SEC FORM 3

SEC Form 3

FORM 3

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

INITIAL STATEMENT OF BENEFICIAL OWNERSHIP OF SECURITIES

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934
or Section 30(h) of the Investment Company Act of 1940

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1. Name and Address of Reporting Person^*

Reilly James T

(Last)

(First)

(Middle)

101 MAIN STREET

(Street)

CAMBRIDGE

02142

(City)

(State)

(Zip)

2. Date of Event Requiring Statement (Month/Day/Year)
05/30/2006

3. Issuer Name and Ticker or Trading Symbol
PEGASYSTEMS INC [ PEGA ]

4. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

	Director	10% Owner
X	Officer (give title below)	Other (specify below)
	Chief Accounting Officer

5. If Amendment, Date of Original Filed (Month/Day/Year)

6. Individual or Joint/Group Filing (Check Applicable Line)

X	Form filed by One Reporting Person
	Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Beneficially Owned
1. Title of Security (Instr. 4)	2. Amount of Securities Beneficially Owned (Instr. 4)	3. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	4. Nature of Indirect Beneficial Ownership (Instr. 5)
Common Stock	12,898	D
Common Stock	1,000	I	UGMA Account

Table II - Derivative Securities Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 4)	2. Date Exercisable and Expiration Date (Month/Day/Year)		3. Title and Amount of Securities Underlying Derivative Security (Instr. 4)		4. Conversion or Exercise Price of Derivative Security	5. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	6. Nature of Indirect Beneficial Ownership (Instr. 5)
1. Title of Derivative Security (Instr. 4)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares	4. Conversion or Exercise Price of Derivative Security	5. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	6. Nature of Indirect Beneficial Ownership (Instr. 5)
Stock Option	12/05/2000⁽¹⁾	09/05/2010	Common Stock	35,000	$4.48	D
Stock Option	06/08/2001⁽²⁾	03/08/2011	Common Stock	7,800	$4.38	D
Stock Option	03/08/2002⁽³⁾	03/08/2011	Common Stock	3,400	$4.38	D
Stock Option	11/22/2001⁽⁴⁾	08/22/2011	Common Stock	10,000	$3.23	D
Stock Option	07/18/2003⁽⁵⁾	04/18/2013	Common Stock	20,000	$4.11	D
Stock Option	02/11/2005⁽⁶⁾	11/11/2014	Common Stock	24,000	$7.33	D
Stock Option	12/08/2005⁽⁷⁾	12/08/2015	Common Stock	12,000	$8.67	D

Explanation of Responses:

1. All options vest on a four year quarterly vesting schedule beginning on the date of grant, with the first vesting date occuring on December 5, 2000.

2. All options vest on a four year quarterly versting schedule beginning on the date of grant, with the first vesting date occurring on June 8, 2001.

3. All options vested on March 8, 2002.

4. All options vest on a four year quarterly vesting schedule beginning on the date of grant, with the first vesting date occurring on November 22, 2001.

5. All options vest on a five year quarterly vesting schedule beginning on the date of grant, with the first vesting date occurring on July 18, 2003.

6. All options vest on a five year quarterly vesting schedule beginning on the date of grant, with the first vesting date occurring on February 11, 2005. On April 6, 2005, the Board of Directors voted to accelerate all outstanding options held by employees that had an exercise price greater than the fair market value of the company's common stock on that date, which resulted in these options vesting in full.

7. All options were fully vested on the grant date. The strike price represents a 20% premium to the fair market value of the issuer's common stock on the grant date, measured as the average of the high and low trading prices of the common stock on such date.

	/s/ Shawn Hoyt, as Attorney-in-Fact	06/01/2006
	** Signature of Reporting Person	Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 5 (b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
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