The Date of this Prospectus is March 19, 1996
Registration # 33-31143
Rule 424(b)(3)
INTERSOLV, INC.
3,583,585 Shares of Common Stock
The Common Stock of Intersolv, Inc. (the "Company" or
"Intersolv"), par value $0.01 per share (the "Common Stock"),
offered hereby is held by the Selling Securityholders (as defined
herein) who may from time to time offer for sale such shares of
Common Stock. See "Selling Securityholders." The Company will
not receive any proceeds from the sale by the Selling
Securityholders of the Common Stock.
The Common Stock is listed on the NASDAQ National Market
under the symbol "ISLI." On March 18, 1996, the last reported
sale price of the Common Stock reported on the NASDAQ National
Market was $11.375 per share. See "Price Range of Common Stock."
_______________________________
See "Risk Factors" beginning on page 5 for certain
information that should be considered by prospective investors.
_______________________________
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.
____________________
Any or all of the Common Stock offered hereby may be sold
from time to time to purchasers directly by a Selling
Securityholder. Alternatively, a Selling Securityholder may from
time to time offer any or all of the Common Stock to or through
underwriters, dealers, brokers or other agents. In addition, the
Selling Securityholders and/or any underwriter, broker, dealer or
other agent may engage in hedging transactions with respect to
the Common Stock. In connection with such transactions, shares
of Common Stock offered hereby may be sold or delivered to cover
any short positions resulting from such transactions. The
Company will pay the expenses of this offering estimated at
$37,000. The Common Stock offered hereby may be sold from time
to time in one or more transactions at a fixed offering price,
which may be changed, or at varying prices determined at the time
of sale or at negotiated prices. Such prices will be determined
by a Selling Securityholder or by agreement between a Selling
Securityholder and its underwriters, dealers, brokers or other
agents.
Any underwriters, dealers, brokers or other agents to or
through whom Common Stock offered hereby is sold may receive
compensation in the form of underwriting discounts, concessions,
commissions or fees from a Selling Securityholder and/or
purchasers of Common Stock for whom they may act. In addition, a
Selling Securityholder and any such underwriters, dealers,
brokers or other agents as agent or to whom they may sell as
principal, or both (which compensation to a particular
underwriter, broker, dealer or other agent might be in excess of
customary commissions) may be deemed to be underwriters under the
Securities Act, and any profits on the sale of Common Stock by
them and any discounts, commissions or concessions received by
any of such persons may be deemed to be underwriting discounts
and commissions under the Securities Act. Those who act as
underwriter, broker, dealer or other agent in connection with the
sale of the Common Stock will be selected by a Selling
Securityholder and may have other business relationships with the
Company and its subsidiaries or affiliates in the ordinary course
of business. The Company cannot presently estimate the amount of
any such discounts, commissions or concessions. The Company
knows of no existing arrangements between the Selling
Securityholders and any underwriter, dealer, broker or other
agent. See "Plan of Distribution."
No person has been authorized to give any information or to
make any representations other than those contained in this
Prospectus and, if given or made, such information or
representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell
or the solicitation of an offer to buy any securities other than
the securities to which it relates or an offer to sell or the
solicitation of an offer to buy such securities in any
circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this Prospectus nor any sale made
hereunder shall, under the circumstances, create any implication
that there has been no change in the affairs of the Company since
the date hereof or thereof or that the information contained
herein or therein is correct as of any time subsequent to the
date of such information.
TABLE OF CONTENTS
Page
Available Information 2
Documents Incorporated by Reference 3
The Company 4
Risk Factors 5
Price Range of Common Stock 7
Use of Proceeds 7
Selling Securityholders 8
Plan of Distribution 11
Description of Capital Stock 12
Legal Matters 13
Experts 14
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder, and
in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other
information filed by the Company with the Commission, including
the Registration Statement on Form S-3 of which this Prospectus
is a part, may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: New York Regional Office, Seven World
Trade Center, New York, New York 10048 and Chicago Regional
Office, 500 West Madison Street, Chicago, Illinois 60661. Copies
of such material can also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Common Stock is traded in
the over-the-counter market and is quoted in the NASDAQ National
Market. Copies of the Company's reports, proxy statements and
other information filed with the Commission can also be inspected
at the offices of the National Association of Securities Dealers,
Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration
Statement on Form S-3 (herein, together with all information
incorporated by reference therein and amendments and exhibits
thereto, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered hereby. This Prospectus does
not contain all of the information set forth or incorporated by
reference in the Registration Statement, certain parts of which
are omitted as permitted by the rules and regulations of the
Commission. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily
complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in
all respects by such reference. For further information
regarding the Company and the securities offered hereby,
reference is made to the Registration Statement.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by the Company with
the Commission (File No. 0-15188) pursuant to the Exchange Act
are incorporated herein by this reference and are made part of
this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal
year ended April 30, 1995, filed pursuant to Section 13 of the
Exchange Act;
(2) The Company's Quarterly Report on Form 10-Q for the
quarter ended July 31, 1995, filed pursuant to Section 13 of the
Exchange Act;
(3) The Company's Quarterly Report on Form 10-Q for the
quarter ended October 31, 1995, filed pursuant to Section 13 of
the Exchange Act;
(4) The Company's Quarterly Report on Form 10-Q for the
quarter ended January 31, 1996, filed pursuant to Section 13 of
the Exchange Act; and
(5) The Company's Current Report on Form 8-K, dated
November 7, 1995 and as amended by Amendment No. 1, dated January
5, 1996, each filed pursuant to Section 13 of the Exchange Act.
All documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to termination of the offering of the
Common Stock shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date any such
document is filed. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein
shall be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any
subsequently filed document which is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to
whom a copy of this Prospectus is delivered, upon written or oral
request, a copy of any and all of the documents incorporated by
reference herein, other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into
such documents. Any such request may be directed to Intersolv,
Inc., Attention: Kenneth A. Sexton, at the Company's principal
executive offices, which are located at 9420 Key West Avenue,
Rockville, Maryland 20850, telephone number (301) 838 5000
Intersolv, APS, Excelerator, Maintenance Workbench, PVCS and
SequeLink are trademarks of Intersolv.
THE COMPANY
Intersolv is a software product and service company,
specializing in open, client/server tools. The Company's
products and services support a broad range of approaches,
ranging from the development of new client/server systems to the
maintenance of traditional systems. The Company's product
strategy emphasizes an open architecture which permits its
products to be used separately, with the Company's other products
and with software development products and approaches offered by
other companies. The Company's objective is to build products
that deliver high productivity on simple projects and are
powerful enough to handle scalability requirements of production-
grade information systems without retooling.
Intersolv offers software products and services in the
following solution areas:
Object Oriented ("OO") Development - The Company has
invested significant resources in the acquisition and
development of OO application development tools. This product
series is focused on the needs of developers using the C++
language. This product series, which will be marketed under
the brand name Allegris, is due for general release early in
fiscal year 1997.
Enterprise Client/Server Development - Intersolv also offers
tools for traditional developers using the Cobol language who
want to move into the client/server architecture. These tools
can be used for rapid application development ("RAD"), design
driven development or for maintenance and reuse of legacy
applications.
Data Warehousing - Intersolv products provide access to more
than 30 database management systems ("DBMS"). Offerings
include an end user query and reporting tool and tools to
deploy cross-platform Open Database Connective ("ODBC") to
compliant applications accessing multiple DBMS.
Software Configuration Management ("SCM") - Intersolv offers
a comprehensive SCM product suite. The Company's SCM offerings
leverage team development on the LAN while supporting multi-
operating systems and multi-tool environments.
The Company markets and distributes its products to end
users, line of business developers, traditional information
system departments, project managers and application development
executives within corporations and independent software vendors
worldwide. Sales in the United States, Japan, United Kingdom,
Germany, France, Belgium and Australia are made through Company
owned and operated entities which use a combination of field
sales (face to face), telesales and third party distribution
channels. The Company's direct sales effort is augmented with a
network of independent software vendors, dealers, distributors
and value added resellers in more than 30 countries around the
world.
Intersolv has expanded its operations both through internal
development and selected acquisition of complementary products
and businesses. In October 1995, Intersolv acquired TechGnosis
International, Inc. ("TechGnosis") in a transaction accounted for
using the "pooling-of-interests" method.
Intersolv was incorporated under the laws of the State of
Delaware in 1985, successor to the business begun in 1982. The
Company's principal executive offices are located at 9420 Key
West Avenue, Rockville, Maryland 20850, and its telephone number
at that address is (301) 838-5000.
RISK FACTORS
Prospective investors should carefully consider, among other
factors, the following:
Technological Changes. The software development tools
market is characterized by rapid changes in technology and user
needs. Compatibility of the Company's products with customers'
preferred operating systems and database management systems are
important to future results of the Company. The current market
trend appears to be weighted towards building client/server and
cooperative applications using a changing mix of operating
systems. Revenue from the Company's Traditional Development
tools area declined by 22% during the year ended April 30, 1995.
Products in this area accounted for 35% of fiscal 1995 revenue,
and the Company expects demand in this area to remain flat or
continue to decline. During fiscal 1995, the decline in
traditional development tools revenues was more than offset by a
70% revenue increase in the Company's other products and
services. Because of the rapidly changing market, there is no
assurance that this substantial growth will continue. Future
operating results could be adversely affected by the market's
acceptance of the Company's existing and new products in this
rapidly changing market.
Competition. The market for the Company's products is
highly competitive. The Company competes with a number of
companies that market similar types of products. The Company
also expects to encounter competition in the future from
established companies and new companies that may develop products
competitive with the Company's products. Many of the Company's
actual and potential competitors have substantially greater
financial, marketing and technological resources than the
Company. Due to the inherently unpredictable nature of the
market in which the Company competes, any actual or potential
competitor is capable of capturing a disproportionate share of
the market in a relatively short time frame. Such a rapidly
shifting demand would adversely affect the Company's
profitability.
Fluctuations in Quarterly Performance. Historically, the
Company recognizes a major portion of its revenue during the last
month of a fiscal quarter and has experienced quarterly
fluctuations in revenues and earnings due to the timing of large
orders. The Company has no significant revenue backlog, and
substantially all of its product revenues in any quarter results
from sales made in the quarter. If sales are delayed and do not
close in a quarter as expected, the Company's results of
operations for that quarter would be adversely affected. Net
income may be disproportionately affected by a reduction in
revenues because a large portion of the Company's expenses do not
vary with revenues. Historically, the Company has recognized the
largest portion of its revenues and operating income in the
fourth quarter of its fiscal year, and the Company typically
experiences lower revenues and operating income for the first
quarter of a fiscal year than in the fourth quarter of the prior
fiscal year.
Acquisition Charges. In the past, the Company has expanded
its operations through selected acquisitions. As a result of
past acquisitions, the Company has charged earnings with
transaction costs and certain restructuring costs to integrate
the acquired businesses. These acquisition charges have resulted
in the Company reporting operating losses in the fiscal quarter
and year in which the transaction was completed.
Global Economies. The Company markets and sells its
products through its own sales force and through third parties in
approximately 30 countries. Consequently, the Company's results
are affected by changes in global economies and currency exchange
rates.
Third Party Sales Channels. In addition to the Company's
own marketing organization, the Company markets its products
through a global network of other independent software vendors
(ISVs), value-added resellers (VARs) and dealers and
distributors. Through third party alliances, the Company enables
selected ISVs to embed and sell certain Intersolv technologies in
their own products, for which the Company receives royalties. In
addition, VARs, dealers and distributors resell the Company's
products in markets which the Company cannot cost effectively
reach on a direct basis. The success of these sales channels,
and thus the amount of royalties the Company may receive, is
dependent on the financial condition and marketing effectiveness
of these third parties, which the Company cannot directly
control.
Dependence on Key Personnel. Competition for qualified
personnel in the software industry is intense. The future
success of the Company will depend on its ability to attract and
retain key employees. The failure to attract or the loss of
these individuals could have an adverse effect on the Company.
Possible Volatility of Stock Price. The market price for
the Common Stock has been highly volatile over the past several
years, and the market price may be subject to significant
volatility in the future, particularly on a quarterly basis.
Factors such as fluctuations in quarterly performance, the
announcement of technological innovations or new commercial
products by the Company or its competitors, as well as market
conditions in the computer software or hardware industries and
the condition of the economy in general, may have a significant
impact on the market price of the Common Stock. In addition, in
recent years the stock market has experienced large price and
volume fluctuations, which often have been unrelated to the
operating performance of specific companies or market sectors.
Effect of Delaware Law and Certain Charter Provisions.
Certain provisions of Delaware law and of the Company's
Certificate of Incorporation could have the effect of making it
more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire, control of the Company.
Such provisions could limit the price that certain investors
might be willing to pay in the future for shares of Common Stock.
Certain of these provisions could make it more difficult for
stockholders to effect certain corporate actions and could also
have the effect of delaying or preventing a change in control of
the Company. See "Description of Capital Stock."
Forward Looking Statements. Prospective investors are
cautioned that the statements in this Prospectus that are not
descriptions of historical facts may be forward looking
statements that are subject to risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors, including those identified under
"Risk Factors" and elsewhere in this Prospectus or documents
incorporated by reference herein.
PRICE RANGE OF COMMON STOCK
The Common Stock is traded in the over-the-counter market on
the NASDAQ National Market under the symbol "ISLI." The
following table sets forth, for the Company's fiscal years
indicated, the high and low last sale prices of the Common Stock
as reported by the NASDAQ National Market.
High Low
1995
First Quarter 8.50 4.75
Second Quarter 10.00 4.75
Third Quarter 13.25 7.75
Fourth Quarter 15.50 9.75
1996
First Quarter 26.20 14.00
Second Quarter 25.37 14.50
Third Quarter 17.20 8.75
Fourth Quarter
(through March 18, 1996) 14.37 9.62
On January 31, 1996, there were approximately 287 holders of
record of the Common Stock. See the cover page of this
Prospectus for the last sales price of the Common Stock reported
on the NASDAQ National Market as of a recent date.
USE OF PROCEEDS
The sale of the Common Stock offered hereby is for the
account of the Selling Securityholders. Accordingly, the Company
will not receive any of the proceeds from the sale by the Selling
Securityholders of the Common Stock.
SELLING SECURITYHOLDERS
The Common Stock offered by this Prospectus was initially
issued by the Company to certain shareholders on October 23, 1995
in connection with the acquisition of TechGnosis. The table
below sets forth information regarding the beneficial ownership
of the Common Stock by the Selling Securityholders as of January
31, 1996 and as adjusted to reflect the sale of Common Stock
offered hereby. For purposes of the following table, a person is
deemed to have "beneficial ownership" of any shares as of a given
date which such person has the right to acquire within 60 days
after such date.
Shares Owned Maximum Shares Maximum Shares
Before the Offering Being Offered Owned After the Offering
Name Number Percent Number Percent
Furman Selz SBIC L.P.(1)
1,062,379 5.17% 1,062,379 0 0
BMI 478,121 2.44 478,121 0 0
Marc Van Rompaey(2)
323,077 1.65 323,077 0 0
Walter Resseler
167,844 0.86 167,844 0 0
Sofinnova Capital II FCPR
154,500 0.79 154,500 0 0
Parnib Deelnemingen BV
120,001 0.61 120,001 0 0
Jean-Claude Deschamps(3)
119,102 0.61 119,102 0 0
Sofinnova Ventures III L.P.
103,000 0.53 103,000 0 0
TEG Holding BV 101,912 0.52 101,912 0 0
Johan Vets 81,077 0.41 81,077 0 0
Andre Van den Bogaert(4)
74,033 0.38 74,033 0 0
Karel De Gucht(5) 65,101 0.33 65,101 0 0
Anne-Lore Resseler 59,855 0.31 59,855 0 0
Sander d'Heer 55,269 0.28 55,269 0 0
Edmund Hajim(6) 50,683 0.26 50,683 0 0
William Sullivan 49,954 0.26 49,954 0 0
D.I.S. NV 43,054 0.22 43,054 0 0
Hugo Ceusters 35,866 0.18 35,866 0 0
STC NV 34,608 0.18 34,608 0 0
Theo Heselmans 32,970 0.17 32,970 0 0
GAIA 22,660 0.12 22,660 0 0
Manu Goossens 20,600 0.11 20,600 0 0
Marc Surinx 20,600 0.11 20,600 0 0
Peter Goossens 16,850 0.09 16,850 0 0
Roger Ghijs 14,574 0.07 14,574 0 0
Intervent NV 14,275 0.07 14,275 0 0
Jenny Van De Put 14,108 0.07 14,108 0 0
Terrence Quinn(7) 13,204 0.07 13,204 0 0
Clear Invest 12,745 0.07 12,745 0 0
Carl Moons 12,300 0.06 12,300 0 0
Etienne Cooreman 12,112 0.06 12,112 0 0
Michiel Carpentier 12,073 0.06 12,073 0 0
Marc Shinbrood 11,165 0.06 11,165 0 0
Jozef Colebunders 11,021 0.06 11,021 0 0
Daniel Goovaerts 10,300 0.05 10,300 0 0
Sargefi SA 9,286 0.05 9,286 0 0
Jan Detremmerie 8,691 0.04 8,691 0 0
Rolf Vets 8,652 0.04 8,652 0 0
Jef Haeverans 7,931 0.04 7,931 0 0
Michael Torto 7,725 0.04 7,725 0 0
Andrew Mills 7,551 0.04 7,551 0 0
Richard Taylor 7,551 0.04 7,551 0 0
Michel Ducourau 7,308 0.04 7,308 0 0
Henri Lagrasse 6,155 0.03 6,155 0 0
Jan Van Riel 5,947 0.03 5,947 0 0
A. Cools 5,191 0.03 5,191 0 0
Etienne Schroyen 5,191 0.03 5,191 0 0
Marc Borgers 4,686 0.02 4,686 0 0
Eddy Aerts 4,379 0.02 4,379 0 0
James O'Schaughessy 4,120 0.02 4,120 0 0
Luc Schets 4,120 0.02 4,120 0 0
Emil Ansarov 3,922 0.02 3,922 0 0
Joseph C. Tricomi 3,780 0.02 3,780 0 0
Carl Thuysbaert 3,044 0.02 3,044 0 0
Pascal Surinx 2,575 0.01 2,575 0 0
Roger De Cadt 2,422 0.01 2,422 0 0
Koenraad Meuleman 2,266 0.01 2,266 0 0
Dirk Dierickx 2,259 0.01 2,259 0 0
Arthur Sarno 2,179 0.01 2,179 0 0
Bud Enright 2,060 0.01 2,060 0 0
Cesar Medina 2,060 0.01 2,060 0 0
Filip Vandenbussche 2,060 0.01 2,060 0 0
Frederic Dalle 2,060 0.01 2,060 0 0
Jo Van Hoey 2,060 0.01 2,060 0 0
Stephen Nelson 2,060 0.01 2,060 0 0
Bart Ghesquiere 1,740 0.01 1,740 0 0
Guido Cooreman 1,730 0.01 1,730 0 0
Patrick Smits 1,730 0.01 1,730 0 0
Jan Bruyndonckx 1,588 0.01 1,588 0 0
Margareta Horemans 1,345 0.01 1,345 0 0
Peter Preston 1,322 0.01 1,322 0 0
Erik Janssens 994 0.01 994 0 0
Marc De Roover 721 0.00 721 0 0
Denis Gijsemans 447 0.00 447 0 0
Johan Coppieters 422 0.00 422 0 0
James McCarthy 412 0.00 412 0 0
Geoff Webb 339 0.00 339 0 0
David Grietens 113 0.00 113 0 0
Ellen Batens 103 0.00 103 0 0
Jennifer Taylor 103 0.00 103 0 0
Barbara Polszak 51 0.00 51 0 0
Guy Marceaux 41 0.00 41 0 0
Bertrand Lepeuple 20 0.00 20 0 0
Carl Blakeley 20 0.00 20 0 0
Christine Dunbar 20 0.00 20 0 0
Stephane Faubert 20 0.00 20 0 0
Virginie Lagrasse 20 0.00 20 0 0
TOTAL 3,583,585 17.41% 3,583,585 0 0
Because a Selling Securityholder may offer by this
Prospectus all or some part of the Common Stock which it
holds, no estimate can be given as of the date hereof as
to the amount of Common Stock actually to be offered for
sale by a Selling Securityholder or as to the amount of
Common Stock that will be held by a Selling
Securityholder upon the termination of such offering.
See "Plan of Distribution."
____________________________________
(1) Includes 975,859 shares issuable upon the
conversion of convertible debt.
(2) Includes 8,804 shares issuable upon the
conversion of convertible debt.
(3) Includes 3,961 shares issuable upon the
conversion of convertible debt.
(4) Includes 1,320 shares issuable upon the
conversion of convertible debt.
(5) Includes 8,802 shares issuable upon the
conversion of convertible debt.
(6) Includes 8,804 shares issuable upon the
conversion of convertible debt.
(7) Includes 13,204 shares issuable upon the
conversion of convertible debt.
PLAN OF DISTRIBUTION
Any or all of the Common Stock offered hereby may be sold
from time to time to purchasers directly by a Selling
Securityholder. Alternatively, a Selling Securityholder may from
time to time offer any or all of the Common Stock to or through
underwriters, dealers, brokers or other agents. In addition, the
Selling Securityholders and/or any underwriter, broker, dealer or
other agent may engage in hedging transactions with respect to
the Common Stock. In connection with such transactions, shares
of Common Stock offered hereby may be sold or delivered to cover
any short positions resulting from such transactions. The
Company will receive no proceeds from the sale of the Common
Stock offered hereby.
The Common Stock offered hereby may be sold from time to
time in one or more transactions at a fixed offering price, which
may be changed, or at varying prices determined at the time of
sale or at negotiated prices. Such prices will be determined by
a Selling Securityholder or by agreement between a Selling
Securityholder and its underwriters, dealers, brokers or other
agents.
Any underwriters, dealers, brokers or other agents to or
through whom Common Stock offered hereby is sold may receive
compensation in the form of underwriting discounts, concessions,
commissions or fees from a Selling Securityholder and/or
purchasers of Common Stock for whom they may act as agent or to
whom they may sell as principal, or both (which compensation to a
particular underwriter, broker, dealer or other agent might be in
excess of customary commissions). In addition, a Selling
Securityholder and any such underwriters, dealers, brokers or
other agents may be deemed to be underwriters under the
Securities Act, and any profits on the sale of Common Stock by
them and any discounts, commissions or concessions received by
any of such persons may be deemed to be underwriting discounts
and commissions under the Securities Act. Those who act as
underwriter, broker, dealer or other agent in connection with the
sale of the Common Stock will be selected by a Selling
Securityholder and may have other business relationships with the
Company and its subsidiaries or affiliates in the ordinary course
of business. The Company cannot presently estimate the amount of
any such discounts, commissions or concessions. The Company
knows of no existing arrangements between the Selling
Securityholders and any underwriter, dealer, broker or other
agent.
At any time a particular offer of Common Stock is made by a
Selling Securityholder, if required, a Prospectus Supplement will
be distributed which will set forth the identity of, and certain
information relating to, such Selling Securityholder, the
aggregate amounts of Common Stock being offered and the terms of
the offering, including the name or names of any underwriters,
dealers, brokers or other agents, any discounts, commissions and
other items constituting compensation from such Selling
Securityholder and any discounts, commissions or concessions
allowed or reallowed or paid to dealers. Such Prospectus
Supplement and, if necessary, a post-effective amendment to the
Registration Statement of which this Prospectus is a part will be
filed with the Commission to reflect the disclosure of additional
information with respect to the distribution of the Common Stock.
The Registration Rights Agreement (the "Registration Rights
Agreement"), dated as of October 23, 1995, by and among the
Company and certain shareholders provides that the Company will
indemnify the Selling Securityholders against certain
liabilities, including liabilities under the Securities Act. The
Registration Rights Agreement also provides for the
indemnification of the Company by the Selling Securityholders for
certain liabilities, including liabilities under the Securities
Act. In addition, under the Registration Rights Agreement, the
Company's obligation to indemnify extends to those who
participate in the distribution of the Common Stock as
underwriters for the Selling Securityholders. Also pursuant to
the Registration Rights Agreement, the Company has agreed to pay
substantially all fees and expenses incident to the preparation,
filing, amending and supplementing of the Registration Statement
of which this Prospectus is a part and any registration
statements or qualifying documents filed under any state
securities laws.
To comply with certain states' securities laws, if
applicable, the Common Stock offered hereby may be sold in such
states only through brokers or dealers. In addition, in certain
states the Common Stock may not be sold unless it has been
registered or qualified for sale in such state or an exemption
from registration or qualification is available and complied
with.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of
50,000,000 shares of Common Stock, $0.01 par value and 3,000,000
shares of Preferred Stock, $0.10 par value ("Preferred Stock").
As of January 31, 1996, there were 19,566,022 shares of Common
Stock outstanding and held of record by 287 stockholders,
excluding the shares of Common Stock issuable upon conversion the
convertible notes. The shares outstanding exclude 1,020,756
shares of Common Stock reserved for issuance pursuant to
Convertible Notes assumed by the Company in connection with the
acquisition of TechGnosis. All of the outstanding shares of
Common Stock are, and the shares offered hereby will be, when
delivered and paid for, fully paid, validly issued and
nonassessable.
Common Stock
Holders of shares of Common Stock are entitled to one vote
per share on all matters to be voted on by stockholders and are
entitled to receive such dividends, if any, as may bc declared
from time to time by the Board of Directors ("Board") from funds
legally available therefor. Upon liquidation or dissolution of
the Company, the holders of Common Stock are entitled to receive
all assets available for distribution to the stockholders,
subject to any preferential rights of the holders of Preferred
Stock. Holders of Common Stock have no preemptive or other
subscription rights. There are no conversion rights or
redemption or sinking fund provisions with respect to Common
Stock.
The Transfer Agent and Registrar for the Common Stock is the
First National Bank of Boston.
Preferred Stock
The Board may, without further action by the stockholders,
authorize the issuance of Preferred Stock in one or more series
and fix the rights, preferences and privileges of Preferred
Stock, including the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption,
liquidation preferences and sinking fund terms of Preferred Stock
of any class or series. No shares of Preferred Stock are
outstanding. 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. Further, the issuance of Preferred Stock could have the
effect of making it more difficult for a third party to acquire,
or of discouraging a third company from attempting to obtain,
control of the Company. The Company has no current plan to issue
any shares of Preferred Stock, except as may be required under
the Company's Shareholder Rights Plan.
Shareholder Rights Plan
On August 18, 1989, the Board adopted a Shareholder Rights
Plan (the "Rights Plan"). Under the Rights Plan, each
stockholder of record has received, and upon future issuances of
shares of Common Stock recipients generally will receive, one
right (a "Right") for each share of Common Stock owned or
received, respectively. Rights trade with the shares of Common
Stock and do not trade separately. Each Right entitles the
holder thereof to purchase one one-hundredth of a share of the
Company's Series A Junior Participating Preferred Stock at an
exercise price of $40.00. The Rights are not exercisable until a
person or group acquires beneficial ownership of 20.0% or more of
the Common Stock or announces a tender or exchange offer that
will result in such person or group owning 30.0% or more of the
Common Stock. In addition, if any person acquires at least 25.0%
of the Common Stock (except pursuant to a tender or exchange
offer for all Common Stock at a fair price) or if a holder of at
least 20.0% of the Common Stock consolidates or merges into or
engages in certain other transactions with the Company, the
Rights will entitle all other holders of the Common Stock to
acquire, at the exercise price of the Right, shares of Common
Stock (or, in the event there is not a sufficient number of
authorized but unissued or reserved shares of Common Stock, any
combination of Common Stock, cash, property or other Company
securities) with a market value equal to twice the exercise price
of the Right. If the Company is involved in a merger or other
business combination in which it is not the surviving corporation
or in which the Common Stock is changed or converted, or if the
Company sells or transfers at least 50.0% of its assets or
earning power, each Right will entitle its holder to acquire, at
the exercise price of the Right, shares of common stock of the
acquiring entity with a market value equal to twice the exercise
price of the Right. Each Right is non-voting, expires on August
31, 1999, and may be redeemed at the Company's option prior to
becoming exercisable at a redemption price of $0.01 per Right.
The Rights Plan is designed to protect stockholders in the
event of (i) an unsolicited offer to acquire the Company,
including an offer that does not treat all stockholders equally,
(ii) the acquisition in the open market of shares constituting
control of the Company without offering fair value to all the
stockholders, and (iii) other coercive takeover tactics that in
the opinion of the Board could impair its ability to represent
stockholder interests. The Company is not aware of any present
efforts by any persons to obtain control of the Company.
The provisions of the Rights Plan may render a takeover of
the Company more difficult or less likely to occur even though
such takeover may offer the Company's stockholders the
opportunity to sell their stock at a price above the prevailing
market rate and may be favored by a majority of the stockholders.
Delaware General Corporation Law Section 203
The Company is subject to the provisions of Section 203 of
the General Corporation Law of the State of Delaware. In
general, Section 203 prohibits certain publicly held Delaware
corporations from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the
date of the transaction in which the person or entity became an
interested stockholder, unless, among other exceptions, (i) the
business combination is approved by the Board prior to the date
the interested stockholder attained such status, or by the
holders of two-thirds of the outstanding voting stock not owned
by the interested stockholder or (ii) the interested stockholder
acquired 85% or more of the outstanding voting stock of the
Company in the transaction. For purposes of Section 203, a
"business combination" is defined broadly to include mergers,
asset sales and other transactions resulting in a financial
benefit to the interested stockholder. Subject to certain
exceptions, an "interested stockholder" is a person or entity
who, together with affiliates and associates, owns or within the
three immediately preceding years of a business combination did
own, 15.0% or more of the corporation's outstanding voting stock.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be
passed upon for the Company by Arent Fox Kintner Plotkin & Kahn,
Washington, D.C.
EXPERTS
The consolidated balance sheets as of April 30, 1995 and
1994, and the consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the three years
in the period ended April 30, 1995, incorporated by reference in
this Prospectus, have been incorporated herein in reliance on the
report of Coopers & Lybrand L.L.P. independent accountants, given
on the authority of that firm as experts in accounting and
auditing.
