-dealers. A selling stockholder may also enter
into option or other transactions with broker-dealers that involve the delivery
of the Shares to the broker-dealers, who may then resell or otherwise transfer
such shares of Segue common stock. A selling stockholder may also loan or
pledge its Shares to a broker-dealer and the broker-dealer may sell the Shares
so loaned or upon a default may sell or otherwise transfer the pledged Shares.
Brokers, dealers, underwriters or agents participating in the distribution
of the Shares as agents may receive compensation in the form of commissions,
discounts or concessions from the selling stockholders and/or purchasers of the
Shares for whom such broker-dealers may act as agent, or to whom they may sell
as principal, or both (which compensation as to a particular broker-dealer may
be less than or in excess of customary commissions). The selling stockholders
and any broker-dealers who act in connection with the sale of the Shares
hereunder may be deemed to be "Underwriters" within the meaning of the
Securities Act, and any commissions they receive and proceeds of any sale of
the Shares may be deemed to be underwriting discounts and commissions under the
Securities Act. Neither Segue nor any selling stockholders can presently
estimate the amount of such compensation. Segue knows of no existing
arrangements between any selling stockholders, any other stockholder, broker,
dealer, underwriter or agent relating to the sale or distribution of the
Shares.
Segue will pay substantially all of the expenses incident to the
registration, offering and sale of the Shares to the public other than
commissions or discounts of underwriters, broker-dealers or agents. Segue has
also agreed to indemnify the selling stockholders and certain related persons
against certain liabilities, including liabilities under the Securities Act.
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Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Segue, Segue
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Segue has advised the selling stockholders that during such time as they may
be engaged in a distribution of the Shares included herein they are required to
comply with Regulation M promulgated under the Securities Exchange Act of 1934.
With certain exceptions, Regulation M precludes any selling stockholder, any
affiliated purchasers, and any broker-dealer or other person who participates
in such distribution from bidding for or purchasing, or attempting to induce
any person to bid for or purchase any security which is the subject of the
distribution until the entire distribution is complete. Regulation M also
prohibits any bids or purchases made in order to stabilize the price of a
security in connection with the distribution of that security. All of the
foregoing may affect the marketability of the Shares.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This prospectus is part of a registration statement Segue filed with the SEC
to register the Segue common stock offered in this offering. It does not repeat
important information that you can find in the registration statement or in the
reports and other documents that Segue files with the SEC. The SEC allows Segue
to "incorporate by reference" the information it files with them. This means
that Segue can disclose important information to you by referring to other
documents that are legally considered to be part of this prospectus, and later
information that it files with the SEC will automatically update and supersede
the information in this prospectus and the documents listed below. Segue
incorporates by reference the documents listed below, and any future filings
made with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until the selling stockholders sell all the shares of
common stock offered under this prospectus:
1. the Annual Report on Form 10-K for the fiscal year ended December 31,
1998;
2. the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1999;
3. the Current Report on Form 8-K filed with the SEC on January 14, 1999;
4. the Current Report on Form 8-K filed with the SEC on December 17, 1998;
and
5. the description of common stock contained in Segue's Registration
Statement on Form 8-A, filed with the SEC on February 16, 1996, as
amended, under Section 12 of the Securities Exchange Act of 1934 and any
amendments or reports filed for the purpose of updating such
description.
You may request a copy of these filings at no cost by writing or telephoning
Segue at the following address: Chief Financial Officer, Segue Software, Inc.,
201 Spring Street, Lexington, Massachusetts 02421 (Telephone: (781) 402-1000).
You should rely only on the information incorporated by reference or
contained in this prospectus or any supplement. Segue has not authorized anyone
else to provide you with different or additional information. The selling
stockholders are not making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information in this
prospectus or any supplement is accurate as of any date other than the date on
the front of those documents.
Segue files annual, quarterly and special reports, proxy statements and
other information electronically with the SEC. You may read a copy of any
reports, statements or other information that Segue files with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. Please
call the SEC at 1-800-SEC-0330 for further information on the Public Reference
Room. Segue's SEC filings are also available from the Internet site maintained
by the SEC at http://www.sec.gov.
10
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You should rely only on the information incorporated by reference or
contained in this prospectus or any supplement. Segue has not authorized
anyone else to provide you with different or additional information. The
selling stockholders are not making an offer of the Segue common stock in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
Risk Factors............................................................... 2
The Company................................................................ 6
Use of Proceeds............................................................ 7
Material Terms of the Eventus Transaction.................................. 7
Selling Stockholders....................................................... 8
Plan of Distribution....................................................... 9
Incorporation of Certain Documents by Reference............................ 10
Legal Matters.............................................................. 11
Experts.................................................................... 11
</TABLE>
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156,501 Shares
Segue Software, Inc.
Common Stock
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PROSPECTUS
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June 25, 1999
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