<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1998
REGISTRATION NO. 333-48047
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
----------------
PLATINUM TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3509662
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1815 SOUTH MEYERS ROAD, OAKBROOK TERRACE, ILLINOIS 60181, (630) 620-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
LARRY S. FREEDMAN, ESQ.
PLATINUM TECHNOLOGY, INC.
1815 SOUTH MEYERS ROAD, OAKBROOK TERRACE, ILLINOIS 60181, (630) 620-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
MATTHEW S. BROWN, ESQ.
MARK D. WOOD, ESQ.
KATTEN MUCHIN & ZAVIS
525 WEST MONROE STREET, SUITE 1600
CHICAGO, ILLINOIS 60661
(312) 902-5200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE PRICE FEE
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<S> <C> <C> <C> <C>
Convertible Subordinated Notes.. $150,000,000(1) 100%(1) $150,000,000(1) $44,250(2)
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Common Stock, $.001 par val- 4,160,600
ue(3).......................... shares -- -- --
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</TABLE>
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(i) under the Securities Act of 1933.
(2) Previously paid.
(3) Such number represents the number of shares of Common Stock initially
issuable upon conversion of the Notes registered hereby and, pursuant to
Rule 416 under the Securities Act of 1933, as amended, such indeterminate
number of shares of Common Stock as may be issued from time to time upon
conversion of the Notes by reason of adjustment of the conversion price
under certain circumstances outlined in the Prospectus. Pursuant to Rule
457(i), no registration fee is required for these shares.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 28, 1998
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P R O S P E C T U S
-----------
LOGO
Logo of Platinum Technology
$150,000,000
6.25% CONVERTIBLE SUBORDINATED NOTES DUE 2002
AND SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF
This Prospectus relates to the offer and sale by the selling securityholders
named herein under "Selling Securityholders," their pledgees, donees,
transferees or distributees, or their respective successors-in-interest
(collectively, the "Selling Securityholders") of 6.25% Convertible Subordinated
Notes due 2002 (the "Notes") of PLATINUM technology, inc. (the "Company") in
the aggregate principal amount of $150,000,000 and shares of common stock, par
value $.001 per share, of the Company (the "Common Stock") issued or issuable
upon conversion of the Notes (the "Shares").
Interest on the Notes is payable on June 15 and December 15 of each year,
commencing June 15, 1998. The Notes mature on December 15, 2002. The Notes are
convertible into Common Stock of the Company at any time prior to the close of
business on the maturity date, unless previously redeemed or repurchased, at a
conversion price of $36.0525 per share (equivalent to a conversion rate of
approximately 27.74 shares per $1,000 principal amount of Notes), subject to
adjustment. See "Description of Notes--Conversion."
The Notes are redeemable by the Company in the event of certain developments
involving withholding taxes of the United States. See "Description of Notes--
Redemption--Redemption for Taxation Reasons." Otherwise, the Notes are not
redeemable prior to December 15, 2000. On or after December 15, 2000, the Notes
will be redeemable at the option of the Company, in whole, or from time to
time, in part, at the redemption prices set forth in this Prospectus, plus
accrued interest and any Additional Amounts (as defined) then payable. See
"Description of Notes--Redemption--Optional Redemption." In the event of a
Change of Control (as defined), each Holder of Notes may require the Company to
repurchase its Notes, in whole or in part, for cash, at 100% of the principal
amount thereof, plus accrued interest and any Additional Amounts then payable.
See "Description of Notes--Repurchase at Option of Holders Upon a Change of
Control."
The Notes are unsecured general obligations of the Company, subordinated in
right of payment to all existing and future Senior Indebtedness (as defined) of
the Company. In addition, the Notes will be effectively subordinated to the
liabilities, including trade payables, of the Company's subsidiaries. As of
April 30, 1998, there was approximately $49.7 million of indebtedness of the
Company outstanding that would have constituted Senior Indebtedness and there
was approximately $86.2 million of indebtedness and other liabilities of
subsidiaries of the Company outstanding (excluding intercompany liabilities) to
which the Notes were effectively subordinated. The Indenture (as defined) does
not restrict the Company from incurring additional Senior Indebtedness of the
Company or its subsidiaries from incurring other indebtedness and liabilities.
The Notes are designated for trading on The Portal Market. Notes sold
pursuant to this Prospectus will not remain eligible for trading on The Portal
Market. Application will be made to list the Notes for trading on the
Luxembourg Stock Exchange. The Common Stock is traded on the Nasdaq National
Market under the symbol "PLAT." The last sale price of the Common Stock as
reported on the Nasdaq National Market on May 19, 1998 was $26 11/16 per share.
The Notes and Shares (collectively, the "Securities") may be offered by the
Selling Securityholders from time to time in transactions (which may include
block transactions in the case of the Shares) on any exchange or market on
which such Securities are listed or quoted, as applicable, in negotiated
transactions, through a combination of such methods of sale, or otherwise, at
fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at negotiated prices.
The Selling Securityholders may effect such transactions by selling the
Securities directly or to or through broker-dealers, who may receive
compensation in the form of discounts, concessions or commissions from the
Selling Securityholders and/or the purchasers of the Securities for whom such
broker-dealers may act as agents or to whom they may sell as principals, or
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions). The Company will not receive any of the proceeds from
the sale of the Securities by the Selling Securityholders. The Company has
agreed to pay all expenses incident to the registration of the Securities
offered by the Selling Securityholders hereby, except that the Selling
Securityholders will pay all underwriting discounts and selling commissions, if
any. See "Plan of Distribution."
The Selling Securityholders and any broker-dealer, agents or underwriters
that participate with the Selling Securityholders in the distribution of the
Securities may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended, (the "Securities Act"), and any commissions
received by them and any profits on the resale of the Securities purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act.
SEE "RISK FACTORS" BEGINNING ON PAGE 1 FOR 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.
-----------
The date of this Prospectus is May , 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), 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 can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Room 1024, Washington, D.C. 20549, and at the Commission's
following Regional Offices: Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained at prescribed rates
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. Reports, proxy statements and other
information filed electronically by the Company with the Commission are
available at the Commission's web site at http://www.sec.gov. The Company's
Common Stock is traded on the Nasdaq National Market, and reports, proxy
statements and other information concerning the Company also may be inspected
at the offices of The Nasdaq Stock Market, 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 amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
For further information, reference is hereby made to the Registration
Statement which may be inspected and copied in the manner and at the sources
described above. Any statements contained or incorporated by reference herein
concerning the provisions of any document filed as an Exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete and, in each instance, reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by
such reference.
DB2 and MVS are trademarks, and IBM is a registered trademark, of
International Business Machines Corporation. This Prospectus also includes
product names and other trade names and trademarks of the Company and its
subsidiaries and of other companies.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Securities and Exchange
Commission (the "Commission") by the Company and are incorporated herein by
reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1997;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998;
3. The Company's Current Reports on Form 8-K dated January 27, 1998, March
3, 1998, April 16, 1998 and April 29, 1998 and on Form 8-K/A dated May
6, 1998;
4. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed March 7, 1991 pursuant to
Section 12 of the Exchange Act and all amendments thereto and reports
filed for the purpose of updating such description; and
5. The description of the preferred stock purchase rights contained in the
Company's Registration Statement on Form 8-A filed December 26, 1995
pursuant to Section 12 of the Exchange Act and all amendments thereto
and reports filed for the purpose of updating such description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated herein by reference shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained in any subsequently filed document which is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
i
<PAGE>
The Company will provide, without charge, to each person to whom a copy of
this prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference (other
than exhibits thereto, unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Written or
telephone requests for such copies should be directed to the Company's
principal office: PLATINUM technology inc., 1815 South Meyers Road, Oakbrook
Terrace, Illinois 60181, Attention: Secretary (telephone: (630) 620-5000).
ii
<PAGE>
RISK FACTORS
In addition to the other information included and incorporated by reference
in this Prospectus, potential purchasers should consider carefully the
following factors in evaluating the Company, its business and the Notes and
shares of Common Stock offered hereby.
NET LOSSES; ABILITY TO SATISFY DEBT OBLIGATIONS
The Company has experienced operating and net losses in 1995, 1996, 1997 and
the three months ended March 31, 1998. There can be no assurance that the
Company will not continue to incur operating and net losses. The Company's
future operating results will depend on a number of business factors,
including other factors discussed in these "Risk Factors", as well as general
economic conditions. Furthermore, prior to a given year or other fiscal
period, the Company hires sales and product development personnel and makes
other decisions which will result in increased expenses in such year or other
period, based upon anticipated revenues for such year or other period. Due to
the seasonality and concentration of the Company's revenues at the end of
fiscal periods, particularly the fourth quarter, the Company's lack of backlog
and the Company's cost structure, if revenue targets are not met, the
Company's operating results would be materially adversely affected. See "--
Seasonality and Variability of Quarterly Operating Results." No assurances can
be given that any of the Company's revenue expectations will be fulfilled, and
the Company's business, results of operations and financial condition will be
materially adversely affected if these expectations are not fulfilled. If
anticipated revenues and income are not achieved, the Company's ability to pay
interest on, or ultimately pay the principal amount of, its indebtedness could
become impaired. As of April 30, 1998, the Company had outstanding long-term
obligations and acquisition-related payables of approximately $300,065,000,
requiring the Company to make payments of principal and interest of
approximately $35,000,000 and $36,000,000 in 1998 and 1999, respectively. If
the Company is unable to meet its cash requirements out of cash flow from
operations and its available borrowings, there can be no assurance that it
will be able to obtain alternative financing or that it will be permitted to
do so under the terms of its existing financing arrangements. In the absence
of such financing, the Company's ability to respond to changing business and
economic conditions, to make future acquisitions, to absorb adverse operating
results or to fund capital expenditures or increased working capital
requirements may be adversely affected.
RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS AND MARKETS
The Company expects that the market for Information Technology ("IT")
software products will continue to be subject to frequent and rapid changes in
technology and customer preferences. Substantially all of the Company's
products have maintained their commercial viability for a significant period
of time, as evidenced by the fact that the Company has discontinued very few
of its products. However, the introduction of products embodying new
technologies and the emergence of new industry standards can render existing
products obsolete and unmarketable. The timing of releases of new products and
enhancements of existing products by the Company varies depending on customer
demand and emerging technology. The Company's growth and future financial
performance will depend upon its ability to develop and introduce new products
and enhancements of existing products that accommodate the latest
technological advances and customer requirements. There can be no assurance
that additional new products will be successfully developed or marketed by the
Company, that any new products will achieve market acceptance, or that other
software vendors will not develop and market products which are superior to
the Company's products or that such products will not achieve greater market
acceptance. Furthermore, customers may delay purchases in anticipation of
technological changes. The Company's ability to develop and market software
infrastructure products and other new products depends upon its ability to
attract and retain qualified employees. Any failure by the Company to
anticipate or respond adequately to the changes in technology and customer
preferences, to develop and introduce new products in a
1
<PAGE>
timely fashion, or to attract and retain qualified employees, could materially
adversely affect the Company's business, results of operations and financial
condition.
RELIANCE ON AND RISKS OF ACQUISITION STRATEGY
The Company expects to continue its strategy of identifying, acquiring and
developing software infrastructure products, services and technologies through
the acquisition of specific products and of businesses which have developed
such products, services and technologies. The Company from time to time
engages in, and is currently engaged in, discussions with potential
acquisition candidates, including discussions relating to acquisitions that
may be material in size and/or scope and which may involve issuances by the
Company of a significant number of shares of Common Stock.
The Company believes that its future growth depends, in part, upon the
success of this strategy. There can be no assurance that the Company will
successfully identify, acquire on favorable terms or integrate such
businesses, products, services or technologies. The Company may, in the
future, face increased competition for acquisition opportunities, which may
inhibit the Company's ability to consummate suitable acquisitions and increase
the costs of completing such acquisitions.
Acquisitions involve a number of special risks and challenges, including the
diversion of management's attention, assimilation of the operations and
personnel of acquired companies, incorporation of acquired products into
existing product lines, adverse short-term effects on reported operating
results, amortization of acquired intangible assets, assumption of liabilities
of acquired companies, possible loss of key employees and difficulty of
presenting a unified corporate image. No assurance can be given that any
potential acquisition by the Company will or will not occur, or that, if an
acquisition does occur, it will not ultimately have a material adverse effect
on the Company or that any such acquisition will succeed in enhancing the
Company's business.
The Company has historically issued Common Stock as consideration for
business acquisitions and expects to continue to do so in the future. There
can be no assurances that such issuances will not be dilutive to the Company's
stockholders. Additionally, the Company has recorded charges for acquired
in-process technology and merger costs in connection with certain of its past
acquisitions, which materially reduced operating and net income for the
periods in which the acquisitions were recorded. The Company expects to
continue to incur such charges in connection with future acquisitions, which
could materially reduce operating and net income in the periods in which such
acquisitions are consummated.
HIGHLY COMPETITIVE MARKETS
The market for the Company's products is highly competitive. The Company
expects to encounter enhanced competition and new competitors as it continues
to penetrate the software infrastructure market, including competition from
relational database vendors and systems software companies. Many of the
Company's current and prospective competitors have significantly greater
financial, technical and marketing resources than the Company. Competitive
pressure could cause the Company's products to lose market acceptance or
result in significant price erosion, with a material adverse effect upon the
Company's results of operations.
A variety of external and internal factors could adversely affect the
Company's ability to compete in the software infrastructure market. Such
factors include the following: relative functionality, integration,
performance and reliability of the products offered by the Company and its
competitors; the success and timing of new product development efforts;
changes affecting the hardware, operating systems or database systems which
the Company currently supports; the level of demonstrable economic benefits
for users relative to cost; relative quality of customer support and user
documentation; ease of installation; vendor reputation, experience and
financial stability and price.
The Company also encounters competition from a broad range of firms in the
professional services market. Many of the Company's current and prospective
competitors in the professional services market have
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<PAGE>
significantly greater financial, technical and marketing resources than the
Company. The competitive factors affecting the market for the Company's
professional services include the following breadth and quality of services
offered, vendor reputation and the ability to retain qualified technical
personnel.
DEPENDENCE ON PROPRIETARY TECHNOLOGY
The Company's success is heavily dependent upon its proprietary software
technology. The Company relies on a combination of contractual rights,
trademarks, trade secrets, patents and copyright laws to establish or protect
its proprietary rights in its products. The Company's license agreements
restrict a customer's use of the Company's software and prohibit disclosure to
third persons. Notwithstanding those restrictions, it may be possible for
unauthorized persons to obtain copies of the Company's software products. The
Company registers its product names and other trademarks in the United States
and certain foreign countries. There can be no assurance that the steps taken
by the Company in this regard will be adequate to deter misappropriation of
its proprietary rights or independent third party development of functionally
equivalent technologies. Although the Company does not believe that it is
materially infringing on the intellectual property rights of others, there can
be no assurance that such a claim will not be successfully asserted against
the Company in the future or that any attempt to protect its technology will
not be challenged.
DEPENDENCE ON DB2
A significant portion of the Company's revenues will continue to be derived
from products that enhance the performance and functionality of IBM's DB2
relational database management software, which operates on IBM and compatible
mainframe computer systems running the MVS operating system. A decline or a
perceived decline in IBM's commitment to DB2 or a decline in the market's
acceptance and utilization of DB2 would have an adverse effect on the Company,
and such adverse effect could be material. Also, if IBM were to enhance DB2 or
its DB2 utilities so as to render the Company's products obsolete or
unnecessary, or devote more resources to developing and marketing IBM's own
DB2 tools and utilities, the Company's business could be materially adversely
affected.
DEPENDENCE ON RELATIONSHIPS WITH RELATIONAL DATABASE VENDORS
The Company believes that in order to address its markets, the Company must
develop, maintain and enhance close associations with, and obtain access to
the technical personnel of, leading relational database vendors. This may
become increasingly difficult due to competition among such vendors. The
Company has entered into alliances with, among others, Oracle Systems Corp.,
Sybase, Inc. and Informix Software, Inc. There can be no assurance that the
Company will be able to maintain existing relationships or enter into new
relationships with such vendors. The Company's failure to do so would have an
adverse effect on its business, results of operations and financial condition,
and such adverse effect could be material.
SUSCEPTIBILITY TO GENERAL ECONOMIC CONDITIONS
The Company's revenues and results of operations will be subject to
fluctuations based upon general economic conditions. If there were a general
economic downturn or a recession in the United States or certain other
markets, the Company believes that certain of its customers might reduce or
delay their purchases of the Company's products or services, leading to a
reduction in the Company's revenues. The factors that might influence current
and prospective customers to reduce their IT budgets under these circumstances
are beyond the Company's control. In the event of an economic downturn, the
Company's business, results of operations and financial condition could be
materially adversely affected. There can be no assurance that growth in the
markets for the Company's products and services will occur or that such growth
will result in increased demand for the Company's products and services.
SEASONALITY AND VARIABILITY OF QUARTERLY OPERATING RESULTS
The Company has experienced a seasonal pattern in its operating results,
with the fourth quarter typically having the highest total revenues and
operating income. Further, revenues for the Company's fourth quarters have
historically been higher than those for the first quarters of the following
years. Because operating expenses
3
<PAGE>
continued to increase in the first quarters of those years, the Company
realized substantially lower operating margins and net income (excluding the
effect of charges for acquired in-process technology and merger costs) for
such quarters. The Company expects this pattern to continue for the
foreseeable future. The Company believes the seasonality of its revenues
results primarily from the budgeting cycles of its software product customers
and the structure of the Company's sales commission and bonus programs.
The Company operates with relatively little order backlog and substantially
all of its software product revenues in each quarter result from sales made in
that quarter. Consequently, if near term demand for the Company's products
weakens or if sales do not close in any quarter as anticipated, the Company's
results of operations for that quarter would be adversely, and perhaps
materially, affected. In addition, the timing and amount of the Company's
revenues are subject to a number of factors that make estimation of operating
results prior to the end of a quarter extremely uncertain. Historically, a
substantial majority of the Company's quarterly software products revenues has
been recorded in the third month of any given quarter, with a concentration of
such revenues in the last week of that third month, further increasing the
difficulty of predicting operating results.
The Company's operating results may vary significantly from quarter to
quarter depending on other factors such as the size and timing of customer
orders, price and other competitive conditions in the industry, the timing of
new product announcements and releases by the Company and its competitors, the
ability of the Company to develop, introduce and market new and enhanced
versions of the Company's products on a timely basis, changes in the Company's
level of operating expenses, changes in the Company's sales incentive plans,
budgeting cycles of its customers, customer order deferrals in anticipation of
enhancements or new products offered by the Company or its competitors, the
cancellation of licenses during the warranty period or nonrenewal--of
maintenance agreements, product life cycles, software bugs and other risks
discussed herein. See "--Rapid Technological Change; Dependence on New
Products and Markets" and "--Highly Competitive Markets."
RISKS OF INTERNATIONAL SALES
The risks inherent in conducting international business generally include
exposure to currency fluctuations, longer payment cycles, greater difficulties
in accounts receivable collection and the burdens of complying with a wide
variety of foreign laws. Approximately 32%, 30%, 29% and 30% of the Company's
revenues in 1995, 1996, 1997 and the first quarter of 1998, respectively, were
attributable to international sales. Exchange rate fluctuations can have a
material adverse effect on the total level of foreign sales and the
profitability of those sales. During the past several years, the Company has
changed the primary means of international distribution of its products from a
network of independent distributors to wholly-owned subsidiaries of the
Company. The Company may encounter difficulties in integrating and managing
these new overseas subsidiaries.
RISKS OF CONSULTING SERVICES BUSINESS
The Company is subject to the risks associated with a consulting services
business, including dependence on its reputation with existing customers,
volatility of workload and dependence on ability to attract and retain
qualified technical personnel. Also, a substantial portion of the Company's
consulting services revenue may be derived from the performance of services
under fixed-price contracts. There can be no assurance that the Company can
consistently perform in a profitable manner under these contracts,
particularly in the field of software development, where cost overruns are
commonplace.
SUBSTANTIAL LEVERAGE
On December 16, 1997, the Company issued $150,000,000 in aggregate principal
amount of the Notes, which bear interest at 6.25% annually and mature on
December 15, 2002. As a result of this additional indebtedness, the Company's
principal and interest obligations increased substantially. The degree to
which the Company is now leveraged could materially and adversely affect the
Company's ability to obtain financing for working capital, acquisitions or
other purposes, and could make it more vulnerable to industry downturns and
competitive pressures.
DEPENDENCE ON KEY PERSONNEL
Competition for qualified personnel in the software industry is intense, and
there can be no assurance that the Company will be able to attract and retain
a sufficient number of qualified employees. The Company's success depends to a
significant degree upon the continued contributions of its key management,
marketing,
4
<PAGE>
product development, professional services and operational personnel,
including key personnel of acquired companies. As the business of the Company
grows, it may become increasingly difficult for it to hire, train and
assimilate the number of new employees required. In addition, it is possible
that the business changes or uncertainty brought about by recent acquisitions
may cause key employees to leave the Company, and certain key members of the
management of acquired companies may decide not to continue with the Company.
Any difficulty in attracting and retaining key employees could have a material
adverse effect on the Company's business, results of operations and financial
condition.
The Company's success to date has depended in large part on the skills and
efforts of Andrew J. Filipowski, the Company's President and Chief Executive
Officer, and Paul L. Humenansky, the Company's Executive Vice President-
Product Development and Chief Operations Officer. The Company has not entered
into non-competition agreements with Messrs. Filipowski or Humenansky or any
of its other key personnel, nor does the Company have "key man" life insurance
policies covering these individuals.
VOLATILITY OF THE COMPANY'S STOCK PRICE
The Company's Common Stock price has historically been volatile. The Company
believes factors such as quarterly fluctuations in results of operations,
announcements of new products and acquisitions by the Company or by its
competitors, changes or anticipated changes in earnings estimates by analysts,
changes in accounting treatments or principles and other factors may cause the
market price of the Common Stock to fluctuate, perhaps substantially. The
market price of the Common Stock may be affected by the Company's ability to
meet or exceed analysts' or "street" expectations, and any failure to meet or
exceed such expectations, could have a material adverse effect on the market
price of the Common Stock. In addition, stock prices for many technology
companies fluctuate widely for reasons which may be unrelated to operating
results. These fluctuations, as well as general economic, political and market
conditions may adversely affect the market price of the Common Stock in the
future. In the past, following periods of volatility in the market price of a
company's securities, class action securities litigation has often been
instituted against such company. Any such litigation instigated against the
Company could result in substantial costs and a diversion of management's
attention and resources, which could have a material adverse effect on the
Company's business, results of operations and financial condition.
ANTITAKEOVER EFFECT OF RIGHTS AGREEMENT, CHARTER AND STATUTORY PROVISIONS
The Company has entered into a rights agreement (the "Rights Agreement"),
which provides that, in the event that 15% or more of the outstanding shares
of Common Stock are acquired by a person or group of persons, the holder of
each outstanding share of Common Stock, other than such acquiring person(s),
shall have the right to purchase from the Company additional shares of Common
Stock having a market value equal to two times the exercise price of such
right. In addition, the Company's Restated Certificate of Incorporation, as
amended, provides that the Board of Directors shall be classified with respect
to the terms for which its members shall hold office by dividing the members
into three classes. The Company is also subject to Section 203 of the Delaware
General Corporation Law which, in general, imposes restrictions upon acquirers
of 15% or more of the outstanding shares of Common Stock. The Rights Agreement
and these other provisions may have the effect of delaying, deferring or
preventing a change of control of the Company, even if such event would be
beneficial to stockholders.
SUBORDINATION; COMPANY STRUCTURE; SUBSIDIARY CASH FLOW
The Notes are general, unsecured obligations of the Company, subordinated in
right of payment to all existing and future Senior Indebtedness of the
Company. Although, to date, the Company has not incurred a substantial amount
of Senior Indebtedness, the Indenture does not restrict the incurrence of
Senior Indebtedness or other indebtedness by the Company or its subsidiaries.
Under the Indenture, generally, the Company will not be permitted to pay the
principal of, or premium, if any, or interest on the Notes or repurchase,
redeem or otherwise retire any Notes in the event of a default in the payment
of any principal of, premium, if any, or interest on any Senior Indebtedness
when it becomes due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise, unless and until such payment
default has been cured or waived, or
5
<PAGE>
in the event of certain other defaults with respect to Senior Indebtedness. In
addition, the Notes are effectively subordinated to all liabilities of the
Company's subsidiaries, including trade payables. Certain of the Company's
principal assets, including the rights to a significant portion of the
Company's proprietary software technology, are owned by the Company's
subsidiaries. If the Company were to default on any of its payment obligations
in respect to the Notes, trade creditors of such subsidiaries would have a
senior claim to such assets as compared to Holders (as defined) of the Notes.
As of April 30, 1998, the Company had approximately $49.7 million of Senior
Indebtedness and the Company's subsidiaries had approximately $86.2 million of
trade payables and accrued liabilities (excluding intercompany liabilities).
The Company conducts a significant portion of its operations through its
foreign subsidiaries. Accordingly, the Company may be dependent, from time to
time, in whole or in part, on its ability to obtain funds from such foreign
subsidiaries in order to service its indebtedness, including the Notes. The
Company's foreign subsidiaries may, from time to time, face governmentally
imposed and other restrictions on their ability to transfer funds to the
Company and may incur costs in connection with any such transfers. The Company
anticipates that from time to time it will incur additional indebtedness,
including Senior indebtedness, and that it and its subsidiaries will from time
to time incur additional indebtedness and liabilities. See "Description of
Notes--Subordination."
ABSENCE OF PUBLIC MARKET FOR THE NOTES AND RESTRICTIONS ON TRANSFER
The Notes are not currently eligible for trading on any exchange. Although
the Initial Purchasers have advised the Company that the they currently intend
to make a market in the Notes, they are not obligated to do so and may
discontinue such market making at any time without notice. In addition, such
market making activity will be subject to the limits imposed by the Securities
Act and the Exchange Act. Accordingly, there can be no assurance that any
market for the Notes will develop or, if one does develop, that it will be
maintained. If an active market for the Notes fails to develop or be
sustained, the trading price of such Notes could be materially adversely
affected. The Notes are designated for trading on The Portal Market; however,
Notes sold pursuant to this Prospectus will not remain eligible for trading on
The Portal Market.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This Prospectus contains and incorporates by reference certain "forward-
looking statements" (as defined in Section 21E of the Exchange Act). Words
such as "anticipates," "believes," "plans," "expects," "estimates" and similar
expressions have been used to identify these forward-looking statements, but
are not the exclusive means of identifying these statements. These statements
reflect the Company's current beliefs and are based on information currently
available to the Company. Accordingly, these statements are subject to known
and unknown risks, uncertainties and other factors that could cause the
Company's actual growth, results, performance and business prospects and
opportunities to differ from those expressed in, or implied by, these
statements. These risks, uncertainties and other factors include the Company's
ability to develop and market existing and acquired products for the IT
infrastructure market; the Company's ability to successfully integrate its
acquired products, services and businesses and continue its acquisition
strategy; risks relating to the Year 2000 challenge; the Company's ability to
adjust to changes in technology, customer preferences, enhanced competition
and new competitors in the IT infrastructure and professional services
markets; currency exchange rate fluctuations, collection of receivables,
compliance with foreign laws and other risks inherent in conducting
international business, risks associated with conducting a consulting services
business; general economic and business conditions, which may reduce or delay
customers' purchases of the Company's products and services; charges and costs
related to acquisitions; and the Company's ability to protect its proprietary
software rights from infringement or misappropriation, to maintain or enhance
its relationships with relational database vendors, and to attract and retain
key employees; and the other factors discussed under the caption "Risk
Factors." The Company is not obligated to update or revise these forward-
looking statements to reflect events or circumstances after the date of this
Prospectus.
6
<PAGE>
THE COMPANY
OVERVIEW
The Company develops, markets and supports software products, and provides
related professional services, that help organizations manage and improve
their IT infrastructures, which consist of data, systems and applications. The
Company's products and services help IT departments, primarily in large and
data intensive organizations, minimize risk, improve service levels, and
leverage information to make better business decisions. The Company's products
typically perform fundamental functions such as automating operations,
maintaining the operating efficiency of systems and applications, and ensuring
data access and integrity. The Company currently develops software products
through its four business units: database management, systems management,
application infrastructure management, and data warehousing and decision
support. Addressing businesses' increasing demand for simplified vendor
relationships and complete solutions to IT problems, the Company's goal is to
become the leading provider of IT infrastructure management solutions by
offering a comprehensive set of "best in class" point products, product
bundles and integrated product suites. The Company also offers a wide array of
professional services, including consulting, systems integration and
educational programs, both in conjunction with and independent of software
product sales.
To achieve its goal, the Company identified key technologies and skill sets
required to better manage the IT infrastructure. Through a combination of an
aggressive acquisition program and vigorous internal product development
efforts, the Company assembled the competencies to create complete
infrastructure management solutions. Devoting substantial resources to
integrating its products and technologies, the Company is now leveraging the
breadth of its product lines and its professional services capabilities to
provide complete, customized solutions for IT infrastructure problems. These
solutions include single products; product suites, which are sets of
integrated products drawn together from multiple business units of the
Company; and product bundles, which are sets of software applications that are
packaged together but do not necessarily have the level of integration that
defines a suite; as well as design and implementation services provided by the
Company's professional services staff. These solutions also include ongoing
product upgrades, maintenance and support, sometimes pursuant to multi-year
contracts. Evidencing the increasing demand from the Company's customers for
comprehensive solutions, the Company completed 102 transactions during 1997,
each over $1 million, as compared to 55 such transactions during 1996 and only
two such transactions during 1995. Each of these large transactions included
licenses for software product bundles or suites, along with future upgrades
and maintenance; software consulting services; or both product licenses and
related consulting services.
The Company is focusing on the development of products and services that
offer its customers maximum flexibility and functionality. The Company's
products are designed to permit a customer to either purchase prepackaged
integrated suites or to choose individual products and later add other
products as needed. The cornerstone of the Company's integration efforts is
POEMS (PLATINUM Open Enterprise Management Services), an internally developed
set of shared components that give the Company's products a common look and
feel, common installation and distribution and common communication, data and
events handling. POEMS integration is built into individual products so that,
as customers purchase additional Company products, the newly acquired and
previously installed products can begin working together immediately. In
February 1998, the Company released for general availability its ProVision
suite of integrated systems and database management tools, which is the
Company's most significant POEMS-enabled integrated offering of products to
date. ProVision initially includes nine tools within the following key IT
management disciplines: job management, performance management and analysis,
software distribution, problem resolution, security, database utilities, and
database administration.
The Company is creating solutions for the needs of specific industries, as
well as general business needs. The Company also is enabling its products and
suites for application with intranets and the internet and offers a broad set
of solutions for the Year 2000 problem. Additionally, in late 1996, the
Company formed specialty consulting practice groups within its professional
services business unit, including groups dedicated to Year 2000 solutions and
internet/intranet technologies.
7
<PAGE>
The Company was incorporated in Delaware in 1987 and its executive offices
are located at 1815 South Meyers Road, Oakbrook Terrace, Illinois 60181. Its
telephone number at that address is (630) 620-5000 and its website is located
at http://www.platinum.com.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sales of the
Securities offered hereby. All of the proceeds will be received by the Selling
Securityholders.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratio of earnings
to fixed charges for the periods shown:
<TABLE>
<CAPTION>
THREE
MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------------------------- MARCH 31,
1993 1994 1995 1996 1997 1998
-------- ------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges (1)...... 10.47(2) 7.49(3) --(4)(5) --(5)(6) --(5)(7) 2.18
</TABLE>
- --------
(1) The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (earnings before income taxes plus
fixed charges less capitalized interest) by fixed charges (interest
expenses plus capitalized interest and the portion of rental expense which
represents interest).
(2) Reflects a pre-tax charge for acquired in-process technology of $8,735,000
relating primarily to the Company's acquisition of Datura Corporation and
a pre-tax charge of $4,659,000 relating to Trinzic Corporation ("Trinzic")
and Locus Computing Corporation ("Locus") restructuring costs.
(3) Reflects a pre-tax charge for acquired in-process technology of
$24,594,000 relating primarily to the Company's acquisitions of Dimeric
Development, Inc. and the net assets of Aston Brooke Software, Inc. and
AutoSystems Corporation.
(4) Reflects a pre-tax charge for acquired in-process technology of
$88,493,000 relating primarily to the Company's acquisitions of Advanced
Software Concepts, Inc., SQL Software Corporation, RELTECH Group, Inc.,
Protellicess Software, Inc., AIB Software Corporation and BMS Computer,
Inc. and the net assets of ViaTech Development, Inc., BrownStone
Solutions, Inc. and ProtoSoft, Inc. and to certain product acquisitions.
Also reflects a pre-tax charge for merger costs of $30,819,000 relating to
the Company's acquisitions of Software Interfaces, Inc., Answer Systems,
Inc., Locus, Altai, Inc., Trinzic and Softool Corporation.
(5)Earnings available for fixed charges of $(122,465,000), $(72,342,000) and
$(89,933,000) were inadequate to cover fixed charges of $782,000,
$1,825,000 and $9,130,000 for the years ended December 31, 1995, 1996 and
1997, respectively.
(6) Reflects a pre-tax charge for acquired in-process technology of
$48,456,000 relating to the Company's acquisitions of Advanced Systems
Technologies, Inc., Software Alternatives, Inc. (d/b/a System Software
Alternatives), Grateful Data, Inc. (d/b/a TransCentury Data Systems) and
VREAM, Inc.; substantially all of the assets of the Access Manager
business unit of the High Performance Systems division of International
Computers Limited; and certain product technologies. Also reflects a pre-
tax charge for merger costs of $5,782,000 relating primarily to the
Company's acquisitions of Prodea Software Corporation, Paradigm Systems
Corporation and Axis Systems International, Inc.
(7) Reflects a pre-tax charge for acquired in-process technology of
$67,904,000 relating to the Company's acquisitions of GEJAC, Inc. and
ProMetrics Group Limited, the purchase of certain product technologies and
other intangible assets from Intel Corporation and the purchase of certain
other product technologies. Also reflects a pre-tax charge for merger
costs of $8,927,000 relating to the Company's acquisition of Australian
Technology Resources Pty Limited, I & S Informationstechnik and Services
GmbH and Vayda Consulting, Inc. and a pre-tax charge of $57,319,000 for
restructuring costs.
8
<PAGE>
SELLING SECURITYHOLDERS
The Notes were issued and sold by the Company to certain initial purchasers
(the "Initial Purchasers") on December 16, 1997 in transactions exempt from
the registration requirements under the Securities Act. The Initial Purchasers
sold the Notes only (i) within the United States, to persons whom it
reasonably believed to be "qualified institutional buyers" (as defined in Rule
144A under the Securities Act) in reliance on Rule 144A under the Securities
Act and (ii) to certain persons outside the United States pursuant to
Regulation S under the Securities Act. The Selling Securityholders (which term
includes their transferees, pledgees, donees and their successors) may from
time to time offer and sell pursuant to this Prospectus any or all of the
Securities.
The following table sets forth, as of May 18, 1998, certain information with
respect to the principal amount of Notes beneficially owned by each Selling
Securityholder and the number of Shares that may be offered by the Selling
Securityholders from time to time pursuant to this Prospectus.
From time to time, Deutsche Morgan Grenfell Inc. or their affiliates have
provided, and may continue to provide, investment banking and financial
advisory services to the Company, for which they have received or will receive
customary fees. None of the other Selling Securityholders has or, within the
past three years, has had with the Company or any of its predecessors or
affiliates any material relationship, except as otherwise set forth below.
Because the Selling Securityholders may offer all or some of the Notes or the
Shares pursuant to this Prospectus, no estimate can be given as to the amount
of Notes or the Shares that will be held by the Selling Securityholders upon
termination of this offering. The table has been prepared based upon
information furnished to the Company by the Selling Securityholders.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NOTES BENEFICIALLY OWNED
-----------------------------------
NUMBER OF PRINCIPAL NUMBER OF
PRINCIPAL SHARES OF AMOUNT OF SHARES OF
AMOUNT OF COMMON NOTES BEING COMMON STOCK
NAME NOTES PERCENTAGE STOCK (1)(2) OFFERED BEING OFFERED
- ---- ----------- ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
AAM/Zazove Institutional
Income Fund, L.P....... $ 2,000,000 1.3% 55,474 $ 2,000,000 55,474
Acamas Anstact.......... $ 500,000 * 13,868 $ 500,000 13,868
AIM Charter Fund........ $10,000,000 6.7 277,373 $10,000,000 277,373
AIM V.I. Growth and In-
come Fund.............. $ 2,000,000 1.3 55,474 $ 2,000,000 55,474
Ameritech Pension Plan.. $ 6,700,000 4.5 185,840 $ 6,700,000 185,840
Argent Classic Convert-
ible Arbitrage Fund
(Bermuda) L.P.......... $ 1,000,000 * 27,737 $ 1,000,000 27,737
Bankers Trust Interna-
tional................. $12,500,000 8.3 346,716 $12,500,000 346,716
Baptist Health.......... $ 104,000 * 2,884 $ 104,000 2,884
Boston Museum of Fine
Arts................... $ 44,000 * 1,220 $ 44,000 1,220
BT Holdings (New York)
Inc.................... $ 4,500,000 3.0 124,817 $ 4,500,000 124,817
Canadian Imperial Hold-
ings, Inc.............. $ 7,000,000 4.7 194,161 $ 7,000,000 194,161
CFW-C, L.P.............. $ 5,000,000 3.3 138,686 $ 5,000,000 138,686
Christian Science Trust-
ees for Gifts and En-
dowments............... $ 135,000 * 3,744 $ 135,000 3,744
Declaration of Trust for
the Defined Benefit
Plans of ICI American
Holdings Inc........... $ 530,000 * 14,700 $ 530,000 14,700
Declaration of Trust for
the Defined Benefit
Plans of ZENECA Hold-
ings Inc. ............. $ 350,000 * 9,708 $ 350,000 9,708
Delaware Group Dividend
and Income Fund, Inc... $ 1,215,000 * 33,700 $1,215,000 33,700
Delaware Group Retire-
ment Income Fund....... $ 65,000 * 1,802 $ 65,000 1,802
Delaware Group Global
Dividend and Income
Fund, Inc.............. $ 610,000 * 16,919 $ 610,000 16,919
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
SECURITIES BENEFICIALLY OWNED
------------------------------------
NUMBER OF PRINCIPAL NUMBER OF
PRINCIPAL SHARES OF AMOUNT OF SHARES OF
AMOUNT OF COMMON NOTES BEING COMMON STOCK
NAME NOTES PERCENTAGE STOCK (1)(2) OFFERED BEING OFFERED
- ---- ------------ ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Delaware Group Premium
Fund, Inc.--Convertible
Securities Series...... $ 140,000 * 3,883 $ 140,000 3,883
Delaware State Employ-
ees' Retirement Fund... $ 1,920,000 1.3 53,255 $ 1,920,000 53,255
Deutsche Morgan Grenfell
Inc. (3)............... $ 1,155,000 * 32,036 $ 1,155,000 32,036
Dunham & Associates Fund
II..................... $ 22,000 * 610 $ 22,000 610
Dunham & Associates Fund
III.................... $ 16,000 * 443 $ 16,000 443
Engineers Joint Pension
Fund................... $ 163,000 * 4,521 $ 163,000 4,521
First Church of Christ,
Science--Endowment..... $ 145,000 * 4,021 $ 145,000 4,021
FJH Absolute Return
Fund, L.P.............. $ 300,000 * 8,321 $ 300,000 8,321
General Motors Employees
Domestic Group Trust... $ 6,830,000 4.6 189,445 $ 6,830,000 189,445
Hamilton Global Invest-
ors Limited............ $ 7,500,000 5.0 208,029 $ 7,500,000 208,029
Hamilton Partners Limit-
ed..................... $ 2,500,000 1.7 69,343 $ 2,500,000 69,343
Hillside Capital Incor-
porated Corporate Ac-
count.................. $ 175,000 * 4,854 $ 175,000 4,854
Infinity Investors Lim-
ited................... $ 4,500,000 3.0 124,817 $ 4,500,000 124,817
The J.W. McConnell Fam-
ily Foundation......... $ 310,000 * 8,598 $ 310,000 8,598
Merrill Lynch Interna-
tional Ltd............. $ 9,800,000 6.5 271,825 $ 9,800,000 271,825
Merrill Lynch Pierce
Fenner & Smith Inc..... $ 1,150,000 * 31,897 $ 1,150,000 31,897
Natwest Securities Lim-
ited................... $ 5,000,000 3.3 138,686 $ 5,000,000 138,686
Nicholas Applegate In-
come & Growth Fund..... $ 1,519,000 1.0 42,133 $ 1,519,000 42,133
Nomura Securities (Ber-
muda) Ltd.............. $ 2,500,000 1.7 69,343 $ 2,500,000 69,343
Royal Bank of Canada
Trust Company (Jersey)
Limited................ $ 350,000 * 9,708 $ 350,000 9,708
San Diego City
Retirement............. $ 441,000 * 12,232 $ 441,000 12,232
San Diego County
Convertibles........... $ 1,350,000 * 37,445 $ 1,350,000 37,445
Shepherd Investments
International Ltd...... $ 2,000,000 1.3 55,474 $ 2,000,000 55,474
Societe Generale Secs.
Corp................... $ 5,500,000 3.6 152,555 $ 5,500,000 152,555
Spear, Leeds & Kellogg.. $ 1,000,000 * 27,737 $ 1,000,000 27,737
Stark International..... $ 2,000,000 1.3 55,474 $ 2,000,000 55,474
Summer Hill Global
Partner L.P. $ 45,000 * 1,248 $ 45,000 1,248
Swiss Bank Corporation-
London Branch.......... $ 2,000,000 1.3 55,474 $ 2,000,000 55,474
Thermo Electron Balanced
Investment Fund........ $ 560,000 * 15,532 $ 560,000 15,532
Wake Forest University.. $ 331,000 * 9,181 $ 331,000 9,181
Any other holders of
Notes or future
transferees, pledgees,
donees or successors of
any such other holder
(4)(5)................. $ 34,525,000 23.0 957,631 $ 34,525,000
------------ ------------
TOTAL................... $150,000,000 $150,000,000
</TABLE>
- --------
* Less than 1%.
10
<PAGE>
(1) Assumes conversion of the full amount of Notes held by such holder at the
initial rate of $36.0525 in principal amount of Notes per share of Common
Stock; such conversion price is subject to adjustment as described under
"Description of Notes--Conversion." Under the terms of the Indenture,
fractional shares will not be issued upon conversion of the Notes; cash
will be paid in lieu of any fractional shares.
(2) The number of Shares held by each Selling Securityholder named herein is
less than 1% of the Company's outstanding Common Stock as of May 18, 1998.
(3) Deutsche Morgan Grenfell served as the sole placement agent for the
December 1997 offering of the Notes.
(4) Information concerning other Selling Securityholders will be set forth in
supplements to this Prospectus from time to time, if required.
(5) Assumes that any other holders of Notes, or any future transferees,
pledgees, donees or successors of any such other holders of Notes, do not
beneficially own any Common Stock other than the Common Stock issuable
upon conversion of the Notes at the initial conversion price.
The Selling Securityholders identified above may have sold, transferred or
otherwise disposed of, in transactions exempt from the registration
requirements of the Securities Act, all or a portion of their Notes since the
date on which the information in the preceding table is presented. Information
concerning the Selling Securityholders may change from time to time and will
be set forth in Prospectus supplements, if and when necessary. In addition,
the per share conversion price and, therefore, the number of Shares are
subject to adjustment under certain circumstances. Accordingly, the number of
Shares offered hereby may increase or decrease. As of the date of the
Prospectus, the aggregate principal amount of Notes is $150,000,000 and the
aggregate number of Shares into which the Notes may be converted is
approximately 4,160,600 shares.
DESCRIPTION OF NOTES
The Notes were issued under an Indenture dated as of December 15, 1997 (the
"Indenture"), between the Company and American National Bank and Trust Company
of Chicago, N.A., as trustee (the "Trustee"). The Indenture (and the form of
Note which is a part thereof) and the Registration Rights Agreement (as
defined below) have been filed as exhibits to the Registration Statement of
which this Prospectus is a part. The following summaries of certain provisions
of the Notes, the Indenture and the Registration Rights Agreement do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Notes, the Indenture and the
Registration Rights Agreement. Wherever particular provisions or defined terms
of the Indenture (or the form of Note which is a part thereof) or the
Registration Rights Agreement are referred to, such provisions or defined
terms are incorporated herein by reference. References in this section to the
"Company" are solely to PLATINUM technology, inc., a Delaware corporation, and
not its subsidiaries.
GENERAL
The Notes are unsecured subordinated obligations of the Company, limited to
$150,000,000 aggregate principal amount and will mature on December 15, 2002,
unless redeemed at the option of the Company or repurchased by the Company at
the option of the holder upon a Designated Event (as defined herein). The
Notes bear interest at the rate of 6.25% per annum, payable semi-annually on
June 15 and December 15 of each year, commencing on June 15, 1998, to the
persons in whose names such Notes are registered at the close of business on
June 1 or December 1, immediately preceding such Interest Payment Date.
Interest is calculated on the basis of a 360-day year consisting of twelve 30-
day months. The Notes are subordinate in right of payment to certain other
obligations of the Company as described under "--Subordination," and
convertible into Common Stock as described under "--Conversion."
The Company maintains an office or agency where Notes may be presented for
payment (a "Paying Agent"), registration (a "Registrar") or conversion (a
"Conversion Agent") in the City of New York, New York. The Company initially
designated the Trustee at its office presently located at 14 Wall Street, New
York, New York 10005, to serve as its agent for such purposes.
At the option of the Company, payment of interest may be made by check
mailed to the holders of the Notes (individually, a "Holder" and,
collectively, the "Holders") at the addresses set forth upon the registry
books of the Registrar. No service charge is made for any registration of
transfer or exchange of Notes, but the
11
<PAGE>
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
The Notes are convertible into Common Stock at the conversion price stated
on the cover page hereof, subject to adjustment upon the occurrence of certain
events described under "--Conversion," at any time prior to the close of
business on the maturity date, unless previously redeemed or repurchased.
The Notes are redeemable at the option of the Company (a) in the event of
certain developments involving withholding taxes of the U.S. as described
below under "--Redemption--Redemption for Taxation Reasons" at a redemption
price of 100% of the principal amount of the Notes to be redeemed, plus
accrued interest to, but excluding, the Redemption Date (as defined), and any
Additional Amounts then payable and (b) under the circumstances and at the
redemption prices set forth below under "Redemption--Optional Redemption,"
plus accrued interest to, but excluding, the Redemption Date, and any
Additional Amounts then payable.
The Indenture does not contain any financial covenants or restrictions on
the payment of dividends by the Company, the incurrence of indebtedness,
including Senior Indebtedness (as defined), by the Company or the issuance or
repurchase of securities by the Company. The Indenture does not contain any
covenants or other provisions to afford protection to Holders of the Notes in
the event of a highly leveraged transaction or a change in control of the
Company except to the extent described below under "--Repurchase at Option of
Holders Upon a Change of Control."
BOOK ENTRY, DELIVERY AND FORM
The Notes were issued in fully registered form, without coupons, in
denominations of $1,000 principal amount and integral multiples thereof.
Global Note, Book-Entry Form. Notes held by "qualified institutional buyers"
("QIBs") are evidenced by a global Note (the "144A Global Note"), which are
deposited with, or on behalf of, The Depository Trust Company, New York, New
York ("DTC"), and registered in the name of Cede & Co. ("Cede") as DTC's
nominee.
Notes held by persons who acquired such Notes in compliance with Regulation
S under the Securities Act (a "Non-U.S. Person") are evidenced by a global
Note (the "Regulation S Global Note"), which is deposited with, or on behalf
of, DTC and registered in the name of Cede as DTC's nominee, for the accounts
of Morgan Guaranty Trust Company of New York, Brussels office, as operator of
the Euroclear System ("Euroclear") and Cedel, S.A. ("Cedel"). Beneficial
interests in the Regulation S Global Note may only be held through Euroclear
or Cedel, and any resale or transfer of such interests to U.S. persons is
subject to certain restrictions. The 144A Global Note and the Regulation S
Global Note are hereinafter collectively referred to as the Global Note.
Except as set forth below, the Global Note may be transferred, in whole or in
part, only to another nominee of DTC or to a successor of DTC or its nominee.
QIBs may hold their interests in the 144A Global Note directly through DTC
or indirectly through organizations which are participants in DTC
("Participants"). Transfers between Participants are effected in the ordinary
way in accordance with DTC rules and are settled in same-day funds. Non-U.S.
Persons may hold their interest in the Regulation S Global Note directly
through Cedel or Euroclear, or indirectly through organizations that are
participants in Cedel or Euroclear (the "Cedel Participants" and the
"Euroclear Participants"). Cedel and Euroclear hold interests in the
Regulation S Global Note on behalf of Cedel Participants and Euroclear
Participants through DTC. Transfers between participants in Euroclear and
Cedel are effected in the ordinary way in accordance with their respective
rules and operating procedures. The laws of some states require that certain
persons take physical delivery of securities in definitive form. Consequently,
the ability to transfer beneficial interests in the Global Note to such
persons may be limited.
QIBs and Non-U.S. Persons who are not Participants may beneficially own
interests in the Global Note held by DTC only through Participants, including
Euroclear and Cedel, or certain banks, brokers, dealers, trust companies and
other parties that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants"). So long
as Cede, as the nominee of DTC, is the registered owner
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<PAGE>
of the Global Note, Cede for all purposes will be considered the sole holder
of the Global Note for all purposes under the Indenture. Except as provided
below and except in certain limited circumstances as provided in the
Indenture, owners of beneficial interests in the Global Note are not entitled
to have certificates registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form, and
are not considered holders thereof under the Indenture for any purpose,
including with respect to the giving of any directions, instructions or
approvals to the Trustee thereunder.
Payment of interest on and principal of and the redemption price or
repurchase price of the Global Note is made to Cede, the nominee for DTC, as
the registered owner of the Global Note, by wire transfer of immediately
available funds on each relevant payment date. Neither the Company nor the
Trustee (nor any Registrar, Paying Agent or Conversion Agent under the
Indenture) has any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
the Global Note, including for any delay by DTC or any Participant or Indirect
Participant in identifying the beneficial owners of the Notes, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests, and the Company and the Trustee may conclusively rely on,
and are protected in relying on, instructions from DTC for all purposes.
The Company has been informed by DTC that, with respect to any payment of
interest on, principal of, or the redemption price or repurchase price of, the
Global Note, DTC's practice is to credit Participants' accounts on the payment
date therefor with payments in amounts proportionate to their respective
beneficial interests in the Notes represented by the Global Note, as shown on
the records of DTC (adjusted as necessary so that such payments are made with
respect to whole Notes only), unless DTC has reason to believe that it will
not receive payment on such payment date. Payments by Participants to owners
of beneficial interests in Notes represented by the Global Note held through
such Participants will be the responsibility of such Participants, as is now
the case with securities held for the accounts of customers registered in
"street name."
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in the principal amount represented by the Global
Note to pledge such interest to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of such interest, may be
affected by the lack of a physical certificate evidencing such interest.
Neither the Company nor the Trustee (or any Note Registrar, Paying Agent or
Conversion Agent under the Indenture) have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC advised the Company that it will take any action permitted to
be taken by a holder of Notes (including, without limitation, the presentation
of Notes for exchange as described below) only at the direction of one or more
Participants to whose account with DTC interests in the Global Note are
credited and only in respect of the principal amount of the Notes represented
by the Global Note as to which such Participant or Participants has or have
given such direction.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entry
changes to accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations such as the Initial Purchasers. Certain of such
Participants (or their representatives), together with other entities, own
DTC. Indirect access to the DTC system is available to others such as banks,
brokers, dealers and trust companies that clear through, or maintain a
custodial relationship with, a Participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among Participants, it is under no
obligation to perform or continue to perform such procedures,
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<PAGE>
and such procedures may be discontinued at any time. If DTC is at any time
unwilling or unable to continue as depositary and a successor depositary is
not appointed by the Company within 90 days, the Company will cause the Notes
to be issued in definitive form in exchange for the Global Note.
Certificated Notes. Notes sold to investors that are neither QIBs nor Non-
U.S. Persons were issued in definitive registered form and may not be
represented by the Global Note. In addition, certificated Notes may be issued
in exchange for Notes represented by the Global Note if no successor
depositary is appointed by the Company as set forth above and as described in
the Indenture.
Restrictions on Transfer; Legends. The Notes are subject to certain transfer
restrictions as described in the Indenture and certificates evidencing the
Notes bear a legend to such effect.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable. The
Company will have no responsibility for the performance by DTC or its
Participants of their respective obligations as described herein or under the
rules and procedures governing their respective obligations.
CONVERSION
The Holders of the Notes have the right, at the Holder's option, to convert
any portion of the principal amount thereof that is an integral multiple of
$1,000 into shares of Common Stock, at any time prior to the close of business
on the Stated Maturity of the Notes (unless earlier redeemed or repurchased)
at the conversion price set forth on the cover page of this Prospectus
(subject to adjustment as described below). The right to convert a Note called
for redemption or delivered for repurchase will terminate at the close of
business on the Business Day prior to the Redemption Date or Repurchase Date
for such Note, unless the Company subsequently fails to pay the applicable
Redemption Price or Repurchase Price, as the case may be.
In the case of any Note that has been converted after any Record Date, but
on or before the next Interest Payment Date, interest the stated due date of
which is on such Interest Payment Date shall be payable on such Interest
Payment Date notwithstanding such conversion, and such interest shall be paid
to the Holder of such Note who is a Holder on such Record Date. Any Note so
converted must be accompanied by payment of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of Notes being
surrendered for conversion (unless such Note shall have been called for
redemption, in which case no such payment shall be required). In all cases,
the Holders will receive the interest payment due on December 15, 2000, even
if they surrender Notes for conversion as a result of the Company's exercise
of its right to redeem Notes on or after December 15, 2000. No fractional
shares will be issued upon conversion but, in lieu thereof, an appropriate
amount will be paid in cash by the Company based on the market price of the
Common Stock (as determined in accordance with the Indenture) at the close of
business on the day of conversion.
The Conversion Price is subject to adjustment upon the occurrence of certain
events, including: (a) any payment of a dividend (or other distribution)
payable in Common Stock on any class of Capital Stock of the Company, (b) any
issuance to all holders of Common Stock of rights, options or warrants
entitling them to subscribe for or purchase Common Stock at less than the then
current market price (as determined in accordance with the Indenture) of
Common Stock; provided, however, that if such options or warrants are only
exercisable upon the occurrence of certain triggering events, then the
Conversion Price will not be adjusted until such triggering events occur, (c)
any subdivision, combination or reclassification of Common Stock, (d) any
distribution to all holders of Common Stock of evidences of indebtedness,
shares of Capital Stock other than Common Stock, cash or other assets
(including securities, but excluding those dividends, rights, options,
warrants and distributions referred to above and excluding dividends and
distributions paid exclusively in cash), (e) any distribution consisting
exclusively of cash (excluding any cash portion of distributions referred to
in (d) above, or cash distributed upon a merger or consolidation to which the
last paragraph of this section "--Conversion" applies) to all holders of
Common Stock in an aggregate amount that, combined together with (i) all other
such all-cash distributions made within the then preceding 12 months in
respect of which no adjustment has been made
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<PAGE>
and (ii) any cash and the fair market value of other consideration paid or
payable in respect of any tender offer by the Company or any of its
Subsidiaries for Common Stock concluded within the preceding 12 months in
respect of which no adjustment has been made, exceeds 10% of the Company's
market capitalization (defined as being the product of the then current market
price of the Common Stock times the number of shares of Common Stock then
outstanding) on the record date of such distribution, and (f) the completion
of a tender or exchange offer made by the Company or any of its Subsidiaries
for Common Stock that involves an aggregate consideration that, together with
(i) any cash and other consideration payable in a tender or exchange offer by
the Company or any of its Subsidiaries for Common Stock expiring within the 12
months preceding the expiration of such tender or exchange offer in respect of
which no adjustment has been made and (ii) the aggregate amount of any such
all-cash distributions referred to in (e) above to all holders of Common Stock
within the 12 months preceding the expiration of such tender or exchange offer
in respect of which no adjustments have been made, exceeds 10% of the
Company's market capitalization on the expiration of such tender offer. No
adjustment of the Conversion Price will be required to be made until the
cumulative adjustments amount to 1.0% or more of the Conversion Price as last
adjusted.
The Company reserves the right to make such reductions in the Conversion
Price in addition to those required in the foregoing provisions as it
considers to be advisable. In the event the Company elects to make such a
reduction in the Conversion Price, the Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder if and to the extent that such laws and
regulations are applicable in connection with the reduction of the Conversion
Price.
In the event that the Company distributes rights or warrants (other than
those referred to in (b) in the second paragraph above) pro rata to holders of
Common Stock, so long as any such rights or warrants have not expired or been
redeemed by the Company, the Holder of any Note surrendered for conversion
will be entitled to receive upon such conversion, in addition to the shares of
Common Stock issuable upon such conversion (the "Conversion Shares"), a number
of rights or warrants to be determined as follows: (i) if such conversion
occurs on or prior to the date for the distribution to the holders of rights
or warrants of separate certificates evidencing such rights or warrants (the
"Distribution Date"), the same number of rights or warrants to which a holder
of a number of shares of Common Stock equal to the number of Conversion Shares
is entitled to at the time of such conversion in accordance with the terms and
provisions of an applicable to the rights or warrants, and (ii) if such
conversion occurs after such Distribution Date, the same number of rights or
warrants to which a holder of the number of shares of Common Stock into which
such Note was convertible immediately prior to such Distribution Date would
have been entitled on such Distribution Date in accordance with the terms and
provisions of and applicable to the rights or warrants. The Conversion Price
of the Notes will not be subject to adjustment on account of any declaration,
distribution or exercise of such rights or warrants.
Under the terms of the Rights Agreement between the Company and Harris Trust
and Savings Bank (the "Rights Agreement"), upon conversion of any Notes prior
to the redemption or expiration of the right (a "Right") to purchase from the
Company, for each share of Common Stock owned, one one-hundredth of a share of
the Company's Class II Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Preferred Rights Shares"), at a price of $125.00
per one one-hundredth of a Preferred Rights Share, the holders of such Notes
will receive, subject to certain limited conditions, an appropriate number of
Rights with respect to the shares of Common Stock issued upon such conversion.
In addition, the Indenture provides that if the Company amends the Rights
Agreement or implements a replacement or successor stockholders' rights plan,
such rights plan must provide that upon conversion of the Notes the Holders
will receive, in addition to the Common Stock issuable upon such conversion,
such rights whether or not such rights have separated from the Common Stock at
the time of such conversion.
In case of any reclassification, consolidation or merger of the Company with
or into another person or any merger of another person with or into the
Company (with certain exceptions), or in case of any sale, transfer or
conveyance of all or substantially all of the assets of the Company (computed
on a consolidated basis), each Note then outstanding will, without the consent
of any Holder of Notes, become convertible only into the kind
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<PAGE>
and amount of securities, cash and other property receivable upon such
reclassification, consolidation, merger, sale, transfer or conveyance by a
holder of the number of shares of Common Stock into which such Note was
convertible immediately prior thereto, after giving effect to any adjustment
event, assuming such holder of Common Stock failed to exercise any rights of
election and received per share the kind and amount received per share by a
plurality of non-electing shares.
SUBORDINATION
The Notes are unsecured general obligations of the Company, subordinated in
right of payment to all existing and future Senior Indebtedness of the
Company. As of April 30, 1998, there was approximately $49.7 million of Senior
Indebtedness outstanding. The Notes are effectively subordinated in right of
payment to all liabilities (including trade payables) of the Company's
Subsidiaries. The Company's Subsidiaries had approximately $86.2 million of
indebtedness and other liabilities outstanding (excluding intercompany
liabilities) at April 30, 1998. The Indenture does not restrict the incurrence
of Senior Indebtedness or other indebtedness by the Company or its
Subsidiaries.
The Indenture provides that no payment may be made by the Company on account
of the principal of, premium, if any, and interest (including any Additional
Amounts) on the Notes, or to acquire any of the Notes (including repurchases
of Notes at the option of the Holder) for cash or property (other than Junior
Securities), or on account of the redemption provisions of the Notes, (i) upon
the maturity of any Senior Indebtedness of the Company by lapse of time,
acceleration (unless waived) or otherwise, unless and until all principal of,
premium, if any, and interest on such Senior Indebtedness are first paid in
full (or such payment is duly provided for), or (ii) in the event of default
in the payment of any principal of, premium, if any, or interest on any Senior
Indebtedness of the Company when it becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise (a
"Payment Default"), unless and until such Payment Default has been cured or
waived or otherwise has ceased to exist.
Upon (i) the happening of an event of default (other than a Payment Default)
that permits the holders of Designated Senior Indebtedness or their
representative immediately to accelerate its maturity and (ii) written notice
of such event of default given to the Company and the Trustee by the holders
of an aggregate of at least $5,000,000 principal amount outstanding of such
Designated Senior Indebtedness or their representative (a "Payment Notice"),
then, unless and until such event of default has been cured or waived or
otherwise has ceased to exist, no payment (by setoff or otherwise) may be made
by or on behalf of the Company on account of the principal of, premium, if
any, or interest or Additional Amounts on the Notes, or to acquire or
repurchase any of the Notes for cash or property, or on account of the
redemption provisions of the Notes, in any such case other than payments made
with Junior Securities of the Company. Notwithstanding the foregoing, unless
(i) the Designated Senior Indebtedness in respect of which such event of
default exists has been declared due and payable in its entirety within 179
days after the Payment Notice is delivered as set forth above (the "Payment
Blockage Period"), and (ii) such declaration has not been rescinded or waived,
at the end of the Payment Blockage Period, the Company shall be required to
pay all sums not paid to the Holders of the Notes during the Payment Blockage
Period due to the foregoing prohibitions and to resume all other payments as
and when due on the Notes. Any number of Payment Notices may be given;
provided, however, that (i) not more than one Payment Notice shall be given
within a period of any 360 consecutive days, and (ii) no default that existed
upon the date of such Payment Notice or the commencement of such Payment
Blockage Period (whether or not such event of default is on the same issue of
Designated Senior Indebtedness) shall be made the basis for the commencement
of any other Payment Blockage Period.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee or the Holders at a time when such payment or
distribution is prohibited by the foregoing provisions, such payment or
distribution shall be held in trust for the benefit of the holders of Senior
Indebtedness of the Company, and shall be paid or delivered by the Trustee or
such Holders, as the case may be, to the holders of the Senior Indebtedness of
the Company remaining unpaid or unprovided for or their representative or
representatives, or to the trustee or trustees under any indenture pursuant
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<PAGE>
to which any instruments evidencing any of such Senior Indebtedness of the
Company may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness of the Company held or
represented by each, for application to the payment of all Senior Indebtedness
of the Company remaining unpaid, to the extent necessary to pay or to provide
for the payment of all such Senior Indebtedness in full, after giving effect
to any concurrent payment or distribution to the holders of such Senior
Indebtedness.
Upon any distribution of assets of the Company upon any dissolution, winding
up, total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary, in bankruptcy, insolvency, receivership or a similar
proceeding or upon assignment for the benefit of creditors or any marshaling
of assets or liabilities, (i) the holders of all Senior Indebtedness of the
Company will first be entitled to receive payment in full (or have such
payment duly provided for) before the Holders are entitled to receive any
payment on account of the principal of, premium, if any, interest or
Additional Amounts on, or with respect to, the Notes (other than Junior
Securities) and (ii) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities (other than
Junior Securities) to which the Holders or the Trustee on behalf of the
Holders would be entitled (by setoff or otherwise), except for the
subordination provisions contained in the Indenture, will be paid by the
liquidating trustee or agent or other person making such a payment or
distribution directly to the holders of Senior Indebtedness of the Company or
their representative to the extent necessary to make payment in full of all
such Senior Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness.
No provision contained in the Indenture or the Notes affects the obligation
of the Company, which is absolute and unconditional, to pay, when due,
principal of, premium, if any, and interest on the Notes. The subordination
provisions of the Indenture and the Notes do not prevent the occurrence of any
Default or Event of Default under the Indenture or limit the rights of the
Trustee or any Holder, subject to the two preceding previous paragraphs, to
pursue any other rights or remedies with respect to the Notes.
The Company conducts certain of its operations through its Subsidiaries.
Accordingly, the Company's ability to meet its cash obligations is dependent
upon the ability of its Subsidiaries to make cash distributions to the
Company. The ability of its Subsidiaries to make distributions to the Company
is and will continue to be restricted by, among other limitations, applicable
provisions of the laws of national and state governments and contractual
provisions. The Indenture does not limit the ability of the Company's
Subsidiaries to incur such restrictions in the future. The right of the
Company to participate in the assets of any Subsidiary (and thus the ability
of Holders of the Notes to benefit indirectly from such assets) is generally
subject to the prior claims of creditors, including trade creditors, of that
Subsidiary except to the extent that the Company is recognized as a creditor
of such Subsidiary, in which case the Company's claims would still be subject
to any security interest of other creditors of such Subsidiary. The Notes,
therefore, are structurally subordinated to creditors, including trade
creditors, of Subsidiaries of the Company with respect to the assets of the
Subsidiaries against which such creditors have a claim.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of the Company or
any of its Subsidiaries or a marshaling of assets or liabilities of the
Company and its Subsidiaries, Holders of the Notes may receive ratably less
than other creditors. See "Risk Factors--Subordination; Company Structure;
Subsidiary Cash Flow."
REDEMPTION
Optional Redemption
The Notes are not subject to redemption prior to December 15, 2000.
Thereafter, the Notes are redeemable at the option of the Company, in whole or
in part, at any time on or after December 15, 2000 upon not less than 30 nor
more than 60 days' notice to each Holder of the Notes, at the following
redemption prices (expressed as
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<PAGE>
percentages of the principal amount) if redeemed during the 12-month period
commencing December 15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2000.............................. 102.50%
2001 and thereafter............... 101.25
</TABLE>
in each case (subject to the right of Holders of record on a Record Date to
receive interest due on an Interest Payment Date that is on or prior to such
Redemption Date), together with accrued and unpaid interest and Additional
Amounts, if any, to the Redemption Date.
In the case of a partial redemption, the Trustee shall promptly redeem the
Notes or portions thereof which are to be redeemed on a pro rata basis or in
such other manner it deems appropriate and fair and in such manner as complies
with any applicable depositary, legal and stock exchange requirements. The
Notes may be redeemed in part in integral multiples of $1,000 only.
The Notes do not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first-class mail, at least 30 days
and not more than 60 days prior to the date fixed for redemption, to the
Trustee and each Holder of Notes to be redeemed to such Holder's last address
as then shown upon the registry books of the Registrar. The notice of
redemption must state the Redemption Date, the Redemption Price, the amount of
accrued interest to be paid and that the Notes called for redemption may not
be converted after the fifth Business Day prior to the Redemption Date. Any
notice that relates to a Note to be redeemed only in part must state the
portion of the principal amount to be redeemed and must state that on and
after the Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be issued. On
and after the Redemption Date, interest will cease to accrue on the Notes or
portions thereof called for redemption, unless the Company defaults in its
obligations with respect thereto.
Redemption for Taxation Reasons
If, as a result of any change in, or amendment to, the laws or regulations
prevailing in the United States or any political subdivision or taxing
authority thereof or therein, which change or amendment becomes effective on
or after the date of this Prospectus or as a result of any application or
official interpretation of such laws or regulations not generally known before
that date (a "Tax Law Change") the Company is or would be required on the next
succeeding Interest Payment Date to pay Additional Amounts (as defined), and
such requirement or obligation cannot be avoided by the Company taking
reasonable measures available to it, the Company may redeem the affected Notes
in whole, but not in part, at any time, on giving not less than 20 days'
notice, at a redemption price equal to 100% of the principal amount thereof
plus accrued interest to, but excluding, the Redemption Date and any
Additional Amounts then payable, provided that no such notice of redemption
shall be given earlier than 90 days prior to the earliest date on which the
Company would be obligated to withhold or pay Additional Amounts were a
payment in respect of the Notes then made.
Prior to the publication of any notice of redemption with respect to a Tax
Law Change, the Company shall deliver to the Trustee (a) a certificate stating
that the Company is entitled to effect such redemption and setting forth a
statement of facts showing that the conditions precedent to the right of the
Company so to redeem have occurred and (b) an opinion of counsel selected by
the Company and reasonably acceptable to the Trustee, to the effect that the
Company has or will become obligated to pay such Additional Amounts as a
result of a Tax Law Change. The Company's right to redeem the affected Notes
shall continue as long as the Company is obligated to pay Additional Amounts,
notwithstanding that the Company shall have theretofore made payments of
Additional Amounts.
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PAYMENT OF ADDITIONAL AMOUNTS
The Company will pay to a Non-U.S. Holder (as defined in "Certain United
States Federal Income Tax Considerations" below) of any Note such additional
amounts ("Additional Amounts") as may be necessary in order that every net
payment of the principal of, premium, if any, and interest on such Note, after
deduction or withholding for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment
by the United States or any political subdivision or taxing authority thereof
or therein, will not be less than the amount provided for in such Note to be
then due and payable; provided however, that the foregoing obligation to pay
Additional Amounts will not apply to:
(a) any tax, assessment or other governmental charge which would not have
been so imposed but for (i) the existence of any present or former connection
between such Non-U.S. Holder (or between a fiduciary, settlor, beneficiary,
member, shareholder of or possessor of a power over such Non-U.S. Holder, if
such Non-U.S. Holder is a trust, an estate, a partnership or a corporation)
and the United States or any political subdivision or taxing authority thereof
or therein, including, without limitation, such Non-U.S. Holder (or such
fiduciary, settlor, beneficiary, member, shareholder or possessor) being or
having been a citizen, domiciliary or resident of the United States or treated
as a resident thereof, or being or having been engaged in trade or business or
present therein, or having or having had a permanent establishment therein; or
(ii) such Non-U.S. Holder's present or former status as a personal holding
company, a foreign personal holding company with respect to the United States,
a controlled foreign corporation, a passive foreign investment company, or a
foreign private foundation or foreign tax exempt entity for United States tax
purposes, or a corporation which accumulates earnings to avoid United States
federal income tax;
(b) any tax, assessment or other governmental charge which would not have
been so imposed but for the presentation by the Non-U.S. Holder of such Notes
for payment on a date more than 15 days after the date on which such payment
became due and payable or the date on which payment thereof is duly provided
for, whichever occurs later;
(c) any estate, inheritance, gift, sales, transfer, personal property or
similar tax, assessment or governmental charge;
(d) any tax, assessment or other governmental charge which would not have
been imposed but for the failure to comply with any certification,
identification or other reporting requirement concerning the nationality,
residence, identity or connection with the United States of such Non-U.S.
Holder (or beneficial owner of such Note), if compliance is required or
imposed by a statute, treaty, regulation or administrative practice of the
United States or any political subdivision or taxing authority thereof or
therein as a precondition to exemption from all or part of such tax,
assessment or other governmental charge;
(e) any tax, assessment or other governmental charge which is payable
otherwise than by deduction or withholding from payments of principal of,
premium, if any, or interest on such Note;
(f) any tax, assessment or other governmental charge imposed on interest
received by a Non-U.S. Holder actually or constructively holding 10% or more
of the total combined voting power of all classes of stock of the Company
entitled to vote;
(g) any tax, assessment or other governmental charge imposed on a Non-U.S.
Holder that is a partnership or a fiduciary or other than the sole beneficial
owner of such payment, but only to the extent that any beneficial owner or
member of the partnership or beneficiary or settlor with respect to the
fiduciary would not have been entitled to the payment of Additional Amounts
had the beneficial owner, member, beneficiary or settlor directly been the
holder of the Note; or
(h) any combination of items (a), (b), (c), (d), (e), (f) and (g).
Notwithstanding the foregoing, the Company shall not be obligated to pay
Additional Amounts in respect of payments becoming due on the Notes more than
15 days after the Redemption Date with respect to any
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<PAGE>
redemption of the Notes described in the first paragraph under "--Redemption--
Redemption for Taxation Reasons" to the extent that the Company's obligation
to pay such Additional Amounts arises from the Tax Law Change that resulted in
such redemption.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE OF CONTROL
The Indenture provides that in the event that a Change of Control (as
defined) has occurred, each Holder of Notes will have the right, at such
Holder's option, pursuant to an irrevocable and unconditional offer by the
Company (the "Repurchase Offer"), to require the Company to repurchase all or
any part of such Holder's Notes (provided, that the principal amount of such
Notes must be $1,000 or an integral multiple thereof) on the date determined
by the Company (the "Repurchase Date") that is no later than 45 Business Days
after the occurrence of such Change of Control at a cash price equal to 100%
of the principal amount thereof, together with accrued and unpaid interest to
the Repurchase Date and any Additional Amounts then payable (the "Repurchase
Price"). The Repurchase Offer shall be made within 30 Business Days following
a Change of Control event and remain open for 15 Business Days following its
commencement (the "Repurchase Offer Period"). Upon expiration of the
Repurchase Offer Period, the Company shall purchase all Notes tendered in
response to the Repurchase Offer. If required by applicable law, the
Repurchase Date and the Repurchase Offer Period may be extended as so
required; however, if so extended, it shall nevertheless constitute an Event
of Default if the Repurchase Date does not occur within 45 Business Days of
the Change of Control.
The Indenture provides that a "Change of Control" occurs upon the occurrence
of any of the following events: (i) upon any merger or consolidation of the
Company with or into any person or any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all of the assets of the
Company, on a consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction, any
"person" or "group" other than the Company is or becomes the "beneficial
owner," directly or indirectly, of more than 50% of the voting power in the
aggregate normally entitled to vote in the election of directors, managers, or
trustees, as applicable, of the transferee or surviving entity, (ii) when any
"person" or "group" is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the voting power in the aggregate normally
entitled to vote in the election of directors of the Company, (iii) when,
during any period of 12 consecutive months after the Issue Date, individuals
who at the beginning of any such 12-month period constituted the Board of
Directors of the Company (together with any new directors whose election by
such Board or whose nomination for election by the stockholders of the Company
was approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in office,
or (iv) the pro rata distribution by the Company to its stockholders of
substantially all of its assets.
For purposes of this definition, (i) the terms "person" and "group" shall
have the meaning used for purposes of Rules 13d-3 and 13d-5 under the Exchange
Act as in effect on the Issue Date, whether or not applicable; and (ii) the
terms "beneficial owner" shall have the meaning used in Rules 13d-3 and 13d-5
under the Exchange Act as in effect on the Issue Date, whether or not
applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time or upon the occurrence of certain events.
On or before the Repurchase Date, the Company will (i) accept for payment
Notes or portions thereof properly tendered pursuant to the Repurchase Offer,
(ii) deposit with the Paying Agent cash sufficient to pay the Repurchase Price
of all Notes so tendered and (iii) deliver to the Trustee Notes so accepted,
together with an Officers' Certificate listing the Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail to the
Holders of Notes so accepted payment in an amount equal to the Repurchase
Price, and the Trustee will promptly authenticate and mail or deliver to such
Holders a new Note or Notes equal in principal amount to any unredeemed
portion of the Notes surrendered. Any Notes not so accepted will be promptly
mailed or delivered by the Company to the Holder thereof. The Company will
publicly announce the results of the Repurchase Offer on or as soon as
practicable after the Repurchase Date.
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The phrase "all or substantially all" of the assets of the Company is likely
to be interpreted by reference to applicable state law at the relevant time,
and will be dependent on the facts and circumstances existing at such time. As
a result, there may be some degree of uncertainty in ascertaining whether a
sale or transfer of "all or substantially all" of the assets of the Company
has occurred.
The Change of Control repurchase feature of the Notes may make more
difficult or discourage a takeover of the Company, and, thus, the removal of
incumbent management. The Change of Control purchase feature resulted from
negotiations between the Company and the Initial Purchaser.
The provisions of the Indenture relating to a Change of Control may not
afford the Holders protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger, spin-off or similar transaction that
may adversely affect Holders, if such transaction does not constitute a Change
of Control, as set forth above. Further, the right to require the Company to
repurchase Notes as a result of the occurrence of a Change of Control could
create an event of default under Senior Indebtedness as a result of which any
repurchase could, absent a waiver, be blocked by the subordination provisions
of the Notes. In addition, the Company may not have sufficient financial
resources available to fulfill its obligation to repurchase the Notes upon a
Change of Control or to repurchase other debt securities of the Company or its
Subsidiaries providing similar rights to the Holders thereof. See "Risk
Factors--Limitations on Repurchases Upon Change of Control."
To the extent applicable, the Company will comply with Section 14 of the
Exchange Act and the provisions of Regulation 14E and any other tender offer
rules under the Exchange Act and any other securities laws, rules and
regulations that may then be applicable to any offer by the Company to
purchase the Notes at the option of Holders upon a Change of Control.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture provides that the Company may not, directly or indirectly,
consolidate with or merge with or into another person or sell, lease, convey
or transfer all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions,
to another person or group of affiliated persons, unless (i) either (a) in the
case of a merger or consolidation, the Company is the surviving entity or (b)
the resulting, surviving or transferee entity is a corporation organized under
the laws of the United States, any state thereof or the District of Columbia
and expressly assumes by supplemental Indenture all of the obligations of the
Company in connection with the Notes and the Indenture; (ii) no Default or
Event of Default shall exist or shall occur immediately before or after giving
effect on a pro forma basis to such transaction; (iii) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and, if a
supplemental Indenture is required, such supplemental Indenture comply with
the Indenture and that all conditions precedent relating to such transactions
have been satisfied; and (iv) the resulting, surviving or transferee entity,
unless it is a Subsidiary (as defined in the Indenture), immediately
thereafter has a consolidated net worth not less than that of the Company
immediately prior thereto.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged
or to which such transfer is made (the "Successor Corporation") shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under the Indenture with the same effect as if such successor
corporation had been named therein as the Company, and the Company will be
released from its obligations under the Indenture and the Notes, except as to
any obligations that arise from or as a result of such transaction; provided,
however, that if the Successor Corporation is a Subsidiary, the consolidated
net worth of which is less than that of the Company immediately prior to such
merger, consolidation, sale, lease, conveyance or transfer, the Company shall
not be released from such obligations but shall remain jointly and severally
liable therefor with the Successor Corporation.
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REPORTS
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and to each Holder, within 30 days after it is or would have been
required to file such with the Commission, annual and quarterly consolidated
financial statements substantially equivalent to financial statements that
would have been included in reports filed with the Commission if the Company
was subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by the
Company's certified independent public accountants as such would be required
in such reports to the Commission and, in each case, together with a
management's discussion and analysis of results of operations and financial
condition as such would be so required.
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (i) the failure by the Company
to pay any installment of interest on, or Additional Amounts with respect to,
the Notes as and when due and payable and the continuance of any such failure
for 30 days, (ii) the failure by the Company to pay all or any part of the
principal of, or premium, if any, on the Notes when and as the same become due
and payable at maturity, redemption, by acceleration or otherwise, including,
without limitation, pursuant to any Repurchase Offer or otherwise, (iii) the
failure of the Company to perform any conversion of any Notes required under
the Indenture and the continuance of any such failure for 30 days, (iv) the
failure by the Company to observe or perform any other covenant or agreement
contained in the Notes or the Indenture and, subject to certain exceptions,
the continuance of such failure for a period of 60 days after written notice
is given to the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in aggregate principal amount of the Notes
outstanding, (v) certain events of bankruptcy, insolvency or reorganization in
respect of the Company or any of its Significant Subsidiaries, and (vi) a
default in the payment of principal at maturity, or an acceleration for any
other reason of the maturity, of Indebtedness of the Company or any of its
Subsidiaries in the principal amount, individually or in the aggregate, of in
excess of $25,000,000. The Indenture provides that if a Default occurs and is
continuing, the Trustee must, within 90 days after the occurrence of such
Default, give to the Holders notice of such Default.
The Indenture provides that if an Event of Default occurs and is continuing
(other than an Event of Default specified in clause (v) above), then in every
such case, unless the principal of all of the Notes shall have already become
due and payable, either the Trustee or the Holders of 25% in aggregate
principal amount of the Notes then outstanding, by notice in writing to the
Company (and to the Trustee if given by Holders) (an "Acceleration Notice"),
may declare all principal and accrued interest and Additional Amounts thereon
to be due and payable immediately. If an Event of Default specified in clause
(v) above occurs, all principal and accrued interest thereon will be
immediately due and payable on all outstanding Notes without any declaration
or other act on the part of the Trustee or the Holders. The Holders of not
less than a majority in aggregate principal amount of Notes generally are
authorized to rescind such acceleration if all existing Events of Default,
other than the nonpayment of the principal of, premium, if any, and interest
on, the Notes that have become due solely by such acceleration, have been
cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any Default, except a
default in the payment of principal of, premium, if any, or interest on any
Note not yet cured, or a default with respect to any covenant or provision
that cannot be modified or amended without the consent of the Holder of each
outstanding Note affected. Subject to the provisions of the Indenture relating
to the duties of the Trustee, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request, order
or direction of any of the Holders, unless such Holders have offered to the
Trustee reasonable security or indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the Notes at the time outstanding will have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred on the Trustee.
AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting the Company and the Trustee to
enter into a supplemental indenture for certain limited purposes without the
consent of the Holders, including to make such changes as are necessary to
qualify the Notes for listing for trading on the Luxembourg Stock Exchange
(such as the addition
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of Luxembourg related notice requirements and the addition of a Luxembourg
registrar, paying agent and conversion agent). With the consent of the Holders
of not less than a majority in aggregate principal amount of the Notes at the
time outstanding, the Company and the Trustee are permitted to amend or
supplement the Indenture or any supplemental indenture or modify the rights of
the holders; provided, further, that no such modification may, without the
consent of each Holder affected thereby: (i) change the Stated Maturity of any
Note or reduce the principal amount thereof or the rate (or extend the time
for payment) of interest therein or any premium payable upon the redemption
thereof, or change the obligation of the Company to pay Additional Amounts in
a manner adverse to the Holders or change the place of payment where, or the
coin or currency in which, any Note or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment or the conversion of any Note on or after the due date thereof
(including, in the case of redemption, on or after the Redemption Date), or
reduce the Repurchase Price, or alter the change of control provisions or
redemption provisions in a manner adverse to the Holders; (ii) reduce the
percentage in principal amount of the outstanding Notes, the consent of whose
Holders is required for any such amendment, supplemental indenture or waiver
provided for in the Indenture; (iii) adversely affect the right of such Holder
to convert Notes; or (iv) modify any of the waiver provisions, except to
increase any required percentage or to provide that certain other provisions
of the Indenture cannot be modified or waived without the consent of the
Holder of each outstanding Note affected thereby.
NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES
The Indenture provides that no stockholder, employee, officer or director,
as such, past, present or future of the Company or any successor corporation
shall have any personal liability in respect of the obligations of the Company
under the Indenture or the Notes by reason of his or its status as such
stockholder, employee, officer or director.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange the Notes in accordance with the
Indenture. The Company may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents, and to pay any taxes and fees
required by law or permitted by the Indenture. The Company is not required to
transfer or exchange any Notes selected for redemption. Also, the Company is
not required to transfer or exchange any Notes for a period of 15 days before
a selection of Notes to be redeemed.
The registered Holder of a Note may be treated as the owner of it for all
purposes.
GOVERNING LAW
The Indenture, the Notes and the Registration Rights Agreement are governed
by and construed in accordance with the laws of the State of New York, United
States of America.
SAME-DAY FUNDS SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect to the Notes represented by
the Global Notes (including principal, premium, if any, and interest and
Additional Amounts) be made by wire transfer of immediately available funds to
the accounts specified by DTC. With respect to Notes represented by
Certificated Notes, the Company will make all payments of principal, premium,
if any, and interest, by mailing a check to each such Holder's registered
address. The Notes trade in DTC's Same-Day Funds Settlement System until
maturity, or until the Notes are issued in certificated form, and secondary
market trading activity in the Notes will therefore be required by DTC to
settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on trading
activity in the Notes.
REGISTRATION RIGHTS
The Company entered into a registration rights agreement with the Initial
Purchasers (the "Registration Rights Agreement") pursuant to which the Company
is required, at the Company's expense for the benefit of the Holders of the
Notes and the Common Stock issuable upon conversion thereof (together, the
"Registrable Securities"), to (i) use its reasonable efforts to file with the
Commission within 90 days after the date of original
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issuance of the Notes, a registration statement (the "Shelf Registration
Statement") covering resales of the Registrable Securities, (ii) use its
reasonable efforts to cause the Shelf Registration Statement to be declared
effective under the Securities Act within 180 days after the date of original
issuance of the Notes and (iii) use its reasonable efforts to keep effective
the Shelf Registration Statement until the second anniversary of the last date
of original issuance of Notes or such earlier date as all Registrable
Securities shall have been disposed of or on which all Registrable Securities
held by Persons that are not affiliates of the Company may be resold without
registration pursuant to Rule 144 (k) under the Securities Act (the
"Effectiveness Period"). This Registration Statement has been filed pursuant
to the Company's obligations under the Registration Rights Agreement. The
Company will be permitted to suspend the use of the prospectus which is part
of the Shelf Registration Statement in connection with the sales of the
Registrable Securities during certain periods of time under certain
circumstances relating to pending corporate developments and certain other
events. The Company will provide to each holder of Registrable Securities
copies of the prospectus that is a part of the Shelf Registration Statement,
notify each holder when the Shelf Registration Statement has become effective
and take certain other actions as are required to permit public resales of the
Registrable Securities. A holder of Registrable Securities that sells such
Registrable Securities pursuant to the Shelf Registration Statement will be
subject to certain of the civil liability provisions under the Securities Act
in connection with such sales and will be bound by the provisions of the
Registration Rights Agreement, including certain indemnification obligations.
If (i) on or prior to 90 days following the date of original issuance of the
Notes a Shelf Registration Statement has not been filed with the Commission or
(ii) on or prior to the 180th day following the date of original issuance of
the Notes, such Shelf Registration Statement is not declared effective (each,
a "Registration Default"), additional interest ("Additional Interest") will
accrue on the affected Notes, from and including the day following such
Registration Default until such time as such Shelf Registration Statement is
filed or such Shelf Registration Statement is declared effective, as the case
may be. Additional Interest will be paid semi-annually in arrears, with the
first semi-annual payment due on the first interest payment date following the
date on which such Additional Interest begin to accrue, and will accrue at a
rate per annum equal to an additional one-quarter of one percent (0.25%) of
the principal amount, to and including the 90th day following such
Registration Default and one-half of one percent (0.50%) thereof from and
after the 91st day following such Registration Default. In the event that
during the Effectiveness Period the Shelf Registration Statement ceases to be
effective for more than 90 days or the Company suspends the use of the
prospectus which is a part thereof for more than 90 days, whether or not
consecutive, during any 12-month period, then the interest rate borne by
affected Notes will increase by an additional one-half of one percent (0.50%)
per annum from the 91st day of the applicable 12-month period such Shelf
Registration Statement ceases to be effective or the Company suspends the use
of the prospectus which is a part thereof, as the case may be, until the
earlier of such time as (i) the Shelf Registration Statement again becomes
effective, (ii) the use of the related prospectus ceases to be suspended or
(iii) the Effectiveness Period expires. The Company agreed in the Registration
Rights Agreement to use its reasonable efforts to cause such Common Stock
issuable upon conversion of the Notes to be listed on the Nasdaq National
Market or, if the Common Stock is not then listed on the Nasdaq National
Market, to be listed on such exchange or market in the United States as the
Common Stock is then listed, upon effectiveness of the Shelf Registration
Statement.
Notes sold by a selling securityholder pursuant to such Shelf Registration
Statement will be represented by a global Note with a new International
Securities Identification Number ("ISIN"), and any beneficial interests held
in such global Note with such new ISIN through DTC or Euroclear or Cedel will
not be subject to any restrictions on transfer. It is anticipated that the
Notes sold pursuant to such Shelf Registration Statement will be listed on the
Luxembourg Stock Exchange, and will not be listed on any other securities
exchange or automated quotation system inside or outside of the United States.
CERTAIN DEFINITIONS
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
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"Designated Senior Indebtedness" means any particular Senior Indebtedness in
which the instrument creating or evidencing the same or the assumption or
guarantee thereof (or related agreements or documents to which the Company is
a party) expressly provides that such Senior Indebtedness shall be "Designated
Senior Indebtedness" for purposes of the Indenture (provided that such
instrument agreement or other document may place limitations and conditions on
the right of such Senior Indebtedness to exercise the rights to Designated
Senior Indebtedness).
"Indebtedness" of any person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of any such person, (i) in respect
of borrowed money (whether or not the recourse of the lender is to the whole
of the assets of such person or only to a portion thereof), (ii) evidenced by
bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except such as would constitute trade payables to trade creditors in the
ordinary course of business, (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) for the payment of money relating
to a Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or
a reimbursement obligation of such person with respect to any letter of
credit; (b) all net obligations of such person under Interest Swap and Hedging
Obligations; (c) all liabilities of others of the kind described in the
preceding clauses (a) or (b) that such person has guaranteed or that is
otherwise its legal liability and all obligations to purchase, redeem or
acquire any Capital Stock; and (d) any and all deferrals, renewals,
extensions, refinancings and refundings (whether direct or indirect) of any
liability of the kind described in any of the preceding clauses (a), (b) or
(c), or this clause (d), whether or not between or among the same parties.
"Issue Date" means the date of first issuance of the Notes under the
Indenture.
"Junior Securities" of any person means any Qualified Capital Stock and any
Indebtedness of such person that is subordinated in right of payment to the
Notes and has no scheduled installment of principal due, by redemption,
sinking fund payment or otherwise, on or prior to the Stated Maturity of the
Notes.
"Senior Indebtedness" means any Indebtedness of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company, unless the
instrument creating or evidencing such Indebtedness provides that such
Indebtedness is not senior or superior in right of payment to the Notes or to
other Indebtedness which is pari passu with, or subordinated to, the Notes;
provided that in no event shall Senior Indebtedness include (a) Indebtedness
of the Company owed or owing to any Subsidiary of the Company or any officer,
director or employee of the Company or any Subsidiary of the Company, (b)
Indebtedness to trade creditors or (c) any liability for taxes owed or owing
by the Company or (d) any Indebtedness of the Company with respect to the
Company's 6 3/4% Convertible Subordinated Notes Due 2001.
"Stated Maturity" when used with respect to any Note means December 15,
2002.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1-02(w) of Regulation S-
X promulgated by the Commission as in effect as of the date of the Indenture.
"Subsidiary," with respect to any person, means (i) a corporation a majority
of whose Capital Stock with voting power normally entitled to vote in the
election of directors is at the time, directly or indirectly, owned by such
person, by such person and one or more Subsidiaries of such person or by one
or more Subsidiaries of such person, (ii) a partnership in which such person
or a Subsidiary of such person is, at the time, a general partner and owns
alone or together with one or more Subsidiaries of such person a majority of
the partnership interests, or (iii) any other person (other than a corporation
or partnership) in which such person, one or more Subsidiaries of such person,
or such person and one or more Subsidiaries of such person, directly or
indirectly, at the date of determination thereof, has at least a majority
ownership interest.
RELATIONSHIP WITH TRUSTEE
The Company has an unsecured line of credit of $55,000,000 with the Trustee
pursuant to a Loan and Security Agreement dated as of December 22, 1997 (the
"Loan Agreement"). As of May 11, 1998, the Company had no outstanding
borrowings under this line of credit. The Trustee also issues letters of
credit to the Company pursuant to the Loan Agreement. The Company currently
has aggregate letters of credit outstanding for approximately $2,933,000 with
expiration dates ranging from September 1998 through July 1999. The Company
maintains its principal checking account at the Trustee, which also serves as
the Company's primary depositary. The Trustee also provides miscellaneous
other banking and related services to the Company.
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CERTAIN FEDERAL TAX CONSIDERATIONS
The following is a general discussion of certain U.S. federal income tax
considerations relevant to holders of the Notes and Common Stock into which
the Notes may be converted. This discussion is based upon the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury Regulations, Internal Revenue
Service ("IRS") rulings and judicial decisions now in effect, all of which are
subject to change (possibly with retroactive effect) or different
interpretations. There can be no assurance that the IRS will not challenge one
or more of the tax consequences described herein, and the Company has not
obtained, nor does it intend to obtain, a ruling from the IRS with respect to
the U.S. federal income tax consequences of acquiring or holding Notes or
Common Stock. This discussion does not purport to deal with all aspects of
U.S. federal income taxation that may be relevant to a particular holder in
light of the holder's circumstances (for example, persons subject to the
alternative minimum tax provisions of the Code). Also, it is not intended to
be wholly applicable to all categories of investors, some of which (such as
dealers in securities, banks, insurance companies, tax-exempt organizations,
and persons holding Notes or Common Stock as part of a hedging or conversion
transaction or straddle or persons deemed to sell Notes or Common Stock under
the constructive sale provisions of the Code) may be subject to special rules.
The discussion also does not discuss any aspect of state, local or foreign
law, or U.S. federal estate and gift tax law as applicable to U.S. holders (as
defined below). In addition, this discussion is limited to original purchasers
of Notes who acquire the Notes at their original issue price within the
meaning of Section 1273 of the Code and who will hold the Notes and Common
Stock as "capital assets" within the meaning of Section 1221 of the Code.
ALL PURCHASERS OF THE NOTES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES AND THE COMMON STOCK.
U.S. HOLDERS
As used herein, the term "U.S. Holder" means the beneficial holder of a Note
or Common Stock that for United States federal income tax purposes is (i) a
citizen or resident (as defined in Section 7701 (b) of the Code) of the United
States, (ii) a corporation, partnership or other entity formed under the laws
of the United States or any political subdivision thereof, (iii) an estate the
income of which is subject to U.S. federal income taxation regardless of its
source, (iv) in general, a trust subject to the primary supervision of a court
within the United States and the control of a United States person as
described in Section 7701 (a) (30) of the Code and (v) any other person whose
income or gain with respect to a Note or Common Stock is effectively connected
with the conduct of a United States trade or business. A "Non-U.S. Holder" is
any holder other than a U.S. Holder.
Interest
Stated interest on the Notes will generally be includable in a U.S. Holder's
gross income and taxable as ordinary income for U.S. federal income tax
purposes at the time it is paid or accrued in accordance with the U.S.
Holder's regular method of accounting. Failure of the Company to file or cause
to be declared effective a Shelf Registration Statement as described under
"Description of Notes--Registration Rights" will cause Additional Interest to
accrue on the Notes in the manner described therein. According to Treasury
Regulations, the possibility of a change in the interest rate will not affect
the amount of interest income recognized by a holder (or the timing of such
recognition) if the likelihood of the change, as of the date the debt
obligations are issued, is remote. The Company believes that the likelihood of
a change in the interest rate on the Notes is remote and does not intend to
treat the possibility of a change in the interest rate as affecting the yield
to maturity of any Note. Similarly, the Company intends to take the position
that the likelihood of a repurchase upon a "Change of Control" or the payment
of "Additional Amounts" is remote under the Treasury Regulations, and likewise
does not intend to treat the possibility of the foregoing as affecting the
yield to maturity of any Note.
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Conversion of Notes Into Common Stock
A U.S. Holder generally will not recognize any income, gain or loss upon
conversion of a Note into Common Stock except to the extent the Common Stock
is considered attributable to accrued interest not previously included in
income (which is taxable as ordinary income) or with respect to cash received
in lieu of a fractional share of Common Stock. The adjusted basis of shares of
Common Stock received on conversion will equal the adjusted basis of the Note
converted (reduced by the portion of adjusted basis allocated to any
fractional share of Common Stock exchanged for cash), and the holding period
of the Common Stock received on conversion will generally include the period
during which the converted Notes were held. However, a U.S. Holder's tax basis
in shares of Common Stock considered attributable to accrued interest as
described above generally will equal the amount of such accrued interest
included in income, and the holding period for such shares shall begin as of
the date of conversion.
The conversion price of the Notes is subject to adjustment under certain
circumstances. Section 305 of the Code and the Treasury Regulations issued
thereunder may treat the holders of the Notes as having received a
constructive distribution, resulting in ordinary income (subject to a possible
dividends received deduction in the case of corporate holders) to the extent
of the Company's current and/or accumulated earnings and profits, if, and to
the extent that, certain adjustments in the conversion price that may occur in
limited circumstances (particularly an adjustment to reflect a taxable
dividend to holders of Common Stock) increase the proportionate interest of a
holder of Notes in the fully diluted Common Stock, whether or not such holder
ever exercises its conversion privilege. Moreover, if there is not a full
adjustment to the conversion ratio of the Notes to reflect a stock dividend or
other event increasing the proportionate interest of the holders of
outstanding Common Stock in the assets or earnings and profits of the Company,
then such increase in the proportionate interest of the holders of the Common
Stock generally will be treated as a distribution to such holders, taxable as
ordinary income (subject to a possible dividends received deduction in the
case of corporate holders) to the extent of the Company's current and/or
accumulated earnings and profits.
Sale, Exchange or Retirement of the Notes
Each U.S. Holder generally will recognize gain or loss upon the sale,
exchange, redemption, retirement or other disposition of Notes measured by the
difference (if any) between (i) the amount of cash and the fair market value
of any property received (except to the extent that such cash or other
property is attributable to the payment of accrued interest not previously
included in income, which amount will be taxable as ordinary income) and
(ii) such holder's adjusted tax basis in the Notes. Any such gain or loss
recognized on the sale, exchange, redemption, retirement or other disposition
of a Note should be capital gain or loss and will generally be long-term
capital gain or loss if the Note has been held or deemed held for more than
one year at the time of the sale or exchange. On August 5, 1997, legislation
was enacted which, among other things, reduces to 20% the maximum rate of tax
on long-term capital gains on most capital assets held by an individual for
more than 18 months and under which, gain on most capital assets held by an
individual more than one year and up to 18 months is subject to tax at a
maximum rate of 28%. A U.S. Holder's initial basis in a Note will be the
amount paid therefor.
The Common Stock
Distributions, if any, paid on the Common Stock after a conversion, to the
extent made from current and/or accumulated earnings and profits of the
Company, as determined for U.S. federal income tax purposes, will be included
in a U.S. Holder's income as ordinary income (subject to a possible dividends
received deduction in the case of corporate holders) as they are paid. Gain or
loss realized on the sale or exchange of Common Stock will equal the
difference between the amount realized on such sale or exchange and the U.S.
Holder's adjusted tax basis in such Common Stock. Such gain or loss will
generally be long-term capital gain or loss if the holder has held or is
deemed to have held the Common Stock for more than one year. On August 5,
1997, legislation was enacted which reduces to 20% the maximum rate of tax on
long-term capital gains on most capital assets
27
<PAGE>
held by an individual for more than 18 months and under which gain on most
capital assets held by an individual more than one year and up to 18 months is
subject to tax at a maximum rate of 28%.
Information Reporting and Backup Withholding
A U.S. Holder of Notes or Common Stock may be subject to "backup
withholding" at a rate of 31% with respect to certain "reportable payments,"
including interest payments, dividend payments and, under certain
circumstances, principal payments on the Notes. These backup withholding rules
apply if the holder, among other things, (i) fails to furnish a social
security number or other taxpayer identification number ("TIN") certified
under penalties of perjury within a reasonable time after the request
therefor, (ii) furnishes an incorrect TIN, (iii) fails to report properly
interest or dividends, or (iv) under certain circumstances, fails to provide a
certified statement, signed under penalties of perjury, that the TIN furnished
is the correct number and that such holder is not subject to backup
withholding. A holder who does not provide the Company with its correct TIN
also may be subject to penalties imposed by the IRS. Any amount withheld from
a payment to a holder under the backup withholding rules is creditable against
the holder's federal income tax liability, provided that the required
information is furnished to the IRS. Backup withholding will not apply,
however, with respect to payments made to certain holders, including
corporations, tax-exempt organizations and certain foreign persons, provided
their exemptions from backup withholding are properly established.
The Company will report to the U.S. Holders of Notes and Common Stock and to
the IRS the amount of any "reportable payments" for each calendar year and the
amount of tax withheld, if any, with respect to such payments.
NON-U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a Non-U.S. Holder.
For purposes of withholding tax on interest and dividends discussed below, a
Non-U.S. Holder (as defined above) includes a non-resident fiduciary of an
estate or trust. For purposes of the following discussion, interest, dividends
and gain on the sale, exchange or other disposition of a Note or Common Stock
will generally be considered to be "U.S. trade or business income" if such
income or gain is (i) effectively connected with the conduct of a U.S. trade
or business or (ii) in the case of most treaty residents, attributable to a
permanent establishment (or, in the case of an individual, a fixed base) in
the United States.
Stated Interest
Generally any interest paid to a Non-U.S. Holder of a Note that is not U.S.
trade or business income will not be subject to U.S. tax if the interest
qualifies as "portfolio interest." Generally interest on the Notes will
qualify as portfolio interest if (i) the Non-U.S. Holder does not actually or
constructively own 10% or more of the total voting power of all voting stock
of the Company and is not a "controlled foreign corporation" with respect to
which the Company is a "related person" within the meaning of the Code, (ii)
the beneficial owner, under penalty of perjury, certifies that the beneficial
owner is not a U.S. person and such certificate provides the beneficial
owner's name and address, (iii) the Non-U.S. Holder is not a bank receiving
interest on an extension of credit made pursuant to a loan agreement made in
the ordinary course of its trade or business, and (iv) the Notes are in
registered form.
The gross amount of payments to a Non-U.S. Holder of interest that do not
qualify for the portfolio interest exemption and that are not U.S. trade or
business income will be subject to U.S. federal income tax at the rate of 30%,
unless a U.S. income tax treaty applies to reduce or eliminate withholding.
U.S. trade or business income will be taxed at regular U.S. rates rather than
the 30% gross rate. In the case of a Non-U.S. Holder that is a corporation,
such U.S. trade or business income may also be subject to the branch profits
tax (which is generally imposed on a foreign corporation on the actual or
deemed repatriation from the United States of earnings and
28
<PAGE>
profits attributable to U.S. trade or business income) at a 30% rate. The
branch profits tax may not apply (or may apply at a reduced rate) if a
recipient is a qualified resident of certain countries with which the United
States has an income tax treaty. To claim the benefit of a tax treaty or to
claim exemption from withholding because the income is U.S. trade or business
income, the Non-U.S. Holder must provide a properly executed Form 1001 or 4224
(or such successor forms as the IRS designates), as applicable, prior to the
payment of interest. These forms must be periodically updated. Under recently
issued Treasury Regulations that will generally be effective after December
31, 1998 (the "New Regulations"), the required Forms 1001 and 4224 will be
replaced by a new Form W-8. Under the New Regulations, a Non-U.S. Holder who
is claiming the benefits of a treaty may be required to obtain a U.S. taxpayer
identification number and make certain certifications to the Company. Special
procedures are provided in the New Regulations for payments through qualified
intermediaries. Prospective investors should consult their tax advisors
regarding the effect, if any, of the New Regulations.
Dividends
In general, dividends paid to a Non-U.S. Holder of Common Stock will be
subject to withholding of U.S. federal income tax at a 30% rate unless such is
reduced by an applicable income tax treaty. Dividends that are connected with
such holder's conduct of a trade or business in the United States (U.S. trade
or business income) are generally subject to U.S. federal income tax at
regular rates, but are not generally subject to the 30% withholding tax if the
Non-U.S. Holder files the appropriate form with the payor, as discussed above.
Any U.S. trade or business income received by a Non-U.S. Holder that is a
corporation may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate or such lower rate as may be applicable
under an income tax treaty. Currently, dividends paid to an address in a
foreign country generally are presumed (absent actual knowledge to the
contrary) to be paid to a resident of such country for purposes of the
withholding discussed above and for purposes of determining the applicability
of a tax treaty rate. Under the New Regulations, a Non-U.S. Holder claiming
the benefits of a treaty generally will be required to provide a Form W-8 (or
suitable substitute form) to the Company certifying such Non-U.S. Holder's
entitlements to treaty benefits. Other recently adopted Treasury Regulations
that will be effective with respect to payments made after December 31, 1997
provide special rules to determine whether, for purposes of determining the
applicability of a tax treaty, dividends paid to a Non-U.S. Holder that is an
entity should be treated as paid to the entity or those holding an interest in
that entity. Prospective investors should consult their tax advisors regarding
the effect, if any, of the New Regulations.
A Non-U.S. Holder of Common Stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to an income treaty may obtain a refund of any
amounts currently withheld by filing an appropriate claim for a refund with
the IRS.
Conversion
A Non-U.S. Holder generally will not be subject to U.S. federal income tax
on the conversion of Notes into Common Stock, except with respect to cash (if
any) received in lieu of a fractional share or interest not previously
included in income. Cash received in lieu of a fractional share may give rise
to gain that would be subject to the rules described below for the sale of
Notes. Cash or Common Stock treated as issued for accrued interest would be
treated as interest under the rules described above.
Sale, Exchange or Redemption of Notes or Common Stock
Except as described below and subject to the discussion concerning backup
withholding, any gain realized by a Non-U.S. Holder on the sale, exchange or
redemption of a Note or Common Stock generally will not be subject to U.S.
federal income tax, unless (i) such gain is U.S. trade or business income,
(ii) subject to certain exceptions, the Non-U.S. Holder is an individual who
holds the Note or Common Stock as a capital asset and is present in the United
States for 183 days or more in the taxable year of the disposition, (iii) the
Non-U.S. Holder is subject to tax pursuant to the provisions of U.S. tax law
applicable to certain U.S. expatriates (including certain former citizens or
residents of the United States), or (iv) in the case of the disposition of
Common Stock, the
29
<PAGE>
Company is a U.S. real property holding corporation. The Company does not
believe that it is currently a "United States real property holding
corporation," or that it will become one in the future.
Federal Estate Tax
Notes held (or treated as held) by an individual who is not a citizen or
resident of the United States (for federal estate tax purposes) at the time of
his or her death will not be subject to U.S. federal estate tax provided that
the interest thereon qualifies as portfolio interest and was not U.S. trade or
business income. Common Stock owned or treated as owned by an individual who
is not a citizen or resident of the United States (for federal estate tax
purposes) will be included in such individual's estate for U.S. federal income
tax purposes unless an applicable estate tax treaty otherwise applies.
Information Reporting and Backup Withholding
The Company must report annually to the IRS and to each Non-U.S. Holder any
interest or dividend that is subject to withholding, or that is exempt from
U.S. withholding tax pursuant to a tax treaty, or interest that is exempt from
U.S. tax under the portfolio interest exception. Copies of these information
returns may also be made available under the provisions of a specific treaty
or agreement to the tax authorities of the country in which the Non-U.S.
Holder resides.
Treasury Regulations provide that backup withholding and additional
information reporting will not apply to payments of principal on the Notes by
the Company to a Non-U.S. Holder if the holder certifies as to its Non-U.S.
status under penalties of perjury or otherwise establishes an exemption
(provided that neither the Company nor its Paying Agent has actual knowledge
that the holder is a U.S. person or that the conditions of any other exemption
are not, in fact, satisfied).
The payment of the proceeds from the disposition of Notes or Common Stock to
or through the U.S. office of any broker, U.S. or foreign, will be subject to
information reporting and possible backup withholding unless the owner
certifies as to its Non-U.S. Holder status under penalty of perjury or
otherwise establishes an exemption, provided that the broker does not have
actual knowledge that the holder is a U.S. person or that the conditions of
any other exemption are not, in fact, satisfied. The payment of the proceeds
from the disposition of a Note or Common Stock to or through a non-U.S. office
of a non-U.S. broker that is not a U.S. related person will not be subject to
information reporting or backup withholding. For this purpose, a "U.S. related
person" is (i) a "controlled foreign corporation" for U.S. federal income tax
purposes, (ii) a foreign person 50% or more of whose gross income from all
sources for the three-year period ending with the close of its taxable year
preceding the payment (or for such part of the period that the broker has been
in existence) is derived from activities that are effectively connected with
the conduct of a U.S. trade or business, or (iii) with respect to payments
made after December 31, 1998, a foreign partnership that, at any time during
its taxable year, is 50% or more (by income or capital interest) owned by
United States persons or is engaged in the conduct of a U.S. trade or
business.
In the case of the payment of proceeds from the disposition of Notes or
Common Stock to or through a non-U.S. office of a broker that is either a U.S.
person or a U.S. related person, information reporting is required on the
payment unless the broker has documentary evidence in the files that the owner
is a Non-U.S. Holder and the broker has no knowledge to the contrary. Backup
withholding will not apply to payments made through foreign offices of a
broker that is not a U.S. person or a U.S. related person (absent actual
knowledge that the payee is a U.S. person).
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.
30
<PAGE>
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE
TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR
TAX CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF THE NOTES AND
THE COMMON STOCK OF THE COMPANY, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE
LAWS.
31
<PAGE>
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds of the sale of the
Securities offered hereby. The Securities may be sold from time to time to
purchasers directly by the Selling Securityholders, their donees, transferees
or distributees, or their respective successors-in-interest (collectively, the
"Selling Securityholders"). Alternatively, the Selling Securityholders may
from time to time offer the Securities through brokers, dealers or agents who
may receive compensation in the form of discounts, concessions or commissions
from the Selling Securityholders and/or the purchasers of the Securities for
whom they may act as agent.
The Securities offered hereby may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. The
Securities may be sold by one or more of the following methods, without
limitation: (a) a block trade 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; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; (d) an exchange
distribution in accordance with the rules of such exchange; (e) face-to-face
transactions between sellers and purchasers without a broker-dealer; and (f)
through the writing of options. At any time a particular offer of the
Securities is made, a revised Prospectus or Prospectus Supplement, if
required, will be distributed which will set forth the aggregate amount and
type of Securities being offered and the terms of the offering, including the
name or names of any underwriters, dealers or agents, any discounts,
commissions, concessions and other items constituting compensation from the
Selling Securityholders 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
Securities. In addition, the Securities covered by this Prospectus may be sold
in private transactions or under Rule 144 rather than pursuant to this
Prospectus.
To the best knowledge of the Company, there are currently no plans,
arrangement or understandings between any Selling Securityholders and any
broker, dealer, agent or underwriter regarding the sale of the Securities by
the Selling Securityholders. There is no assurance that any Selling
Securityholder will sell any or all of the Securities offered by it hereunder
or that any such Selling Securityholder will not transfer, devise or gift such
Securities by other means not described herein.
The Selling Securityholders and any brokers, dealers or agents who
participate in the distribution of the Securities may be deemed to be
"underwriters," and any profits on the sale of the Securities by them and any
discounts, commissions or concessions received by any such brokers, dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act. To the extent the Selling Securityholders may be deemed to be
underwriters, the Selling Securityholders may be subject to certain statutory
liabilities of, including, but not limited to, Sections 11, 12 and 17 of the
Securities Act and Rule 10b-5 under the Exchange Act.
The Selling Securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation,
Regulation M which may limit the timing of purchases and sales of any of the
Securities by the Selling Securityholders and any other such person.
Furthermore, Regulation M of the Exchange Act may restrict the ability of any
person engaged in the distribution of the Securities to engage in market-
making activities with respect to the particular Securities being distributed
for a period of up to five business days prior to the commencement of such
distribution. All of the foregoing may affect the marketability of the
Securities and the ability of any person or entity to engage in market-making
activities with respect to the Securities.
Pursuant to the Registration Rights Agreement entered into in connection
with the offer and sale of the Notes by the Company, each of the Company and
the Selling Securityholders will be indemnified by the other against certain
liabilities, including certain liabilities under the Securities Act, or will
be entitled to contribution in connection therewith.
The Company has agreed to pay the expenses incidental to the registration,
offering and sale of the Securities to the public other than commissions, fees
and discounts of underwriters, brokers, dealers and agents.
32
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the validity of the Securities will be
passed upon for the Company by Katten Muchin & Zavis, Chicago, Illinois.
EXPERTS
The consolidated financial statements and related financial statement
schedules of PLATINUM technology, inc., as of December 31, 1996 and 1997 and
for each of the years in the three-year period ended December 31, 1997,
incorporated by reference in this Prospectus from the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 have been audited by KPMG
Peat Marwick LLP, independent certified public accountants, as set forth in
their reports thereon incorporated by reference herein.
With respect to the unaudited interim financial information for the periods
ended March 31, 1998 and 1997, incorporated by reference herein, the
independent certified public accountants have reported that they applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate report included in the Company's
quarterly report on Form 10-Q for the quarter ended March 31, 1998, and
incorporated by reference herein, states that they did not audit and they do
not express an opinion on that interim financial information. Accordingly, the
degree of reliance on their report on such information should be restricted in
light of the limited nature of the review procedures applied. The accountants
are not subject to the liability provisions of section 11 of the Securities
Act for their report on the unaudited interim financial information because
that report is not a "report" or a "part" of the registration statement
prepared or certified by the accountants within the meaning of sections 7 and
11 of the Securities Act.
33
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the approximate amount of fees and
expenses payable in connection with the issuance and distribution of the
Securities pursuant to the Prospectus contained in this Registration
Statement. The Company will pay all of these expenses.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $ 44,250
Accountants fees and expenses................................... 20,000
Legal fees and expenses......................................... 20,000
Miscellaneous expenses.......................................... 15,750
--------
Total......................................................... $100,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Ten of the Company's Restated Certificate of Incorporation provides
that the Company shall indemnify its directors to the full extent permitted by
the Delaware General Corporation Law and may indemnify its officers to such
extent, except that the Company shall not be obligated to indemnify any such
person (i) with respect to proceedings, claims or actions initiated or brought
voluntarily by any such person and not by way of defense, or (ii) for any
amounts paid in settlement of an action indemnified against by the Company
without the prior written consent of the Company. With the approval of its
stockholders, the Company has entered into indemnity agreements with each of
its directors and certain of its officers. These agreements may require the
Company, among other things, to indemnify such officers and directors against
certain liabilities that may arise by reason of their status or service as
directors or officers, to advance expenses to them as they are incurred,
provided that they undertake to repay the amount advanced if it is ultimately
determined by a court that they are not entitled to indemnification, and to
obtain directors' and officers' liability insurance if available on reasonable
terms.
In addition, Article Nine of the Company's Restated Certificate of
Incorporation provides that a director of the Company shall not be personally
liable to the Company or its stockholders for monetary damages for breach of
his or her fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware, or (iv) for any transaction
from which the director derives an improper personal benefit.
Reference is made to Section 145 of the General Corporation Law of the State
of Delaware which provides for indemnification of directors and officers in
certain circumstances.
The Company has purchased an insurance policy under which it is entitled to
be reimbursed for certain indemnity payments it is required or permitted to
make to its directors and officers.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
4.1* Restated Certificate of Incorporation of the Company.
4.2 Certificate of Amendment to the Restated Certificate of Incorporation
of the Company, incorporated by reference to Exhibit 4.11 to the
Company's Registration Statement on Form S-8, filed with the Commission
on September 8, 1995.
4.3* Bylaws of the Company.
4.4 Indenture, dated as of December 15, 1997 between the Company and
American National Bank and Trust Company of Chicago, N.A., as Trustee,
incorporated by reference to Exhibit 4.6 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 (the "1997 10-K").
4.5 Form of Note (included in Exhibit 4.4).
4.6** Registration Rights Agreement, dated as of December 15, 1997, between
the Company and Deutsche Morgan Grenfell Inc.
4.7* Specimen stock certificate representing Common Stock.
4.8 Rights Agreement dated as of December 21, 1995 between the Company and
Harris Trust and Savings Bank, incorporated by reference to Exhibit 1
to the Company's registration statement on Form 8-A, filed December 26,
1995.
5** Opinion of Katten Muchin & Zavis as to the legality of the securities
being registered (including consent).
12 Computation of Ratios of Earnings to Fixed Charges, incorporated by
reference to Exhibit 12 of the 1997 10-K.
15 Acknowledgement of Independent Certified Public Accountants Regarding
Independent Auditors' Review Report
23.1 Consent of KPMG Peat Marwick LLP with respect to the Company's
financial statements.
23.2** Consent of Katten Muchin & Zavis (contained in their opinion filed as
Exhibit 5 hereto).
24 Power of Attorney (contained on the signature page of this Registration
Statement).
25** Form T-1 for American National Bank and Trust Company of Chicago, N.A.,
as Trustee.
</TABLE>
- --------
* Filed with the Commission as an Exhibit to the Company's Registration
Statement on Form S-1, Registration No. 33-39233, and incorporated herein
by reference.
** Previously filed.
ITEM 17. UNDERTAKINGS
(a)The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to
include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b)The undersigned hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933 (the "Securities Act"), each
filing of the Company's annual report pursuant to Section 13(a)
II-2
<PAGE>
or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(h)Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Oakbrook Terrace, State of Illinois, on May 27,
1998.
PLATINUM technology, inc.
/s/ Andrew J. Filipowski
By: _________________________________
Andrew J. Filipowski
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registration Statement has been signed below by the following persons in
the capacities indicated as of May 27, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C> <C>
/s/ Andrew J.
Filipowski
- -------------------- President, Chief Executive Officer (Principal ---
Andrew J. Filipowski Executive Officer) and a Director
*
- -------------------- Executive Vice President, Chief Operations ---
Paul L. Humenansky Officer and a Director
*
- -------------------- Executive Vice President, Chief Financial Officer (Principal ---
Michael P. Cullinane Financial and Accounting Officer), Treasurer and a Director
*
Director
- -------------------- ---
James E. Cowie
*
Director
- -------------------- ---
Steven D. Devick
*
Director
- -------------------- ---
Arthur P. Frigo
*
Director
- -------------------- ---
Gian M. Fulgoni
</TABLE>
/s/ Andrew J. Filipowski
*By______________________
Andrew J. Filipowski
As Attorney-in-fact
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
15 Acknowledgement of Independent Certified Public Accountants Regarding
Independent Auditors' Review Report.
23.1 Consent of KPMG Peat Marwick LLP with respect to the Company's
financial statements.
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II-5
<PAGE>
Exhibit 15
PLATINUM technology, inc.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
Ladies and Gentlemen:
Re: Registration Statement No. 333-48047
With respect to the Amendment to the registration statement on Form S-3, we
acknowledge our awareness of the use of our report dated April 14, 1998
incorporated herein by reference related to our review of interim financial
information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
Very truly yours,
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
May 27, 1998
<PAGE>
Exhibit 23.1
The Board of Directors
PLATINUM technology, inc.
We consent to the use of our reports dated February 9, 1998, except for Note 18,
which is as of March 14, 1998, on the consolidated financial statements of
PLATINUM technology, inc. and subsidiaries as of December 31, 1997 and 1996, and
for each of the years in the three-year period then ended, and related financial
statement schedule, incorporated herein by reference and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
May 27, 1998
