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Filed pursuant to Rule 424(b)(3)
Registration No. 333-84267
PROSPECTUS
3,309,122 SHARES
BINDVIEW DEVELOPMENT CORPORATION
COMMON STOCK
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The common stock of BindView Development Corporation is included in The
Nasdaq National Market under the symbol "BVEW". The last sales price of our
common stock on August 17, 1999, as reported by The Nasdaq Stock Market, was
$21.38.
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THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN MATTERS THAT
YOU SHOULD CONSIDER BEFORE PURCHASING OUR COMMON STOCK.
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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.
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The shareholders named in this Prospectus under the heading "Selling
Shareholders" are offering all of the 3,309,122 shares of common stock offered
hereby. We will not receive proceeds from the sale of these shares but will bear
certain of the expenses incident to the offering and sale of the shares.
The selling shareholders may sell these shares from time to time in the
over-the-counter market, on any stock exchange on which the common stock may be
listed at the time of sale, in private transactions or pursuant to underwriting
agreements at prices related to prices then prevailing involving payment of
customary commissions or discounts. See "Plan of Distribution".
August 18, 1999
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ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3 under the Securities Act of 1933 with respect to the
shares. This prospectus, which is included in the registration statement, does
not contain all of the information in the registration statement. For further
information regarding BindView and our common stock, please see the registration
statement and our filings with the SEC, which you may read without charge at the
public reference facilities maintained by the SEC at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048, at Citicorp Center, 500 West Madison Street, 14th Floor, Chicago,
Illinois 60661, at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006 or through the
Commission's Web site at http://www.sec.gov.
We furnish holders of our common stock with annual reports containing
financial statements audited by our independent auditors in accordance with
generally accepted accounting principles following the end of each fiscal year.
We file reports and other information with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934.
Descriptions in this prospectus of documents are intended to be summaries
of the material, relevant portions of those documents, but may not be complete
descriptions of those documents. For complete copies of those documents, please
refer to the exhibits to the registration statement and other documents filed by
us with the SEC.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following, which we have filed with the SEC are incorporated herein by
reference:
(i) BindView's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, filed with the Commission on February 23, 1999 (except
for the financial statements which have been restated to reflect the
pooling of interests with Netect Ltd. -- see item (v) below);
(ii) BindView's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999, filed with the Commission on May 17, 1999
(iii) BindView's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1999, filed with the Commission on July 28, 1999;
(iv) The description of BindView's Common Stock, no par value per
share, contained in the Registration Statement on Form S-1 of the
Registrant (Reg. No. 333-66941), originally filed with the Commission on
November 6, 1998; and
(v) BindView's Current Report on Form 8-K dated March 1, 1999, filed
with the Commission on March 16, 1999, as amended by Amendment No. 1 to
Form 8-K on Form 8-K/A, filed with the Commission on May 7, 1999.
All documents that we file with the SEC pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus but before the termination of the offering by this prospectus shall
be deemed to be incorporated herein by reference and to be a part hereof from
the date of the filing of those documents.
We will provide, without charge, to each person to whom a copy of this
prospectus has been delivered, upon written or oral request of such person, a
copy of any or all of the documents incorporated by reference herein (other than
certain exhibits to such documents not specifically incorporated by reference).
Requests for such copies should be directed to Investor Relations, BindView
Development Corporation, 5151 San Felipe, 22nd Floor, Houston, Texas 77056,
telephone number 713/561-3000.
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PROSPECTUS SUMMARY
OUR COMPANY
BindView Development Corporation develops, markets and supports a suite of
systems and security management software products that manage the security and
integrity of complex, distributed client/server networks operating on Microsoft
Windows NT and Novell NetWare environments. Our primary product line, BindView
EMS, provides software solutions for systems administration, security
management, enterprise inventory of local area network assets and Year 2000
assessment of PC hardware and software. Network administrators, security
auditors and other information technology personnel use BindView EMS to
proactively identify, diagnose and, in many cases, fix a wide range of systems
management problems. BindView EMS enables organizations to reduce the total cost
of ownership of enterprise computing.
On March 1, 1999, BindView acquired all of the outstanding equity interests
in Netect Ltd. in a stock-for-stock exchange treated as a pooling of interests.
Netect is a provider of anti-hacker software solutions that identify and close
security holes to prevent internal and external network intrusions, including
attempts to hack into a network via the Internet.
Our principal executive offices are located at 5151 San Felipe, 22nd Floor,
Houston, Texas 77056, and our telephone number is 713/561-4000.
THE OFFERING
Securities offered......... 3,309,122 shares of common stock.
Use of proceeds............ We will not receive any proceeds from the sale of
the shares.
Nasdaq symbol.............. The shares of Common Stock are included in the
Nasdaq National Market under the symbol "BVEW".
RISK FACTORS
An investment in our common stock involves a high degree of risk. For a
discussion of certain matters that should be considered by prospective
purchasers of our common stock offered hereby, see "Risk Factors" on page 4.
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RISK FACTORS
An investment in the common stock offered by this Prospectus involves a
high degree of risk. Accordingly, you should consider carefully the following
risk factors, in addition to the other information concerning BindView and its
business contained in and incorporated into this Prospectus, before purchasing
shares. This Prospectus contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. Actual results
could differ materially from the projections included in such statements.
Factors that could cause or contribute to such differences include those
discussed below and elsewhere in this Prospectus.
OUR QUARTERLY REVENUES, EXPENSES AND OPERATING RESULTS MAY FLUCTUATE
SIGNIFICANTLY. These fluctuations may be due to a number of factors, including:
- demand for our products;
- size and timing of significant orders and their fulfillment;
- our ability to develop and upgrade our technology;
- changes in our level of operating expenses;
- our ability to compete in a highly competitive market;
- undetected software errors and other product quality problems;
- changes in our sales incentive plans and staffing of sales territories;
and
- changes in the mix of domestic and international revenues and the level
of international expansion.
Generally, we do not operate with a backlog because we ship our products
and recognize revenue shortly after orders are received. At the time we ship our
products we have satisfied all of the criteria of Statement of Position No. 97-2
"Software Revenue Recognition," and therefore we recognize the related license
revenue. As a result, orders booked throughout a quarter substantially impact
product revenues in that quarter. Our sales also fluctuate throughout the
quarter as a result of customer buying patterns. We base our expenses to a
significant extent on our expectations of future revenues. Most of our expenses
are fixed in the short term and we may not be able to quickly reduce spending if
our revenues are lower than we had projected. If our revenue levels do not meet
our projections, we expect our operating results to be adversely and
disproportionately affected.
Our quarterly operating results also are subject to certain seasonal
fluctuations. Year-end customer buying patterns and compensation policies based
on annual revenue quotas have caused our revenues to be strongest in the fourth
quarter of the year and to decrease in the first quarter of the following year.
In future periods, we expect that these seasonal trends may cause first quarter
revenues to be significantly lower than the level achieved in the preceding
fourth quarter.
Prior to January 1, 1998, we provided telephone support free of charge and
sold product upgrades separately or through subscription contracts. We now
require our customers to purchase a subscription policy in order to receive
product upgrades and technical support. Unlike software license revenues that we
generally recognize upon shipment of the product, we recognize subscription
contract revenues ratably over the life of the contract term. As a result, if we
derive a larger percentage of our revenues from subscription contracts, we will
experience an increase in deferred revenue that is likely to decrease our
operating margins. Decreased operating margins may materially adversely affect
our business, operating results and financial condition.
As a result, we believe quarter-to-quarter comparisons of our revenues,
expenses and results of operations are not necessarily meaningful. You should
not rely on our quarterly revenues, expenses and results of operations to
predict our future performance.
WE HAVE A LIMITED OPERATING HISTORY. Although BindView was founded in 1990,
we have derived substantially all of our revenues since 1995 from sales of
BindView NCS product family, replaced in 1996 by BindView EMS. We therefore have
a limited operating history based on our primary products. An investor in
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our Company must consider the risks and uncertainties frequently encountered by
software companies in the early stages of development, particularly those faced
by companies in the highly competitive and rapidly evolving systems management
software market. To compete in this market, we believe that we must devote
substantial resources to expanding our sales and marketing organization and to
continue product development. As a result, we will need to recognize significant
quarterly revenues to remain profitable. Our revenues have increased in recent
years, and revenues for recent quarters have exceeded revenues for the same
quarter for the prior year. However, we cannot be certain that we can sustain
these growth rates or that we will remain profitable on a quarterly or annual
basis in the future.
OUR MARKETS ARE HIGHLY COMPETITIVE. We face competition from different
sources. Currently, our products compete with products from the following
organizations:
- providers of security analysis and audit products, such as Axent
Technologies, Inc. Security Dynamics Technologies, Inc., ISS Group, Inc.
and Network Associates Inc.;
- providers of stand-alone inventory and asset management products, such as
Tally Systems Corp.;
- providers of LAN desktop management suites, such as Intel Corporation,
Hewlett-Packard Company and Microsoft Corporation;
- providers of Year 2000 assessment products, such as Greenwich Mean
Time -- UTA, L.C.;
- providers of event notification and response technology, such as
Attention Software, Inc.; and
- providers of Windows NT management and migration tools, such as Mission
Critical Software, Entevo Corp. and FastLane Technologies Inc.
- In addition, certain management features included in our products compete
with the native tools from Novell, Inc. and third-party tools from
certain vendors, such as Computer Associates, Inc. and other companies.
We expect competition in the network management software market to increase
significantly as new companies enter the market and current competitors expand
their product lines and services. Many of these potential competitors are likely
to enjoy substantial competitive advantages, including:
- greater resources that can be devoted to the development, promotion and
sale of their products;
- more established sales channels;
- greater software development experience; and
- greater name recognition.
We also believe that operating system software vendors, particularly
Microsoft and Novell, could enhance their products to include functionality that
we currently provide in our products. If these vendors include our software
functionality as standard features of their operating system software, our
products could become obsolete. Even if the functionality of the standard
software features of these vendors is more limited than ours, there is a
substantial risk that a significant number of customers would elect to keep this
limited functionality rather than purchase additional software.
To be competitive, we must respond promptly and effectively to the
challenges of technological change, evolving standards and our competitors'
innovations by continuing to enhance our products, services and sales channels.
Any pricing pressures, reduced margins or loss of market share resulting from
our failure to compete effectively could materially adversely affect our
business.
OUR PRODUCTS ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE. The market for our
products is characterized by rapid technological change, frequent new product
introductions and enhancements, uncertain product life cycles, changes in
customer demands and evolving industry standards. Our products could be rendered
obsolete if new products based on new technologies are introduced or new
industry standards emerge. We rely heavily on our relationships with Microsoft
and Novell and attempt to coordinate our product offerings with
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the future releases of their operating systems. These companies are competitors
or ours and may not notify us of feature enhancements prior to new releases of
their operating systems in the future. In that case, we may not be able to
introduce products on a timely basis that capitalize on new operating system
releases and feature enhancements.
CLIENT/SERVER COMPUTING ENVIRONMENTS ARE INHERENTLY COMPLEX. As a result,
we cannot accurately estimate our software product life cycles. New products and
product enhancements can require long development and testing periods, which
depend significantly on our ability to hire and retain increasingly scarce and
technically competent personnel. Significant delays in new product releases or
significant problems in installing or implementing new product releases could
seriously damage our business. We have, on occasion, experienced delays in the
scheduled introduction of new and enhanced products and cannot be certain that
such delays will not occur again.
Our future success will depend, in part, upon our ability to enhance
existing products, develop and introduce new products, satisfy customer
requirements and achieve market acceptance. We cannot be certain that we will
successfully identify new product opportunities and develop and bring new
products to market in a timely and cost-effective manner. Further, the products,
capabilities or technologies developed by others may render our products or
technologies obsolete or shorten their life cycles.
WE ARE DEPENDENT UPON CONTINUED GROWTH OF THE MARKET FOR WINDOWS NT AND
NOVELL NETWARE OPERATING SYSTEMS. We depend upon the success of Microsoft's
Windows NT and Novell's NetWare operating systems. In particular, market
acceptance of our products depends on the increasing complexity of these
operating systems and the lack of effective tools to simplify system
administration and security management for these environments. Although demand
for Windows NT and NetWare operating systems has grown in recent years, this
market is still emerging and we cannot be certain that it will continue to grow.
If the market does continue to grow, we cannot be certain that the market for
our products will continue to develop or that our products will be widely
accepted. If the markets for our products fail to develop or develop more slowly
than we anticipate, our business could be materially adversely affected.
The percentages of our revenues attributable to software licenses for
particular operating system platforms can change from time to time. A number of
factors outside our control can cause these changes, including changing market
acceptance and penetration of the various operating system platforms which we
support and the relative mix of development and installation by value-added
resellers ("VARs") of application software operating on such platforms.
PRODUCT CONCENTRATION. Substantially all of our revenues are derived from
sales of the NOSadmin and NETinventory products from the BindView EMS product
family. We anticipate that these products along with products additions as a
result of the Curasoft and Netect acquisitions will account for majority all of
our revenues for the foreseeable future. Our future operating results will
depend on continued market acceptance of NOSadmin and NETinventory, introduction
of new products from the Curasoft and Netect acquisitions, enhancements to these
products and the continued development of additional snap-in modules for our
Enterprise Console product. Competition, technological change or other factors
could reduce demand for, or market acceptance of any or all of our products and
could substantially damage our business. Although we currently plan to broaden
our product line, we cannot be certain that we will be able to reduce our
product concentration or that we will be able to generate material revenues from
products acquired as a result of the Curasoft and Netect acquisitions.
RISKS ASSOCIATED WITH LENGTH OF SALES CYCLE. We have sold our products to
customer workgroups and corporate divisions. As a result, our sales cycle has
ranged from three to six months. Recently, we have focused more of our selling
effort on products for the customer's entire enterprise and have found that our
sales cycle to enterprises has ranged from six to twelve months. The sales cycle
to enterprises is typically longer for a number of reasons, including:
- the significant resources committed to an evaluation of network
management software by an enterprise require us to expend substantial
time, effort and money educating them on the value of our products and
services; and
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- decisions to license and deploy enterprise-wide software generally
involve an evaluation of our software by a significant number of
personnel of the enterprise in various functional and geographic areas,
each often having specific and conflicting requirements.
As a result, we cannot predict the timing and amount of specific sales. Our
inability to complete one or more enterprise-wide sales in a particular quarter
or calendar year could materially adversely affect our business and could cause
our operating results to vary significantly from quarter to quarter. For more
information, see "-- Our Quarterly Financial Results are Subject to Significant
Fluctuations".
NEED TO MANAGE CHANGING OPERATIONS. We have expanded our operations rapidly
in recent years. We intend to continue to expand in the foreseeable future to
pursue existing and potential market opportunities. This rapid growth places a
significant demand on management and operational resources. In order to manage
growth effectively, we must implement and improve our operational systems,
procedures and controls on a timely basis. If we fail to implement and improve
these systems, our business, operating results and financial condition will be
materially adversely affected.
DEPENDENCE ON KEY PERSONNEL. Our success depends largely on the efforts of
our executive officers, particularly Eric J. Pulaski, the President and Chief
Executive Officer of BindView. We do not have an employment contract requiring
Mr. Pulaski to continue his employment for any period of time. We do not
maintain key man life insurance policies on any of our executive officers.
We believe that our future success will depend in large part upon our
ability to attract and retain highly skilled research and development, technical
support and sales and marketing personnel. We face intense competition for
qualified personnel, and we cannot be certain that we will successfully attract
and retain additional qualified personnel in the future. The loss of the
services of one or more of our key individuals or the failure to attract and
retain additional qualified personnel could substantially damage our business.
RISKS ASSOCIATED WITH INTERNATIONAL SALES AND OPERATIONS. During 1998, 1997
and 1996, we derived approximately 10%, 13% and 10% of our revenues,
respectively, from sales outside North America. We only recently opened direct
telesales offices outside the United States. We have historically generated
revenues outside North America through indirect channels, including VARs and
other distributors. We are in the early stages of developing our indirect
distribution channels in certain markets outside the United States. We cannot be
certain that we will be able to attract third parties that will be able to
market our products effectively or to provide timely and cost-effective customer
support and service. Our reseller arrangements generally provide that resellers
may carry competing product offerings. We cannot be certain that any distributor
or reseller will continue to represent our products. The inability to recruit,
or the loss of, important sales personnel, distributors or resellers could
materially and adversely affect our business.
As we expand our sales and support operations internationally, we
anticipate that international revenues will grow as a percentage of our total
revenues. To successfully expand international sales, we must:
- establish additional international direct telesales offices;
- expand the management and support organizations for our international
sales channel;
- hire additional personnel;
- customize our products for local markets;
- recruit additional international resellers where appropriate; and
- expand the use of our direct telesales model.
If we are unable to generate increased sales through a direct telesales
model, we will incur higher personnel costs without corresponding increases in
revenue, resulting in lower operating margins for our international operations.
In addition, employment policies vary among countries outside the United States,
which may reduce our flexibility in managing headcount and, in turn, managing
personnel-related expenses. If we do not address the risks associated with
international sales in a cost-effective and timely manner, our
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international sales growth will be limited, operating margins could be reduced
and our business could be materially adversely affected. However, even if we are
able to successfully expand our international operations, we cannot be certain
that we will be able to maintain or increase international market demand for our
products.
LIMITED PROTECTION OF PROPRIETARY TECHNOLOGY; RISKS OF INFRINGEMENT. Our
success depends to a significant degree upon our software and other proprietary
technology. The software industry has experienced widespread unauthorized
reproduction of software products. We rely on a combination of trademark, trade
secret, and copyright law and contractual restrictions to protect our
technology. These legal protections provide only limited protection and such
protection is generally lower outside of the United States. However, as our
products are more globally distributed, this associated with the unauthorized
reproduction of software products could increase. The steps we have taken may
deter competitors from misappropriating our proprietary information. However, we
may not be able to detect unauthorized use or take appropriate steps to enforce
our intellectual property rights. If we litigated to enforce our rights,
litigation would be expensive, would divert management resources and may not be
adequate to protect our business. We also could be subject to claims alleging
infringement of third-party intellectual property rights. In addition, we may be
required to indemnify our distribution partners and end-users for similar claims
made against them. Any claims against us could require us to spend significant
time and money in litigation, pay damages, develop non-infringing intellectual
property or acquire licenses to intellectual property that is the subject of the
infringement claims. As a result, claims against us could materially adversely
affect our business.
RISKS ASSOCIATED WITH COMPLETED AND POTENTIAL ACQUISITIONS. We have made
and may continue to make investments in complementary companies, technologies,
services or products if we find appropriate opportunities. If we buy a company,
we could have difficulty assimilating the personnel and operations of the
acquired company. If we make other types of acquisitions, assimilating the
technology, services or products into our operations could be difficult.
Acquisitions can disrupt our ongoing business, distract management and other
resources and make it difficult to maintain our standards, controls and
procedures. We may not succeed in overcoming these risks or in any other
problems we might encounter in connection with any future acquisitions. We may
be required to incur debt or issue equity securities to pay for any future
acquisitions. In addition, there can be no assurance that we will be able to
successfully integrate our recent acquisitions of Curasoft and Netect or we will
be able to integrate the products and technology we acquired into our sales
model or product offerings.
RISKS OF UNDETECTED SOFTWARE ERRORS. Our software products are complex and
may contain certain undetected errors, particularly when first introduced or
when new versions or enhancements are released. We have previously discovered
software errors in certain of our new products after their introduction. We
cannot be certain that, despite our testing, such errors will not be found in
current versions, new versions or enhancements of our products after
commencement of commercial shipments. Such undetected errors could result in
adverse publicity, loss of revenues, delay in market acceptance or claims
against us by customers, all of which could materially adversely affect our
business.
YEAR 2000 RISKS
Background. Some computers, software and other equipment include
programming code in which calendar year data is abbreviated to only two digits.
As a result of this design decision, some of these systems could fail to operate
or fail to produce correct results if "00" is interpreted to mean 1900 or some
other default condition, rather than 2000. These problems are widely expected to
increase in frequency and severity as the year 2000 approaches and are commonly
referred to as the "Millennium Bug" or "Year 2000 Problem".
Assessment. The Year 2000 Problem could affect computers, software and
other equipment that we and our customers and suppliers use. Accordingly, we
have reviewed our internal computer programs and systems to ensure that they
will be Year 2000 compliant. We presently believe that our computer systems will
be Year 2000 compliant in a timely manner. However, while the estimated cost of
these efforts is not expected to be material to our financial position or any
year's results of operations, there can be no assurance to this effect.
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Customers. Although the latest versions of BindView EMS are designed to be
Year 2000 compliant, releases of BindView EMS before version 5.2a have not been
tested for Year 2000 compliance and/or are not Year 2000 compliant. Customers of
BindView EMS before version 5.2a under subscription contracts have been provided
upgrades to versions of BindView EMS that are designed to be Year 2000
compliant. Customers that have not upgraded to Year 2000 compliant versions of
BindView EMS will have to either i) enter into a subscription agreement with the
Company and upgrade to a compliant version or ii) purchase the latest Year 2000
compliant version of BindView EMS. We believe that it is not possible to
determine with complete accuracy that all Year 2000 Problems affecting our
software products have been identified or corrected due to the complexity of our
products and the fact that these products interact with other third party vendor
products and operate on computer systems that are not under our control. Because
of the Year 2000 Problem, we have and may continue to encounter potential
customer sites that are unwilling to purchase any additional software for their
computing environments until after the millennium. If a significant amount of
our customers lock down their computing environments because of the Year 2000
Problem, this may have an adverse effect on the Company's revenues.
Internal Infrastructure. We believe that we have identified substantially
all of the major computers, software applications and related equipment used in
connection with our internal operations that must be modified, upgraded or
replaced to minimize the possibility of a material disruption to our business.
We commenced the process of modifying, upgrading and replacing the systems that
have been identified as potentially being adversely affected and completed this
process during the first quarter of 1999. The costs associated with upgrading
and replacing these systems did not exceed $1.0 million and substantially all of
these costs have been capitalized.
Systems Other Than Information Technology Systems. In addition to computers
and related systems, the operation of office and facilities equipment, such as
fax machines, photocopiers, telephone switches, security systems, elevators and
other common devices may be affected by the Year 2000 Problem. We have recently
replaced our primary telephone switch with equipment that provides additional
capacity to meet the Company's growth needs and is believed to be Year 2000
compliant. We believe non-information technology equipment failures that could
occur because of the Year 2000 Problem are not likely to have a material adverse
effect on our business.
We estimate that our total cost of completing any required modifications,
upgrades or replacements of these internal systems will not have a material
effect on our business, financial condition or results of operations.
Suppliers. We have been gathering information from vendor web sites and
available compliance statements and have initiated communications with
third-party suppliers of our major computers, software and other equipment used,
operated or maintained by us to identify and, to the extent possible, resolve
issues involving the Year 2000 Problem. However, we have limited or no control
over the actions of such third-party suppliers. Thus, while we expect that we
will be able to resolve any significant Year 2000 Problems with such systems,
there can be no assurance that our suppliers will resolve any or all Year 2000
Problems with such systems before the occurrence of a material disruption to our
business or any of our suppliers. Any failure of these third-parties to resolve
Year 2000 problems with their systems in a timely manner could have a material
adverse effect on our business, financial condition or results of operation.
MOST LIKELY CONSEQUENCES OF YEAR 2000 PROBLEMS. We expect to identify and
resolve all Year 2000 Problems that could materially adversely affect our
business, financial condition or results of operations. However, we believe that
it is not possible to determine with complete certainty that all Year 2000
Problems affecting us have been identified or corrected. The number of devices
that could be affected and the interactions among these devices are simply too
numerous. In addition, we cannot accurately predict how many failures related to
the Year 2000 Problem will occur or the severity, duration or financial
consequences of such failures. As a result, we expect that we could possibly
suffer the following consequences:
- a significant number of operational inconveniences and inefficiencies for
us and our customers that may divert our time and attention and financial
and human resources from our ordinary business activities; and
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- a lesser number of serious system failures that may require significant
efforts by us or our customers to prevent or alleviate material business
disruptions.
Should these possibilities actually occur, we could experience operating
expense levels higher then currently budgeted or reductions in our expected
growth rates.
Contingency Plans. We have developed contingency plans as part of our
efforts to identify and correct Year 2000 Problems affecting our internal
systems. These plans include (i) accelerated replacement of affected equipment
or software, (ii) short to medium-term use of backup equipment and software,
(iii) increased work hours for our personnel or use of contract personnel to
correct on an accelerated schedule any Year 2000 Problems which arise or to
provide manual workarounds for information systems (iv) divert attention from
other critical ongoing business initiatives and (v) and other similar
approaches. If we are required to implement any of these contingency plans, such
plans could have a material adverse effect on our business, financial condition
or results of operations. However, based on the activities described above, the
Company does not believe that the Year 2000 Problem will have a material adverse
effect on the Company's business, financial condition or results of operations.
The discussion of the Company's efforts and expectations relating to Year
2000 compliance are forward-looking statements. The Company's ability to achieve
Year 2000 compliance and the level of incremental costs associated therewith,
could be adversely impacted by, among other things, the availability and cost of
programming and testing resources, vendors' ability to modify proprietary
software and unanticipated problems identified in the Company's ongoing
compliance review.
The foregoing statements are intended to be and are hereby designated "Year
2000 Readiness Disclosure" within the meaning of the Year 2000 Information and
Readiness Act.
RISK OF PRODUCT LIABILITY CLAIMS. Because our product design provides
critical network management services, we may receive significant liability
claims. Our agreements with customers typically contain provisions intended to
limit our exposure to liability claims. These limitations may not, however,
preclude all potential claims. Liability claims could require us to spend
significant time and money in litigation or to pay significant damages. As a
result, any such claims, whether or not successful, could seriously damage our
reputation and our business.
CONTROL BY OFFICERS AND DIRECTORS. As of June 30, 1999, the officers,
directors, five percent or greater shareholders and their affiliates in the
aggregate beneficially owned approximately 46.5% of the outstanding common
stock. These shareholders will continue to control BindView and, if they act
together, could elect all of the directors, appoint management and control all
matters submitted to our stockholders for a vote.
ANTI-TAKEOVER PROVISIONS. Incumbent management and our Board of Directors
could use certain provisions of our certificate of incorporation and Texas law
to make it more difficult for a third party to acquire control of our company,
even if the change in control might be beneficial to our stockholders. This
could discourage potential takeover attempts and could adversely affect the
market price of our common stock.
POTENTIAL VOLATILITY OF STOCK PRICE. The market price of our common stock
has fluctuated in the past and is likely to fluctuate in the future. In
addition, the securities markets have experienced significant price and volume
fluctuations. Investors may be unable to resell their shares of our common stock
at or above the offering price. In the past, companies that have experienced
volatility in the market price of their stock have been the object of securities
class action litigation. If we were the object of securities class action
litigation, it could result in substantial costs and a diversion of management's
attention and resources.
10
<PAGE> 11
SELLING SHAREHOLDERS
Of the shares of common stock offered by this prospectus, 1,154,690 were
issued on March 1, 1999 in connection with our acquisition of Netect Ltd. The
remaining 2,154,432 shares were owned by General Atlantic Partners 44, L.P.
("GAP 44"), GAP Coinvestment Partners, L.P. ("GAPCo") and JMI Equity Fund III,
L.P. ("JMI"). GAP 44, GAPCo and JMI sold these 2,154,432 shares to CIBC World
Markets Corp. ("CIBC") on August 18, 1999. See "Plan of Distribution." The
shares reflected in the table below as being held by CIBC are the same shares as
those held by GAP 44, GAPCo and JMI. This prospectus has been supplemented to
add CIBC as a selling shareholder. We have filed the registration statement of
which this prospectus forms a part to fulfill our obligations under a
Registration Rights Agreement entered into in connection with our acquisition of
Netect Ltd. The following table sets forth the names of the selling
shareholders, together with the number of shares of our common stock that may be
offered and sold by this prospectus. All of the selling shareholders other than
CIBC, GAP 44, GAPCo and JMI were shareholders of Netect before our acquisition
of Netect. The beneficial ownership shown below includes an aggregate of 109,224
shares of our common stock held in an escrow account. The shares in this escrow
account cannot be sold until March 1, 2000, and we may assert claims against
this account until March 1, 2000 for matters related to the acquisition. For
purposes of this offering, we have assumed that all of the shares of our common
stock held by the selling shareholders other than GAP 44, GAPCo and JMI will be
sold, and that the selling shareholders other than GAP 44, GAPCo and JMI will
not hold any shares after this offering. Giving effect to the offering, GAP 44,
GAPCo and JMI own 1,007,781 shares, 246,651 shares and 315,221 shares,
respectively, representing 4.4%, 1.1% and 1.4% of the outstanding shares of
BindView common stock as of June 30, 1999.
<TABLE>
<CAPTION>
NAME SHARES
- ---- ---------
<S> <C>
CIBC World Markets Corp..................................... 2,154,432
General Atlantic Partners 44, L.P........................... 1,007,781
GAP Coinvestment Partners, L.P.............................. 246,651
JMI Equity Fund III, L.P.................................... 900,000
David Allouch............................................... 47,845
Noam Sabo................................................... 28,357
Dan Kaminski................................................ 34,720
Kost Levary & Forer Trust Company (1992) Ltd. .............. 10,937
Advocate Ziv Ironi, FBO David Allouch....................... 7,636
W.S.P. Capital Holdings Ltd. ............................... 83,479
Lamont Ltd. ................................................ 83,479
David Binamowitch........................................... 29,432
Michael Safra............................................... 27,283
Noga Electrotechnica Ltd. .................................. 30,743
Ravaya -- Aspackat Mime Be'er Yaacov Ltd. .................. 17,102
Phillipe Cahen.............................................. 12,767
Yona Hollander.............................................. 21,476
Jacob Lif................................................... 27,800
Eli Simon................................................... 31,777
Ofer Segev (as a trust of David Bauminger).................. 2,062
Ofer Segev (as a trust of Guy Hudara)....................... 65
Zalman Aberman.............................................. 36,390
Delta Capital Ltd. ......................................... 47,447
Marc Caminetsky............................................. 1,631
I.J.T. Technologies Ltd. ................................... 39,308
XDL Netect Holdings, Inc. .................................. 22,611
Charlie Federman............................................ 30,003
Paul E. Blondin............................................. 4,387
Paul E. Blondin, Charitable Remainder Unit Trust Dated
12/5/96................................................... 8,698
Genesis Partners L.P. ...................................... 35,879
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
NAME SHARES
- ---- ---------
<S> <C>
Genesis Partner (Cayman) L.P. .............................. 15,948
Integral Capital Partners I, L.P. .......................... 72,485
Integral Capital Partners International III, L.P. .......... 17,311
Lamont Ltd. ................................................ 13,814
W.S.P. Capital Holdings Ltd. ............................... 13,814
Nir Barkat Holdings Ltd. ................................... 16,857
Eli Barkat Holdings Ltd. ................................... 16,857
Yuval 63 Holdings (1995) Ltd. .............................. 16,857
Moore Global Investments, Ltd. ............................. 114,990
Remington Investments Strategies, L.P. ..................... 25,243
Albert Amato................................................ 807
First Marathon Capital Corporation.......................... 8,068
Lionel Robins............................................... 4,034
Rubin Osten................................................. 1,008
Anna DeCristofaro........................................... 1,008
CIBC Wood Gundy Capital (SFC) Inc. ......................... 16,135
Fairwater Capital Corporation............................... 8,068
Chalet Capital Corporation.................................. 4,034
Opeongo Investments Limited................................. 4,034
3060357 Canada Inc. ........................................ 12,102
Amaranth Resources Limited.................................. 6,050
BGT XDL Partnership......................................... 4,034
Robert Grundleger........................................... 8,068
Fallbrook Holdings Limited.................................. 4,034
Harrowston Inc. ............................................ 4,034
Grosvenor Park Equities Ltd. ............................... 4,034
Jordan Levy................................................. 1,008
Nir Shafrir................................................. 1,008
984081 Ontario Limited...................................... 1,210
677345 Ontario Limited...................................... 4,034
1203332 Ontario Inc. ....................................... 4,034
XDL Capital Corp. .......................................... 6,354
Total....................................................... 3,309,122
</TABLE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock offered by the selling shareholders pursuant to this prospectus. The
Company will incur the costs related to this offering and estimates that these
costs will not exceed $110,000. The Company will charge these costs to expense
as they are incurred.
12
<PAGE> 13
DESCRIPTION OF CAPITAL STOCK
The following summarizes the material provisions of our capital stock.
COMMON STOCK
Our authorized capital stock consists of 100,000,000 shares of common
stock, no par value. As of June 30, 1999, there were 23,040,051 shares of common
stock outstanding.
The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by our Board of Directors out of funds legally available therefor. In
the event of the liquidation, dissolution, or winding up of the company, the
holders of common stock are entitled to share ratably in all assets remaining
after payment of liabilities, subject to prior distribution rights of preferred
stock, if any, then outstanding. Our common stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the common stock. All outstanding shares
of common stock are fully paid and nonassessable, and the shares of common stock
to be issued upon completion of this offering will be fully paid and
nonassessable.
PREFERRED STOCK
Our Board of Directors has the authority to issue the preferred stock in
one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series or the designation
of such series, without further vote or action by the shareholders. The issuance
of preferred stock may have the effect of delaying, deferring or preventing a
change in control of the company without further action by the shareholders and
may adversely affect the voting and other rights of the holders of common stock.
The issuance of preferred stock with voting and conversion rights may adversely
affect the voting power of the holders of common stock, including the loss of
voting control to others. At present, we have no plans to issue any of the
preferred stock.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE ARTICLES OF INCORPORATION, BYLAWS AND
TEXAS LAW
Articles of Incorporation and Bylaws
Our Articles of Incorporation provide that our Board of Directors is
divided into three classes of directors, with each class serving a staggered
three-year term. The classification of our Board of Directors has the effect of
generally requiring at least two annual shareholder meetings, instead of one, to
replace a majority of our board members. Our Articles of Incorporation also
provide that all shareholder actions must be effected at a duly called meeting
and not by a consent in writing. Further, provisions of our Bylaws and Articles
of Incorporation provide that our shareholders may amend our Bylaws or certain
provisions of our Articles of Incorporation only with the affirmative vote of
80% of our entire outstanding capital stock. These provisions of our Articles of
Incorporation and Bylaws could discourage potential acquisition proposals and
could delay or prevent a change in control of our company. These provisions are
intended to enhance the likelihood of continuity and stability in the
composition of our Board of Directors and in the policies formulated by our
Board of Directors and to discourage certain types of transactions that may
involve an actual or threatened change of control of our Company. These
provisions are designed to reduce the vulnerability of the company to an
unsolicited acquisition proposal. The provisions also are intended to discourage
certain tactics that may be used in proxy fights. However, these provisions
could have the effect of discouraging others from making tender offers for the
Company's shares and, as a consequence, they also may inhibit fluctuations in
the market price of the Company's shares that could result from actual or
rumored takeover attempts. These provisions also may have the effect of
preventing changes in the management of the Company. See "Risk Factors --
Anti-Takeover Provisions."
13
<PAGE> 14
Texas Takeover Statute
The Company is subject to Article 13.03 of the Texas Business Corporations
Act, which, subject to certain exceptions, prohibits a Texas corporation from
engaging in any business combination with any affiliated shareholder, as defined
in the Statute, for a period of three years following the date that the
shareholder became an affiliated shareholder, unless: (i) prior to such date,
the board of directors of the corporation approved either the business
combination or the transaction that resulted in the shareholder becoming an
affiliated shareholder or (ii) the business combination is approved and
authorized by the affirmative vote of at least two-thirds of the outstanding
voting stock that is not owned or controlled by the interested shareholder, at a
meeting of shareholders and not by written consent, duly called for that purpose
not less than six months after the date that the affiliated shareholder first
became an affiliated shareholder of the corporation.
Article 13.02 of the Texas statute defines a business combination to
include:
- any merger, share exchange or conversion involving the corporation and
the affiliated shareholder,
- any sale, lease, exchange, mortgage, transfer, pledge or other
disposition of 10% or more of the assets of the corporation involving the
affiliated shareholder,
- subject to certain exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the corporation
to the interested shareholder,
- the adoption of a plan or proposal for the liquidation or dissolution of
the corporation pursuant to an agreement with an affiliated shareholder,
- any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or series of
the corporation beneficially owned by the interested shareholder or
- the receipt by the affiliated shareholder of the benefit of any loans,
advances, guarantees, pledges, tax credits or other financial benefits
provided by or through the corporation.
In general, Article 13.02 defines an affiliated shareholder as any entity
or person beneficially owning 20% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
REGISTRATION RIGHTS
The holders of approximately 11 million shares of common stock are entitled
to certain rights with respect to the registration of our shares under the
Securities Act. If we propose to register any of our securities under the
Securities Act for our own account, these holders are entitled to notice of the
registration and are entitled to include their shares of common stock therein.
Additionally, these holders are also entitled to certain demand registration
rights pursuant to which they may require us to file a registration statement
under the Securities Act at our expense with respect to their shares of common
stock, and we are required to use our best efforts to effect a registration of
these shares. Further, holders may require us to file additional registration
statements on Form S-3 at our expense. All of these registration rights are
subject to certain conditions and limitations, including the right of the
underwriters of an offering to limit the number of shares included in a
registration and our right not to effect a requested registration within six
months following an offering of our securities, including this offering.
14
<PAGE> 15
PLAN OF DISTRIBUTION
The 3,309,122 shares of common stock offered pursuant to this prospectus
are being offered for the account of the selling shareholders.
Sales of the shares of common stock by the selling shareholders may be made
from time to time in the over-the-counter market, on any stock exchange on which
the common stock may be listed at the time of sale or in private transactions at
prices then prevailing. The shares of common stock offered hereby may be sold by
any one or more of the following methods:
- a block trade (which may involve crosses) in which the broker or dealer
so engaged will attempt to sell the securities as agent but may position
and resell a portion of the block as principal to facilitate the
transaction;
- purchases by a broker or dealer as principal;
- ordinary brokerage transactions in which the broker solicits purchasers;
and
- privately negotiated transactions.
The selling shareholders and any broker-dealers that participate in the
distribution of the shares of common stock may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with sales, and any
profit on the sale of shares of common stock by it and any fees and commissions
received by any such broker-dealers may be deemed to be underwriting discounts
and commissions. The shares of common stock also may be sold pursuant to Rule
144 of the Securities Act to the extent such sales may be made in compliance
with the requirements of Rule 144.
At the time a particular offering of the common stock is made hereunder, to
the extent required by law, a prospectus supplement will be distributed which
will set forth the amount of common stock being offered and the terms of the
offering, including the purchase price, the name or names of any dealers or
agents, the purchase price paid for the common stock purchased from the selling
shareholders and any items constituting compensation from the selling
shareholders.
Each of GAP 44, GAPCo and JMI has agreed with BindView, subject to certain
exceptions, not to offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of BindView common stock or any securities
convertible into or exercisable or exchangeable for BindView common stock for
one year from the date of this Prospectus without BindView's prior written
consent.
On August 18, 1999, GAP 44, GAPCo and JMI sold all 2,154,432 of the shares
held by them and included in the offering to CIBC for $19.25 per share.
The last sales price of the common stock on August 17, 1999, as reported by
The Nasdaq Stock Market, was $21.38 per share.
LEGAL MATTERS
Certain legal matters with respect to the common stock were passed upon for
the company by Fulbright & Jaworski L.L.P., Houston, Texas, counsel to the
company.
EXPERTS
The consolidated financial statements of BindView Development Corporation
incorporated by reference in this Prospectus by reference to the audited
consolidated financial statements included in Exhibit 99.3 to the BindView
Development Corporation Amendment No. 1 of Current Report to Form 8-K on Form
8-K/A dated May 7, 1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
15
<PAGE> 16
The consolidated financial statements of BindView Development Corporation
appearing in BindView Development Corporation's Annual Report (Form 10-K) for
the year ended December 31, 1996, have been audited by Grant Thornton LLP,
independent auditors, as set forth in their report included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Netect Ltd. appearing in BindView
Development Corporation's Current Report (Form 8-K) dated March 1, 1999 for the
years ended December 31, 1998 and December 31, 1997 and the five months ended
December 31, 1996, have been audited by Kost, Forer and Gabbay, independent
auditors, as set forth in their report included therein and incorporated herein
by reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon authority of such firm as
experts in accounting and auditing.
On March 6, 1998, the Company notified Grant Thornton LLP that they were
dismissed as the Company's independent auditor. The decision to change
accountants was approved by the Company's Audit Committee of the Board of
Directors.
The report of Grant Thornton on the Company's financial statements for the
year ended December 31, 1996 did not contain an adverse opinion or a disclaimer
of opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles. The Company and Grant Thornton had not, in connection
with the audit of the Company's financial statements for the year ended December
31, 1996, or in connection with the period from December 31, 1996, through March
6, 1998, had any disagreement on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to Grant Thornton's satisfaction, would have
caused Grant Thornton to make reference to the subject matter of the
disagreement in connection with its report.
On March 6, 1998, PricewaterhouseCoopers LLP was engaged by the Company to
act as its new independent auditors. During the two most recent fiscal years and
any subsequent interim periods prior to engaging PricewaterhouseCoopers LLP,
neither the Company nor anyone on its behalf consulted PricewaterhouseCoopers
LLP regarding either (i) the application of accounting principles to a specified
transaction, whether completed or proposed or (ii) the type of audit opinion
that might be rendered on the Company's financial statements. The Company was
neither provided with a written report nor oral advice that
PricewaterhouseCoopers LLP concluded was an important consideration by the
Company in reaching a decision as to the acceptance of its engagement as the
independent auditors of the Company, relating to accounting, auditing or
financial reporting matters, or any matter that was the subject of either a
disagreement or an event described in the paragraph immediately above.
16
<PAGE> 17
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY
OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Information............... 2
Incorporation of Certain Information
By Reference....................... 2
Prospectus Summary................... 3
Risk Factors......................... 4
Selling Shareholders................. 11
Use of Proceeds...................... 12
Description of Capital Stock......... 13
Plan of Distribution................. 15
Legal Matters........................ 15
Experts.............................. 15
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
3,309,122 SHARES
BINDVIEW DEVELOPMENT
CORPORATION
COMMON STOCK
---------------------
PROSPECTUS
---------------------
August 18, 1999
- ------------------------------------------------------
- ------------------------------------------------------
